Tomorrow’s Budget is critically important to the hip-pockets of households. In that group are many people who have been monetarily mugged by 13 rate rises. While some of them paid too much for homes, they’re all stretched by a huge spike in the cost of living. This could be a ‘make it or break it event’ for the political fortunes of the man who would be PM — Dr. Jim Chalmers.

His name has been up in lights since he took on the Treasury gig. First it was as Opposition spokesperson on the numbers. Then he took over the main gig after Anthony Albanese took power for Labor in 2022.

This Budget will KO Dr Jim as a “genius in waiting” (as many Labor lovers would see him), if the headlines on Wednesday say:

1. Budget kills rate cuts!
2. Budget hurts RBA inflation-beating goal!
3. Budget blows out. Inflation to rise!
4. Budget brings rate rises!

You get the point. This Budget has to help the RBA beat down inflation and increase the chances of rate cuts before the end of the year and before next year’s election. This Budget will be very political with positive short-term economic consequences, but some economists will question the long-term consequences.

That said, arguably the world’s most memorable economist, John Maynard Keynes, once did respond to a critic about his policy implications and the long-term effects with: “In the long run, we are all dead!”

The bottom line in economics is never clear because we often don’t see recessions looming, market crashes coming and what government policies lie out there to happen.

For example, who would’ve thought Dr Phil Lowe could be so wrong on his ‘no rate rise until 2024’ message? I must confess I did and said it on 2GB, Sky News and in this column. Certainly, Dr. Phil didn’t!

So back to what the SMH’s press gallery expert, Shane Wright tips we’ll see tomorrow night that will be crucial in the making of rate cuts, which in turn will make or break Dr Jim’s political reputation.

1. The Budget will help inflation back into the 2% to 3% band by year’s end!
2. This will help interest rate cuts happen ASAP.
3. Inflation will be forecasted to be 3% by year’s end and 2.75% by mid-2025, which the RBA says will be 3.2%. However, the RBA didn’t know what Dr. Jim was planning to do with this Budget.
4. Expect more cost-killing cuts to electricity prices via subsidies.
5. And a Budget surplus is expected but that means someone will have to pay. I suspect it will be wealthier non-Labor voters!
6. But it’s not all upside, with economic growth tipped to be slower than the RBA’s tip with the upcoming financial year expected to see growth of 2%.

On the second Tuesday in May, Treasurers have been famous for bringing rabbits out of hats, bringing home the bacon and asking Aussies to “have one for the country”, as did Treasurer Peter Costello when he was offering baby-making incentives! This Budget is a ballbreaker for Dr. Jim Chalmers and the millions of interest rate sufferers out there, who want to believe that rate cuts are coming, and fast!