The Cave - Federal Budget Special 2026

It's The Cave federal budget special!

Last year, we provided a full list of every major budget measure. We were up until 2am, the ABC did a better job of it, and it got less attention than a conveniently released response to the Murphy Review.

So this year, we're playing to our strengths with sassy analysis, winners and losers, and the weirdest spending decisions that Albo and Jimbo have cooked up.

Don’t mention the war (on Boomers)

Did you know there’s a war on? You certainly do now.  

Jimbo (AKA the Hon Jim Chalmers MP, AKA the Treasurer, AKA the man who spent the day holding the budget papers like a newborn child) strolled into Parliament tonight trying to convince Australians that Labor can simultaneously reform the economy, repair the budget, fight inflation, calm intergenerational rage and not get politically obliterated by property investors in the process.

Too easy. Maybe. 

The Treasurer framed it as a “responsible budget shaped by war”, which is a phrase so catchy you can just see the content creators in lock up repeating it ad nauseum. He’s not wrong though. Oil shocks, Trump-induced trade instability, sluggish productivity, and sticky inflation add up to one rather large and expensive storm cloud. 

Treasury is forecasting inflation to hit 5% this year and economic growth to slow to just 1.75%. Meanwhile gross debt is expected to crack $1 trillion. The interest bill alone will hit $31.9 billion next year and grow to almost $47 billion by the end of the decade.  

That’s a lot of numbers to say “ouch”. As a result, the budget feels tighter than people might have expected from a government with a huge majority and an election still a fair way over the horizon. 

Labor keeps talking about roughly $64 billion in savings and reprioritisations. 

But here’s the thing about Canberra language. When governments say “savings”, they usually mean cuts. When they say “reprioritisation”, they almost always mean cuts. And when they say “budget repair”, a department cancels three projects and a catered lunch.

Boomer vs Zoomer

But the real story tonight is not austerity. It’s a redistribution of both dollars and loyalties that marks the clearest attempt in decades to rebalance the tax system away from asset wealth and toward workers.

Negative gearing for existing homes? Gutted for future purchases.

The Howard-era 50% capital gains tax discount? Wound back. 

Trusts? Hit with a new minimum 30% tax. 

If you needed a reminder that Millennials and Zoomers now outnumber Boomers in every state and territory in the country, this is it. 

These policies are as much emotional positioning as economic reform. They address populist frustration that the economy rewards asset ownership over labour, while explicitly rejecting Kerry Packer’s ethos that anyone not minimising their tax is an "idiot."

Chalmers may attempt to avoid the term, but these changes are undoubtedly broken election promises.

Labor is (somewhat ironically) gambling that modern politics is willing to tolerate breaches of faith if voters believe circumstances have genuinely changed. We’ll soon find out whether housing anxiety truly outweighs integrity outrage and questions of broken trust.

Healthy tension

On health, this budget is fascinating - less for what it announces and more for what it quietly confirms. Australia’s health system is caught in a structural mismatch: it is an architecture built for short-term episodic care being forced to shoulder the weight of long-term chronic complexity.

Medicare Urgent Care clinics receive $1.8 billion and an additional 5000 beds per year are headed towards aged care (thanks to close to $3 billion in savings delivered by cutting private health subsidies for over 65s). But perhaps outside of the previously announced hospital funding and an additional $25 billion for the National Health Reform Agreement, this budget focuses on keeping the existing machine alive, rather than aiming for transformational health reform. 

The elephant in the room is that the NDIS remains the budget’s biggest political and moral tightrope. Australians overwhelmingly support cracking down on fraud and unsustainable growth, right up until budget repair starts feeling like vulnerable people carrying the cost.  

Chronic disease barely cuts through. Mental health feels peripheral. Innovation, prevention and digital health remain oddly undercooked for a government constantly talking about productivity.

You cannot have a serious productivity conversation in Australia without eventually confronting the fact we are becoming an older, sicker and more expensive country to keep functioning. But for another year, at least, it looks like we’re going to try.

A big swing or shifting furniture?

Overall, Labor clearly believes the biggest long-term political danger is continuing to avoid difficult structural decisions altogether. 

This, ultimately, is the defining vibe of this budget. Not abundance. Or generosity. Or even optimism. Just a government staring down an ageing population, younger generations with no hope of a fair go, slowing productivity, a trillion dollars of debt, and finally choosing action.

Whether they’ve taken a big swing or shifted the furniture on the Titanic is up for debate. But regardless, it’s shaping up to be pretty economically formative.

Buy a house! Watch it burn in the climate crisis?

Winners

If you’re a first home buyer, congratulations, the parents funding your purchase are poorer. Wait, no. You win! More homes, less competition for them, and a fundamental shift in a culture of rewarding wealth that’s lasted generations. Zoomers rejoice.

If you have a job in 2028 (which for many sometimes feels more like a hope than an expectation), you’ll get up to $54 more in your pocket every week. The bad news - if global instability pushes inflation to 7%, that will barely be enough to cover a daily coffee.

If you get sick, you might be in luck (relatively speaking). Public hospitals will receive an additional $25 billion over five years, the PBS gets an additional $5.9 billion investment, and a $1.8 billion investment in urgent care clinics means four in five Aussies will live within 20 minutes of one. They may also be able to afford to drive there, with the fuel excise halving.

If you’re a new business or risk-taking business (which are the same thing), you’ll see priority tax treatment and measures to improve cash flow. This is great news. Oh come on, everyone reads the budget with an element of self-interest, after all.

Losers

Is this…actual populism? The wealthiest 10% of Australian households will get hit with a 30% tax rate on family trusts, while property investors will wave goodbye to negative gearing and capital gains tax discount. If you’re an investor and you’re reading this, we hope you settled by 7:29pm AEST tonight.

With a geopolitical crisis to the fore, the climate crisis has been somewhat forgotten. Tax breaks for electric vehicles will be phased back, $1 billion will be slashed from the subsidy scheme for green hydrogen, and similar programs promoting domestic battery and solar panel manufacturing will also have their uncommitted funding removed.

In terrible news, $2.7 billion will be cut from departmental budgets for spending on consultants. Jimbo giveth, Jimbo taketh away.

A berry good night

Unbeknownst to most of us, there seems to have been an emotionally charged national conversation about strawberries. In response the Government has adjusted the agricultural levy, increased the biosecurity component, cut research and development, held the overall levy at current rates, and managed to create a staggering $0.1 million decrease over five years. Which is probably less than the fees paid to lobbyists to negotiate all that.

Jimbo may have regretted this one as Sarah Ferguson tore into him, but the Government is pouring more than $21 million into news and media sustainability. This includes propping up AAP, modernising media regulation, pausing broadcasting taxes and trying to stop Australia’s media ecosystem collapsing into three TikToks and a podcast hosted by a former reality TV contestant. 

More than $50 million was committed to continue the work of the Office of the Special Investigator to investigate and support the prosecution of war crimes alleged to have been committed by the Australian Defence Force in Afghanistan, henceforth known as the Ben Levy.

Submarines are mentioned 34 times in Budget Paper two. For those keeping count ‘housing’ is mentioned 26 times. ‘Women’ 16.

You know, priorities.