“Economic management”, a well-worn political trope even in ordinary times, has been especially prominent in the lead-up to the Albanese government’s third federal budget on Tuesday.

With a fresh sting in the tail of the protracted struggle against inflation, the prevailing view is that the budget will make or break the government’s efforts to convince voters it has a handle on their cost of living pressures.

Expectations are high. But economists, who often believe we overstate how much governments can manage the economy at all, have offered the treasurer counterintuitive advice: tread softly and try not to break anything.

Ken Henry, who led Treasury through the global financial crisis, last week told Jim Chalmers to “wait and see … A neutral stance is the appropriate stance, neither adding to [economic activity] nor substantially detracting from it”.

And budget economist Chris Richardson submitted a “modest” request: “Don’t make inflation worse … Amid an inflation crisis, most governments do small things and pretend they’re big things.”

That advice may jar with voters who want the government to do something about the rising prices that have squeezed their household budgets for two years.

But the treasurer has also downplayed the prospect of any big moves, promising a “sensible, responsible and balanced” budget, with no “slash and burn” cuts and no spending “free-for-all” either.

That language reflects Mr Chalmers’s acceptance that his third budget, like the first two, will again be dominated by the inflation story. But while some voters may accept the argument that the government must be cautious to avoid worsening inflation, that patience may wear thin if interest rates remain high – or even rise higher — by the next federal election.

The treasurer is not short on ambition – his tenure began with a promise to take on big “conversations” about the future. But instead the government has been necessarily preoccupied by the cold realities of the present.

With an election fast approaching, his challenge on Tuesday will be to thread a needle between caution and courage.

Governors, premiers, ministers and dictators in the way

But, as always, the treasurer will not be the budget’s only author. A variety of other actors, some a help and some a hindrance, will shape the document and its reception.

Perhaps the most important is Reserve Bank governor Michele Bullock.

Last month’s release of inflation figures for the March quarter made for ugly reading. The headline number – prices up 3.6 per cent over the year – was itself modest.

But prices accelerated slightly in the past three months, and “homegrown” inflation (excluding imports) was high. So too was inflation in services, a troubling sign of persistence because service prices are more strongly associated with domestic wages than goods prices.

Mr Chalmers’s immediate reaction was to downplay the significance of the figures, accusing commentators of “overreacting”. But that language was harder to sustain after last week’s RBA board meeting.

While the board left rates on hold, Ms Bullock confirmed it had contemplated a rate rise for the first time in months. Rate cuts, which only weeks earlier seemed to be around the corner, have been banished by most forecasters until 2025.

In its statement, the board removed its previous references to “encouraging” progress against inflation, and instead warned it was falling “more slowly than expected” and added the near future was “highly uncertain” and “unlikely to be smooth”.

This has brought the government’s own contributions to the inflation fight into sharper focus. The International Monetary Fund (IMF) has told governments the world over they should be doing more to help their central bankers by taking money out of the economy with spending cuts and tax hikes.

But the government has so far preferred to avoid both.

It argues it has contributed somewhat to the inflation fight by “banking” most of the hundreds of billions of dollars in extra taxes it has collected in the past two financial years.

A lot of that money has come from income tax. This is the rarely acknowledged positive consequence of bracket creep: Inflated incomes lead to an inflated income tax take, which takes money and heat out of the economy provided the government doesn’t spend it again — a temptation it has mostly resisted.

But focus on its own policy decisions, and a different story emerges. In each of the government’s fiscal updates, its new policies have added to economic activity: $10 billion in its first budget, $20 billion in its second and $5 billion in December’s mid-year update.

Those numbers are modest in the context of a $700 billion annual budget and are enough that the IMF and other economists have considered the government’s efforts to be inflation neutral, or only slightly inflation positive, until now.

But the spectre of “sticky” inflation means the bar will be set higher this time. While Dr Henry has called for a neutral approach, other economists have called for a “contractionary” budget that takes money out of the economy.

Steven Hamilton, associate professor at George Washington University, told the ABC the government’s tax cuts and spending decisions were “stimulus … pumping [billions] into the Australian economy” and prolonging inflation.

And Dr Henry and Dr Hamilton both agree that the government’s subsidies for energy bills and child care, which the treasurer has claimed are “disinflationary” because they directly reduce prices, also add to inflation by freeing up money to be spent elsewhere.

For her part, Ms Bullock has avoided criticising the government. Last Tuesday, she said the treasurer had assured her he had inflation “on his mind”, continuing what has appeared to be an unofficial agreement between the two where, as Mr Chalmers puts it: “I don’t tell her how to do her job and she doesn’t tell me how to do mine.”

But if the RBA raises rates again, or if rates stay higher for longer, the political fallout for the government will be significant.

Even so, the inflation fight is not entirely on the treasurer’s shoulders. Several other players threaten to pull things in the wrong direction.

First, there are state and territory premiers and treasurers, several of which have budgets in much worse shape than the federal budget. The Queensland and Victorian governments have both offered cost of living stimulus in their recent budgets. The NSW budget has not been handed down yet, but the state’s government will likely feel pressure to follow suit.

Second, there are world leaders. Russia’s actions in Ukraine and Iran’s actions in the Middle East could both reinvigorate global inflation, and China’s precarious economy and signs of resurgent US inflation would both have major implications here.

Finally, there are Mr Chalmers’s own ministerial colleagues, many of them seeking to land ambitious reform agendas before the next election, often with significant price tags attached.

The courage to change the things you can

In that context, there are limits to what the treasurer can reasonably be expected to control. But perhaps the biggest constraints are political.

For example, there are several ways to imagine a budget that would make an enormous contribution to the inflation fight.

One would be the “slash and burn” budget Mr Chalmers has ruled out, with spending cuts across every area of government. But that would be a highly risky strategy given, in the RBA’s own words, households are in a “very weak” position and there is a risk of a “significant deterioration” in the jobs market.

That is the main reason Dr Henry has warned against the idea — the persistence of inflation might be one risk, but recession is another.

But there are also more targeted ways the government could consider taking money out of the economy. For instance, wealthy asset owners with no debt have not received any signal from high interest rates not to spend, and in many cases they are earning more from higher interest.

Temporary measures to take money away from that cohort, which includes many retirees, could go a long way to snuffing out the last of inflation. But the political toxicity of such a move is obvious, just as it is for other alternatives suggested by economists, such as Angela Jackson’s suggestion to delay the onset of the stage 3 tax cuts.

It is a reminder that the most consequential budgets are often the most controversial ones – perhaps the reason budget night has mostly been a dull, incremental affair since the Abbott government’s 2014-15 budget, which aimed for a “slash and burn” approach but ultimately burnt the government.

Mr Chalmers began his term promising “real talk” on the “hardest, thorniest” budget issues. But on the thorny issue of inflation, the approach may again be a more cautious one.