In his first term, Anthony Albanese was highly reluctant to break promises. He resisted for a long time recalibrating the Coalition’s tax cuts, because he had undertaken to deliver them intact.

This term, it seems to be a different story. In last year’s election campaign, Albanese promised there would be no change to negative gearing. Asked in one of the debates to confirm that “negative gearing is off the table”, the prime minister was unequivocal, “Yeah, it’s off the table […] the key is supply, and that measure will not boost supply”.

Nor did Albanese indicate he would reform the capital gains tax.

Now, next week’s budget is expected to see changes to both.

On Monday, Treasurer Jim Chalmers was asked about the government likely breaking promises (one directly, the other more contestable), in the name of intergenerational equity (an issue, it was pointed out to him, that was obvious before the election).

Chalmers was asked: “Is it your thought that if something’s popular […] you don’t have to promise it before an election, that that outweighs going to an election saying what you are and what you’re not going to do?”

In his defence, Chalmers turned the notion of “trust” on its head. “The best way to build trust is to make the right decisions for the right reasons,” he said.

“There are genuine intergenerational concerns and pressures in our budget, in our tax system, in our housing market and in our economy more broadly.

"I thought the prime minister put this well in some of those interviews that we saw over the weekend. A government like ours, a responsible government, cannot ignore the very real pressures and concerns that people have in our communities.

"As these pressures have been building, obviously we calibrate our budgets to the conditions that we confront.

"I think the intergenerational pressures are really serious.”

Pressed further on breaking promises, Chalmers said: “You build trust by taking the right decisions for the right reasons and explaining, if you’ve come to a different view over time, being upfront and explaining why that has been the case.

"I refer you, for example, to the necessary and I think warranted steps that we took when it came to the stage three tax cuts. When we came to a different view, we explained why, and we made the right decision for the right reason. We explained why that was necessary. I think that’s how you build trust.”

Chalmers is putting a particular slant on what happened with the tax cuts. Before the 2022 elections Labor agreed to deliver them to make itself a small target. Quite soon after the election, Chalmers tried to get Albanese to go back on that decision. Albanese held out because he worried about the consequences of breaking trust.

On these various issues, it is not so much a question of the government coming to a different view on the matters – it’s more that the political circumstances have made it possible and advantageous for it to implement its original views.

The changes the government does make to property taxes in next week’s budget may well be desirable.

The point is not to criticise whatever those changes turn out to be. The point is that we will have learned again not to take too much notice of what politicians say before elections. Once Albanese was persuaded to break his promise on the tax cuts – however justified that decision might have been – he gave notice that he’d probably be willing to break his word again.

Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

With all the talk about the May 12 budget containing significant tax reform, Anthony Albanese sounded very sensitive when confronted about one big reform his government won’t be making.

In a question-and-answer session at a forum run by the Daily Telegraph on Friday, it was put to Albanese, “You’re talking about fundamental and profound reforms, but why won’t you do the simplest and most effective reform and index income tax rates?”

The prime minister bristled, first saying (wrongly) “no government has done that” and then going on, “you define it that way. I don’t think that’s the most – I think that’s a very big call from you,” he told editor Ben English.

Pressed on whether such a change would not be about equity, Albanese said, “It’s an even bigger call for you to say that that’s the biggest thing we can do on equity in the budget. So, thank God you’re not on the ERC [expenditure review committee].

"There’s a range of tax measures you can do to really go hard on equity. That’s not at the front of them.”

Economist Richard Holden, from UNSW, points out that “bracket creep” – inflation pushing people into higher tax brackets – will worsen as a result of the Iran war.

“The higher inflation flowing from the ongoing impact of the energy crisis will lead to more bracket creep than before,” Holden told The Conversation.

“Even pre-crisis, bracket creep was significant. Based 2.5% per annum inflation over a decade a taxpayer on average full time earnings would go from paying an average tax rate of 22.8% to 25.9% over a decade.”

An advocate for indexing tax brackets to inflation, Holden said “this would end bracket creep forever.

