Photo by Fabian Blank on Unsplash
By Mark Kenny
A version of this article was originally published by The Canberra Times.
Even when pointless wars are forcing oil prices skyward, budgets remain an extension of politics by another means.
Besieged by Donald Trump's unilateral Iran folly and its infuriating pretend ceasefire, Treasury's midway guesstimate is alarming - positing a continuation of the current $100-a-barrel price which only "glides" down to a more palatable $80 by June next year.
If that isn't shocking enough, its horror scenario considers a global oil price peaking at twice that per-barrel while taking three years to fall back down. Blimey.
Uncertainty abounds.
Jim Chalmers's fifth budget is no exception to the politics-by-another-means formula, with tactical calculations written into every scripted word, every tightly calibrated spending and savings measure. And most critically, every broken promise.
Here, in the curbing of property tax breaks which have lined the pockets of the already-comfortable for years, are the makings of good policy, and the chance of good politics too - an undoing of the Howard-era debauchment which swung so much of the tax burden onto earned income and gave a freer ride to that from assets.
This, however timid, is overdue reform - assuming Chalmers and Anthony Albanese can weather the coming storm.
Because it will come. With the winding-in of negative gearing and capital gains tax concessions, their opponents will raise merry hell - especially after the Coalition was so comprehensively outplayed by Labor's backflip on stage three tax cuts during Albanese's first term.
Expect scare campaigns and misrepresentations
At face-value, it is a slam-dunk for the prosecution - a clear and obvious broken promise.
Few in Canberra will forget that Albanese became exasperated during the election campaign when insisting there would be no changes to these perks. "How many times do I have to say it?" he fumed. To be fair, he probably meant it at the time.
Yet the reason journalists kept asking on the hustings in 2025 just happens to be the same as the logic on which Albanese and Chalmers are now relying to roll back these investor-friendly incentives.
Simply put, tax incentives favoured the wealthy and encouraged them to compete for housing, thus bidding up prices even when those purchases would generate losses. It was crazy. And cruel.
Younger Australians now constitute the majority of voters and they rightly feel dudded, excluded, ignored by an economy whose benefits have been locked up by older generations.
Buckle up because this is the big "political" story in this budget even if it is not the meatiest fiscal measure. Expect raucousness, indignation, and bilateral piousness.
Chalmers gave an indication of the sophistry to come in his pre-budget speech press conference, predicting scare campaigns and misrepresentations from the government's opponents about the way Labor "came to a view" about what was necessary to address intergenerational unfairness in the housing market.
It is an indication that Labor understands the risks of its decision but has calculated that with two years to go to an election, and a whopping 51-seat majority, it can afford to lose some paint.
Ambitious or carefully bold?
Yet the government is also aware how vulnerable it is to a broader, potentially corrosive narrative around excessive spending and the upwards pressure that can have on interest rates.
The Treasurer says revenue and spending imbalances are smaller and less baked in.
"Gross debt peaks earlier and lower and is lower in every year compared to the mid-year update," his budget blurb proclaims.
"Gross debt peaks 1.2 percentage points lower than the mid-year update and is $173 billion lower in 2026-27 than the estimate at the 2022 PEFO" - the last mid-year statement by the Morrison government.
That, like much else is sure to be contested.
Yet, for all its pre-publicity about being "the most important and ambitious budget in decades," the 2026 blueprint feels a little like a microcosm of the Albanese Labor government - a clutch of worthy measures across a wide variety of fronts adding up to an imaginative proposition best viewed in the whole. In a couple of words, carefully bold.
Mark Kenny is the Director of the ANU Australian Studies Institute and host of the Democracy Sausage podcast.