Albanese hopeful about end of war against Iran as budget looms

Welcome back to your weekly federal politics update, where this week Jake Evans will get you up to speed on the happenings from Parliament House.

Perhaps the prime minister was hoping US President Donald Trump was tuning in to Triple M when he claimed that the attack on Iran had now achieved its aims, and offered an off-ramp for the war to end.

Appearing on Hobart airwaves this morning, Anthony Albanese came as close as he could to calling the US attack on Iran "mission accomplished".

"I can see this ending," Albanese said.

"I mean, there's a specific issue that Iran being denied of its nuclear weapons potential was important.

"I think that's been achieved."

It's not clear if the PM has conveyed directly to the president his view that Iran is a success and it's time to go — the pair have not spoken directly since a phone call on March 10. 

Trump may not place much stock in the opinion of a friend he says he no longer wants or needs, anyway.

Albanese's condition of support when the US and Israel struck Iran was to see its nuclear threat neutralised.

Trump's aim was never that limited.

It sure doesn't feel like the war is ending with fresh attacks that have damaged Australian facilities. Meanwhile, Iran has issued orders for several nations to evacuate their gas fields —$US30,000 drones mean Iran can prolong carnage cheap and easy — and Australia is copping heat from Trump for not getting more deeply involved in the war effort.

No wonder the PM wants the war over. Beyond the human toll, it has also put a cloud over Australia, threatening to send inflation above 5 per cent, hitting families and businesses with high fuel prices, and forcing up interest rates while unemployment creeps up — one of the horsemen of an economic slowdown now stalking this country and others.

Governments are considering dystopian scenarios for a prolonged war that look more like a Hollywood script than sober Treasury analysis.

It's all feeling a bit 'Thunderdome'-y

There's a particular word for it all being repeated in the corridors of Canberra that can't be written down here.

It feels a bit like we are living in the prequel to Mad Max, as if in 36 days' time the country will run out of petrol and we'll start attaching chains and spikes to our cars — or buying personal war drones from Alibaba.

Don't panic, the fuel situation is a little better than that.

Panic, however, has been the flavour of the week, and there has been some mixed messaging. We are in a fuel crisis, an "unprecedented" crisis, the "biggest in history". Opposition politicians say we have failed to prepare, we are highly dependent on oil imports and a lot of it has just been cut off, while right in front of our eyes petrol prices are ticking up quicker than we can race out to refuel (if you can get the stuff).

It's no surprise people are having flashbacks to empty grocery aisles in the pandemic.

Yet the tankers are arriving, stocks have been released to smooth the bumps, a fuel tsar has been appointed to direct trucks to oil-thirsty towns and the government is not planning to ration fuel "yet" (not a caveat likely to induce calm).

What happens next? there's no threshold for when the taps might be tightened; the tankers are coming but there's little sense of what happens if they stop.

In that context, it hardly seems fair for the energy minister to call people "un-Australian" for making a calculation that the outlook seems pretty bad and maybe they should line up at Bunnings behind everyone else for a jerry-can they can fill with petrol and stuff in a corner of the garage where it can slowly go rotten.

That's not the "Australian way," the PM says.

Isn't Mad Max distinctly Australian?

Meanwhile, a budget is being written

Somewhere in the distance the wheels of government are still trundling along.

Jim Chalmers has been readying to finally "grasp the nettle", as he promised a year ago, and hand down a budget that is expected to include more bitter medicine than sugar hits.

The treasurer has flagged "substantial savings options", with a primary target the Capital Gains Tax discount, a tax gift given almost entirely to the highest earning Australians —  83 per cent of the CGT benefit is received by the nation's top 10 per cent of earners. 

More than half of all capital gains reported are by the top 1 per cent of earners in the country — people earning more than $375,000 a year, who on average reported a capital gain of about $851,000 last financial year.

As economics reporter Tom Crowley writes, "we pretty much know" Labor plans to take a slice out of the 50 per cent discount to taxes from capital gains, which also acts as an incentive for housing investors.

The Opposition says it will hurt housing supply, but even among its base the resistance has been mild — and the MP whose electorate benefits most from the tax discount agrees it needs a trim.

This budget puts Chalmers in a tight spot: having spent a year setting expectations for a belt-tightening budget, the treasurer finds himself again under pressure to dole out some relief in the wake of petrol price spikes and interest rate rises further putting the squeeze on households.

But the treasurer today affirmed he would be making "hard decisions" in May for the good of the country, even if it costs him a bit of political skin.

The defining influence on the budget now, if it wasn't clear already, is the war in the Middle East, Chalmers said today — likening the moment to 2008's Global Financial Crisis and the COVID-19 pandemic.

Even in the brightest scenario being considered by Treasury, oil prices don't return to normal until the end of this year, and in the middle scenario it takes another two years on top of that.

A third "more drastic" scenario under development was not detailed by Chalmers.

"The conflict in the Middle East is a stark reminder of how quickly the global economic outlook can change," he said.

The whole thing makes the leadership spills of last month feel a bit quaint.