"Many peer jurisdictions, including the United States, do exactly this. Politicians have an incentive not to do so, so they can dish out essentially fake tax cuts.”

Governments shy away from indexation because of the cost to revenue, and also the fiscal flexibility and political advantage they get when they have discretion over the timing and amount of tax cuts.

The Fraser government introduced tax indexation but later cut it back and then dropped it altogether.

Former treasury secretary Ken Henry has advocated indexing income tax thresholds. Henry said last year: “Fiscal drag has got so bad, politicians are getting away with blue murder – and they shouldn’t”.

Then opposition leader Peter Dutton flirted with the idea before the last election but did not commit to it as a policy promise.

The budget will contain changes to the capital gains tax and negative gearing. They will be sold as promoting intergenerational equity, and helping with housing affordability.

On another tax front, Albanese has ruled out any new tax on gas exports, despite a strong public campaign for one.

Meanwhile Treasurer Jim Chalmers has released updated numbers to show some of the “biggest spending pressures” on the budget.

They include:

• $25 billion for the hospitals agreement with the states

• About $14 billion for defence investments

• More than $6 billion in new and amended Pharmaceutical Benefits Scheme listings

• $4.4 billion in additional payments for Disability Support Pensioners

• $3.2 billion in additional income support for Jobseekers

• $2.5 billion to halve the fuel excise

• $2.5 billion in additional natural disaster support

• $1.5 billion to meet infrastructure cost pressures

• $1.5 billion in additional financial support for Carers

• $1.5 billion in additional payments for Aged Pensioners

• More than $500 million to respond to the antisemitic Bondi terrorist attack – with additional funding provisioned for the National Gun Buyback scheme.

The figures cover the budget period, over five years from 2025-2026. (The hospitals agreement covers five years from 2026-27.)

The spike in inflation from the Middle East conflict affects both the spending and revenue sides of the budget, increasing the cost of some programs but also boosting some revenue items.

Chalmers said the Middle East conflict meant higher borrowing costs on debt “that will hit the budget hard, and higher inflation that will flow through to higher payment costs”.

Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

The interim report from the royal commission on antisemitism, set up after the Bondi massacre, leaves hanging more questions than it answers.

Perhaps no one should be surprised. The decision to have this report was a case of putting the cart before the horse.

Initially the government planned, after the December murder of 15 innocent people at a Jewish festival, to have a quick inquiry into whether federal agencies had adequate powers, processes and communications arrangements. That inquiry was to be done by former senior public servant Dennis Richardson.

Later, and reluctantly, Prime Minister Anthony Albanese was pushed into having a much wider royal commission into “antisemitism and social cohesion” under Virginia Bell. The Richardson review was folded into the commission. This didn’t go well and Richardson quit in March, declaring he had become a “fifth wheel” and “surplus to requirements”.

The merging of the review, with its end-of-April deadline, into the commission, has meant this interim report has been made before relevant figures have appeared before the commission, which only starts hearing evidence next week.

Given this apparently illogical timing, it would have made more sense to have extended the deadline for the interim report, to enable the commission to gain the full picture on key issues it canvasses. Undoubtedly the government would have granted extra time if the commission had requested it.

As it is, the interim report is thinner than one would wish, as Richardson predicted it would be when he quit.

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Read more: Grattan on Friday: Dennis Richardson’s exit puts antisemitism royal commissioner under more pressure

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Albanese at a news conference on Thursday seized on the commission’s conclusion that no legal or regulatory gap had been found that impeded “the ability for law enforcement, border control, immigration and security agencies to prevent or respond to” an attack of the kind that happened at Bondi.

The legal framework might be OK but how well or badly did agencies operate within it? Key answers to that are left for later.

“Important issues arising from the Bondi attack, including whether there was any failure to identify and act upon intelligence in the lead up to it, or in the allocation of police resources to the Chanukah event, will be addressed in hearings,” the report says.

“No conclusion in these respects can be reached on a review of the agencies’ documents alone and in the absence of according procedural fairness to any person or agency at risk of an adverse finding.”

