There was, on paper, no gap between the nation’s two most powerful men over policy.

But the sequence and emphasis of comments about December’s Budget update by Anthony Albanese and Jim Chalmers suggests there is no mind-meld between the old man of Labor’s class wars and his younger reform-touting treasurer.

Standing at the site of Melbourne train station he’s going to help pay for, Anthony Albanese last Wednesday foreshadowed that the Mid-Year Economic Review will implement more “cost of living” measures. They will either be subsidies, tax breaks or payments. Mr Albanese wasn’t giving away any more information.

Anyone looking forward to what might uncharitably be called bribes might have taken a sharp breath on Sunday when Dr Chalmers pointed out what is obvious to every economist and budget expert but perhaps not so much in the Cabinet.

Rising wholesale interest rates will make it more expensive to pay for $1 trillion in government debt.

“We are right now working on a savings package to be announced this year,” he said on the Insiders TV show.

In case the rest of the ministry missed the point, he repeated his warning that “savings” are coming, a word used to describe tax increases, spending cuts, or slower spending increases than previously planned. “I can make it really clear, there will be more savings in the mid‑year update,” he said.

Dr Chalmers’ tactic when delivering bad news to go early, and softly, so by the time the unpleasant information arrives it sounds like old news.

At this stage of the Budget cycle, with Cabinet’s Expenditure Review Committee offering a “yay” or “nay” to spending requests from across the Government — no departments willingly volunteer cuts — what is left of Dr Chalmers’ credibility as an economic manager depends on his ability to not allow his next four years of deficits to get worse.

Mr Albanese’s priority is clearly salvaging his approval ratings by giving voters cash, the Prime Minister’s go-to solution for most challenges. But the Prime Minister is driving money into an economy that doesn’t need any more and can’t absorb all that it has.

And if official interest rates rise again in November, Dr Chalmers must know many people will blame him — not the Labor Party leader with a degree in political economy.

Good job?

The personal threat to the Treasurer was illustrated over the weekend when Labor MP Andrew Charlton — a man very few Australians have heard of — was suggested as a replacement for Dr Chalmers.

Dr Charlton, who has a PhD in economics rather than political communications, praised the Treasurer for doing an “extraordinary job”.

If four rate rises in eight months qualifies as extraordinary, we’ld hate to see Dr Chalmers in a bad year.

The Treasurer continues to insist that his government is not fuelling inflation. He argues individuals are choosing to spend a fair bit more, while government spending is restrained. By using selective data, he is not sharing the full story.

“If you compare the last year of demand in our economy compared to the year before, what you’ll see is that public demand has halved over the last year while private demand has tripled,” he said on Sunday.

“So for every $5 of demand in our economy $1 is public, $4 is private. We actually saw public final demand grow more slowly in the new figures that were released at the start of last week.”

Drawing a distinction between public and private demand to make himself look responsible is clever but misleading.

Public spending, which is calculated by the statistics bureau and includes the states, doesn’t include welfare payments and other cash transfers to individuals.

Once this money is spent, it appears in the national accounts as “private demand”, separating it from the Government.

A better measure is the increase in government spending. The latest Budget papers showed this rose 5.1 per cent last financial year after a 5.6 per cent rise the year before. Both were among the biggest spending increases of the past 25 years, according to independent economist Saul Eslake.

Dr Chalmers also leaves out from his commentary that even his preferred measure of public demand surged after the Labor Party took power in 2022.

When he came to power it was about 26 per cent of the economy. Now it’s almost 29 per cent, thanks to a first-term splurge on disability payments, wage subsidies, a bigger public service and other help for favoured groups of the Albanese Government.

Welfare nation

These big Budget shifts are turning Australia into a welfare-dependent nation.

Government-funded benefits comprise close to 23 per cent of the average person’s spending, up from about 15 per cent in 1990, according to the e61 Institute, a Sydney-based think tank.

The effects of immigration, government expansion, higher prices and rising interest rates are disrupting politics.

A poll in Monday’s Australian Financial Review put One Nation first, on 29 per cent, followed by Labor on 28 per cent. Mr Albanese’s approval rating fell ten percentage points in one month to negative 27 per cent, while Dr Chalmers’ fell 9 points to minus 23 per cent.

It was Mr Albanese’s worst personal result in the poll’s history, the same as Coalition leader Peter Dutton’s the day before he was smashed in the 2025 election, according to the AFR.

The figures demonstrate the nation crying out for good government. Voters don’t want to be told that fighting inflation is someone else’s problem. They want the problem fixed.

Which may help explain why Dr Chalmers consistently plays down the Government’s responsibility for bringing prices under control.

Higher interest rates will reduce the value of property and hit spending on holidays, dining out and new cars. It will have less impact on health and disability spending, childcare and educational services, all of which the Albanese Government has lavished spending on and are resilient to economic conditions.

By getting Australians hooked on state aid, the government has baked in spending that can’t be cut. To do so would be a repudiation of the entire Albanese program. Which is why people with the biggest mortgages, who are typically the most economically productive, are being punished the hardest by rising interest rates.

In two months time, when Mr Albanese and Dr Chalmers deliver “cost-of-living relief” at the Budget update, they may force the Reserve Bank to prolong the pain for this class of Australians.

They will call it responsible economic management.

Voters might call it class warfare.