Budget, gas and housing: Can Labor finally deliver real reform?
The Weekly Brief: Your weekly guide to the issues shaping Australian politics this week.
This week’s briefing outlines the big issues to look out for: Labor’s defining Budget test over tax reform, housing affordability, gas exports and cost-of-living pressures, as the Albanese government faces growing demands for economic change while navigating the rise of One Nation, deepening tensions with China and mounting questions about whether caution has replaced genuine reform.
The federal Budget and Labor’s reform agenda
The Albanese government’s upcoming federal Budget will dominate political discussion this week, particularly around whether Labor is willing to pursue serious budgetary reform in its second term, even though it’s process that it will be starting around four years too late. Better late than never though. The pre-Budget debates have focussed on housing tax concessions, budget repair, energy policy and whether Labor has become far too cautious politically for its own good.
Treasurer Jim Chalmers and Prime Minister Anthony Albanese are facing pressure from the more progressive MPs on its backbench, from many economists, and the independents on the crossbench, to pursue broader tax reform; while business groups – who represent the many vested interests across Australia – are warning against any major change, aside from their erstwhile demands for “lower taxes”. And why not: they’re doing very well from the existing arrangements, and will always work to protect their own interests, and not in the interests of the community. Questions around gas exports, fuel security and the government’s broader economic narrative are likely to define the week: it is, after all, Budget week.
Gas exports, energy prices and the “windfall tax” debate
The political fight over gas exports and domestic energy prices has been escalating, and the debate had focused on whether Australia should implement a 25 per cent gas export tax or expand reservation schemes to lower domestic prices and increase government revenue.
While the Albanese government has announced a 20 per cent reservation that will be implemented in 2027, it has ruled out a gas exports tax, arguing it could damage certainty in investment – even though there’s much evidence out there to suggest that it won’t – and it’s a debate that’s taking place at the same time that multinational gas companies keep extracting enormous profits without a sufficient return to the Australian public. Independent MPs, unions and the Australian Greens are expected to intensify pressure this week ahead of the Budget.
Housing affordability and negative gearing
Housing affordability remains as one our most politically volatile issues, especially for millennials and Gen Z. There has been much speculation about changes to negative gearing and capital gains taxes, but there’s other issues that relate to housing supply as well, and it will be interesting to see what the government will announce on Tuesday night. The government faces a number of pressures – younger people demanding housing reform, so at least they can live somewhere, while industry groups are lobbying hard to resist these changes.
And it’s usually the industry groups that win out, irrespective of the government of the day. The Coalition and the Australian Greens will continue to frame the Labor government as being either too weak or too cautious on the housing crisis and, in this case, they are absolutely correct.
The rise of One Nation and right-wing populism
One Nation’s growing electoral support is becoming a major political issue for both Labor and the Coalition, but especially for the Liberal Party, which was almost wiped out at the Farrer byelection on the weekend. One Nation won the byelection and this suggests the party is increasingly attracting rural working-class voters frustrated by housing costs, migration levels, energy prices and economic insecurity, even though the party offers no real solutions to any of these concerns and is primarily an avenue for the electorate to funnel their grievances and anger, emotions that are usually whipped up by the likes of One Nation in the first place.
It’s a classic case of vote for us, because we will fix the problems that we created.
While it’s not clear at this stage how this splintering of the conservative side of politics will affect the Labor Party – it didn’t run a candidate in this byelection, and the recent state election in South Australia suggests that there hasn’t been an negative effect so far – it does appear to be a reorganisation of the deck chairs, primarily at the expense of the Liberal Party.
The eternal cost-of-living pressures
Inflation has risen to 4.6 per cent, and cost-of-living pressures have the potential to cause major political problems. Rising insurance costs, rents, mortgages, groceries, fuel prices and electricity bills continue to drive voter dissatisfaction, although it’s not being vented directly towards the Labor government.
The Leader of the Opposition, Angus Taylor – facing his own pressures after the Liberal Party’s diabolical performance at the Farrer byelection – is attempting to frame Labor as economically weak and ineffective, while the government is arguing that global conditions and energy instability are major contributing factors.
But as the British Prime Minister Harold McMillan once said, the role of government is to manage events: whether they’re expected or unexpected, it’s up to the government of the day to resolve them. We should expect to see more arguments this week around wages, supermarket pricing, tax relief and energy bills.
Australia–China relations and more tensions in the Indo–Pacific
Australia’s relationship with China always bubbles under the surface – amplified and magnified by conservative politicians and the right-wing media – and it again is being whipped up to the forefront of political debate, particularly around issues relating to defence spending, regional security, trade dependency and the expanding and secretive AUKUS arrangements with the United States and Britain.
Recent military activity in the South China Sea and growing concern about instability around Taiwan are putting pressure on the Albanese government to clarify Australia’s long-term strategic position while at the same time, business groups and sections of Labor Party are continuing to push for stable economic engagement with China, given its importance to Australian exports and the strong cultural and social relationship between the two countries.
The Coalition is likely to argue Labor is not moving quickly enough to prepare for a war with China – a war that has around a zero per cent chance of materialising – while the government will attempt to balance national security concerns with economic pragmatism. It’s a debate that’s likely to intensify this week because, in Australian politics, there’s always room for jingoism and a healthy dose of racism.
