It’s May 2028. Australians are heading to the polls and Anthony Albanese is asking for a third term. The prime minister is not hugely popular with voters. He mangles his sentences. He broke promises two years ago on negative gearing, capital gains tax and taxing trusts. He’s been in office for six years and the days of “hot Albo” memes are a distant memory. The prime minister is seen as old and boring.
The oil crisis is over. US President Donald Trump’s second term will finish soon. The Reserve Bank finally has inflation under control and has cut rates a couple of times, but house prices haven’t started to spiral out of control – at least not yet – because investing in housing is now less attractive.
The world feels a little more certain than in May 2026, and Albanese faces two opposition leaders. The first is Pauline Hanson, who is riding a populist wave and eyeing off regional seats held by the Liberals and Nationals and outer suburban Labor seats. The polls suggest she could win a Senate seat in every state and perhaps up to 10 lower house seats.
The Coalition leader, Angus Taylor, is trying to fend off Hanson by railing against immigration. His promise to deny permanent residents access to government benefit programs is popular in the seats the Coalition is trying to save from One Nation, but it has sunk like a stone in Australia’s multicultural communities, where Taylor desperately needs to make inroads.
Voters admire his promise to index income tax rates, but they have questions about how he will pay for it, especially after he repeals Labor’s changes to capital gains, negative gearing and trusts.
Albanese and Treasurer Jim Chalmers, meanwhile, are offering tax cuts and an explanation of how they will pay for them, and the prime minister is urging voters not to risk three years of a chaotic Liberal-National-One Nation minority government. Labor is the last remaining centrist political party running Australia, the prime minister argues, and, if you don’t know, play it safe and just vote Labor.
Which brings us back to the point of the May 2026 budget, which is to fire the starting gun on the May 2028 election campaign. That campaign has begun already and after breaking promises in this budget, Albanese will make it a referendum on trust – and he expects to win.
In the 1987 election, John Howard’s chances of victory were cruelled by Joh Bjelke-Petersen’s quixotic tilt at the prime ministership and Bob Hawke won because he was a known quantity. He won on trust. Albanese plans to contest May 2028 on the same terms. If Taylor loses his job to another Liberal such as Andrew Hastie in the next two years, the strategy will not change.
Already, Albanese is telling colleagues that Labor will target Liberal-held Sydney seats including Mitchell, Berowra and Lindsay. The prospect of a Coalition-One Nation coalition could be unpopular in those first two seats because of the diverse demographics, while One Nation would fancy its chances in Lindsay. In Melbourne, the plan is to hold on to the vast swath of seats Labor already holds. A Labor defeat in the November 2026 Victorian state election would help federal Labor do just that.
Albanese has plenty of flaws as a politician but strategic thinking and long-term planning are not among them. As one former Labor staffer remarked recently, it would not be a surprise to learn that Albanese entered office as PM knowing the exact date he hoped to retire – and has been ticking off a to-do list of policies before he stands aside.
Amid all the hyperbole over Chalmers’ fifth federal budget, it’s worth taking a moment to think again about what Labor has attempted to do in its most recent economic statement. The federal government says the May 2026 budget is focused on tackling intergenerational equality. The two opposition leaders claim it is unfair, an attack on aspiration and innovation, a deeply political document and, essentially, class warfare. News Corp has poured accelerant on these claims.
This budget isn’t class warfare, but it does more than just rebalance the scales to help first home buyers. Economists and economic writers complaining that merely raising taxes isn’t “real reform” have completely missed the point, for two reasons. First, the federal budget has a yawning chasm at its heart which is a structural deficit created by years of governments baking in new spending but refusing to take the difficult step of raising taxes to pay for it. The problem has been papered over by years of higher than forecast commodity prices, but it has never gone away.
Particularly since the pandemic, Australian voters have grown comfortable with governments spending more on them. That spending has to be paid for, either by raising taxes or by cutting a heck of a lot more than the National Disability Insurance Scheme. At least the budget tax measures and NDIS cuts are an attempt to start fixing the problem.
Second is the complaint that the budget doesn’t constitute proper tax reform because it doesn’t cut income taxes. Taylor deserves a big tick for the brave promise to index income tax rates if elected prime minister, but it would also cost significant revenue. In two years, he will be under considerable pressure to make the sums add up.
Chalmers flagged on budget day that Labor has tax cuts planned for later in the term. It’s a nakedly political decision, one designed to win over voters by 2028, but those tax cuts will be paid for by the decisions in the May 2026 budget. This budget was about more than tackling intergenerational equality. It sought to shift the tax burden away from workers and towards people who live off their assets, and who for years have enjoyed a raft of perks in the tax system. Chalmers’ promised tax cuts will almost certainly, once again, favour workers over investors.
Choosing to create losers, not just winners, in this budget was a deliberate decision. The government has already taken on a bit of water, with a fall in its primary vote in this week’s Resolve Political Monitor, but the ship of state is not about to sink. The poll showed that about a third of voters supported the tax rises in this budget, about fifth opposed them and a little over a third were undecided. For anyone who thinks the prime minister is fretting over that poll, just quietly – he’s not.
The next election is two years away. Albanese plans to have the new taxes through the parliament by the end of the July sitting period, with a few tweaks and the help of the Greens, and he has told colleagues he expects the caravan will then move on.
In May 2028, the prime minister will borrow a line from John Howard and ask voters, “Who do you trust to manage the economy?” Running on trust when you’ve just broken a handful of major election promises is a high-risk strategy. But with a thumping majority and two years to persuade the Australian people, Albanese believes he can still pull it off.
James Massola is chief political commentator.
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James Massola is chief political commentator. He was previously national affairs editor and South-East Asia correspondent. He has won Quill and Kennedy awards and been a Walkley finalist. Connect securely on Signal @jamesmassola.01Connect via X or email.