Everyone Can See It but Them

Jim Chalmers must have mistaken the Dow for a dhow, given how determined he is to paddle his little boat up the river Denial.

The treasurer is not just denying the horror impact of his ‘reforms’ to capital gains tax and negative gearing, which have cratered the housing market, he also refuses to concede that massive and growing government spending is the only thing driving inflation, or that he’s going anywhere.

On the last one especially, he’s looking increasingly delusional. The longer he holds out and refuses to do what Paul Keating grudgingly did, and back down on tax changes that were a disaster then and a bigger disaster now, the more knives are coming out behind his back. The more his colleagues deny they’re getting ready to knife him, the sharper the blades are glittering.

The business backlash is no longer confined to the usual suspects muttering into their Chardonnay. On Wednesday night investment heavyweight Geoff Wilson launched his anti-budget campaign, Get Ahead, to a packed room at Jackson’s on George in Sydney. Standing room only: fund managers, corporate heavyweights, economists, entrepreneurs, even an AFL star or two. Pauline Hanson’s chief of staff Chris Taylor was there, chatting with business council types he once worked alongside.

Taylor’s defection from the Australian Banking Association to One Nation earlier this year was already a signal; the fact that serious business people are now treating One Nation as a credible interlocutor is the louder one. Get Ahead is, quite plainly, the market’s answer to GetUp! Where the latter spends its time trying to drag the country leftward via activist pressure, the former is simply pointing at the wreckage and demanding the treasurer reverse course before more of it hits the water.

Wizard Home Loan founder Mark Bouris was blunt.

“I will back anything that changes the legislation. It’s dumb.”

Kerry Stokes’ former lieutenant Bruce McWilliam was blunter still.

“I think Albo is a very smart politician and he will throw Chalmers overboard. The guy’s an idiot. He’s got a social studies degree in Paul Keating.”

Social Services Minister Tanya Plibersek, meanwhile, is still denying everything. Fresh figures showing new home loans in freefall have not shaken her professed belief that the tax changes need no reversal. Reforming treasurers, she insists, always cop a pile-on.

“We’re in difficult economic circumstances globally. He’s steadied the ship, and I’d also say, every single time we have a treasurer that is bold, that does difficult things that the nation needs, there’s a pile on.”

“It’s tough, when you are in the main job.”

“It’s tough”? She should try being an ordinary Australian trying to pay the mortgage that just keeps jacking up, or the aspiring homebuyer watching their chance at the Australian dream vanish in a puff of red smoke. Plibbers wants us to believe the rising share of owner-occupier loans is evidence the market is “rebalancing”. What she left out, or just doesn’t get, is that the sharpest property downturn in four decades has still produced 3,700 fewer first-home buyers taking out loans than last year. Biggest share of a smaller number is not the same as more people getting houses.

The deeper problem is that Chalmers’ instincts look less like the Keating he claims to admire and more like another Labor Jim who once occupied the same office. Jim Cairns, Gough Whitlam’s treasurer, was an open Marxist who believed the market could never deliver full employment or the goods people needed – only ever-expanding government spending could.

“I have been saying all my life that the government has to spend money if you are to provide employment for everyone who wants it, that is full employment. The market never will do that … If the people are going to have things that the market now does not provide or adequately provide, it has to be provided by the government.”

This, remember, from the guy who went from a short six months in the treasurer’s office to trying to hawk communist pamphlets at a Melbourne Sunday market. I’m not making that up.

Chalmers holds a doctorate in political science and studied under a Marxist professor at university. He has not admitting that he’s emulating Cairns’s ideology, but the policy reflexes are uncomfortably similar: comfort with a larger economic role for government (seizing the means of production?), industrial intervention, and expanding public expenditure at a time when inflation remains stubborn and growth is anaemic. The mid-1970s parallels are hard to miss: rising spending, sticky prices, an energy shock and an uncertain American ally. Cairns’ brief tenure ended with Australia staring at the economic consequences of those very instincts. Keating at least understood that prosperity required deregulation, competitive markets and fiscal discipline.

Guess whose homework Chalmers is copying in his little red exercise book?

The knives behind Chalmers are not simply personal. They are the sound of colleagues calculating whether the treasurer’s refusal to reverse course will drag the whole government into the same river he is paddling. Business has already decided the answer. The only remaining question is how long it takes the rest of the cabinet to notice the water is rising.