Tom Crowley

You're right.

This was a budget where all of the framing was telling us that the government was seeing that it had a bit of clear air and perhaps political capital to start tackling the really deep structural problems that they were talking about.

So I think if they designed this budget in a vacuum, it would have been a budget that had probably some significant spending cuts, probably some tax reform such as capital gains, but maybe a couple of others as well.

overall an improved budget position and doing something about that persistent structural deficit that the federal budget has had for some time.

And then also perhaps quite an ambitious suite of productivity measures, which was the focus of this roundtable last year in which governments know the absence of that productivity growth is really looking very bad for the Australian economy over the next few years if we want to keep increasing living standards.

Then I think the resurgence of inflation earlier this year was the first thing that knocked them off course a little bit.

Absolutely.

And I think that that maybe, if anything, made them want to go maybe a little harder on the spending side, at least in the way that they were talking, and it dominated their focus a little bit.

Now the war, though, has really muddied it.

And that's what I think is hard to read.

And it depends on how much it looks like we're heading for recession by May, really, because Jim Chalmers this week shifted his language.

He was asked very directly about that budget table of truth that economists like to point to, which singles out the government policy decisions in each budget.

Are they adding to the deficit or are they improving the deficit?

And what would that be this year?

And his language was all about, oh, it's the quality of spend, not the quantity of spend.

The kind of hedging that you do, if you're aware that perhaps the cost of the fuel excise and any other cost of living relief and the economic position might not allow you to go as far with improving the budget bottom line as you had previously planned.

I don't think we should get too carried away at drawing any firm conclusions from these things because I really do think that

that a lot of the key budget pieces, including wherever tax reform lands, are still up in the air as the government watches how this goes.

But clearly now, I mean, we've managed to get this far into the podcast without using the word stagflation, but perhaps we can talk about it because the government's focus is now split.

At the same time, it's worried about both overheating and too much cooling.