The next few months may be the most crucial Jim Chalmers has faced as treasurer, at least for judgements about his ability to drive change.

They could tell us whether Chalmers really is as committed to serious economic reform as he claims, and how much influence he has to take Prime Minister Anthony Albanese with him on a journey that might involve spending political capital.

As the education year gears up, think of it as Chalmers preparing for his first personal assignment of Labor’s second term.

The background to Chalmers’ test is economically grim, but the political context provides wide-open opportunities.

Last week’s inflation hike (to 3.8% in the year to December), and this week’s interest rate rise (to 3.85%) brought a jolt of economic reality.

Pre-election, things felt more positive. Inflation had been artificially held down through the energy rebates. Real wages had been creeping up. Labor had more handouts on the way. All that (as well as an inept opposition) helped the government glide through the election to its massive majority.

But now the immediate future has darkened for many households. Inflation is forecast to remain high. Interest rates are widely expected to rise further. Real wages are not expected to grow until mid-next year.

Is this the time for ambitious reform, which often comes with short-term pain and losers? But then there is that old question: if not now, when?

The May 12 budget will be the first of this parliamentary term, in theory the best time for hard decisions. The government has not only a huge lower house majority but a fairly pliant Senate, where it can get tough measures through with the support of either the Greens (if they’re attractive to the left) or the conservatives (on the right flank). The opposition is a shambles and is likely to remain so for the foreseeable future, so its attacks will have little impact.

Economists would mostly agree reform needs to include significant cuts to, and containment of, spending. Chalmers is very sensitive to the argument Labor’s high spending is contributing to inflationary pressures, but he knows action has to be taken to improve the fiscal situation. The government this week announced an extensive sell-off of defence assets to produce some modest revenue that it says will go into the defence budget.

Chalmers flags the budget will contain savings. To get the budget into better shape these need to be substantial, without smoke and mirrors. One should be suspicious if once again the government lauds cuts to consultants, which have been a go-to bucket for past savings.

Yet here is the dilemma. While many economic observers believe the budget has to be put in a better position, the public wants more and more from government, in services, benefits and other spending. Attempts to curb the growth of programs can come with a lot of blowback, as did the efforts to bring NDIS spending growth to manageable proportions.

So, the first test for Chalmers will be whether he can achieve adequate structural savings.

Pre-budget messaging is often Delphic, but Chalmers is sending some signals, in addition to the one on savings.

First, he believes he has a strong mandate from last year’s economic reform roundtable to embark on tax reform.

Second, he is focused on finding ways of tackling intergenerational inequity, particularly in relation to housing.

One way of pursuing intergenerational equity broadly would be to commit to a medium-term fiscal strategy of balancing the budget over the economic cycle. This avoids loading debt onto future generations.

In terms of specifics, speculation is running hot that the capital gains discount could be reviewed. This discount means people are taxed on only 50% of the capital gain from the sale of assets held for more than a year. The debate is particularly centred on housing properties, given the affordability crisis.

While saying the government’s attention is on boosting supply, Chalmers has carefully not ruled out trimming this tax break. If the government went down this path, which would tilt the advantage away from investors, it would have to decide whether to confine the change to housing, rather than including other assets. It seems more likely it would.

Changing the capital gains discount would make only a limited difference to housing affordability. It would be emblematic rather than dramatic.

The other main tax option affecting housing would be to limit negative gearing in some way (such as by capping the number of properties an investor could negatively gear). Given his past promises, this would be highly problematic for Albanese.

Very much in the too-hard basket is a non-tax reform: shaking up industrial relations in the construction sector, where productivity has been going backwards in recent years. This is particularly needed in non-housing construction, but benefits would flow on to housing. If Chalmers could persuade his colleagues to take some measures here he’d be a miracle-worker, but this would have Labor’s union base up in arms.

Circling back to tax, a far-reaching reform that would help younger people (though not directly related to housing) would be to bring in tax indexation. But governments are loath to go down this road because they want to keep control of when to give tax cuts, and how to frame them.

Before, during and after the economic roundtable, Chalmers highlighted, as a reform priority, reducing excessive regulation. His reading text at the time was Abundance by left-leaning authors Ezra Klein and Derek Thompson, who (counterintuitively for those on the left) set out a deregulatory agenda.

At the end of the roundtable, Chalmers listed actions that had been endorsed, including to finalise the long-stalled reform of the Environment Protection and Biodiversity Conservation Act. The government landed the EPBC changes late last year. It also announced an AI plan, which was on the meeting’s agenda. But the new road user charge remains in negotiations and many other measures discussed at the summit are still in progress. Come budget time, Chalmers will be aiming to have more of his homework from the roundtable completed.