MARK RILEY: PM warns Iran war uncertainty delays decisions as tax changes and spending cuts loom

The first thing Anthony Albanese did when he woke in Perth in the early hours of Wednesday was reach for his phone.

It is something that world leaders have done instinctively since Donald Trump returned to the White House.

They have been doing it with even more urgency since the war in Iran began.

“You check your phone and find out what announcements have been made overnight,” Albanese told the WA Chamber of Minerals and Energy.

“They have an impact on the global economy.”

And ours.

Has the ceasefire been broken? Are the peace talks in Pakistan on again or off again? Have any fuel tankers managed to get through the Strait of Hormuz?

Framing a Federal Budget beneath that shifting cloud of doubt is exceedingly difficult.

Budgets are based on assumptions. But assuming anything in the current circumstances is like navigating the reaches of the vast unknown with a broken compass.

As a result, senior ministers say the Economic Review Committee’s deliberations on framing the May 12 Budget are running behind. Well behind.

Treasury’s increasingly pessimistic projections about the longer-term impacts of the war are encouraging the budget team to go deeper and harder than they had planned.

The war has created a necessity for some decisions and provided political cover for others.

This Budget is shaping up as one of tax increases, spending cuts and broken promises. That is a hard sell.

But Albanese and Treasurer Jim Chalmers will argue that it is all for the greater good.

On the prospect of breaking promises, they are emboldened by the experience of walking away from Albanese’s “my word is my bond” declaration to me in a Seven Spotlight special shortly after the 2022 election.

Albanese issued that memorable line when insisting he wouldn’t break his promise to keep Scott Morrison’s stage three tax cuts, even though they contradicted the central integrity of Labor’s principles by favouring the well-off at the expense of those at the lower and middle ends of the income scales.

“I believe that when you go to an election and you make commitments you should stick to them,” Albanese said.

And then, of course, he didn’t.

Now, he is about to break another previously inviolable commitment not to mess with property taxes.

Again, he will argue that circumstances have changed, now policy must change, too.

The Budget will ditch John Howard’s generous capital gains tax concessions on the sale of investment properties and replace them with a more moderate indexation-based scheme, closer to that introduced by Bob Hawke and Paul Keating in the 1980s.

That prospect has been floated for some weeks and ministers have been emboldened by the lack of ferocity in the backlash it has attracted.

They have copped an expected slap from big-time property investors but the response from average voters has been subdued.

Working people seem willing to accept that dialling back investment incentives is the right and fair thing to do in order to give younger people a better crack at getting into the housing market.

And that is the chief objective.

Younger voters are losing faith in governments and the political system itself because of a bleak feeling of intergenerational unfairness that has convinced them — quite reasonably — that they will never enjoy their parents’ privilege of owning a home.

Reducing the tax advantages investors carry with them as they line up against first-home buyers at weekend auctions will go some way towards addressing that inequity.

And so will reducing the benefits of negative gearing. That is another thing Albanese and his Government promised not to do before the last election. But it is also now back under serious consideration.

There are good reasons for the Government to rein in these investment incentives.

But they are the same persuasive reasons that existed before the election when it promised that it wouldn’t.

It said that because it believed it needed to in order to be re-elected.

Just as Albanese promised he wouldn’t change stage three before the 2022 election, despite equally persuasive arguments to do so then.

The breaking of these promises delivers the right policy result but at considerable cost to political integrity.

There is already a deeply embedded trust deficit in Australian politics. Governments routinely promise one thing before an election and do the opposite after.

Anthony Albanese promised that his Government would be different. It has proven undeniably that it is not.

That might be something else for him to think about when he wakes up early and reaches for his phone.

Mark Riley is the Seven Network’s political editor