Michelle Grattan | Jim Chalmers wants national economic conversation but government has bigger problems

Values-based capitalism might sound more like a topic for a university economics seminar than something to grab the attention of Ms and Mr Suburbia, as they worry about what the Reserve Bank will do to their mortgages on Tuesday.

But Chalmers' ideas, to the extent the government pursues them over coming years, could have considerable practical impact, even though there's disagreement about exactly what he's saying.

Some commentators insist there's not much to see here, just a new version of the government-private partnership models that have taken various forms under Labor previously.

Others, in the business community and the business-oriented media, see this as interventionism on steroids. It's a repudiation of Hawke and Keating, they cry. Chalmers rejects this as nonsense.

Looking to where Australia should be going after the international shocks of the global financial crisis, the pandemic and now the energy and inflation crisis, Chalmers advocates more government-business collaboration, including co-investment; the renovation of institutions such as the Reserve Bank and the Productivity Commission, and improving the operation of markets.

Chalmers is attempting to interlock economic and social policy objectives. The success of his prescriptions, however, would depend on how they were implemented, case by case.

For example, co-investments can be productive and nation-building, or result in expensive white elephants if the choices are unwise.

An inquiry is already examining the Reserve Bank. Changes may well improve it, but if they are ill-conceived, that could compromise the bank's independence and decision-making. Similarly, some markets need rules but it is the appropriateness and quality of the regulation that's critical.

And on all these fronts, there will be differences of opinion about what, and how much, should be done.

The essay is also notable for what it doesn't cover, especially the knotty question of the level and distribution of taxation. The International Monetary Fund's latest report on Australia, released this week, gave the government another prod on tax, observing "there are opportunities to make the tax system more efficient and equitable, rebalancing it from currently high direct to indirect taxes, and raise sufficient revenue to fund the government programs".

Chalmers, who seeks a good relationship with business, has risked losing some of that sector's confidence with his blueprint. But more basic to the (short term) judgements of him by business will be his second budget, brought down in May, for which work is underway.

The October budget (with germs of the "values-based" approach in its "wellbeing" statement) was fairly easy, implementing election promises and garnering savings from Coalition programs. May will be more substantial and not everyone can be kept happy.

On the upside the economy, while slowing, "is expected to come to a soft landing in 2023", according to the IMF. For the budget, high commodity prices are yielding a rich river of revenue. Welcome as that is, it makes more difficult selling the need to contain spending. Meanwhile, Chalmers is being hit by pressures for new spending.

If anything requires "renovation" it's the nation's health system, with doctor shortages and hospitals under severe strain: starting to fix that will mean more money, as well as extensive structural changes.

Then there are welfare payments. To secure industrial relations legislation last year, Anthony Albanese agreed to Senate crossbencher David Pocock's demand for a committee to look at "the adequacy, effectiveness and sustainability of income support payments" before each budget. This group, chaired by former minister Jenny Macklin, will no doubt urge increases. The government doesn't have to accept what it says, but will be under pressure to do so, not least because its findings are published before the budget.

The budget's run up will also see another round of the debate about the controversial stage three tax cuts, which Chalmers tried unsuccessfully to have the government deal with in October.

Back then, Albanese let Chalmers lay the ground for changing stage three (which favour higher income earners), before deciding to shut down the debate. Chalmers said on Thursday the government had "other priorities in the budget", but the calls for a rework of those tax cuts will continue.

In general, Albanese doesn't cramp Chalmers, whose natural bent is to extend into whatever space is available (hence he was front and centre in dealing with the energy pricing crisis). Chalmers is activist in the moment, and ambitious for the future.

Albanese's preferred style as PM is a relatively hands-off approach, leaving his ministers free to run their own shows as much as possible. At the same time, he keeps himself highly visible, constantly on the move around the country (not to mention around the world - he clearly relishes his international role).

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As issues deepen and become more difficult, he is forced into the weeds. We saw that on energy policy late last year, and we're now seeing it after the intractable Indigenous problems have blown up in Alice Springs.

On the latter, Albanese received on Wednesday the report on whether alcohol bans should be reimposed on Northern Territory communities. The report, by Dorrelle Anderson, who was appointed by the federal and territory governments last week as Central Australian Regional Controller, recommends the NT "urgently" legislates restrictions, something Albanese wants. Chief Minister Natasha Fyles has been reluctant (on the grounds bans are race-based). Both governments will consider the issue next week. It's an important test for the PM.

On the Voice referendum, Albanese will have to become increasingly involved in managing the nitty gritty - there is already a feeling minister Linda Burney is struggling.

Albanese's reputation from the last Labor government is as an effective political wrangler, rather than a policy innovator. As prime minister he has, thus far, shown himself very good at the politics; he relates well to the public. Whether he and his government will prove as good at handling the looming policy challenges is the big question for 2023.

On the other side of the fence, Opposition Leader Peter Dutton starts the parliamentary year bedevilled by party division over how to deal with the Voice referendum. For Dutton, there is no politically comfortable place on that issue, but the course he takes will say a lot about both the Liberals and him personally.