Come on, treasurer! This was your chance to hit it out of the park

Treasurer Jim Chalmers’ fifth budget was a unique reform opportunity.

Labor has emerged politically dominant after last year’s thumping election win; its opponents are in disarray.

This was also the first budget of the parliamentary term – a moment when an established government could take hard decisions in the knowledge that the next election is two years away.

So, given the government’s political opportunity, was it ambitious enough?

The government should be applauded for tackling intergenerational equity.

Home ownership rates have slumped in recent decades, especially among Australians aged under 45. The budget papers point out that, since 1999, housing prices have risen more than twice as fast as average full-time earnings.

Many young people have lost all hope of home ownership, and Australia’s intergenerational compact is fraying.

The sweeping overhaul to capital gains tax (CGT) and negative gearing announced by Chalmers on Tuesday night are bold reforms that will help many more people get a foot on the property ladder. The budget papers predict these reforms will “support around 75,000 additional first home buyers into the market over the next decade”.

These are changes that will reshape the dynamics of the property market, and hopefully pave the way for many more young people to buy a home, although detailed examination is now required to ensure they work as intended.

It is disappointing that Prime Minister Anthony Albanese went to the last election ruling out changes to CGT and negative gearing. He made things worse by repeating this promise only recently.

Keeping promises matters, and it will be up to the government to explain its case for breaking this one.

The government must also do a good job of explaining the need for reforms that promote greater intergenerational fairness, given many voters will feel aggrieved that tax benefits have been withdrawn.

But Australia must do more to support prime age workers who will drive future productivity growth and pay the bulk of taxes needed to fund the services required by an ageing of the population.

While the Herald endorses the government’s efforts to improve generational inequality, the job is far from over.

This budget passed on the opportunity to introduce meaningful tax reforms that reward effort, boost productivity and reduce the income tax burden on young workers.

While the $250 working Australians tax offset (WATO) that will flow to workers from 2027-28 may prove politically popular, it is much more giveaway than reform.

This budget also adds to the growing debt burden that we are leaving future generations to pay. The cumulative deficits forecast over the next four years will total $150 billion, and the Commonwealth’s gross debt will climb above the $1 trillion mark for the first time by mid-2027.

There is also a strong argument that the government should be running a tighter fiscal policy given the heightened global uncertainty caused by war in the Middle East.

The 2026 budget is perhaps the most significant in more than a decade, given the changes to CGT and negative gearing.

But this was Chalmers’ now or never moment.

Considering the government’s strong political position, it should have done far more.

Get across all our coverage

• Winners and losers: This is who benefits from the budget, and who misses out
• Tax changes: Negative gearing, CGT, family trusts and how this will affect the property market

• Generational divide: Baby Boomers, Gen X, Millennials and Gen Z, this is what the budget means for you
• Shane Wright’s analysis: ‘The war against Iran is the dark cloud over this entire budget’
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