Precisely. But some hearings will have to be held in secret, the commission adds.

Much material about ASIO is classified in this report, including how it sets its priorities. The report gives year-by-year public statements from ASIO, which assess the various threats.

“It can be seen from the course of the Director-General of Security’s public statements from 5 August 2024 until late 2025 that ASIO publicly and repeatedly drew attention to the heightened risk of a terrorist attack and to an environment of ‘disturbing escalation’ of antisemitic incidents,” the report says.

“It will be necessary to investigate whether and how ASIO and other Commonwealth and state intelligence and law enforcement agencies understood and acted on those assessments of a probable attack; and to consider the adequacy of what was said to be ASIO’s ‘full use of our capabilities and powers’ in the context of ongoing antisemitic attacks.

"These are matters that will be explored in hearings.”

The report invites a lot of reading between the lines.

The commission does make the pointed observation, after reviewing classified material, that despite an overall increase in funding for the national intelligence community, “the proportion of funding allocated to counter-terrorism significantly declined across the NIC over the period from 2020 to 2025”.

Albanese was anxious to stress the government is acting quickly on the report’s recommendations, as far as they relate to Commonwealth responsibilities. Cabinet’s national security committee ticked off on them early Thursday morning.

Of the 14 recommendations, five are secret.

A big restraint referred to in the report is the criminal action against the surviving alleged Bondi offender. This means while some now-secret material may be released subsequently, that could be a long time away given how slowly the law proceeds. A relevant question is how much of a constraint the legal proceedings will put on the commission’s final report.

The report’s chapter about Commonwealth and state intelligence and law enforcement agency activities regarding Bondi is classified. “It should remain confidential until the finalisation of any criminal proceedings arising out of the Bondi attack. Thereafter a public version of the chapter should be released.”

Two recommendations go to the government’s gun buyback scheme, saying in essence it should be finalised as soon as possible. At present some jurisdictions are being recalcitrant or dragging their feet. Queensland on Thursday immediately repeated it would not be budging in its refusal to sign up to the gun buyback.

But, though given a lot of emphasis by the government, the gun issue is not the most important of the many challenges presented by the threats of terrorism and antisemitism.

Certain recommendations go to doing the very obvious. For example: “The Counter-Terrorism handbook should be updated promptly and then at least every three years”, and the Commonwealth Counter-Terrorism Coordinator’s role should be full-time.

The report also says the federal government “should consider whether National Security Committee ministers, including the Prime Minister, should participate in a counter-terrorism exercise, along with all National Cabinet members, within nine months of each federal election”.

At the sharp end of things, the commission recommends a more comprehensive approach by New South Wales police at high-risk Jewish events.

The commission observes, “the outbreak of hostilities between the United States and Israel and Iran in February 2026 is likely to have increased the risk of attacks directed at the Australian Jewish community”.

Public attention has been focused on how the war has exposed Australia’s vulnerability on fuel and other items coming through our supply lines, and its implications for inflation and economic growth. The commission’s grim warning is a reminder of the intensified danger of terrorism as another cost the Iran war poses.

Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Early voting is now in full swing for the coming Farrer election on May 9. The by-election is being framed as a temperature check of the right in federal politics, given the rise of One Nation and the collapse of the Liberal and National parties.

The competition in the southwestern New South Wales seat is mainly between a high-profile independent, Michelle Milthorpe, and One Nation’s David Farley. Key campaign issues include health, water management, climate projects, and the current oil shock and ongoing cost-of-living crisis.

In this podcast, we spoke to veteran election analyst Antony Green about why this by-election is so nationally significant, including ahead of Victoria’s coming state election.

We also spoke to Milthorpe and, for One Nation’s perspective, Barnaby Joyce. (Farley, who spoke about being One Nation’s local candidate when we visited Farrer last month, declined an interview.)

‘A complete diversion’ from history: Green

Antony Green has covered more than 90 Australian elections over nearly four decades. He highlighted how unusual this Farrer by-election is, contrasting it with generations of elections before it.

