PETER VAN ONSELEN: Jim Chalmers insists the 2024 Budget is all about bringing down the cost-of-living for Aussies doing it tough - but will it be enough?

Treasurer Jim Chalmers will be handing down his third Budget on Tuesday evening. 

The big question: Is this an election budget? Chalmers is adamant that's not how he is framing it. 

'Oh no. What we've tried to do here is be really attentive to the economic cycle, and that means a really responsible Budget, a pretty restrained Budget. But a Budget that is focused overwhelmingly on the cost of living pressures that people are feeling right,' Chalmers told me. 

With an election due before the middle of next year, and possibly before the end of this year, Budget 2024 could be the last one delivered before voters head to the polls. 

So what does the Chalmers think Australians should be looking out for in the Budget on Tuesday night?

'Well, the foundation stone of the whole Budget is a tax cut for every taxpayer. An average cut of about $36 a week to help with the cost of living,' Chalmers said.

These are the changes Labor made to the Coalition's Stage Three tax cuts, characterised as a broken election promise after Anthony Albanese promised the legislated tax cuts would be implemented as he promised. 

But Chalmers and Albanese have been unapologetic about breaking that commitment. Chalmers made clear he changed the design of the cuts to favour younger voters who he says 'have been losing out for too long'. 

'People can expect to see that (the newly designed income tax cuts) in their bank accounts from July. We think that's really important. It's the biggest part of the cost of living help in the budget but not the only part', Chalmers pointed out. 

Another form of help contained in Budget 2024 is reductions in the indexing of Higher Education Contributions (HECs), backdated to last year. 

'That's about recognising that students copped it in the neck last year when inflation was especially high in the way that calculated their student debt', Chalmers said.

But what about the millions of taxpayers subsidising that change who either didn't go to university or have already paid back their debts without the help? There is anger out their amongst such groups. 

'Oh I understand that. It's very rare that a decision taken by government, even a good one, receives unanimous support... but that's not the only thing we're doing in the Budget,' he said.

Other flagged Budget measures include tipping more money into housing as part of funding agreements with the states. 

'The Budget will build pretty substantially on the $25billion we're already investing in building more homes for Australians. We know that we don't have enough homes, that's why rents are higher than we'd like them to be. That's why people find it hard to get a toehold in the market,' the Treasurer said.

Chalmers described the election commitment to build 1.2million new homes by 2029 as 'ambitious but achievable', but in a sign that he recognised they might not get there, also noted 'that's going to be hard, but it's not impossible'. 

At the moment the building of new houses is well below where it needs to be to achieve the promised target. To boost that, Chalmers said building the construction workforce is crucially important.

'That's why we've announced these 20,000 fee free opportunities for people who want to work in the building and construction industry,' he said.

The Budget is being delivered in the context of inflation being too high and recent reports have suggested there is even a chance that interest rates go up, not down. At the least the previous expectation that they would fall this year now looks less likely. 

How does the Treasurer see the challenge of bring inflation down? 

'It is really the defining focus of the Budget, to provide as much help as we can,' he said.

But that help - in the shape of more spending - could have the opposite effect and stoke inflation. Chalmers is well aware of the balancing act.

'That's really the thing that we have spent the most time grappling with, frankly, as we've put this Budget together.

'So balance is really the word that defines this Budget', Chalmers declared.

Living standards in Australia have taken their biggest tumble in more than half a century. Chalmers is keen to share the blame for this reality with the Coalition.

'Oh, we were very conscious when we came to office that one of the big problems was that people's wages were going backwards', Chalmers said.

'That was a combination of high and rising inflation in the first half of 2022 (when the Coalition was in power) combined with a decade of wage stagnation (during most of which the Coalition was in power).

'And so we've been working very hard to turn that around.' 

Chalmers cited rising real wages in some parts of the economy as something he's proud of in his first two years in the job. 

Asked for a simple way of assessing whether Budget 2024 is a success or failure by the time of the next election - if rates don't rise, you got it right, if they do, then you got your spending wrong, Chalmers rejects the binary choice.

'I think that's an oversimplification. My job is to try and get on top of this inflation challenge and help people doing it tough and invest in the future.'

Former Treasury Secretary Ken Henry, who Chalmers worked with when a staffer to then-treasurer Wayne Swan, has described booming terms of trade that Chalmers and other treasurer's have enjoyed as 'dumb luck' that is saving Australia from political decision making. 

Asked if he agrees that dumb luck has gotten him where he is, Chalmers pauses and bristles slightly before saying: 'Err, no, you won't hear me say that', adding 'but there's some really important parts of that question'. 

'First of all, we appreciate the important role that the resources sector plays in our economy... we can't say that enough'. 

Labor is desperate to retain the swathe of WA seats it picked up at the last election. 

The Treasurer also highlighted the strength of the Labor market: '780,000 new jobs created under the Albanese government and getting wages moving again'. 

Chalmers noted that 'revenue upgrades' in the Budget are in no small part a consequence of 'the strength of the labour market'. 

But it is what the government does with the upsurge in revenue the terms of trade has assisted with that matters. 

Chalmers is adamant 'we have overwhelmingly banked it over the course of the first two years in office. Our predecessors spent most of it. We have saved most of it'.

'That's made a big difference because it's meant that we can get debt down and pay less interest on that debt,' he said.

But Budget 2024, while expected to show a surplus for this financial year and the next, is also likely to deliver deficit forecasts in the out years. And plenty of economists have expressed concerns about the underlying structural deficit - when unexpected booming revenue sources are removed from the budget bottom line. 

With more than one trillion dollars of accumulated government debt and higher than expected interest rates, there is an argument that Labor should spend even less than it claims it is. 

That would appear to be the direction Opposition Leader Peter Dutton will take his Budget in reply speech on Thursday evening. Coupling the challenge spending creates for rising debt into the future with the stimulating impact is has on inflation. 

Chalmers' Budget forecasts suggest he'll get inflation back within the 2-3 per cent band earlier than most economists are predicting. Also earlier than the Reserve Bank of Australia has forecast. 

'Inflation's come off a heap since 2022', Chalmers said. 

'What we are trying to do is to design our cost of living help so that we can take some of the sting out of this inflation that all of your readers are suffering under'. 

That sounds like the key performance indicator the Treasurer and the Labor government should be judged by at the next election. It is risky business, but they are ready for the political fight.