Has the Albanese-Chalmers relationship broken down?

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Opinion

October 17, 2025 — 5.00am

October 17, 2025 — 5.00am

Is there a problem between Anthony Albanese and Jim Chalmers? It sure looked like it this week.

After two years of insisting he would not alter his proposed superannuation tax changes, the treasurer was grim-faced and circumspect as he announced six major changes (mere tweaks, Chalmers claimed) to the policy, largely addressing critics’ grievances.

Anthony Albanese and Jim Chalmers have different ideas about tax reform.

Anthony Albanese and Jim Chalmers have different ideas about tax reform.Credit: Alex Ellinghausen

If there is a problem between the two men, that is a big concern – because the prime minister-treasurer relationship helps define governments. Peter Costello and John Howard were not personally close but worked well together; Paul Keating and Bob Hawke were a powerhouse team early on until they fell out over the leadership; Josh Frydenberg and Scott Morrison were close, but critics argued that treasurer was too close to his prime minister.

After nearly four years in government, the Albanese-Chalmers dynamic remains opaque, although both insist their working relationship is strong.

While I was preparing a profile of Chalmers nearly two years ago, the treasurer told me that sometimes he spoke to Albanese six or seven times in a day, but then he may go two or three days without much more than a few text messages. To illustrate his point that they got along well, Chalmers mentioned that Albanese and fiancee Jodie Haydon had called him just a couple of days earlier when the pair got stuck on a clue in a newspaper crossword.

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Albanese and Chalmers have regular dinners together at the Lodge (unlike Howard and Costello), share the same birthday (March 2), grew up in households that didn’t have a lot of money, and have known each other for decades, going back to when Chalmers was a political staffer and Albanese a shadow minister. But there are key differences and a 15-year age gap.

Albanese is from the Left faction, Chalmers from the Right. Chalmers’ natural inclination is towards redistributing wealth from capital to labour – much like his former boss, ex-treasurer Wayne Swan – whereas Albanese is friendlier with business and more interested in growing the national pie rather than just redistributing it.

The prime minister’s closest political allies are cabinet ministers Penny Wong, Katy Gallagher and Mark Butler while the treasurer’s include fellow Queensland MP Anthony Chisholm and cabinet minister Tanya Plibersek.

Which brings us back to the superannuation tax changes unveiled by Chalmers. They include removing the tax on unrealised capital gains, splitting the tax into two brackets, surrendering some of the original forecast revenue and giving a boost to the super of low-income earners. And they suggest the Albanese-Chalmers relationship is on rocky ground at the moment.

The changes were sensible and necessary. Taxing unrealised capital gains, in particular, was problematic. But the change of direction on super also illustrated, once again, that Albanese is a cautious prime minister who spends his political capital reluctantly and is more than willing to overrule the ambitious younger man.

‘Everyone realises Jim has eaten a giant shit sandwich; the question is why?’

A cabinet minister, speaking on condition of anonymity.

Concern within some sections of the government about the original super proposal had been growing for months and, eventually, Albanese stepped in and ordered Chalmers to alter the package. Albanese let his treasurer reshape it rather than dictating a redesign, but the message to Chalmers was clear: fix it.

It’s hardly the first time that Albanese has stepped in to overrule a minister: Tanya Plibersek’s environmental reforms were shelved late last term because of the prime minister’s intervention; Chalmers’ push to alter the so-called stage three tax cuts was put on ice by Albanese early in the previous term before the PM relented early in 2024.

But in this case, so disappointed was Chalmers after two years of defending the original policy that, during the press conference, he made a point of avoiding questions from journalists with The Australian Financial Review and The Australian until the end, such was his frustration with the two outlets that campaigned against his initial plan.

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Meanwhile, the prime minister was having his first holiday since the election, sunning himself with Haydon on a tiny Micronesian Island and facing no questions at all about the change. It is still unclear why Albanese ordered Chalmers to announce the changes while he would be on leave; the super proposal had already stalled (the Coalition opposed it and the Greens were asking for changes that Labor wouldn’t agree to) and parliament was not sitting for another two weeks.

What is clear is that Albanese, Chalmers and the rest of the Expenditure Review Committee of cabinet met last Friday, worked through the details and signed off on the changes before the prime minister went on holidays. Cabinet then met on Monday this week to give its seal of approval, a formality after the ERC’s agreement.

One cabinet minister in the room on Monday said the discussion about the revised superannuation package had lasted only about 20 minutes and the changes had been very tightly held within the government right up to the last minute.

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“It felt like both the decision and the timing of it were a snub,” the minister, who asked not to be named so they could speak freely, said. “Everyone realises Jim has eaten a giant shit sandwich; the question is why? People never mentioned it as an issue when I was on the campaign trail.”

One theory, widely discussed, is that Albanese is wary of Chalmers because of the younger man’s well-known leadership ambitions. That is almost certainly part of the explanation, but not all of it.

And as the same cabinet minister puts it: “Albo is there for as long as he wants, that’s the reality. And if he decided to leave, the replacement would be Albo’s pick.”

That assessment is correct. Albanese has the overwhelming support of his Left faction, and key right-wing powerbrokers Tony Burke and Don Farrell.

Perhaps the prime minister simply decided his political capital would be better spent later in his second term on a policy he himself wants to implement. What is clear is that the manner and timing of the superannuation backdown, with Albanese on holidays and Chalmers forced to front up alone to announce it, was brutal.

The treasurer will recover, but questions over his relationship with the prime minister will persist.

James Massola is chief political commentator.

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