Chalmers the new master of distraction

At a time when we need a debate about cost-of-living relief for battlers in the budget, the narrative has been about whether or not the Albanese government will honour its pre-election commitment to press ahead with tax cuts still two years away.

It's been a tour de force. The Opposition, seduced by the giddy prospect of the government breaking a major election promise less than six months after taking office, has fallen for this hook, line and sinker. Instead of challenging the Treasurer's repeated talking down of the economy ahead of what is now going to be a "budget about tough decisions", it has allowed itself to be led by the nose.

And, more remarkably, it has allowed itself to be suckered by what is, at best, no more than a change in nuance. No matter how closely one reads and rereads Dr Chalmers' many utterances from the past seven days it is impossible to find a direct commitment to either axing or amending the tax cuts.

The reverse is the case. Dr Chalmers, the Prime Minister and other senior ALP figures have repeatedly said there has been no change to the position the ALP took to the election - at least yet.

The argument, by many within the federal media pack, that a slight shift in language reflects a major shift in policy - and a potential political blunder on a scale comparable to Paul Keating's axing of the L-A-W tax cuts, Julia Gillard's broken "no carbon tax" promise and Tony Abbott's breach of faith with the Australian people - doesn't fly outside the Parliamentary triangle.

All Dr Chalmers has done to date is to refuse to deny he had "floated the balloon" on stage three tax cuts when that question was put to him by a journalist on Thursday.

"I don't need permission [from the Prime Minister] to point out that every budget we hand down, including the one that I'll hand down in less than three weeks' time, will put a premium on responsible economic management ... when it comes to the stage three tax cuts our position hasn't changed," he said.

While people are free to read into that what they will, Dr Chalmers has given himself plausible deniability and has the luxury of being able to jump either way.

What this debate has done is to divert oxygen away from discussion of the impact the reduction in OPEC oil production in conjunction with the recent reintroduction of the 25c a litre fuel excise is going to have on prices at the bowser. This will make life that much tougher for millions of Australians, especially those in the regions, in the weeks and months ahead.

It has also drawn attention away from the RBA's Financial Stability Review, which dropped on Friday. The report warned "the combination of higher interest rates and inflation will increase pressure on household budgets and business profitability over the period ahead" and that "debt servicing challenges will become more difficult still if household incomes are affected by worse-than-expected labour market outcomes".

These would appear to be arguments in favour of keeping future interest rate rises as low as possible in order to avoid pushing an economy that, to date, has been surprisingly resilient, towards negative growth or even recession.

All of these are much more immediate concerns than tax cuts that are not due to kick in until long after the RBA expects the current inflationary cycle to have been brought under control.

That said, the Treasurer is playing a dangerous game. By encouraging this speculation he has exposed his Prime Minister's credibility to question.