The tilt of this budget was, when you think about it, predictable.

The Albanese government has used the first budget of its second term to do what you’d expect a Labor government that had won a massive majority would do.

It doesn’t have a mandate to implement its key changes on housing taxes. Quite the opposite. But its sweeping 2025 election win has given it the political heft.

In its first term, Labor shifted the industrial relations system decisively towards workers.

Now, at the start of term two, Treasurer Jim Chalmers’ fifth budget cracks down on the tax treatment of housing and trusts, and delivers new (modest) tax relief to those in the workforce.

Former Labor leader Bill Shorten may be smiling, or crying. He proposed changing negative gearing and capital gains tax at the 2019 election and lost the almost unloseable election. It’s taken a few years for Labor to be able to get back to those issues.

During the 2025 campaign, Prime Minister Anthony Albanese denied he had any intention of going down such a road. Post-election, he began packing his bags for the journey.

Negative gearing will wind down gradually and selectively. It won’t apply to new purchases of established properties. But existing arrangements will be grandfathered, and the tax break will remain for new builds.

Many economists dispute that cracking down on negative gearing will make more than a marginal difference to the housing crisis. Treasury modelling suggests house prices “will temporarily grow about 2% less over a couple of years”. Chalmers reiterates lack of supply is the main thing, and that’s caused by some intractable problems.

But politically, recent focus has come on to negative gearing, which has increased the government’s will to make the change.

The danger for the government is that by the time of the 2028 election, we still have a housing crisis, regardless of the tax change.

The 50% capital gains tax discount will be scrapped, replaced by a discount based on inflation. The effect on investment remains to be seen but there has been concern it might discourage start ups. Chalmers stresses there will be consultations.

For workers, on top of tax cuts already in the pipeline, there is a new $250 “Working Australians Tax Offset”, which will be ongoing. Its start is delayed for more than a year to minimise the inflationary effect.

This is framed as help with “cost of living”. But like some earlier cost-of-living help it is open to the criticism that it goes to all workers, rather than being targeted to lower income earners.

On the other hand, if the government wanted to give serious help to workers, especially younger ones, it would contemplate tax indexation, but that is never given consideration.

It’s usual to question the assumptions underlying budgets. But those in this budget are particularly vulnerable. The Middle East conflict means things can change month by month, even week by week.

Chalmers notably includes two scenarios from Treasury: in the more pessimistic one oil would peak at $US200 and take three years to fall back down. The treasurer says there would still be no recession but unemployment would spike and inflation peak above 7%.

What happens internationally could throw the budget numbers out drastically. But there are some heroic assumptions in the calculations within the government’s control. In particular, the claim it can keep growth in the cost of the National Disability Insurance Scheme to 2% annually over the four years of the budget period seems entirely unrealistic.

Over the past few days, the prime minister has taken a hammering over his anticipated broken promises. He’s betting, probably correctly, the debate will quickly move on. Chalmers anticipated a scare campaign but with the parlous state of the opposition, its bite is likely to be blunted.

Meanwhile, Labor MPs who might be less adept at explaining away backflips (the benign description) or outright deception, have been given useful talking points to help them through.

When they are asked “Have you broken promises?” the talking points suggest they should say “The right decision is to do the right thing with the right policies at the right time.”

Or, “Young people, and their parents and grandparents are worried they will never own their own home.”

Or, “Any responsible government must take these issues seriously.”

Talking points to explain away not keeping your word? Is there any surprise the public are cynical about politicians?

Michelle Grattan, Professorial Fellow, University of Canberra. Republished from The Conversation.