Friend,

Tonight’s budget is shaping as one of the more fascinating exercises in political psychology we’ve seen from Canberra in years.

That’s because:

1. It’s going to be an austerity / structural reform budget (very rare)
2. We already know (largely) what the Government will announce (very normal)
3. The government is resting their rationale for structural reform on a moral argument, not an economic one.

IMO all this is partly because the “do or die” numbers for leadership survival have changed. We can learn a lot about communication and leadership from that.

I find this 1, 2 and 3 combination above fascinating and a good lesson in “pre-suasion”. If you don’t know what that is, please ChatGPT it and read what it says about Robert Cialdini’s work. This is stuff you need to know.

Apparently, Chalmers does already.

What we expect in the budget

Ahead of tonight, Labor appears ready to:

1. Restrict negative gearing largely to new builds
2. Wind back capital gains concessions
3. Tighten trust structures
4. Push investment toward housing supply rather than existing homes.

These used to be political kryptonite. Labor was badly burned on similar proposals in 2019.

So why now?

The numbers

It’s partly because the numbers (electoral maths) have changed.

For the first time, Millennials and Gen Z (some 7.7 million people) exceed Baby Boomers (some 5.9 million) as a voting bloc. Under compulsory voting, younger Australians can’t be ignored as a disengaged demographic. Thanks to compulsory voting they still turn up even if they write “you suck” at the ballot box

Increasingly, they are voting around one defining issue: housing access.

Can I buy a home?

Will I be financially okay?

Is the system fair?

That’s why the government has spent months framing housing less as an economic debate and more as a generational issue.

The possible political payday here is that some Baby Boomers and Gen X, even as they stand to lose the things that made them rich, also want this type of reform.

The lead up messaging

This sh7t is classic pre-suasion. The goal isn’t to make voters love tax reform, it’s to make reform feel morally justified before the detail lands!

The bigger strategic question tonight is whether Labor believes the political centre of gravity is shifting:

• away from protecting accumulated housing wealth at all costs,
• and toward restoring access to it.

That’s a huge bet.

If these reforms fail to meaningfully improve affordability or supply, the government risks angering both investors and younger voters simultaneously.

But if Labor is right about where the electorate is heading, tonight may be remembered as one of the first serious attempts to rewrite Australia’s housing compact around generational equity rather than asset protection.

😰😰😰

Best,

Carden | she/her (here’s why that matters @work)

On our radar:

The other big story this week

Let the budget spin begin: Labor makes pitch to young voters

Ahead of the federal budget announcement, Prime Minister Anthony Albanese has appealed directly to young voters on social media to make his case. With promises to "level the playing field" through the tax system and create greater ease of access to the housing market, the budget is set to speak directly to younger concerned Australians.

Why Chalmers will rein in the property free-for-all in the federal budget

Following previous tax reform rejections, the Albanese government is set to overhaul lucrative property tax arrangements in negative gearing and capital gains tax. Reforms in the budget are expected to add to housing supply and incentivise first-home buyers to join the market, reducing intergenerational wealth inequality.

Calls for CGT, negative gearing reforms 'unanimous': Mulino

Assistant treasurer Daniel Mulino has confirmed that the expected changes to negative gearing and capital gains tax originated in last August's Economic Reform Roundtable, following conversations that ended in unanimous agreement that younger Australians were failed by existing policy.

Get to know your journo

This week's market movers

Big plays, bold bets, and (occasional) unconfirmed speculation

Australians scramble for Wall Street’s AI boom despite crash fears – In May alone, $230 million have been injected into ASX-listed funds that track US indices, fuelled by an AI-exposed surge despite ongoing global conflict and instability.

ASIC launches probe into former DroneShield ex-CEO, chair share sales – ASIC has begun its investigation into the controversial sale of $70 million worth of shares by multiple DroneShield executives last year, leading to over 50% decline in share price after a 52-week high.

Millions to be spent hiring executives for high-speed rail project – With 130 people working on the $93 billion Newcastle to Canberra high-speed rail link, nearly a dozen executives are being headhunted for $500,000+ salaries to lead the job. It is set to be Australia's largest infrastructure project.