While being the country’s Treasurer is a tough job, the buck stops with the politician in charge of keeping this country’s books in good order.

Being the country’s Treasurer or keeper of the books is a tough job. And if the nation’s central bank raises rates because inflation is too high, the buck stops with the politician we listen to on the second Tuesday in May called Budget night.

That guy is Jim Chalmers, despised by conservative voters because they’re often distrusting of Labor for whole host of reasons, and many business owners who find the current economy better suited to being an employee than employer.

Those business owners should blame former Minister for Employment and Workplace Relations Tony Burke, who oversaw changes that pleased his union colleagues and lots of workers. While pay and conditions improved because of Burke, costs to business spiked and productivity didn’t follow upwards. And that also hurts the cost of doing business.

And let’s not praise the work-from-home trend as a productivity creator until credible tests are performed to pass judgement. There are lot of bosses who think their businesses would be better if their workers turned up for work.

I could go on with other developments that hit productivity, such as employees falsely using mental stress to avoid being sacked and the fear of bosses being accused of harassment if they make suggestions to improve an employee’s performance.

It used to be called training or mentoring but now many bosses are gun shy about doing what used to be seen as leadership in the workplace.

Remember productivity boosts production and reduces costs and is great for profits and helping to reduce the need for a business to increase prices.

While productivity sounds boring, it is the business magic pudding, as it can deliver profit to the employer and better wages for the employee.

While Chalmers isn’t directly responsible for all the causes of lower productivity and rising inflation, it could be argued he has a ‘charming’ approach that has come back to bite him. Treasurers like Paul Keating and Peter Costello were tough nuts at times and would take on a colleague whose agenda undermined what they were trying to achieve. Often sparks would fly when the Budget loomed and ministers wanted money for their pet projects, which to be fair, could have been important for the welfare of the population and future election outcomes.

A Treasurer has two big jobs to do: make sure the economy is growing nicely and contain inflation. The Reserve Bank is a partner in this dual goal. That’s why the likes of Paul Keating at time blasted the central bank for being late to the party, in say cutting rates or raising them.

However, the fact that there is a ‘party’ going on in the economy that needs to be checked, quietened or shut down is often because the Treasurer mismanaged the whole show from the beginning.

And this is where the charming Mr Chalmers is in the frame for the predicament that those with big mortgages and business debt find themselves in as interest rates rise.

Even though the RBA Governor chickened out when asked if big government spending was at the heart of this inflation problem by sidestepping the issue, economists know that if Jim had been a bastard-like Treasurer like the ones of yesteryear, rates wouldn’t have gone up yesterday.

Sure, while unemployment would be higher and the economy would be growing slowly with some businesses in trouble, that’s what Treasurers and central banks do when inflation is seen as persistent and undermining the future of the economy.

Shane Wright in the SMH agrees with me in his piece headlined: “More rate hikes are on the way unless Chalmers finds savings in May.” And no one with economics training would disagree with that headline.

Here are Wright’s main points:

• Raising interest rates after the RBA cut rates six months ago says we have long-term budgetary problems.
• The RBA says a lack of productivity is at the heart of the problem.
• While Government support for the economy via wage increases, tax cuts, energy rebates, infrastructure spending and other social welfare programs have helped consumers and businesses to spend, this has created inflation.
• The RBA doesn’t see inflation getting back into the 2-3% band until mid-2027, which is 17 months away.

So, what’s my take on all this?

Well, Chalmers has allowed the economy to grow and has got one part of his job right: he has created jobs and economic growth but has failed on inflation and is the prime cause of rising interest rates.

Next, the RBA’s forecasters have failed to understand our economy and have arguably cut rates too early in February last year and gave too many cuts. It also could be argued that it was too soft on us when they were raising rates because the Kiwis did go harder on rate rises. They got a recession and now inflation there is 3.1%, where we are at 3.8% and set to go to 4.2% this year.

I expect unemployment will rise this year with rates set to rise.

Wright does say productivity isn’t easily boosted and “former treasurers Wayne Swan, Joe Hockey, Scott Morrison and Josh Frydenberg” aren’t famous for turning productivity around but they weren’t famous or infamous for being too generous to create inflation and a big interest rate problem.

Chalmers bowed to his political masters and helped create a great election win last year. But the price has been inflation and now rising rates.

Paul Keating was a Treasurer who tackled the unions and got concessions to boost productivity. The likes of Peter Reith took on the wharfies. And Costello and John Howard improved the tax system that helped our economy grow without worrying inflation for nearly two decades.

The May Budget needs to be tough to reduce the need for the RBA to keep raising rates. The remedy is in the hands of Dr Chalmers. I hope this toughness will be about not raising taxes. The Treasurer has to cut spending and give up his charming ways with his colleagues. It gets down to “no guts no glory!” Jim.