Waiting for Albo: Is the PM really timid, or just tactical?

It’s worth imagining the alternative universe in which, rather than being prodded by the Greens for changes to negative gearing and capital gains tax discounts, the Albanese government had acted first. Early on, perhaps, announcing all its housing measures in one big sweep, a dramatic intervention on behalf of those unable to buy a home. What would be different?

The government would have had to endure savage attacks. It would have been accused of smashing house prices. The tone of careful progress that Albanese so prized in that first year would not have existed. And Peter Dutton would have a clear cause – one that would be championed in some sections of the press.

Illustration by Jozsef Benke.

On the other hand, we would not be hearing concerns about the prime minister’s “timidity”. Voters would be in no doubt that the government was taking housing affordability seriously: it would be one of the central issues of this term (along with inflation).

There are two points to this hypothetical. The first is that there is no win-win political strategy, ever: only choices between different types of political pain. The second is a reminder of what massive political dust-ups actually look like. They drown out all else, taking over the media.

In other words, they bear little resemblance to the recent stand-off in the Senate over two of the government’s lesser housing initiatives. In the political world, the dispute seemed large. But it wasn’t, really. The government’s decision to make much of the delays by the Coalition and the Greens was probably a good one, tactically, as far as it goes – and perhaps the decision of those parties to block was, too. But it was all fairly petty. Even the prime minister’s vague threats of a double dissolution election seemed tinny. How many Australians noticed? Does anyone really think they should have?

Of course, getting anyone to care much about anything outside of inflation is difficult: it continues to dominate, more than any other issue in recent memory. Voters in focus groups say they are “treading water”. This, to my mind, is a good description of the pervading political atmosphere: on the edge of exhaustion, waiting with growing desperation for something to change.

And so, perhaps feeling something of this themselves, and certainly aware that voters feel this way, and not wanting the blame to fall on them, everyone in political life suddenly seems eager to point the finger somewhere else.

The Minerals Council recently took pot-shots at Albanese. Last week, the Business Council of Australia – sick of being “scapegoats”, apparently – added its take. The Liberals blame Labor for everything, Jim Chalmers appears to blame the Reserve Bank for “smashing” the economy, both the government and other businesses criticise big tech.

The striking fact about all this is how low-stakes most of the disputes are. Occasional attempts by business to drum up fears around “sovereign risk” and investor flight seem silly. The government’s IR laws are not insignificant, but hardly radical. In other areas, the government seems to do what it can without annoying business too much: it acts on scams but won’t force banks to reimburse victims; it won’t ban gambling ads; it increases tax on gas and oil but not that much. Arguments are being conjured out of nothing because the divides are not that large.

The fact that these specific policy disputes – either between the major parties or between parties and business - are not that large relates to the fact that the philosophical divides are not that clear. A telling moment occurred when the prime minister pointed out last week that the listed priorities of the Business Council and his own were the same. He was right.

The point is not that business, Labor and the Coalition hold identical views of the world – that’s clearly false. It’s more that the philosophical (or ideological) dividing lines have become smudged because each group has been going through a long period of confusion about its purpose and where in the political landscape it should stand. It’s worth noting that each has also endured a decade of being fairly ineffectual. The two facts are likely related. And that wasted decade, for each, likely feeds into the sense of restless impatience that is currently on display.

To return to housing: the benefits of acting on negative gearing and CGT are mixed. Some experts suggest the impact on housing prices would be small; the Grattan Institute has suggested perhaps only 2 per cent. The revenue gained, though, would be significant.

What such action would definitely do would be to make a significant philosophical intervention in the market. Both tax breaks are part of what the patron of Tenants Victoria and former Supreme Court judge, Kevin Bell, recently wrote was the defining philosophy of our housing system.

“The commodity value of housing as an investment has been allowed to dominate the social value of housing as a home” - which, he wrote, is a “skewed way of looking at a fundamental human need”.

Labor may derive some political benefit from being seen to stand for something so philosophically clear. But in the current inflationary environment it would be accused not only of hurting house prices, but of doing so at a time families are particularly concerned about their finances.

Of course, inflation is not the only reason the Albanese government hasn’t acted. In this, as in other areas, its instinct is for moderation – or timidity – depending on your point of view. But it does feel as though we have hit a particularly tricky point. Everyone – voters, politicians, business, no doubt other sectors too – is treading water in this inflationary environment, increasingly tired and petulant, wanting something to happen, anything. But it is that same environment that makes action of any sort so difficult to imagine, and reasonable public conversations even more impossible than usual.

Does that mean the next months will be as petty as the week just gone? Quite possibly. It’s not a pleasant thought.

Sean Kelly is author of The Game: A Portrait of Scott Morrison, a regular columnist and a former adviser to Julia Gillard and Kevin Rudd.