Some people will hate Tuesday's federal budget but Jim Chalmers doesn't mind

Jim Chalmers is preparing his fifth and most consequential federal budget. (ABC News: Toby Hunt) Link copiedShareShare articleThe truth is that, for all the hype, federal budgets are often dull affairs. Not this time. Emboldened by a thumping election win and undeterred by the onset of war, Treasurer Jim Chalmers has projected a relaxed demeanour as he prepares his fifth and most consequential set of books, which will be headlined by contentious tax reforms. Or at least, he is eager to seem relaxed, his social media feed filled with early morning jogs and casual filmed chats with rolled-up sleeves while he makes his own coffee. But over the last few weeks, in which the closure of the Strait of Hormuz has rocked the global oil market, the Reserve Bank has hiked rates again, and a campaign has started against tax policies that aren't confirmed yet, he admits a few nervy moments. "Most days have been like that," he told the ABC in a sit-down interview in his office this week. "It's been a real rollercoaster, and I draw parallels to my experience in the Global Financial Crisis," he says, referring to his stint as adviser to then-treasurer Wayne Swan. This time the curveball is a war, not a banking crisis, but the feeling is the same. "When the first thing that you read when you wake up in the morning is the international news, and you try to work out what it means not just for your budget, but what it means for your day — it's been like that since the last day of February." Since then, the government has scrambled to buy extra fuel and has discounted it for Australians filling up at the bowser — both steps that have added billions to the budget bottom line at a time Chalmers is under pressure to spend less to dampen inflation. But plans sketched out over summer to revisit the policies voters rejected at the 2016 and 2019 elections have survived the carnage. The ABC reported earlier this week that Chalmers will deliver changes to negative gearing, the capital gains tax and trusts. Though declining to confirm those details, Chalmers has confirmed the budget will contain tax reform focused on housing. And just like the last two times Labor tried, it is bound to provoke a fierce backlash. Chalmers says he is undeterred. "I fully expect that there'll be another big scare campaign full of lies," he says. "But this budget is about choosing the hard road of reform rather than the path of least resistance, and I think for too long the political system has rewarded the opposite." Politicians, activists and economists have long labelled the capital gains tax discount and negative gearing as one of the culprits in Australia's festering housing wound. While there is solid consensus among the economists that the best thing governments can do is to stop obstructing the construction of more homes — a view Chalmers and his colleagues share and have been prosecuting — some say tax has mattered too. John Howard's 1999 reforms to the capital gains tax, lowering the tax paid by many landlords on their sale proceeds, were followed by a boom in property investment. The government is poised to make changes to negative gearing, the capital gains tax discount and the tax treatment of trusts. So how do they work, and what could changes look like? Landlords could negatively gear, writing off their rental losses against their tax while they owned a property, then cash in with a more lightly-taxed gain on sale. Chalmers was the finance spokesperson when Labor pledged to halve the capital gains tax discount and abolish negative gearing under Bill Shorten in 2019. Back then, the case for change pitted rich against poor. "It's a massive transfer of billions of dollars out of the pockets of ordinary working people to benefit a tiny sliver of the Australian population," Chalmers thundered during that campaign. "It's a tax break for the top end of town." In the years since, millennial anger about the housing market has for many coalesced around negative gearing and capital gains, seen as proof of a system that is rigged against the young, a perception the Greens have encouraged. This time, Labor's language is less about the "top end" and more about homes for the young. "We want to help people to get a toehold in the market, but more importantly we want more Australians to get a toehold in our economy," the Chalmers of 2026 says. Treasurer Jim Chalmers has framed the budget's tax changes as a response to the housing crisis. (ABC News: Ian Cutmore) "A lot of us came here to try to make the economy fairer and stronger at the same time, and part of that means recognising the very real and legitimate intergenerational concerns that people have. And housing is at the pointy end of that." Will a different framing produce a different response? Labor's judgement is that the demographics are more favourable now, but opposition is assured given that more than one million people, many young and middle class, utilise the tax concession

Some people will hate Tuesday's federal budget but Jim Chalmers doesn't mind

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Some people will hate Tuesday's federal budget but Jim Chalmers doesn't mind

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