Historically, it’s significant. We’ve had a party system now for eight decades – a Labor Party, a Liberal Party, a National Party – they’re the ones that nearly always have competed to form government to win almost all seats.

But this by-election, it looks like a breakout: a contest between an independent and One Nation. That’s a complete diversion from the tradition of Australian political history.

It’s also significant for what’s going to happen at the next election, because Farrer is a very rural seat. It’s the sort of seat Labor rarely polls well in, and they’re not even contesting the by-election. If the Coalition parties can’t win a seat like Farrer […] what are their hopes of winning government at the next election?

Green said if One Nation wins this by-election, it would be their first victory in a federal lower house seat – and give them significant momentum nationally, especially leading up to November’s state election in Victoria.

I think winning Farrer would be a huge boost to One Nation. It would put every member for a rural or regional seat, give them a warning that One Nation is coming for them.

[…] It also portends what we might see at the Victorian election […] Perhaps One Nation will be the party that breaks Labor’s grip on northern and western Melbourne.

Support ‘from around the country’: Milthorpe

Independent Michelle Milthorpe, who’s running for Farrer for the second time, was not willing to be drawn on how much money her campaign had spent far, but said she’s been “overwhelmed” by individual donations.

There’s probably 98% of my donations have come from individual donors from Farrer and around the country […] I’ve got significantly more money than I did last time. So look, that’ll all be disclosed in the only way, that’s actually open and transparent, because I am independent.

[…] We wanted to put our best foot forward in this campaign and to compete equitably with other parties. Like, the [political] parties have had people from all over Australia here, and their staff, MPs from all around Australia here. I’m pretty confident they’re not doing it for free.

So these are other costs that aren’t being considered when people are asking me these questions […] We’ve got volunteers doing the work that other parties have staff doing.

Pressed on how much political crowdfunding group Climate 200 had donated, Milthorpe replied “$20,000” – and contrasted that with the high-profile support given to her opponents, such as billionaire Gina Rinehart’s support for One Nation.

I haven’t had Gina donate any money to my campaign. I haven’t had any gambling companies. I haven’t had any banks, or insurance, or anything like that. So yeah, I’m just really grateful to the ordinary Australians, who’ve gone out and put money in behind my campaign.

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Read more: View from The Hill: Taylor defends putting One Nation ahead of Farrer independent as ‘least worst option’

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‘Australians are changing their votes’: Joyce

Asked about One Nation’s rising popularity and controversies it’s faced during this campaign – notably the revelation that its Farrer candidate had flirted with Labor in the past – former Nationals leader turned One Nation MP Barnaby Joyce said there’s nothing new about people trying to bring One Nation down.

It’s just a litany of people who are trying to bring us down, and that’s not unusual. That has happened throughout the history of One Nation. And they grasp anything like, ‘oh, we’ll bring them down with this, we’ll bring them down with that’.

[…] We are under attack from every side because they are terrified of the fact that the Australian people have made a decision to change their vote. They don’t want that. It means things move out of their control. Even the bureaucrats, it means things are moving out of control. And they want to have control. They want two reins and one rein is the Labor Party and the other reins the Coalition. And if they don’t have those two reins, they’re unhappy with their horse.

Asked if Gina Rinehart had given any support to One Nation’s Farrer campaign, Joyce said he didn’t know.

I don’t know whether she is. I mean, I’ll absolutely welcome it if she is, absolutely. Because this is another thing. So we have travel companies [with] multiple, multiple hundred millionaires [that] fund the Greens. And that’s not a problem.

We’ve got Andrew Forrest, who supports with [Anthony] Pratt, the Labor Party, and that’s not a problem. We’ve got Pratt again, and other […] multiple millionaires who support the Liberal Party, but that’s not a problem.

But if someone supports the One Nation party, that’s somehow maligned and suspicious and all has to be brought up. I mean, people have a philosophical view and they back it in. I’d be more upset if no one believed in One Nation to the extent that they’d ever want to support us.

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Read more: Politics with Michelle Grattan: why Farrer is a key test for One Nation vs the Coalition

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Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.