If, as widely expected, the federal budget winds back the tax benefits attached to property investment and family trusts, it will amount to a breakthrough that has eluded every federal government since the Howard era. The achievement will be symbolic as well as material.
Even Scott Morrison, as treasurer, flirted with some winding back of the excesses of negative gearing concessions to property investors. Labor’s modest proposals for reform at the 2019 election were part of the mix that cost Bill Shorten victory at that election.
While Howard was not responsible for negative gearing, his government introduced the 50% capital gains tax concession that added large incentives to property investment. Meanwhile, even while wages grew during the boom of the early 2000s, the price of houses grew faster.
Howard publicly celebrated the increased value of housing. Who wanted their home to be worth less, he asked? Howard knew he was on to a winner so long as those who owned their homes – and perhaps an investment property or five on the side – would continue supporting him.
If you had run up a huge debt in the process of buying a home or a suite of investment properties, you were even less likely to look favourably on risk-taking at election time, as Mark Latham found to his cost in 2004. Property owners were most likely to be middle-aged and older Australians. They easily outnumbered the young. Howard was a reassuring presence.
Anthony Albanese and Jim Chalmers will cop a good deal of criticism for breaking their election promises but they have political capital to burn. There is not only the size of Labor’s lower-house majority and the disarray of its opponents. Another favourable factor is the altered atmosphere around any policy issues that smack of intergenerational unfairness.
That is partly about electoral calculation. As commentators pointed out at the last election, generations Y and Z now outnumber baby boomers on the electoral roll.
They are also making their voices heard, loud and clear. Most of them will not touch the conservative parties with a barge pole but many vote for the Greens and independents. They mainly direct their preferences to Labor, which helps sustain the lead of about 10 percentage points it maintains in most polls. Their relationship to Albanese is loveless: the great-uncle you see once a year at Christmas who cannot quite recall the name of your spouse or what you do for a living.
This shift on tax looks like part of a larger transformation. One aspect of it is the electoral clout of migrant communities who, even where their material circumstances and ideological orientation would lead one to expect Liberal voting, have become alienated from the Coalition. Many see the conservative parties as hostile to migration and multiculturalism – and with good reason, given the loudening beat of that drum as the Coalition seeks to head off the One Nation challenge.
These problems have been brewing for much of the present century even if the pot only boiled over this decade. When Howard and his Coalition government lost the 2007 election to a resurgent Labor party, it seemed like more than a mere change of government. The size of the victory, the euphoria of the Kevin 07 campaign, and Howard’s loss of his own seat of Bennelong, all pointed to something bigger: a sense that voters – or at least a fair majority of them – had decided to put the Howard era behind them.
Much that immediately followed pointed in a similar direction. There was Rudd’s apology to the stolen generations – an apology Howard had resolutely refused to deliver. There was the 2020 Summit – the government was open to the ideas of those Howard had dismissed as “elites”. And then there was the global financial crisis, which Rudd used to proclaim the end of neoliberalism, and his treasurer, Wayne Swan, to announce a new Keynesianism.
After that, Howard’s ghost reasserted itself. The climate wars really began. Boat arrivals resumed. The culture wars raged almost as fiercely as before. Critics complained about a profligate Labor government, even as its spending helped keep the country out of recession. Tony Abbott replaced Malcolm Turnbull as Liberal leader and almost won the 2010 election. In 2013 he achieved a landslide.
But the larger story – not easily visible in the phenomenon of a landslide victory – was more complex. High levels of immigration had been rapidly changing the country. Younger Australians were being locked out of home ownership and secure jobs. Wages were stagnant. Inequality was growing.
Meanwhile, Abbott and his government looked and sounded rather like Coalition governments of old, with treasurer Joe Hockey even borrowing Robert Menzies’ 1942 formula of “lifters versus leaners”. But Labor also struggled to adapt: when it tried something a bit adventurous in 2019 on the revenue-raising side, it was brutally punished at the polls and retreated into a shell.
Labor has sometimes seemed to inhabit that same shell during its four years in government. The 2026 federal budget provides an opportunity to get out of it. And the remainder of Labor’s second term will be critical in deciding whether it is remembered as a reform government to rival Gough Whitlam’s, Bob Hawke’s and Paul Keating’s, or as the missed opportunity its friendly critics sometimes fear.
• Frank Bongiorno is director of the Vice-Chancellor’s Centre of Public Ideas
