Did Labor just jump the shark?

I'm going to be in Tokyo this weekend, so posting will be light until I return.

I'm no fan of yesterday's Budget, in which the Albanese government broke two of its loudest pre-election promises, while doing almost nothing for intergenerational equity.

The economic case against what amounts to a tax hike is relatively straightforward. Essentially, "tax reform" – the Treasurer claims his Budget does "tax reform", but he's mistaken – requires removing distortions and improving the marginal incentive to work, save, or invest in a positive way. The tax changes in this Budget do the opposite, creating "a further disincentive to work effort", all while locking out the young from wealth-building vehicles older generations have been using for decades. As UNSW's economics professor Richard Holden summarised:

"This budget makes yachts more attractive and productivity-enhancing investment less attractive for wealthier Australians."

But while the economics is atrocious, it's the broken promises that might come back to haunt Anthony Albanese in a couple of years. It's not like he was just lying by omission; when asked last year whether he could rule out any changes to negative gearing and capital gains tax, Albanese snapped: "Yes. How hard is it? For the 50th time."

Voters will remember the betrayal. The mandate that delivered Albanese a landslide majority was a vote against Peter Dutton and Donald Trump, not a vote for the 2019 Shorten housing tax agenda the electorate explicitly rejected. Indeed, the Albanese government was dead in the water until Trump ramped up the crazy during his second term, as was Carney's centre-left government in Canada.

Both swung on the same dynamic: voters looked at the possibility of a postliberal MAGA equivalent at home (Dutton/Poilievre), recoiled, and chose the devil they knew. That was the deal. Sensible adults, no drama, stick close to what was promised – "My word is my bond," as Albanese proudly proclaimed shortly after becoming Prime Minister.

With yesterday's Budget, Albanese has broken that deal. While Canada's Mark Carney has moved his party to the centre on the issues the Conservatives had been winning on, such as scrapping the carbon tax, unlocking natural resources, and cancelling a proposed hike in the capital gains tax, Albanese is doing the opposite. Voters don't seem to care all that much about their stupid pet projects, whether it's Carney's sovereign wealth fund or Albanese's Future Made in Australia, both of which will make them poorer. Governments are great at hiding the true costs of those projects deep in the back pages of the Budget.

But they do care about being lied to, especially when those lies leave them visibly worse off. The mother wanting to sell some shares during maternity leave? She'll now be subject to a flat 30% tax on any real gains she was fortunate enough to earn. As will someone taking unpaid leave for illness. And let's not forget the 20-year-old saving for a house deposit, who will now find it even more difficult to get into the housing market.

The Coalition might be broken, but by confirming every pre-election attack line about Labor secretly coming for your house, Albanese has burned the trust that delivered him a majority in the first place.

The Senate situation makes it even more precarious for Albanese. Labor needs 10 votes from outside its own party to pass these tax measures. The Coalition (27 seats) has already said it will oppose them, and based on Pauline Hanson's tweets last night, presumably One Nation (4 seats) will as well. That leaves the Greens (10 seats) as the deciding vote, which means whatever passes will pass with the Greens' fingerprints all over it. The 2025 Coalition campaign explicitly warned voters about exactly this scenario, and now here we are, eighteen months later, and the Coalition gets to point at a Labor-Greens tax grab and say "we told you so".

Angus Taylor now has a golden opportunity to run against the party of broken promises. He gets to attack policies that poll badly with aspirational voters, working families with shares, and anyone who rightly suspects that their retirement plans got a bit more difficult.

Albanese might have just jumped the shark. Governments that break their loudest promises usually pay for it at the next election. Stage 3 was a smaller broken promise, and Albanese got away with it partly because Dutton was the alternative and partly because it was a tax cut, not a hike. The 2028 alternative will be Angus Taylor, or whoever replaces him, running on a campaign Labor has spent the last 24 hours writing for them.

The next election has gone from a sure thing to wide open in a single night.