Watt Urges Labor Colleagues to Stop Undermining Chalmers as Budget Savings Push Divides Cabinet

On Monday, after cabinet ministers sat down again to go through possible budget savings, the environment minister, Murray Watt, was asked a direct question: did he want to see an end to the "undermining and leaking" aimed at the treasurer, Jim Chalmers? "Yes, I would," he said.

The meeting was of the expenditure review committee of cabinet, and its job is to settle which savings go into the mid-year budget update, expected in the middle of December. The aim is to reduce government spending and ease pressure on the economy. It came days after the Reserve Bank raised interest rates. The governor, Michele Bullock, said that while governments manage their budgets independently of the central bank, public and private spending had created "excess demand" in the economy.

Watt was asked about speculation of tension between Chalmers and the prime minister, Anthony Albanese. He framed his answer around the duty of government members to support one another and government policy in what he called very difficult times. He said Chalmers was doing an excellent job, and that many of the forces bearing on the economy sit well outside any treasurer's control. Then he made an admission: it was "pretty obvious," he said, that "all sorts of people" were making "all sorts of comments." In effect, a cabinet colleague confirmed that the treasurer is being undermined from within Labor.

The political backdrop is poor for the government. A Resolve Political Monitor poll in the Age and the Sydney Morning Herald put Labor's primary vote at 28%, down from 34.6% at last year's election. The Coalition fell one point to 22%, and One Nation held steady at 25%. A Redbridge poll in the Financial Review was grimmer for Labor: its primary vote slipped two points to 26%. The Coalition rose four points to 25%, while One Nation dropped one point to 28%.

Watt also turned toward the opposition. He accused the Coalition and minor parties of letting existing spending proposals sit in parliament, among them savings from changes to the private health insurance rebate for people over 65. "For all of their demands that we find more savings," he said, the Coalition is currently blocking $10 billion in measures before the parliament.

Albanese has confirmed that public service spending will be scrutinised in the update. Last year, departments and agencies were asked to identify potential savings of as much as 5% from their annual budgets, part of an effort to cut lower-priority spending.

The clean energy programs are also in play. Labor's home battery subsidy, announced in April 2025, was originally designed to cost about $2 billion but is now a $7 billion program. More than 600,000 systems have been installed, and the program could have means testing added. Separately, subsidies meant to encourage electric vehicle purchases have cost the budget far more than first expected, and these too could be reined in. Both are popular measures, which makes the choice politically awkward.

On the opposition side, Angus Taylor announced a "red tape razor gang" on Monday, intended to reduce the burden of costly regulation on business.

The next marker is the December update, where the government will have to show which savings it has chosen, and whether the $10 billion stalled in parliament has moved by then.