Albanese doesn’t share Chalmers’ ambition. He’s got a different one

He says the principle of fairness between the generations affects a wide range of policy areas – housing, wages, public debt, the environment, how to handle AI, all of which were discussed at the closed-door confab in the cabinet room. And, the most politically explosive of all – tax.

Chalmers didn’t need to be convinced. He already was concerned at the perversity of a country that offers each successive generation a worse deal than the one before. He already was interested in pursuing reform of negative gearing, for example.

At an age where people no longer have to worry about the cost of raising children and paying a mortgage, they get generous concessions funded by people who do.

Negative gearing, while sacrosanct to many older voters, is seen as an affront to younger ones. Older people are seen to be gathering up all the available real estate as tax dodges while leaving nothing affordable for their youngers. And the treasurer invited to his roundtable a couple of experts who illustrated how government policy was aggravating the problem of unfairness. ANU economist Professor Bob Breunig gave a paper which said: “The evidence is stark: the Australian government’s relative expenditure on older Australians has increased significantly in recent decades, funded by those of working age.”

The average impact of the tax and transfer (social welfare and other government payments) system, he estimates, cuts the income of a 30-year-old by a few thousand dollars a year, while it adds some $25,000 to the income of a 75-year-old.

At an age where people no longer have to worry about the cost of raising children and paying a mortgage, they get generous concessions funded by people who do.

Grattan Institute chief executive Aruna Sathanapally explained how younger people pay much more tax than older people even if they have an identical income.

Someone under the age of 65 with household earnings of $100,000 pays about $30,000 a year in tax on average. Someone over 65 with exactly the same income pays around $10,000 in tax on average: Largely because of the tax concessions they enjoy on their super, negative gearing and capital gains.

In other words, it doesn’t pay to work for a living. It pays to live on the proceeds of investment income. Is that really the principle Australia wants to live by?

The system was not designed this way; it was gradually twisted this way by governments increasingly favouring older voters over the past 30 years. It now needs correcting. Point made.

But before Chalmers can even think about making any changes, he has to persuade a notoriously cautious prime minister to take the risk.

Once given a tax concession – that is, a favour courtesy of the Treasury – the lucky beneficiaries guard it jealously as a fundamental human right. Even the gentlest adjustment brings violent screams of political protest. Just look at the outrage over the government’s plan to reduce the tax concession on super balances over $3 million.

The Daily Telegraph on Friday supplied a premonition of the sort of campaign the government would face if it tried to address the anti-youth bias in the system. Its front page headline: “Incoming Tax. Jim’s warning: older Aussies will take the heat.”

In the famous Chinese classic novel of the 16th century, Journey to the West, Buddha assigns an important task to the mischievous Monkey King. He must guard a priest on a journey carrying sacred sutras from India. But Monkey chafes under Buddha’s control.

So Buddha gives him a challenge. If he can leap out of Buddha’s hand, he can go free. Monkey summons all his supernatural strength into a mighty bound that carries him high into the sky. But when he lands, he finds himself still in the palm of Buddha’s hand. Buddha is all-powerful. Monkey sullenly resumes his task.

Anthony Albanese is the Buddha of Australian politics; Chalmers is the Monkey King. Will the dominant Albanese allow his treasurer to break free?

Even before Chalmers delivered his closing remarks to the reform roundtable this week, Albanese had read the treasurer’s proposed conclusions. And approved them. The prime minister wasn’t in the room; he was a kilometre away in the Lodge. Albanese is all-seeing.

The common refrain from frustrated commentators and would-be reformers is that, with his swag of 94 seats in the House, Albanese has enormous political capital and he now must spend some to achieve reform.

That’s not how Albanese sees it. His priority is not political capital; it’s trust capital. Not the overwhelming majority of 94 seats but Labor’s underwhelming primary vote of 34.56 per cent. To compare, when Kevin Rudd won in 2007, Labor’s primary vote was 43 per cent. When Keating won in 1993, it was 44.9. When Hawke won in 1983, it was 49.5.

Albanese’s intention is to build trust with voters to increase Labor’s primary vote. Why? To entrench Labor in power over the long term. His mission is to expand Labor’s base to establish a more stable and secure grip on power. Which is why he’s reluctant to make a big or sudden change beyond his election platform. It’s not that he lacks ambition. He has a different kind of ambition.

Mind you, he’s very keen to enlarge his House majority, as well as build Labor’s primary vote. He wants it all. He’s already told Labor national secretary Paul Erickson that he wants the party to conclude its preselections for the next election by the end of this year.

That’s unheard of. Parties usually finalise their preselections weeks or months ahead of an election. Albanese’s deadline would be two years ahead. Why? His logic is threefold.

One, to show that Labor is not complacent but intent on expanding its command of the parliament. Two, to give Labor’s candidates the time and predictability to plan their campaigns. This is especially important to the candidates who ran and lost at the May election. Albanese wants to encourage many of them to run again. Third, to take advantage of the Liberals’ dire precariousness and disorganisation.

So what hope does Chalmers have of persuading his leader to take the risk of proposing controversial new tax policies before the 2028 election?

Albanese’s refrain in the run-up to the roundtable was “they might be in the cabinet room, but they’re not the cabinet”. Chalmers has been careful publicly to defer to the primacy of the cabinet in any future decisions on reform.

But Albanese is not absolutist about resisting future reforms, even controversial ones. He will keep an open mind and see how the term evolves. As he did with the stage 3 tax cuts in his last term, where he refused to make any changes until circumstances dictated that he should.

This week’s roundtable produced other results. Chalmers’ list of 10 immediate action points begins with pursuing a road-user charge, abolishing nuisance tariffs, reforming the national construction code to speed house building, and accelerating reform of the Environment Protection and Biodiversity Conservation Act.

Each is important. But they are more housekeeping tasks while Australia needs a thoroughgoing economic rejuvenation. They will occupy the government for now, making Chalmers the god of small things while the Buddha remains inscrutable.

Peter Hartcher is political editor.