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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John Howard
Never ever gst
Core and non core promises.
I do not remember the word PROMISE in any labor election
Cath, I agree, I’ve not heard Albo or Chalmers use the word “promise”. Such terms as “not on the agenda”, “no change in policy” evern “not at this time”, but never the word “promise”, this is just a coalition media beat-up. Any politician who “promised” anything would have rocks in their head, decisions should be based on the conditions at the time. A change in conditions would warrant a change in policy.
“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.” CGT has contributed to the unaffordability of houses for a large section of our community. 21% of total dwellings are investment properties, that’s 3.25 million dwellings.71% are people with 1 investment property, 19% with 2 and 10% with 3 plus. What is alarming is that 1% of tax payers own 25% of investment properties. So that 1% owns 812,000 homes.
I as well never heard the “promise” from either Albanese or Chalmers. Perhaps your writer needs to study Modern Monetary Theory (MMT) which is how the economy of fiat nations like Australia work. He does not seem to understand the changes that Nixon made to the world’s economies in 1973 by taking the US Dollar off the Gold Standard and the subsequent mess that neo-liberalism (introduced mainly by Howard) made to our economy. We are still getting over that.
This ongoing nonsense about broken promises is very annoying and seems to be more a media thing enjoyed particularly by the Murdoch press and, of course, SKY.
I heard Peta Credlin of all people last night castigating the Treasurer Jim Chalmers as a liar. How quickly she forgets her previous job as minder and warm-up act for Tony Abbott when Abbott told SBS News on the eve of the election that there would be no cuts to education, no cuts to health, no change to pensions, no change to the GST and no change to the ABC or SBS. In fact we saw $80 billion cut from health and education, pressure on the states to support GST increases (which they resisted) and cuts to both ABC and SBS.
The Negative Gearing and CGT changes are positive in that they contribute to a policy of intergenerational equity and first homebuyer access to the market. They alone are not a panacea but already we are hearing from banks and financial advisers that they expect there will be more existing homes coming onto the market fairly rapidly as investors move to other forms of investment and tax minimisation schemes.
Terry, Garry, Cath, JonAngel et alia. Readers appear to have forgotten Labor promises. But just because they can’t remember them, it doesn’t mean they don’t exist.
On 9 April 2025, Albanese was asked directly: “Can you just be really clear — can you rule out any changes to negative gearing and capital gains tax settings if re-elected?” His reply: “Yes. How hard is it? For the 50th time.”
That is not an ambiguous statement. That is a prime minister, one month before a federal election, ruling out the policy in terms so emphatic he counted the repetitions himself.
As recently as August 2025, three months after winning that election, Albanese responded to calls for reform from unions and welfare groups by saying: “The only tax policy we’re implementing is the one we took to the election.”
The Canberra Times’ political analyst Mark Kenny, hardly a partisan voice, called it “at face-value, a slam-dunk for the prosecution — a clear and obvious broken promise,” noting that “few in Canberra will forget that Albanese became exasperated during the election campaign when insisting there would be no changes to these perks.”
The broken promise claim in the piece is not only defensible — it is the consensus position of the national press gallery, the opposition, and Albanese’s own former words played back against him.
The readers protesting are confusing two things: whether the policy change is good — which is arguable and which the piece does not dispute — and whether a promise was broken — which is not arguable at all. Good policy can emerge from broken promises. That is precisely what makes it worth writing about.
Garry Bates: Thank you for a genuinely substantive comment. You raise real issues and deserve a real answer rather than a dismissal. Let me take each point in turn.
On the promise — with respect, it is on the record.
You say you never heard it. On 9 April 2025, one month before the federal election, Albanese was asked directly: “Can you just be really clear — can you rule out any changes to negative gearing and capital gains tax settings if re-elected?” His reply: “Yes. How hard is it? For the 50th time.” That exchange was broadcast nationally. As recently as August 2025, three months after winning the election, Albanese said: “The only tax policy we’re implementing is the one we took to the election.” The promise was made. Loudly, repeatedly, and on camera. Not hearing it is understandable given the volume of political noise — but it happened.
On MMT — you are more right than the mainstream will admit, but it does not rescue this budget.
You are correct that Nixon’s closure of the gold window in August 1971 — not 1973, though the Smithsonian Agreement and the subsequent float of major currencies extended through 1973 — fundamentally changed the nature of money in sovereign fiat economies. You are correct that Australia, as the issuer of its own currency, is not financially constrained in the way a household or a business is. Warren Mosler, Stephanie Kelton, Bill Mitchell at Newcastle — who has been making this argument about Australia longer than almost anyone — are right that the federal government cannot run out of Australian dollars in any operationally meaningful sense.
But — and this is the critical point MMT’s own leading theorists insist upon — that does not mean government spending is without constraint. The constraint is not financial. It is real. It is inflation. It is the productive capacity of the economy. A sovereign currency issuer that spends beyond the economy’s capacity to absorb that spending generates inflation, not prosperity. Right now, Australian inflation is forecast to peak at around 5% this quarter, with the economy running above its productive capacity. MMT economists themselves — including Bill Mitchell — would not advocate expansionary fiscal policy into a 5% inflation environment. The constraint is real even when it is not financial.
