Chalmers ready to fight ‘scare campaign of lies’ before bravest budget yet
Jim Chalmers has vowed to crack down on “fear campaigns full of lies” as Labor prepares to make good on its promise to maintain tax cuts for investors and the exchequer risks its credibility on a raft of measures to lift living standards after years of low growth and rising populism.
This imprint could reveal Labor is planning a major housing supply package, including potential new incentives for states to combine with tax increases to tip the balance in the “reform and resilience” budget in favor of first home buyers.
Prime Minister Anthony Albanese is betting that next week’s budget will win the support of financially strapped Australians and outweigh the political burden of breaking his repeated election promise to leave negative gears untouched.
At a time of concern about immigration, Chalmers, who has vowed to overhaul the skilled program to bring in the workers “we want”, has announced productivity measures that he says will boost GDP growth by $13 billion a year. Productivity, which has slowed since 2010 and failed to improve under four years of Labor, has been blamed by the RBA as a factor in its decision to raise interest rates.
Chalmers and Chancellor of the Exchequer Katy Gallagher announced $64 billion worth of savings in the budget on Friday, including from the NDIS and redirected defense spending as it struggles to reduce inflation and deficits after years of near-record spending.
The treasurer told this imprint that his reforms “give us the best chance in a generation to move the needle” on increasing the country’s wealth, as Labor’s negative gears prepare for arguably their biggest ever policy fight over overhauling capital gains taxes and trusts.
“We know this will invite the usual scare campaigns,” Chalmers said from his office in Parliament House, recalling the 2019 election when Bill Shorten proposed similar policies. “We are not deterred by that.”
The government says its first budget of its second term will not be a cash splash after winning a decisive majority. Ministers are refusing to say how much the budget deficit will be reduced.
Economist Chris Richardson said the more important test was whether the government’s spending and savings decisions were taking money out of the economy, after RBA boss Michele Bullock warned against aid earlier this week.
With the next election years away and the opposition leaking support for One Nation, Chalmers sees this moment as a big chance for Labor to make tough decisions. He warned Labor could be out of time if it did not make big changes to the economy.
The Labor Party has also begun to lend some support to the populist right. Albanese told colleagues there was potential for both the Greens and One Nation to rise if housing became unaffordable and pessimism about the country and the world continued.
“I am an impatient person and I am trying to do what we can as quickly as possible, knowing that the clock is ticking one way or another for every government,” Chalmers said.
“The degree of difficulty is also at its highest level. It’s not every bit the same as the budget we will be handing out in February, but I think what might surprise people is how much we still plan to do despite the disruption and distraction from the Middle East.”
“What we’re trying to do here is not just absorb the shock, but accelerate reform. It’s kind of two budgets in one in that sense.”
The 48-year-old leader is delivering his fifth budget amid the second outbreak of inflation since Labor came to power. The Queenslander, widely considered a premiership candidate, lost 17kg over the summer and went for a run before 6am in front of cameras in Canberra on Friday to signal action and ambition.
Shadow treasurer Tim Wilson said his counterpart was “cooking the budget books and making excuses for new taxes as ‘savings’ to hide that the inflation dependency has not gone away”.
“The treasurer had previously boasted of $114 billion in savings and in the next breath went on to spend another $223 billion.”
Chalmers said he was pushing for a range of policies to boost productivity to encourage the economy to grow faster and raise workers’ incomes without increasing inflation. The Productivity Commission called for red tape costs to be cut by $10 billion a year; Chalmers says his measures will reduce costs by $10.2 billion.
Part of the package is a change to Australia’s skilled migration programme. Former treasury secretary Martin Parkinson conducted a review of the Labor immigration system in 2023 and concluded that the mechanism for selecting skilled migrants was inadequate and that around half of the country’s skilled migrants did not benefit from their qualifications.
As the government pushes to get more homes built in Australia, Labor is proposing changes to cut the time it takes migrant tradesmen to enter the workforce by six months. Additionally, the government will make changes to the immigration points system to select more highly educated and younger people.
Chalmers said the points system was good but flawed.
“We think this is an important lever to get the people we want in the industries we want,” he said. “This is about making sure our immigration system works in our national interest, and in particular our national economic interest.”
As this imprint revealed last year, tradesmen including builders, plumbers and electricians often face charges of up to $1600 to access mandatory Australian standards on everything from solar panel installation to electrical wiring.
These standards will now be free of charge to construction, occupational health and safety and product safety companies.
Small businesses will be eligible for a permanent asset write-off of $20,000 per year. The coalition went to the last election promising to earn $30,000 of this money.
Proposed reforms also include harmonizing state and territory retail tenancy regulations, standardizing certain product standards including agricultural and veterinary chemicals, and $655 million will be spent on expanding Digital Identity to reduce the need for personal data to be shared and stored by businesses.
Paul Sakkal is the Chief Political Correspondent. He has previously covered Victorian politics and won the Walkley award as well as the 2025 Press Gallery Journalist of the Year award. Contact him securely on Signal @paulsakkal.14.Connect with: X or email.
Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
