The Albanese government's tax package passed the House on Thursday morning and is law by lunchtime. The Senate had already done its work on Tuesday. Anthony Albanese stood at the dispatch box during Question Time and called it "the most significant tax reform in a quarter of a century." Clare O'Neil, the Housing Minister, called the falling auction clearance rates "a market correction." The Treasurer, Jim Chalmers, called it "a fairer tax system that better aligns the tax system with our economy." Bloomberg's Michael Heath, writing the same morning, called it what it is. A$185 billion has been wiped off the value of Sydney and Melbourne housing in three months. Sydney prices are down 2.7 per cent since March, costing the city A$120 billion. Melbourne is down 2.3 per cent, costing A$65 billion.

That is the wealth effect everyone in Treasury used to worry about, applied in reverse. The same households whose spending propped up the GDP figures through the inflation crisis have just lost a quarter of a trillion dollars in notional equity. They will spend less. They will save more. They will tell their adult children to keep renting. The Bloomberg piece, dry as it is, notes that the slump "is likely to weigh on the wealth effect that underpins consumer spending across the economy."

The grandfathering regime in the legislation rewards anyone with a tax lawyer and a property held before May. Anyone without one is exposed. The much-discussed "widows tax" persists: a couple who owned a property before the May budget loses the grandfathering exemption if one of them dies or they divorce. Pat Conroy, the Minister for Defence Industry, told the Channel Nine Today Show on Thursday that "this is no different to any other part of the taxation system, that when there's a change of asset ownership, things like grandfathering end." Tom Steinfort pressed him three times. He never answered.

Shadow Housing Minister Andrew Bragg, the same morning, told PerthNow's reporters that "it's a long game housing and I'm not sure that she's a forecaster," referring to O'Neil. "Ultimately," Bragg said, "until we see a larger amount of housing supplied, I don't think we're going to see price stability or affordability." Bragg is right about the supply problem. He is wrong if he thinks the supply problem and the tax problem are separate. The tax package raises the carrying cost of every property that does not enjoy grandfathering. That is investors, future first home buyers planning to upgrade, anyone whose circumstances change. The new build pipeline does not appear out of optimism. It appears when the after-tax return crosses the developer's cost of capital. The Albanese government has just made that arithmetic worse.

Treasury's modelling, of course, does not see any of this. It sees a one-off transfer from investors to first home buyers. The 75,000 figure the Prime Minister cited in Question Time is a Treasury assumption, not a measured outcome. The measured outcome so far is A$185 billion in two cities, and we are one quarter in.

This is what reform looks like when it is designed for the press release.