The Budget That Will Not Save You

In which Jim Chalmers breaks several promises and the planet simultaneously

Many years later, as he faced the press gallery, “Lucky” Jim Chalmers would remember that distant afternoon when his father first explained to him what a promise was.

It was a simple idea. You said a thing. You did the thing. The two events were connected, like a door and its frame, like a tax and its revenue, like a fossil fuel subsidy and the silence that surrounds it in every budget speech delivered in this country since before most of its recipients were born.

Chalmers broke the promise on negative gearing. In the lead-up to the last election, Labor promised not to touch negative gearing or the capital gains tax concession. Then he touched both. He explained that if they continued to kick the can down the road on some of these difficult policy changes, that would make life harder and lock more Australians out of the system. The can, having been kicked since approximately the Hawke government, had by now rolled so far down the road it was somewhere near the horizon, still rolling, gathering neither moss nor housing supply.

This is what passes, in the Australia of 2026, for structural reform.

The numbers have a kind of hallucinatory grandeur. The underlying cash deficit is $28.3 billion, an improvement of $8.5 billion on the mid-year update. Over five years, the forecast underlying cash balance has improved by a cumulative $44.8 billion, driven primarily by a windfall revenue gain of $41.1 billion. Windfall. The word sits in the budget papers like a man who has found a wallet in the street and is spending it on fuel storage.

The windfall, if you are wondering, comes from the war. Volatility from the Iran war is forecast to push inflation to five per cent but also deliver $33 billion in revenue upgrades over the next two years as commodity prices soar, particularly LNG exports. Australia is not a party to the war. It merely benefits from it, in the quiet, deniable way of a man who did not start the fire but has been warming his hands at it since February and would prefer you not to mention it at dinner.

The gas companies meanwhile are printing money in a building with no windows and a very good accountant. The Australia Institute, who have been pointing at this particular burning building for years with increasing desperation, calculate that a 25% tax on Australia’s natural gas exports, had it been enacted when Labor took office in 2022, would have already raised $63.8 billion over the following three and a half years: enough to fund free childcare or free university for all Australians across that same period. Instead, fossil fuel subsidies cost Australian governments $16.3 billion in 2025-26 alone, an increase of 9.4% on the previous year; a larger increase than the growth of the NDIS, which clocked 7.6%. The biggest single subsidy is the federal Fuel Tax Credit Scheme at $10.8 billion, which mainly benefits multinational mining companies.

So. Are we all good with that?

We grew fossil fuel subsidies faster than we grew disability support. Then we had a “national conversation” about the sustainability of the NDIS?

The housing measures are real. They are also, in the way of all Australian housing measures, slightly beside the point. Negative gearing for established residential properties is abolished from 1 July 2027 for purchases made after budget night, with new builds exempt. Properties held before budget night are grandfathered under the existing rules until sold. The 50% capital gains tax discount is replaced by cost base indexation.

From 1 July 2028, a 30% minimum tax will be levied on discretionary trusts at the trustee level; the financial instrument by which comfortable families have been laundering income into lower brackets since John Howard was a young man.

Together, the changes will raise $8 billion. Together, the government’s own budget papers admit that these changes to negative gearing and capital gains tax will reduce the supply of new housing by around 35,000 homes over the next decade. The housing industry called this the right hand giving and the left hand taking. The government calls it levelling the playing field.

The young worker on two casual shifts at Woolworths on Nicholson Street or the Footscray Market IGA, struggling to make rent in a share house in Footscray calls it something that cannot be published in a family publication.

Australia has been in the grip of a housing crisis for years. The national median dwelling value sat at approximately $120,000 in the late 1990s. Despite many daily papers claiming a fourfold increase, by February 2026 it stood at $922,838; a roughly sevenfold increase in nominal terms, against wages that have grown at perhaps a third of that pace. Sydney’s median now requires more than ten times the median annual household income to purchase. A decade ago that ratio was approximately six times. The budget’s answer to all of this is $250 a year; a new Working Australians Tax Offset, ongoing, paid annually through tax returns.

Two hundred and fifty dollars a year. The average Australian house costs nearly a million dollars. The gap between those two numbers is not a gap. It is an I’m-all-right-Jack and-bugger-the-rest-of-you philosophy.

The opposition, apparently led now by Tim “Water Cannon” Wilson, describes the budget as characterised by broken promises, higher taxes, lower living standards and fewer homes. Wilson used the word “weird” off-camera to the ABC. This is a man whose party oversaw the Farrer by-election result of nine-point-eight per cent last Saturday. The word “weird” is doing considerable heavy lifting in his vocabulary this week. But Tim ”weird” Wilson can be passing strange himself. On housing, for example.

The Shadow Treasurer argues that the biggest problem facing the country was the lack of houses being built. He does not explain, when asked, what the Coalition’s policy on negative gearing is. Does he need to? The Coalition’s policy on negative gearing is the same as it has always been: that negative gearing is sacred, that its abolition would cause the sky to fall, and that the sky has been falling continuously since the late 1990s in a way that has made a small number of people extraordinarily comfortable.

The Climate Council notes gently that as long as Australia relies on fossil fuels, households will stay exposed to supply shortages and soaring prices, and that the switch to renewable power is Australia’s best chance to ensure energy security. The budget responds with a $2.9 billion package to halve the fuel excise, a $10.7 billion package to increase fuel storage, approval of new coal mines, a mega-polluting gas export project, and a gas drilling approval running until 2080.

Until 2080. There are children in Australian primary schools today who will be drawing their superannuation before that approval expires. They will live in a world shaped by decisions made tonight in a building in Canberra by people in good suits who will not be there to see it. Global average temperatures have already risen more than 1.2 degrees Celsius above pre-industrial levels. The budget’s response to this fact is a permanent Australian Fuel Security Reserve.

The economy is expected to grow by 2.25 per cent in 2026-27, recovering to 2.25 per cent in 2027-28. This recovery assumes that global oil prices begin to decline from the middle of 2026 and largely stabilise from the middle of 2027, informed by current market expectations. It’s a magnificent leap of faith.

It assumes the war ends. It assumes the Strait of Hormuz reopens. It assumes the things that governments always assume in budget papers, which is that the worst thing will not happen, because the worst thing has never happened before, and the years in which it did are not counted.

In Macondo, the rains came for four years, eleven months and two days. Nobody had predicted this. Nobody had built it into their forward estimates. The town drowned anyway, with great precision and no prior warning, exactly as all towns eventually do.

The budget will be voted on. The measures will pass or fail. The gas will continue to leave the country, taxed at rates that would make a Norwegian weep. The houses will not be built at the pace required. The young will continue to rent from the old at prices set by a market that was never designed to house them, only to enrich their landlords, and the landlords of their landlords, in a recursive arrangement of extraction that has been going, without serious interruption, for the entirety of living memory.

Two hundred and fifty dollars a year.

The promises were broken because, as Chalmers explained, the can had been kicked far enough. He was right about the can. He has been less forthcoming about who has been doing the kicking, for how long, and what exactly is inside it.

The budget is done. The gas is gone. The houses are not built. The forward estimates assume, with professional serenity, that none of this will be a problem for the relevant period.

Going forward.

This article was originally published on URBAN WRONSKI WRITES 

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