Fooling people can be hard when you have economists working for you who aren’t politicians skilled at gilding the lily.

Treasurer Jim Chalmers has been taught a Lincoln lesson. The US President once gave the world this famous take on politics: “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.”

Fooling people is especially hard when you have economists working for you who have largely secure jobs and who aren’t politicians who are skilled at gilding the lily.

That’s what the Treasurer has learnt on the subject of ‘who caused the $54 billion budget deficit to blow out?’ over the next decade. The blowing out of the budget pressured inflation, which then made it hard for the RBA to resist a rate rise.

This isn’t to imply that Chalmers’ team is disloyal and are running to the media to embarrass their boss. They simply had to tell the truth to a Senate Committee, which isn’t the place to do any lily gilding because they have non-Labor politicians asking questions and listening to answers.

Listening to the associated Q&A was the AFR’s Economics Editor John Kehoe, who reported: “At a Senate committee hearing in Canberra on Wednesday, Treasury confirmed a $54 billion blowout in the budget deficit in the next decade was largely due to higher expenditures. That was despite Chalmers earlier refuting this, and arguing it was largely explained by tax receipts after The Australian Financial Review first revealed the budget deterioration last month.”

Thankfully, we do have the Parliamentary Budget Office, which tries to be objective on the very ‘subjective’ subject called economics, where assumptions can be framed to distort objective revelations, which of course politicians love!

Poking the Treasurer is SGH chief executive Ryan Stokes, who noted that the RBA has a restrictive stance by raising interest rates, while the Government has an expansionary fiscal policy, boosting spending on often unproductive and pro-inflationary policies or projects.

In contrast, Treasury Secretary Jenny Wilkinson, showed she knew who she worked for when arguing to the Committee “that a rebound in the private sector – with stronger-than-expected business investment in data centres, home building and consumer spending – had caused the department to underestimate pressure on prices,” Kehoe revealed.

Call me an economist Jenny, but while data centre investment is business preparing for a more productive future via AI, more home building and consumer spending must have been helped by tax cuts, energy rebates, NDIS spending and other dangled carrots that were in big supply before last May’s election.

While much of that over-spending would be supported by many Australians, my main objection is that if you commit the ‘crime’ of putting people first over prudent policies for the economy, you simply should tell the truth and say we underestimated the impact of our policy on inflation.

Chalmers was not alone in thinking inflation was on the decline because the RBA did too. That’s why they gave us three rate cuts early in 2025. But they too were tricked by how much the Treasurer’s friendly spending to offset the rising cost of living would rekindle inflation.

To be fair, the PBO spokesperson at the Senate Committee hearing said the blowout was 60% caused by too much spending and 40% on less tax receipts, which Treasury deputy secretary Damien White confirmed as about right.

The reality is that the Albanese Government has been nice to workers with higher wages, socially challenged with the NDIS, the planet with their anti-fossil fuel policies that have driven up power prices, households with tax cuts and energy rebates, while not giving business and employers many incentives to create jobs and income.

There’s been big support for the work-from-home trend, which can’t be easily argued has helped productivity and cost reductions to bring inflation down.

The hard lesson I’ve learnt watching treasurers over at least three decades is the really good ones — both Labor and Liberal — get hated but they get respected, and if they don’t end up being a Prime Minister, it isn’t because the voters of Australia stopped them. It was more their own leader, who stayed too long.

Paul Keating got lucky because he ran against Dr John Hewson who made the fatal mistake of telling too much truth about the 15% GST he was planning if he won the election in 1993. That was a lesson Bill Shorten failed to learn, and that cost him dearly in 2019. And given Jim Chalmers is looking like he’ll be reducing the capital gains tax discount in the May Budget that helped Shorten lose the ‘unlosable’ election, it shows the Treasurer has certainly learnt the lesson about truth before an election very well.