$2.1 billion in savings on the federal budget?

Labor is talking up another $720 million in savings from cutting back on private consultants—part of a bigger $2.1 billion in budget savings set to be announced on Tuesday. It’s all part of a push to bring more work back into government departments, with Finance Minister Katy Gallagher saying this approach has saved $4.7 billion so far during Labor’s first term.

Her argument? It’s cheaper to use public servants than to outsource everything—and that means more money for things like cost-of-living relief, Medicare, and housing.

But here’s the catch: these savings are nowhere near the amount of new spending in the budget. For example, Labor is rolling out:

• $8.5 billion for bulk billing (to make seeing a doctor cheaper)

• $1.8 billion to extend energy bill relief

On top of that, some of the so-called savings aren’t really savings at all—they’re just “re-prioritisations”, meaning the money gets shifted to something else within the same department.

How’s It All Getting Paid For?

Treasurer Jim Chalmers has hinted that Tuesday’s budget will look pretty similar to the one in December, meaning the gap between spending and cuts is likely to be filled by higher-than-expected tax revenue.

What’s the Coalition Saying?

They’re basically matching most of Labor’s spending, plus throwing in:

• $5 billion for housing infrastructure

• A big (but unspecified) taxpayer bill for nuclear power plants—which could easily top $100 billion

Shadow Treasurer Angus Taylor is promising that, overall, the Coalition will spend less than Labor—but they’re keeping the full details under wraps until closer to the election.

The “Secret Cuts” Debate

Taylor has also pledged to cap government spending so it doesn’t grow faster than the economy. On paper, that sounds reasonable, but Labor is warning it could mean hidden cuts to key services like:

• NDIS (National Disability Insurance Scheme)

• Aged care

• Health

• Defence

Labor is especially hitting back over the NDIS, which has already seen its growth rate shrink from 14% to 8% under new rules (with Coalition support). Treasurer Jim Chalmers is accusing the Coalition of having no real plan, saying their approach would be terrifying for people who rely on the program.

Big Issues: Defence, Energy & Health

• Defence: Labor isn’t planning to increase spending in this budget after boosting it last year, but the Coalition hasn’t ruled out more funding.

  
  

• Energy: The Coalition has backflipped and is now supporting Labor’s energy bill relief, even though Peter Dutton is still blaming Labor for failing to lower power prices.

  
  

• Nuclear Power: The cost of the Coalition’s nuclear plan is anyone’s guess. Their own modeling says the total system cost could hit $331 billion, but Taylor insists a lot of that would come from private investment.

  
  

• Health: Both sides are backing key Medicare changes like $25 medicines and bulk billing incentives. The Coalition is also promising to bring back 10 extra subsidized mental health therapy sessions, which Labor cut. But they’ve been quiet on Labor’s 50 new urgent care clinics, instead announcing four of their own—all in marginal seats.

  
  

This budget is shaping up to be a pre-election showdown, with both sides claiming to be the more responsible spender. Labor is betting that voters will appreciate its cost-of-living relief, while the Coalition is promising big projects like nuclear power—but without all the details on how they’ll pay for them.

One thing’s for sure: we’re in for a long political fight over who can manage the budget better.