The defining tension of Labor’s second term in office will be over how to interpret the landslide victory.

Was it a sweeping mandate to enact bold reform or a vindication of a cautious approach to policy-making during the last term?

Despite hoping for bold reform myself, I am inclined to believe the latter. In a time of global uncertainty (a phrase I am sick of), voters backed the incumbent government.

It is often said that oppositions do not win elections, governments lose them. This time around, I think the inverse was true: Anthony Albanese didn’t win, Peter Dutton lost. The 2025 election was a comprehensive rejection of Trump-style politics in Australia. Labor must not delude itself into thinking that the electorate has given them permission to do whatever it wants. They have not.

Australia faces a raft of challenges. Housing, climate change and tax reform spring to mind. If Labor is perceived to be inadequate in addressing these, its majority could disappear at the next election.

The Greens, in particular, remain an enduring threat. Adam Bandt is probably right when he says that many Greens voters perceived voting for Labor as the surest way to keep Dutton out. Now that the spectre of Voldemort-for-PM has been banished for good, the Greens are likely to reclaim several seats at the next election.

How can Labor manage these competing imperatives? On the one hand, it must respect the will of the broader Australian electorate, on the other hand it must convince progressive voters that it can deliver meaningful change.

To meet these ends, Labor must pursue a two-pronged strategy. First, it must implement its agenda as promised, including policies that it failed to pass during its first term. Second, it must prepare the groundwork for an ambitious suite of policies to take to the next election, so it can secure a mandate for even greater reform.

On the first point, there are several outstanding issues from the last parliament that, if passed, would firmly bolster Labor’s progressive and reformist credentials. Chief among these are gambling reform and setting up a federal environmental protection authority.

As I have  previously written, Labor’s decision to water down proposed reforms to gambling advertising was shameful. Implementing a full-scale ban on gambling ads (in print, on TV, and online) would be well-received. This is an area where the government can go further without breaching an election commitment.

Establishing a federal environment protection agency is long overdue. Rumour has it that then environment minister Tanya Plibersek had reached a deal with the Greens to pass this legislation, but Albanese personally intervened to scupper the deal. Personally, I am inclined to believe this, because it accords with Albanese’s broader strategy towards the Greens: cede no ground and force them to either give in or vote down progressive legislation.

Albanese’s strategy has seemingly worked. The Greens now hold balance of power in the Senate, not because they gained seats, but because Labor did. The government’s hand has been greatly strengthened, and Albanese stated in his first press conference after being re-elected that establishing an EPA was a priority.

Another area where Labor can go further is higher education. As recommended by the Australian Universities Accord, Labor should scrap Scott Morrison’s “Job Ready Graduates” scheme, which saw the cost of studying the humanities increase by 113%. If they wanted to go further, they could backdate these changes so that students who have already been affected see their debts reduced.

In terms of setting the stage for a third term, which at this point seems all but assured, Labor should continue playing to its greatest strength: Medicare.

At the moment, Labor’s investments in Medicare are about playing catch-up. After years of neglect by the Coalition, bulk billing rates are in free fall. An election promise of  $8.5 billion in extra spending to lift bulk billing rates to 90% by 2030 is excellent, but it does not fundamentally expand Medicare.

In his farewell speech to parliament, Bill Shorten expressed hope that a future Labor Government would take up one of his 2019 policies: removing out-of-pocket costs for cancer treatment. Labor could also pinch a few ideas from the Greens and the Coalition, putting dental into Medicare and expanding the number of free psychology sessions from 10 to 20, respectively.

The best defence is a good offence. And as we have seen, when Labor goes on the offensive regarding Medicare, it wins big.

Another open-ended area for the government is the 2035 emissions reduction target, which is yet to be set. With the Coalition on the ropes over their nuclear policy, now seems an opportune moment to increase Australia’s ambition on emissions reduction and goad the Coalition into opposing it.

All of these suggestions are entirely within the remit of Labor’s election mandate. Of course, how Labor’s second term pans out also has much to do with whom the Coalition and the Greens select as their respective leaders. If the Liberals decide to careen even further to the right (which I think they will) by selecting Angus Taylor and Jacinta Price, whereas the Greens opt for the pragmatic Sarah Hanson-Young, then Labor’s chances of passing progressive legislation would be greatly improved.

Politics is the art of responding to circumstances that are outside your control. So far, Albanese has excelled at doing just that.