If the CPI measures the price consumers pay for things, of course lowering the price of one of those things lowers inflation. If the CPI includes lots of things that most people don’t buy (like new cars), and some things that nearly everyone buys (like electricity), it is possible for the government to literally “buy” a reduction in the CPI by subsidising the price of electricity.

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There’s nothing hypothetical about this. When Scott Morrison made childcare free at the height of the COVID-19 pandemic, it lowered the CPI by 1.1 per cent and made life easier for a lot of people. No one said he was cheating. Likewise, when Morrison increased the cost of some university degrees, the CPI went up by a 0.25 per cent over two years. The impact on young people, and the indexation of wages and welfare benefits, was very real.

Keeping in mind how sad many people would be if Chalmers proposed a carbon price that caused energy prices and inflation to rise, why are they also sad that he is spending $3.5 billion on lowering electricity prices in order to lower the CPI?

It all comes back to beliefs.

If you believe that inflation is the biggest problem we face, or that inflation is always caused by excessive spending, of course you think public spending will put upward pressure on inflation and will gawk at the treasurer saying he can spend money to buy a lower inflation rate.

But if you believe that the current bout of inflation was caused by a combination of one-off supply shocks after COVID, a one-off war in Ukraine that pushed up world energy prices, and a one-off surge in profit grabbing by firms taking advantage of the aforementioned supply shocks, then you wouldn’t panic about the treasurer’s strategy, you’d applaud and wonder why he didn’t go further.

If our current bout of inflation was caused by a succession of unusual events, why would we respond with the usual tool of higher interest rates? Higher interest rates are a great way of getting people with mortgages to spend less in the shops. But if bottlenecks in Chinese factories and high world energy prices caused inflation, and if consumer spending is already falling steadily, why would higher interest rates be the best solution?

People who like paying low taxes like to argue that public spending is neither necessary nor efficient, often because they choose to spend a lot of money on private schools, private health insurance and private transport over public alternatives. And, as luck would have it, those who like low taxes have long argued that low levels of public spending are a great way to control inflation, even though there is little evidence to support it.

Now that Chalmers has argued that subsidising energy is a good way to fight inflation, it is obvious that making childcare, healthcare and public transport free, as it is in many other rich countries, would be a great way to lower costs of living and tackle inflationary shocks.

That’s not just a scary thought for those who believe public spending is the root of all inflation, it is terrifying for those who hate paying taxes to fund public services that benefit everyone.

Dr Richard Denniss is executive director of independent think tank the Australia Institute.