Paul Keating had a piece on John Menadue’s website Pearls And Irritations this month with the headline: Never before has a Labor government been so bereft of policy ambition.

It was a response to Foreign Minister Penny Wong’s speech to the National Press Club the day before, and repeated Keating’s views about AUKUS and Australia’s position on America’s side in the “great power competition” between it and China.

But the headline would have stung … because it’s Paul Keating. And by the way, he wrote that headline, but it was meant specifically for foreign affairs; in my view it could have been broadened.

Something strange and sad has happened to the Labor Party. The policy courage of Whitlam, Hawke and Keating has been replaced by reviews and inquiries.

Ambitious policies punished

It’s understandable in a way – every ambitious Labor policy of the past 25 years has been punished; in fact, it’s hard to think of one that has worked out.

Kevin Rudd’s Resource Super Profit Tax in 2010 was a debacle that cost him his job, and even that was an exercise in timidity. He plucked it out of the broad and ambitious Henry Tax Review, thinking that that was all he could get away with, and it turned out he couldn’t even get away with that.

Julia Gillard’s replacement of it, the Minerals Resource Rent Tax, did actually become law in 2012, but was repealed in 2014, along with the “carbon tax”, or Clean Energy Act of 2011. Together they cost Gillard her job in 2013.

And then Shorten’s attempt to establish a mandate for some tax increases to pay for ambitious policies at the 2019 election was a crushing failure.

See the common theme? Rudd, Gillard and Shorten all went up in flames trying to raise taxes, so not only did Anthony Albanese and Jim Chalmers promise not to do that, they promised to keep Scott Morrison’s Stage 3 tax cuts at vast expense and are showing no signs yet of breaking that promise.

Gillard’s other big idea – the NDIS – has also turned into a nightmare, with minister Bill Shorten saying it has lost its way and needs a reboot, while blaming the Coalition’s “malign neglect” of course.

As an aside, the Coalition’s big attempt to cut spending in the 2014 budget also backfired, so when an excuse arrived to increase spending in the form of a pandemic, they went quite berserk.

The point being that both sides of politics have learnt the hard way that increasing taxes and cutting spending are bad career moves. Best to do the opposite.

Bill Shorten, Kevin Rudd and Julia Gillard all struggled after ambitious reform attempts. Photo: AAP

Nothing particular new or surprising about that – after all, Keating brutalised John Hewson in 1993 over his plan for a GST.

But politics is more vicious and polarised now than it used to be and although the Coalition is a wounded animal, sinking in the polls, possibly dying, it’s still getting equal media time and can therefore punch above its parliamentary weight.

‘Relief, repair, restraint’

So it would be understandable if the budget in 12 days from now was a defensive one – a nip here, a tuck there, a bit of bullsh-t multinational tax reform, marketed as “responsible”.

Which is what Jim Chalmers flagged in February, when he unveiled his three-point plan: “Relief, repair, restraint.”

But really, has there ever been a Labor government so bereft of policy ambition? Relief, repair, restraint? Really?

It’s true that it’s hard to be ambitious when you haven’t got any money, but on the other hand Chalmers starts with a windfall; the deficit for this financial year – the starting point for the 2024 budget to be brought down on May 9 – will be at least $25 billion less than the $37 billion forecast in October, thanks to the big rise in commodity prices and lower unemployment than expected.

Not much can be done to restrain the big spending items. The higher defence budget is locked in, it will take a while for Shorten to get much money out of the NDIS, and the three “cares” – aged, child and health – all need more money to be viable, not less.

Which brings us to tax. Jim Chalmers needs to put on his suit of armour, pick up the battered shield and sword in the cupboard at Labor HQ left by Rudd, Gillard and Shorten and boldly charge into the Valley of Tax, into the mouth of hell, as Tennyson put it in The Charge of the Light Brigade.

Drop Stage 3 tax cuts now

Specifically, now is the time to do something about the Stage 3 tax cuts, not next year when they’re about to happen.

Albanese and Labor are miles ahead in the polls and everyone understands the spending pressures on the government and the absurdity of $20 billion per year in tax cuts when the budget is in deficit and inflation is a problem.

Also, what has to be done is obvious and doesn’t need an inquiry – just keep the 37 per cent tax bracket rather than abolish it, as proposed, while keeping the reduction in the 32.5 per cent bracket to 30 per cent, as well as the increase in the top marginal tax threshold from $180,000 to $200,000, although that could probably go as well.

The Grattan Institute says those tweaks would save $8 billion a year, and although it would be a broken promise, it should be easy to sell.

Apart from that, Chalmers should confine negative gearing to new houses, not existing ones, and go back to capital gains tax at the full marginal income tax rate, adjusted for inflation, instead of the flat 50 per cent discount.

He should have another go at a resources rent tax, perhaps just increasing the one that’s already levied on oil and gas, and maybe even do some more tax on super, which is, after all, compulsory and doesn’t need to be enticed with tax breaks, which mostly go to the well-off anyway.

OK, tax increases are not really “policy ambition”, but they allow it – in the 2024 budget, when you need it, in time for the 2025 election.

Alan Kohler is founder of Eureka Report finance presenter on ABC news. He writes twice a week for The New Daily