On breaking a promise.

I have written many blogs about Donald Trump but not so many about Australian politics.                    Yesterday, the Australian Labor government in Canberra brought down a reformist budget.                       It attempted to partly undo the effects of the "Middle Class Welfare"  legislation of the Howard-Costello conservative government which just over twenty five years ago made it possible for investors to turn the housing market into a  speculators dream. A Homeowner was able to buy another house and "negatively gear" it so that all of the costs in renting it out could be claimed as a deduction against income earned when tax time came around each July. So attractive was this tax reduction scheme that some people acquired many rental properties as negatively geared investments. In fact, they felt inclined to purchase more and more negatively geared rentals to further reduce their total income tax.                  Labor governments opposed this system as it meant young home buyers were being out bid  at home auctions by well healed and negatively geared bidders who owned many rental homes.                            This Labor budget of 2026 has courageously tried to undo the damage being  done by the "Middle Class Welfare" legislation                                                                                                                                                                                                                                                                                                                The conservative media, as usual, have nothing good to say about Labor’s budget. They talk about broken promises as if no other political Party has ever changed its mind. It was John Maynard Keynes who once addressed the question of broken promises when he said, " when the facts change I change my mind , Sir. What do you do?

Who can forget Tony Abbott in 2013, three days before a federal election saying he was at one with Labor on Gonski and there would be no cuts health, education or welfare and definitely no cuts to the ABC and SBS. A few months later he presented his budget and made drastic cuts to all of these vital areas and many more. The conservative media were ecstatic about Abbott's budget and its numerous totally broken promises.

This 2026 Labor budget has addressed some of the middle class welfare that Howard and Costello introduced in 1999 that turned the housing market into an investment bonanza for those who already had a house. Since 1999 house prices have risen by about 400% while salaries have risen by about. 200%.

The ratio between house prices and salaries was getting wider and wider each year and making it almost impossible for young people to get into the housing market where they were outbid by house owners who owned several other houses.

Instead of criticising Treasurer Jim Chalmers for breaking a promise given before the 2025 election not to change the negative gearing policies of Howard and Costello, the media should admit that this is the right decision to address a widening gap between the haves and have nots. In fact it highlights the great tragedy that Australia inflicted upon itself when it rejected then labour leader, Bill Shorten , in the 2019 election.

Shorten wanted to get rid of negative gearing and capital gain tax exemptions entirely. He also wanted to get rid of Franking Credits . This was another of Howard and Costello’s middle class welfare policies that enabled shareholders to claim a tax refund when they had not paid any tax in the first place.

Shorten’s removal of negative gearing, capital gains tax exemptions and franking credits would have provided many billions of dollars to fully fund the National Disability Insurance Scheme and resuscitate Medicare which the conservative LNP government was underfunding.

Shorten lost that 2019 election and Australia got the LNP Morrison government which continued to underfund Medicare, the CSIRO, education, social welfare, the ABC and SBS. While the Morrison government short changed the many agencies that Labor had wanted to bolster it inflicted Robodebt onto the poor and unemployed. It also indulged itself in Rorts for Regions where federal money was spent exclusively in Liberal and National Party electorates,

During the Covid pandemic, 2019-2022, the Morrison government rightly sought to provide aid and financial stimulus to industry just as Labor would have done. The problem though, was that the Morrison government, in this period, gave billions of dollars to rich and profitable companies that did not need the money, did not ask for it, did not spend it and, most importantly, did not have to pay it back. They kept it and gave bigger dividends to their shareholders. In this way the LNP, who always boast that they are the best money managers, ran up a debt of 600 billion dollars,

We need to remember that when these profligate LNP members now criticise Labor for having a debt of nearly one trillion dollars without owning up To the $600 billion that they contributed to that debt.

Like many Australians I am pleased to see at last a Labor government with the courage to address fundamental flaws in our taxation system. These changes will get the speculators out of the housing market and once again make it possible for young people to purchase their own homes without having to outbid rich bidders with an extensive government subsidised real estate portfolio.