Plot
In the South Pole, