Australia is demanding bold changes. If Albanese doesn’t deliver, he will have failed us

The accusation Prime Minister Anthony Albanese bristles at most is that his government hasn’t done anything significant. Four years into its tenure, the Labor government has every suitable condition to make major changes to address our society’s deepest problems. In this cost-of-living crisis, there’s a need, there’s support from experts, and the government has a record majority and tons of political capital.

If it doesn’t seize this opportunity, take a big risk and invest that capital in fixing the generational inequity that is diminishing our society, its members will have failed us.

From one fundamental issue, so many problems flow. What we call a cost-of-living crisis is not just about the cost of goods and services. It’s got just as much – and possibly even more – to do with the cost of buying or renting a place in which to live.

The next election is two years away. The opposition is adrift, a shambles putting most of its energies into trying not to look like one. An insurgent force, One Nation, is picking up support and momentum by promising to set fire to the established way of doing things – the institutions, the system, even what’s left of polite, respectful public language. Left unchecked, One Nation could well start to eat into Labor’s support in the same way that it has taken supporters from the Coalition parties.

Labor has a political obligation to defend and recharge the orthodox political and economic systems – to take action that offers hope that the public’s trust can be regained. It would do this by showing that those systems are sufficiently responsive, imaginative and considerate to fulfil their remit to develop a better, fairer society that’s not constantly anxious.

The key question is whether the government has the wherewithal to do it. Given that we live in the era of the endless news cycle, every day it seems to get easier to lose sight of the way things were not that long ago. The Albanese government stands supreme now but this time last year, it didn’t look like that. With an election due in a few months’ time, it was struggling in the polls. It had endured a bad 2023 thanks to the Voice to parliament referendum. It recovered briefly in 2024 after rejigging the previous Coalition government’s Stage 3 tax cuts before slumping again. Labor went into the election year facing the prospect of falling short of a parliamentary majority.

But then a reborn Donald Trump upended world trade, hitting Australia with tariffs, and the Coalition revealed that it hadn’t done its policy homework in opposition. Labor’s historic landslide victory followed. The government’s political fortunes changed mightily. Australia’s fundamental problem of intergenerational inequity, which has been slowly building and worsening for most of this century, did not.

How will Labor capitalise on its good fortune? Surely not, after four years of steady incrementalism, with more of the same. The policy challenges are too profound for that. So much is wrong. Far too many Australians are in hock up to their eyeballs. Indebtedness is baked into the adult experience from the very start. Tertiary graduates enter the workforce with debt from their tuition. Home loans are enormous multiples of younger Australians’ annual income.

For sure, doing difficult things is more hazardous for governments these days. The public space is festooned with self-styled economic experts and sectoral rent-seekers. The media is diffuse. The public conversation is ceaselessly verbose and fuelled by contentiousness. But as in sport, every player who signs on accepts that they must perform on the ground that’s provided.

Essentially, the big question overhanging this government is on the scope of what it will do. Treasurer Jim Chalmers made it clear at the productivity summit he convened last year that his focus in this term would be on tackling intergenerational inequality. But he gives every appearance of operating on a tight leash. Albanese, the left-winger, is the cautious one. Chalmers, from the party’s Right, is more audacious, although that’s a relative term.

The government’s ability to present Labor at the last election as the lower tax party mostly came about because Chalmers had managed to persuade Albanese to rejig the Stage 3 tax cuts. Chalmers instinctively has higher economic policy ambitions than Albanese, who has, for almost seven years as leader, been all about orderly process and “keeping the temperature down”, as he so often puts it. Will Albanese let Chalmers have his head this time?

Chalmers told Treasury staff on Monday that the May budget would contain packages on productivity and savings. He hedged on tax reform, saying that the policy options on tax were being worked through. But that was mostly an attempt to stop hares running in the media. There will be a tax package. The mooted capital gains tax discount reduction would be part of a wider set of tax changes. Seemingly lost in so much of the overheated discussion about the proposed reduction of the discount, especially the grim claims by the Liberals that this would amount to a new housing tax, is that the Liberals won an election in 1998 by promising to introduce a new 10 per cent tax on goods and services. But what we know as the GST was offset by big income tax cuts.

It’s worth noting that the tax system endorsed at that election was the result of 12 months of tough work to put together and it was released independently, not as part of a traditional budget. The government’s packages of measures will, in keeping with Albanese’s inclination to move slowly and incrementally, constitute the bulk of the budget to be handed down on May 12. When you consider the spending cuts that the government has flagged will also be part of the budget, it’s clear that it’s likely to stand as the most significant policy package this government is likely to offer. It’s likely to define the Albanese government’s legacy.

Young Australians need change. They are demanding it. They deserve it. This is going to require Albanese to reset his approach and for Chalmers to be intellectually courageous as he leads a modernisation project almost as big as the one led by Bob Hawke and Paul Keating in the 1980s. As the old advertising jingle said, it’s time.

Shaun Carney is a regular columnist, an author and former associate editor of The Age.

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