The Albanese government handed down what may well be the most consequential peacetime budget in a generation. Capital gains tax, negative gearing, discretionary trusts, three pillars of how Australians have built private wealth for decades, that have remained untouched for fear of voter backlash, all changed in one go. Yes, the Labour Party broke the election promises and the frustration is real and legitimate.

But broken political promises and sound policy are not mutually exclusive. The question worth asking isn't whether he should have told us sooner. It's whether the changes themselves are sensible. I think the honest answer is mostly, yes, with some important caveats.

Most of the coverage this week has been about negative gearing and capital gains tax. Fair enough. Those are real changes that affect real people. But there is a bigger story buried in the budget papers and it deserves a lot more air time.

The government's preferred deficit figure for next year is $31.5 billion. That sounds like a number you can work with. But the actual cash going out the door, once you include equity injections into the housing funds, the National Reconstruction Fund, Snowy Hydro and everything else, is $64.1 billion. Roughly double. The gap exists because governments have quietly learned to reclassify spending as investment so it does not show up in the headline number.

Gross federal debt crosses one trillion dollars this financial year. By 2030 it reaches $1.2 trillion. And here is the part worth sitting with. The interest bill on that debt is forecast to nearly double in four years. From around $27 billion now to $42 billion by 2030. That is $42 billion a year just in interest. Money that cannot go to hospitals, schools, or anything else.

CPA Australia put it plainly. For every two dollars this budget raises, only one dollar goes back to taxpayers. That is not reform. That is the government spending more and dressing it up as something else. A budget that does not show fiscal discipline will likely lead to a political disaster for the Labour Party.

Picture the RBA as a parent walking around the house switching off lights to keep the power bill down. Noble effort. Sensible plan. The only problem is that federal and state governments are following right behind them, flicking every switch back on. A new infrastructure program here, a cost-of-living payment there, a housing fund quietly reclassified so it does not show up on the bill. The parent keeps making the rounds, but the bill stays high because nobody is dealing with the kids. The result is that your mortgage rate stays higher for longer than it needs to. Not because the RBA is not trying. But because it is fighting a losing battle against a government that will not stop leaving the lights on.

And then there is the thing that bothers me most. The thing almost nobody is talking about. The 50% CGT discount for business founders will be scrapped.

Think about what it actually means to start a company. You are not buying a share on your phone in thirty seconds. You are betting years of your life on something that might never work. The equity, the potential payoff at the end, is the entire trade off. It is how startups attract talented people when they cannot compete with big corporations on salary.

Under the old rules, a founder who sold their company paid effectively 23.5 cents in tax on every dollar of gain. The 50% discount existed precisely because someone recognised that building something real deserves different treatment from passive wealth accumulation. Now for a successful exit the tax for the founder can go all the way to 47 cents in the dollar. Nearly half of everything they built go the government.

*Assumes inflation averages 2.5% and for high income earner above $190,000 on top 47% marginal tax rate.
Chart: Financial Review, Source: Christian Gillitzer

The same rate as someone who bought shares, went on holiday, and checked their portfolio four years later.

The ironic thing is that the government has reportedly widened the tax incentives for venture capital funds, the professional investors who back these startups. So the person who writes the cheque gets a concession. The person who quits their job, skips a salary, builds the product, hires the team, and takes the company from nothing to something worth buying gets taxed at the full rate. We are protecting the investors and penalising the builders. If you were trying to design a system to discourage the exact behaviour an economy needs most, that is pretty much what it would look like. Every comparable market is moving in the opposite direction right now. This budget moves us away from all of them.

An economy can stand a week consumer sentiment. But a week business investment and activities can send an economy into recession. When people stop building things. When the reward for real risk gets taxed away. A country will lose its vitality,

At a recent Macquarie conference, KKR's Vance Serchuk made a point that stuck with me. We have moved from an era of benign globalisation into one of great power competition, and in that world, everything that can be weaponised eventually gets weaponised: energy, supply chains, critical infrastructure, technology. For Australia, that tension cuts both ways. Think of the US and China as two neighbours who share a fence with Australia. When they are fighting, both start demanding you pick a side, who you trade with, where you source your materials, which infrastructure you let them build. The noise is uncomfortable and the economic cost is real. But when they are getting along, it can be just as dangerous, because deep integration with either giant makes it easy to keep outsourcing the hard work of building industries of our own. The clearest example of this is fuel. Australia is one of the largest energy exporters in the world, shipping LNG and coal offshore by the shipload, yet we have almost no domestic fuel refining capacity. We are entirely dependent on imports for the refined fuel that runs our cars, trucks, and military. Why build the capability when you can just buy it cheaply from someone else? That question made sense in a stable world. It makes a lot less sense in this one.

That is the trap Australia has been quietly walking into for decades. We have been so reliant on digging things out of the ground and selling them north that we have underinvested in the sovereign industrial base that would make us genuinely resilient when the rules change. And the rules are changing. The countries and investors that recognise the shift early, more spending on security, supply chain independence, and critical infrastructure, will be better placed than those still waiting for the world to go back to normal. It is the lens through which we are watching everything unfold.