Jim’s pilot light of purpose is yet to fully ignite

The volatility of the forecasts is exacerbated by the assumptions plugged into the modelling. The last IGR was released only two years ago by Josh Frydenberg. It forecast average annual economic growth over the next 40 years slowing from 3.1 per cent to 2.6 per cent.

The latest IGR lowers that outlook to 2.2 per cent for no other reason than Jim Chalmers lowered the productivity growth rate assumptions underpinning the budget from 1.5 per cent to a more realistic and honest 1.2 per cent.

Thus far, there have been a grab bag of tax increases which do not amount to reforms, and promises of more ‘bite-size chunks’.

When Peter Costello conceived and released the first IGR in 2002, under the Charter of Budget Honesty, it contained similarly rubbery but well-intentioned projections.

Costello was treasurer during an era of great profligacy, fuelled by the biggest boom since the postwar period. As detailed in his memoir, Costello spent a great deal of his time in the lead-up to budgets trying to hide mining boom revenue from John Howard, so he wouldn’t spend it.

In the same vein, the Future Fund was created by Costello and finance minister Nick Minchin, and seeded with the proceeds from the sale of the final tranche of Telstra, which otherwise risked being sprayed against the wall on more middle-class welfare.

Costello squirrelled away the money after being warned of a giant unfunded superannuation liability for Commonwealth public servants that would start to bite from 2020 onwards.

Similarly, his eye was on the future when he released his first IGR. It warned, for example, that “the government could face a $40 billion to $50 billion-a-year budget blowout in health, aged care and income support programs within a generation unless it moves to curb the sharply rising costs”.

Echoes of previous opposition critiques

At the time, Labor bagged the document as a “little more than a cynical attempt to bolster Costello’s image and at the same time an attempt to justify spending cuts”.

“Labor supports the objective of making government policies forward-looking and attempting to anticipate future budgetary pressures,” said then-shadow treasurer Bob McMullan.

“But despite the government’s rhetoric, there is evidence the IGR has been turned into a cynical political exercise to enhance the treasurer’s image.”

Which is not that much different from the opposition’s statements this week in the lead-up to the release of the latest IGR.

Opposition finance spokeswoman Jane Hume called it a “Trojan horse” for higher taxes. “Is the only solution really increasing taxes? Surely, you could make your economy more productive, grow the pie rather than slicing it differently,” she said.

And there was, no doubt, a level of intellectual preening from the treasurer, who hopes one day to be leader.

A new timetable for IGRs

The visionary flourish behind his speech to the National Press Club, his words about “dragging my arse” through airports at 4.30 am, driven by the “pilot light of purpose”, all for the greater national good, are not those of somebody who plans for that same arse to sit in Treasury forever.

Costello envisaged releasing an IGR every five years, a timetable which has been more or less adhered to. Until now.

Chalmers has rushed out the sixth IGR just two years after the last one, and plans to change the timetable to once every term of government, or every three years.

It’s not just about him being seen to be visionary, but the need to more frequently remind the polity of the urgency of change if the hurdles he cited – myopia and the Senate – are to be overcome.

This IGR contains the usual eye-glazing figures about what things will cost in 40 years, by when the Millennials, who have yet to develop an app to prevent ageing, will take their turn as being a burden on the young.

Climate change changes everything

But it has the added edge of the immediacy of climate change.

When Costello released the first IGR more than 20 years ago, there were just two passing mentions of climate change. Now it is not just having impacts across the economy, it poses a threat to all that has carried this country since Federation – its natural wealth.

Thus, the great hope is that as fossil fuel exports are phased out, critical minerals like lithium, of which Australia has an abundant supply, will take their place.

Chalmers argues the productivity debate should no longer be about the 1980s focus on industrial relations, but the Minerals Council was pretty adamant on Thursday that if the government forges ahead with its second wave of IR reforms, mining these critical minerals will be more expensive than need be.

“We may have some of the biggest deposits of critical minerals than anywhere in the world, but to develop those opportunities requires enabling policy settings that attract investment and build confidence,” the miners said.

In launching the report, Chalmers said governments had to show the same policy vision to buttress Australia for the next 40 years as the Hawke-Keating government showed in the 1980s, and which served the economy so well over the past four decades.

“So that in 40 years’ time, our successors will be able to look back and see that we got it right, like we now look back on the 1980s,” he said.

Thus far, there has been a grab bag of tax increases which do not amount to reforms, and promises of more “bite-size chunks”.

In addition, the government has done a lot of work on other measures it deems critical to adapting the economy, such as transforming the energy sector to a net zero economy.

It’s been an encouraging start and expectations have been created, but the reluctance, for example, to embrace the simple and obvious concept of an electric vehicle road user charge to replace the revenue from dwindling fuel excise shows there’s a risk aversion that Keating never had.