Treasurer Jim Chalmers says now is not the time to “slash and burn,” and millions of Australians will be hoping the Reserve Bank board agrees with him when it meets on Tuesday.

Another shock move up for official interest rates like we saw in November would be the last thing the government needs a week out from a budget widely seen as laying the foundation for its re-election within the next 12 months.

Chalmers is walking a tightrope but says his plans are a balance between restraint and growth.

The near term is all about taking pressure off prices, while the longer term is about investing to grow a “future made in Australia”.

Revenue boost banked

To that end, much of the spending to be announced next Tuesday night will apply in two or three years’ time and about 95 per cent of the announced $25 billion revenue upgrade will be banked.

Rising prices and loan repayments have soured the mood in the electorate, with a tightening in the opinion polls adding to the pressure on the Treasurer to provide a circuit breaker.

Treasurer Jim Chalmers.

But even well-received budgets have a habit of not delivering the sought-after “bounce”.

According to one senior Labor insider, “budgets have to fit into a credible economic narrative and that builds on previous budgets”.

On that score Chalmers believes he is delivering.

“We’ve made substantial progress in getting the budget in better nick, having delivered the first surplus in 15 years with a second one in prospect, but we know that the pressures on the budget are intensifying, not easing,” he said.

Although the bulk of scrutiny is on what the government is doing, we have reached the stage in the electoral cycle where the alternative government’s views and proposals take on more significance.

Nuclear on hold

Peter Dutton’s budget reply speech on Thursday week was flagged to put more meat on the bones of his nuclear energy policy as a key transition to net zero by 2050 and cheaper electricity.

That has been put on hold while the Coalition resolves its differences over a key sticking point about where the nuclear power plants will go.

It appears the penny has dropped for the Nationals that the plants will be in their regional electorates.

One Liberal old hand says if Dutton maps out ambitious detailed policies “he’s a fool”.

The remark was prompted by the way in which former Labor leader Bill Shorten locked into ambitious tax reforms well ahead of the election that gave the Coalition government plenty of time to launch a lethal scare campaign.

Taylor-made solution?

But there is no secret about what shadow treasurer Angus Taylor believes should be done to meet the current challenges.

Taylor says this Labor government is addicted to spending and according to the law of economics, big spending in the four years of the forward estimates “is going to be inflationary”.

Taylor earned the Treasurer’s fury when he accused Jim Chalmers of using “funny numbers” and spending the majority of windfalls from higher commodity prices and tax revenues.

Chalmers says Taylor is “either lying or he doesn’t know what he is talking about”.

Labor’s first budget banked 82 per cent of the revenue upgrade. It went further in December’s mid-year review with 92 per cent saved for an overall figure of 88 per cent since coming to government, “compared to the Coalition’s 40 per cent”.

This performance was critical in Labor delivering the first budget surplus since 2007-08, with another in prospect this year.

What would Coalition cut?

The Taylor attack and prescription begs the question: What would a Dutton Coalition government cut?

Nationals frontbencher and leadership aspirant Barnaby Joyce helpfully suggested he “would cut the mad policy of renewables” and ducked a challenge on morning television to say how much going nuclear would cost.

Joyce’s antipathy to renewals and attachment to coal-fired energy is no surprise, but how that helps the Liberals to regain the metropolitan seats lost to climate change activist independents is anybody’s guess.

Taxation confusion

Just what the Liberals will do on taxation is equally confusing.

Deputy Liberal leader Sussan Ley at the weekend foreshadowed a plan “that is lower, simpler and fairer in its approach to taxation”.

She left open whether this meant returning some of the stage-three tax cuts to the top end, let alone how this would be paid for without going into much deeper deficit or embark on draconian spending cuts.

In a trainwreck interview on Sky TV, Ley at the same time appeared to rule out touching the stage-three rearrangements at all.

For now, the RBA board is more worried about the inflationary outlook and may well take a dour view even if it sits on its hands.

Chalmers says he will leave it to RBA governor Michele Bullock and the board to do their job, no doubt hoping they endorse the way he is going about his.

Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with more than 40 years’ experience covering Australian politics