One Nation has cast a shadow over the federal budget and influenced decisions to reform negative gearing and taxes, with Jim Chalmers admitting many Australians are feeling economic anxieties that are “driving them to consider” rightwing populist parties.

The treasurer and Anthony Albanese have conceded that many people are locked out of the housing market and that the problem is getting worse, not better, under Labor. With Pauline Hanson’s party winning a historic byelection in Farrer – its first lower house seat win in its 30-year history – the government was alive to the threat of a populist wave of grievance similar to those in the United States, Britain and Europe.

“I think the housing market and the tax system is not working for a lot of Australians, and tonight, we seek to address that,” Chalmers said on Tuesday morning, hours before delivering his fourth budget.

“At the same time, it will respond to a lot of the pressures and anxieties that people are feeling, which is driving them to consider some of the parties outside the mainstream.”

One Nation has recently been polling a close second, behind Labor, in published opinion polls, nabbing up to 25% of the primary vote.

In Farrer, the One Nation’s David Farley won nearly 40% of the primary vote. The Liberals and Nationals scored 22% combined in a seat where former MP Sussan Ley had won a 43% primary vote last year.

Albanese and his senior ministers have recently been talking more about how to combat a rising threat on the ultra-conservative fringe, including by restoring trust in government and delivering material improvements to people’s lives.

The prime minister, Chalmers and other government sources have all but confirmed major changes to negative gearing, capital gains tax and the treatment of trusts in a bid to tilt the economic balance back toward ordinary voters rather than investors and wealthy Australians.

Asked if Tuesday’s budget had one eye on One Nation, Chalmers said it was an economic document, not a political strategy, but that the government was trying to fix the same type of problems that were fuelling the Hanson vote.

“I don’t dismiss or deny the very real concerns that a lot of Australians have about their ability to get a toehold in the housing market or to get a toehold in the economy more broadly,” he said.

The shadow treasurer, Tim Wilson, said he feared young people looking to enter the housing market would be deprived of the opportunities for wealth creation enjoyed by older generations, who received generous tax breaks on property investments and assets. He claimed the widely speculated changes were “lifting the ladder of opportunity up from young Australians”.

“Meanwhile, they’re protecting existing arrangements for those existing investors,” he said.

Albanese on Monday said the surge to rightwing populists like One Nation was “what happens when people don’t think they have a shot at a fair go”. On Tuesday, he said economic conditions were worsening for many Australians.

“At the moment, we know that the dream of home ownership is becoming more difficult for a generation of Australians. And unless we do something about that, then that’s likely to get worse, not better,” he told 2HD Radio.

On Nova radio, Albanese said the budget would tackle “some issues that have been kicked down the road essentially for too long”.

“What you’ll see is some changes tonight in the way that the tax system works, but also in driving supply,” he said.

The Australian Council of Social Services (Acoss) called on the government to do more for the most at-risk Australians, including lifting income support and investing in social and affordable housing.

“People on the lower incomes are already skipping meals, delaying medical care and rationing energy just to get by, and in a moment of unprecedented economic shock, they are the group with the least protection,” Acoss’ CEO, Cassandra Goldie, said.

“Tax cuts will not help those with the least. Already, many people with disability are alarmed and fearful of what major cuts to the NDIS will mean for them.”