“This is not a good election to win,” Ross Gittins said in a speech to the Australian Business Economists Annual Forecasting Conference last month.

“The Rudd Government is unlikely to be as lucky as the Howard government… the chances of a recession occurring some time in the next three years would have to be high… There’s a fair chance the Howard government will go down in history as an exemplary economic manager, whereas Labor’s reputation as hopeless economic managers will be confirmed for a generation.”

Wayne Swan was sworn in yesterday as Treasurer. He would have arrived in his office just in time to find a TD Securities-Melbourne Institute survey on his desk with the news underlying inflation is heading up towards 4%, well outside the Reserve Bank’s target range of 2-3%.

Global credit markets are already steadying themselves for more bad news from the sub-prime market and various debt products. There are fears of a US recession.

The Reserve Bank board is meeting today. They are not expected to raise rates again this month, but there is strong speculation of a move in February or March.

Swan has said that dealing with inflationary pressures in the economy will be the government’s “number one priority”.

“Strict budget discipline is also very important,” he told Kerry O’Brien last night.

But he is yet to switch from campaign speak. His references to “Kevin” on The 7:30 Report sort of gave that away. “Kevin” has indicated, Swan says, that “he’s pretty keen on seeing the Treasury more engaged at every level.”

Kevin is now the Prime Minister, thank you very much. He doesn’t need Treasury to tell him that all those campaign commitments to education revolutions, training, infrastructure and federal-state relations will all take time to deliver results.

Kevin and Wayne, however, will need Treasury to help them deliver their short term commitments – like tax cuts – in ways that will minimise inflation.

A recession will sink the prospects of a second term, but breaking promises gets the first off to a very poor start.