It’s time.
After four years of caution, Anthony Albanese is about to break a major promise on tax and unveil a budget the Labor faithful have been longing for since May 2022.
After a couple of false starts, it now seems clear that next week’s budget will wind back generous negative gearing and capital gains tax breaks, while the tax treatment of family trusts (with a possible exception for farmers) will also change, to reduce their ability to minimise tax.
The trio of policies will not be identical to the proposals Bill Shorten took to the 2019 election – Albanese dumped those when he became opposition leader – but they are the same tax levers. Changes to franking credits, which were weaponised by the Coalition in 2019 to lethal effect, aren’t on the table.
But Albanese is now poised to use his record 94 seats and the likely support of the Greens in the Senate to make significant changes.
The prime minister is betting that Australians will embrace these reforms – like they did with his changes to Scott Morrison’s stage three tax cuts – if the government can argue that they will make the tax system fairer, particularly for Millennial and Gen Z Australians trying to buy their first home.
Quite a shift from the heat of the 2025 election campaign, when Albanese promised that any changes to negative gearing were “off the table”.
That wasn’t a one-off statement. Albanese was asked more than a dozen times during the 2025 campaign whether he would make changes to negative gearing or capital gains tax (he was asked once about changing the tax treatment of trusts and did not rule it in or out).
Asked by a journalist on April 9: “can you rule out any changes to negative gearing and capital gains tax?”
Albanese’s response: “Yes. How hard is it? For the 50th time.”
And on April 17: “I rule [it] out. I rule [it] out. I have responded to that lots of times”.
This is plainly a broken promise.
Albanese sidestepped questions on Tuesday but clearly believes that persistently high inflation, an inaccessible housing market, global economic uncertainty and painfully high petrol prices mean these windbacks of tax cuts are necessary – and that voters will accept them.
“People will see the budget there, and people will make their own mind up about the decisions that we have made,” he said.
But Angus Taylor has no intention of letting Albanese off the hook and he went for the jugular on Tuesday.
“This government and this prime minister is incompetent, he’s fraudulent, and he’s a liar, and when they run out of their money, they come after yours,” Taylor said, in a sign of the rhetoric to come in the months ahead.
There are risks for the opposition leader in this approach.
Albanese’s changes to the stage three tax cuts were hugely controversial when first announced in January 2024. Peter Dutton slammed the broken promise and demanded Albanese call an election because of the breach of faith.
But those changes, which helped millions of ordinary wage earners while delivering a smaller tax cut to people in the top tax bracket, sailed through the parliament and the controversy over a broken promise was quickly forgotten.
The lesson was simple: Australians are ok with politicians breaking their promises, at least occasionally, as long as the government explains why.
And if that broken promise creates more winners than losers – as the stage three changes did – then it’s much more likely that voters will accept it.
Albanese is making a similar bet with prospective changes to CGT, negative gearing and trusts – that voters will back him, as long as the changes create more winners than losers.
Labor is calculating that winning over millennials and Gen Zs who despair that they’ll never buy a home matters more than keeping Baby Boomers happy, given they are much more likely to vote for the Coalition anyway.
The prime minister bristles when his government is described as cautious and argues his government has been bold on issues ranging from the Voice to parliament referendum to the stage three tax cuts.
No one could accuse Albanese of being cautious after this broken promise.
