How does a Prime Minister maintain confidence in a Treasurer who rushes generational tax changes into a Budget without proper consultation, terrifies investors, enrages small business, alarms tax professionals and then immediately starts retreating anyway?

Jim Chalmers hasn't merely broken election promises. He's botched the breaking of them - and it's profoundly damaged the PM's standing in the community.

'Fire the liar' is fast becoming the phrase most closely associated with Albo.

Voters can forgive a course correction if it's done honestly and with at least a modicum of competence. They can accept a government saying that circumstances have changed and the national interest requires a difficult turn.

What they are far less likely to forgive is a simple bait and switch followed by yet another mangled backflip. That is precisely what Labor has delivered.

A callow Treasurer stumbling through a policy so poorly designed that it has required humiliating backflips within weeks of the announcement. A PM who explicitly ruled out the changes before the election now pretending the broken promise is somehow a noble shift when it's really just a tax grab.

If Albo maintains full confidence in Chalmers, it says as much about the PM's judgment (or lack thereof) as it does about the Treasurer's (in)competence.

Labor went to the election explicitly ruling out changes to negative gearing and capital gains tax. Albo wasn't vague about it, leaving himself no wriggle room. Asked whether he could rule out such changes, he shot back: 'Yes. How hard is it? For the fiftieth time.'

Then came the Budget. Negative gearing was curtailed. The capital gains tax discount was overhauled. Trusts were targeted. A 30 per cent minimum tax rate was dropped into the mix like a fiscal hand grenade. Investors, founders, family businesses and estate planners suddenly discovered the rules had changed overnight.

Labor dressed it all up as intergenerational fairness, because that's what it always does when it wants to turn a revenue grab into a morality play.

But the politics of it all reek of panic.

This was a desperate hunt for money, disguised as reform. A government short on revenue and addicted to spending needed someone to pay for its largesse. So it looked at capital, trusts, investment and aspiration, then wrapped the whole thing in the language of helping young people buy homes.

It produced a mess - or more accurately, Chalmers did.

His first mistake was breaking the promises made. His second was refusing to even properly own having done so.

Tax law reaches into every corner of the economy. It alters incentives, changes investment decisions, and affects business structures, estate planning, housing supply, retirement decisions and the success of start-ups. The consequences play out over decades. Simply put, Chalmers has put decades of future prosperity at risk.

Which is why serious tax reform demands consultation and technical discipline. Labor instead chose an ambush, hoping that approach would work politically.

The testamentary trust debacle was the canary in the coal mine. Only a government detached from the real-world consequences of its own legislation could wander into a death tax argument and fail to see it coming. Testamentary trusts are not some exotic billionaire loophole dreamed up in a Point Piper wine cellar. They're often used in estate planning for entirely legitimate reasons, including protecting vulnerable beneficiaries and managing complex family circumstances after death. 

Yet somehow Labor found a way to stumble into the blast zone, take fire from every direction, and then this week retreat with their tails between their legs.

Then came the small business scramble to unpick Chalmers' mistakes. After ferocious backlash, the government lifted the threshold for one small business capital gains tax concession from $2million to $10million and began handing out exemptions.

But every carve-out is a confession of the errors made in the first place. This is how bad policy risks becoming even worse. The original design was too broad so the backlash was appropriately brutal. Now that the exemptions are being bolted on, the complexity of the changes is multiplying, the uncertainty is spiking, and rather than becoming simpler and fairer, the tax system is even more distorted and vulnerable to future political fiddling.

Then there is the ministerial discretion Chalmers tried to insert into the bill but has also backed down from. Otherwise known as his right to play God.

When legal and accounting experts warned of overreach, the Treasurer's instinct wasn't to listen. It was to sneer at their concerns, dismissing them as 'rubbish', 'not true' and 'lies'.

The irony of a Treasurer who lied before an election only to do the opposite afterwards hurling insults at others shouldn't be lost on anyone.

A fortnight later, Chalmers was backing down, talking about the need to provide more clarity and certainty.

Were the concerns rubbish, or were they serious enough for the government to rewrite the legislation and remove Chalmers' God-like powers to do whatever he wanted?

For Albo, the danger isn't just that voters conclude that he misled them before the last election. It's that they conclude his government doesn't know what it's doing.

Trust can sometimes be rebuilt; incompetence is harder to overcome.

The mining tax ghost is inescapable here. Labor has seen this movie before - and this is more than a resurfaced embarrassment from the Treasurer's past.

Wayne Swan and Kevin Rudd produced a tax that was meant to be bold, reformist and redistributive. Instead, it became a case study in how not to do major tax policy: poor consultation, a furious industry backlash and political panic soon followed, causing internal chaos, redesigns, revenue disappointment and long-lasting damage to Labor's economic credibility.

And who was sitting close to the centre of the Swan operation when that disaster unfolded? Jim Chalmers, of course, as his most senior adviser.

If anyone in modern Labor should understand the lethal consequences of mishandling a major tax change, it is Chalmers. Yet here we are again.

Albo cannot plead ignorance either. He was Leader of the House during the Rudd-Gillard-Rudd years, deep inside the parliamentary Labor machine when the mining tax went from political weapon to governing wound.

That is what makes the current farce so damning. These are not novices learning the craft; they are career Labor operatives who lived through the party's tax debacles in the recent past and yet somehow managed to absorb all the wrong lessons.

Chalmers has spent years cultivating the aura of a serious, reforming Treasurer. However, this Budget has exposed the chasm between his self-image and performance.

The deeper humiliation is that Albo's frontbench contains far stronger economic minds hiding in plain sight. Assistant Treasurer Daniel Mulino has a Yale PhD in economics. Cabinet Secretary Andrew Charlton has an Oxford PhD in economics. Chalmers' doctorate is in political science, focused on Paul Keating's leadership.

The PM must now decide whether loyalty to Chalmers is worth the damage the Treasurer is doing to the government.

Sacking a Treasurer is dramatic, but so is watching him shred an election promise and destroy business confidence, only to get rolled week after week in the aftermath of the damage done.

So Albo now faces a test of authority. He's already allowed Chalmers to be rolled on his signature policies. The question now is whether the PM has the political courage to decide that the Treasurer himself has become part of the problem. Because this is not just about one messy tax package anymore.

But perhaps it's already too late for Albo to kick Chalmers to the curb. He authorised two broken promises, was complicit in the pre-election lies, and the Prime Minister's dissatisfaction rating is up to an eye-watering 60 per cent. 

Oh, and Pauline Hanson is the preferred PM now, too. Perhaps Albo, in his weakened state, already lacks the authority necessary internally to move against Chalmers?

What a mess.