So when Chalmers targets a balanced budget by 2034-35 and restrains new spending, he is not necessarily being a neoliberal — he may simply be reading the inflationary conditions correctly, which is what MMT actually prescribes in an overheating economy. The critique of this budget from an MMT perspective is not that it spends too little right now. It is that it cuts the wrong things — disability support, public services — while subsidising fossil fuels at $16.3 billion and failing to use the government’s currency-issuing capacity to build public housing directly, at scale, without relying on the private market at all.
On Howard and neoliberalism — agreed, with one amendment.
You are right that Howard entrenched neoliberalism in Australia with a ferocity that is still working its way through the society. But neoliberalism did not arrive with Howard. It arrived with Hawke and Keating — the float of the dollar in 1983, financial deregulation, corporatisation of public assets, enterprise bargaining replacing centralised wage-fixing. Howard inherited a deregulated economy and embedded it culturally — WorkChoices, the capital gains tax discount in 1999, the privatisation of everything that could be sold. But the architecture was Labor’s. That is the uncomfortable truth the Labor tradition has never fully reckoned with, and it is precisely why this budget — for all its housing tax reforms — cannot quite bring itself to do what a genuinely post-neoliberal government would do: build public housing, tax gas exports properly, fund the NDIS, and stop treating a balanced budget as a moral virtue rather than an operational choice.
In summary:
Your MMT instincts are sound. Your history is largely correct, with minor dating adjustments. Your conclusion — that the writer does not understand how fiat economies work — is, with respect, not supported by the piece. The piece’s argument is not that the government cannot afford to do more. It is that the government has chosen not to — and has dressed that choice in the language of responsibility while cutting disability support and subsidising fossil fuels. That is a political critique, not a macroeconomic error.
The piece stands. But you have sharpened it, and that is what good readers do.
The only thing that has to be kicked down the road is neoliberalism, and then crushed,and until that happens,we are just killing ourselves,especially the young.
Maybe that insulting fool in the Whitehouse is inadvertantly creating the conditions for the changes the world so desperately needs.Catastrophic though that will be.
Our current government keeps operating within that neoliberal bubble,shifting that tax an inch to the left,or that subsidy an inch to the right.Our government is not going to shift the dial in any meaningful way on their own, it has to be global.
The rich and powerful,the corporations,aren’t going to roll over without a fight.Makes China’s system look appealing.
I once had a high opinion of Jim Chalmers, however that’s no longer the case, the biggest con job ever the grace itself as a budget….and does nothing to stop the never-ending bleeding of all the parasites that have been gutting taxpayer’s funds for over 30 years, that’s the cohort that needs to be removed for one dollar more, the greed and abuse is off the charts and lawyers, banks and accountants are just as culpable.
There are circumstances where you genuinely need to protect your assets with firewalls however just accumulating property for the sake of it is not.
Then you have the bum investor who acquires property for the sake of it and holds out their hands for rent whilst not maintaining a property, who becomes insolvent, wins a VCAT case, refuses to return the bond, evicts tenant and does a ‘third party’ related sale to demolish existing 60 y.o. building and lob a planning permit to build six units and make a further killing. A real charming fella.
The only ‘service’ that banks offer now is mortgage lending, they are nothing more than a clearing house for money and money laundering via Real Estate.
If you want a better banking experience, go with a community bank or building society which are becoming banks anyway due to government regulations and they all participate in the broader network in which there is a pecking order for funds clearance as banks own that system as well so it’s a case of how well do you know that devil?
It’s an entitlement that many were never meant to have except for the lobbying of the Real Estate industry and rather than saying thank you for the graft that they got away with they are complaining loudly for a loss that’s not a loss that’s never been intended other than win-lose-win at any cost until that selfish grub Howard decided that he wanted the job for life, oops!
https://michaelwest.com.au/scaremongers-alert-like-negative-gearing-buy-shares/
@ David Tyler: Thank you for this provocative article and your subsequent explanations to Garry Bates.
I support the Chalmers Negative Gearing (NG) and CGT reforms after riding the residential housing wave into retirement. However, I agree that politicians are too gutless with their refusal to properly reduce tax concessions to Australian and foreign owned corporations.
Why are politicians providing handouts for fossil fuel exploration when the nation is (attempting allegedly) to move to a fossil free future?? That is just one example.
Why are politicians averse to reopening regional railway services that would cut all pollution levels and reduce fossil fuel consumption, when all our solar and wind energy generation occurs in regional districts?
Politicians can pursue a half-baked Northern Inland Railway proposal to benefit the Pilliga Scrub CSG field developers provided it is extended to the export Port Gladestone at enormous public expense for private corporate benefit ….. and those politicians having ”grazing property” interests in that location.
Politicians can dig up Inner West Sydney for cross Harbour tunnels but not tunnel under the Dividing Range to remove one of the most dangerous roads in NSW ….. and reduce road transport costs to export ports?