'Very effective partnership': Treasury secretary reappointed

Dr Chalmers has made the announcement, and revealed the first-term surplus ambitions when the two men met in Dr Chalmers' kitchen on the day after the 2022 election win, at a pre-budget speech to the Committee for Economic Development of Australia (CEDA) in Sydney.

It is a speech where the Treasurer has tempered expectations of both a cash splash and a larger surplus on May 14.

While it is the Prime Minister's role to recommend heads of departments to the Governor-General, Dr Chalmers said he asked Anthony Albanese to reappoint Dr Kennedy when his first term ends in early September.

"I really enjoy working with Steven. Ours is a very effective partnership," Dr Chalmers said in his CEDA speech.

"He represents the very best traditions of the Treasury and the Australian public service more broadly. And I look forward to the opportunity to work with him for longer."

Dr Chalmers said Mr Albanese sought his view over the role.

He said he was grateful and he said the pre-May 14 budget timing for the confirmation was critical.

"We want to provide some certainty and stability here, we have a lot of important work on the go, so we are starting the process now," the Treasurer said.

In the speech, Dr Chalmers briefly cast back to the day after the 2022 federal election in his Logan City kitchen.

"Steven brought with him big swathes of briefing, and it was exciting after a long campaign and even longer in opposition to be getting amongst the real work not even a full day since the polls closed," he said.

"But there was trepidation too, we knew things were not going to be easy."

"I haven't said this publicly before, but it was back then that we first talked about shooting for a surplus in the first term. With some genuine restraint we believed we could get there."

With a modest surplus delivered in 2023 for the first time in 15 years, and now, less than two months out from the 2024 budget, Dr Chalmers is flagging a "second surplus is in reach". There will be additional cost of living measures but not in the magnitude of the stage three tax cuts amendments revealed in January. There will not be a so-called cash splash amid cost-of-living pain in the community.

"We believe budgets should be shaped by the economic cycle not the electoral cycle," he said.

"We don't see cost-of-living help as stimulus. At least not in the way we thought of it in the GFC [global financial crisis] or the pandemic."

The Treasurer said that most of the big budget announcements have already been made, pointing to an increase in defence spending, the move to pay super on commonwealth paid parental leave, the remote housing investment, and the $2 billion finance facility to drive clean energy investment in Southeast Asia.

A lot of the revenue upgrades, which will be smaller than previously expected, will again be banked, but not as much as previous Chalmers budgets.

"In each of our first two budgets, we benefited from more than $100 billion in revenue upgrades.This year, we won't see anything like that," the Treasurer said.

"In fact, we are even looking at much less than the $69 billion we booked in the latest mid-year budget update."

In a non-partisan note, he pointed to Liberal Treasurer Josh Frydenberg over Dr Kennedy's original appointment in September 2019.

"I thank and pay tribute to my Liberal predecessor for appointing someone of Steven's calibre, someone who has served both sides of politics with diligence and distinction," he said.

The career public servant served as Secretary of the Department of Infrastructure, Transport, Cities and Regional Development between September 2017 and August 2019.