The Budget: Labor’s slow and stuttered crawl toward reform
The Albanese government’s biggest economic test will not be the size of the Budget, but whether it is prepared to take on vested interests and structural inequality.
On Tuesday night, Treasurer Jim Chalmers will deliver what is being regarded as one of the most important federal Budgets in many years, promising action on housing affordability, productivity, cost-of-living pressures and long-awaited tax reform.
Of course, we’ll have to wait to see whether this will be the case or not, but behind all of this talk about “structural repair” and “reprioritisation” lays a deeper political issue: after four years of caution, hesitation and carefully managed expectations, is the Albanese government finally prepared to confront the vested interests that have distorted the Australian economy and worked against too many people for far too long, or is this another round of choreography designed to look “transformative” without actually changing very much at all?
The Prime Minister, Anthony Albanese, has spent most his time in office acquiescing to many powerful groups in Australia. For example, there was great debate about the introduction of a 25 per cent gas exports tax, only for Albanese to rule it out after pressure from the resources sector.
To support Albanese’s position, Chalmers has indicated that the petroleum resources rent tax has raised additional revenue in this financial year, so there’s no need to worry about taxing gas exports at an appropriate rate. But Chalmers is trying to be too clever, and not even by half: yes, the revenue PRRT has increased from $1.41 billion, to $1.5 billion, but a gas exports tax – even if it fully replaced the PRRT – would raise around $17 billion per year, a sum that’s 188 times greater than the additional revenue Chalmers has claimed. This is the price the public pays – $17 billion in this case – when governments pander to the vested interests in Australia.
For well over a decade, the major parties – if we can still call the Liberal Party a “major party” – have avoided the serious reform of negative gearing, capital gains concessions and the massive wealth accumulations gained through property, despite the mounting economic and social evidence that shows how the existing system overwhelmingly benefits older asset holders while locking younger Australians out of home ownership.
Everyone seems to know about this: Labor, Liberal, Treasury, most economists. Yet governments continue treating even the mildest reforms as political kryptonite, terrified of stirring up yet another scare campaign from the property industry, the mainstream media and the opposition parties who defend a system of intergenerational protectionism that makes millennials and Gen Z pay for the largesse of the older and already wealthy propertied class. This is not to pit different generations against each other but the reality is that is unsustainable economically and socially – and politically.
The government’s language in the lead up to the Budget suggests that something will change, but many governments over the past 30 years or so have perfected the art of leading the “bold conversations” before the Budget that somehow end up in mouse talk, modest adjustments, a raft of review panels and carefully diluted compromises, once the final decisions are made.
The Housing Australia Future Fund is an excellent example of this – after much parliamentary debate, political grandstanding and delay, it was introduced in late 2023, 18 months after the Albanese government was first elected in May 2022. As of May 2026, just 889 dwellings have been completed: only 889, in four years of office; or an average of one dwelling per 17 suburbs across Australia. Whichever way it’s calculated or viewed, this is a pathetic number.
Sure, there are a further 9,500 currently under construction and 55,000 social and affordable homes are due to be completed by mid-2029 – but it’s around 500,000 dwellings short of where it needs to be, and that’s according to the government’s National Housing Supply and Affordability Council. There was a “bold conversation” in the lead-up to the 2022 federal election but, on housing at least, the strong words have been matched up with very weak action.
The bigger contradiction here is that governments talk endlessly about productivity and fairness – or in the case of the Prime Minister, “no one left behind” – while preserving the tax structures that overwhelmingly reward the wealth class and speculators more than work itself. A salary is for mugs: the real support from government goes to the people whose real work is deciding the best time to sell a property to maximise the profit, or at which point rents should be raised on a working and struggling family.
Will any of these areas be addressed in Tuesday night’s Budget? Will the Labor Party remember the people who brought it into office in 2022, and returned it again in 2025 with the greatest majority a government has ever held in the lower house? The Labor Platform can’t just be a document that Albanese uses for his bedtime reading at The Lodge, as a reminder of yesteryear and the possibilities that can exist for a progressive government; it’s something that has to be lived and breathed by the entire Labor Caucus.
If Albanese still holds these core Labor beliefs of “no one left behind” and has simply been waiting for the “right time” to fully introduce them, then this is the time. Otherwise, no one left behind will just become a football-type slogan and that’s used ironically against the Labor Party, in the same way the “honest John” moniker was used against former Prime Minister John Howard, when he was anything but.
The point is that there probably never ever will be a greater time for the introduction of a true Labor agenda within federal Parliament. The early signs, however, are not good – Chalmers promising “spending restraint” on the eve of the Budget, including a $37 billion cutback for the NDIS over four years – but if Labor genuinely wants to claim a mandate for reform after its substantial 2025 election victory, then this Budget will determine whether it intends to start governing differently – and that would be about time – or just continue with the business as usual approach and manage the continuing divides within the Australian community slightly more softly and less savagely than its conservative opponents.
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Good piece but I think your assumptions are incorrect.
You are assuming that Albo and Dr Jim actually give a sh&t about Australians and the Australian economy.
You also seem to think that they have the intelligence and courage required, to actually engage in serious reform.
Respectfully, you must be joking. Albanese and Chalmers, being snake oil salesmen, aren’t interested in real reform.
They know full well that Australia is facing a fiscal disaster and they plan to steal $$ whenever and wherever they can, as long as it doesn’t lose them votes.
And so they’ll target those who don’t vote for them - wealthy people but also people who aren’t wealthy, but who have (gasp) purchased an apartment somewhere as an investment.
But of course they will - both these guys are unimpressive ALP dinosaurs, political hacks, whose horizons are limited to the next election.
We aren’t talking about serious leaders here such as Hawke, Keating or Howard. In fact, the idea of journeymen like Albo and Dr Jim engaging in structural reform is in itself laughable.
Neither men have the intellect, vision, guts or work ethic to even start the process.
Their CGT / negative gearing plan is incredibly stupid, from an economic perspective.
It will decrease housing supply, increase rents and disincentivise new construction and property development.
It won’t deliver positive outcomes for investors, renters or indeed the Federal government (as it’s not going to increase tax revenues).
But then again, their plan is to use this to win votes, pure and simple.
The frustrating thing is that there are solutions right in front of them, that could save Australia an absolute fortune.
The easiest way they could save $ billions? Take an axe to the APS. No more outrageous salary rises for politicians and public servants. This is costing an eye watering ~$5 billion AUD annually.
The most effective way to free up housing supply and increase opportunity for employment for Australians? Cut the mind boggling volume of immigration of people that Australian corporations use for cheap labour.
These two decisions alone would work far better than targeting investors, but they require an average IQ to understand and basic competence to execute, which rules out Albo and Dr Jim.
And so what we will get is a politicised budget, a divisive one, wrapped up in the nonsensical Canberra spin that we have become accustomed to in Australia, that will be aimed at one thing and one thing only - votes.
Mr “I grew up in Public housing” is unlikely to change his timidity , and fear of upsetting
his corporate donors . Hollow rhetoric is likely to continue to be his agenda .
Does he not see what is happening to Starmer in the UK ??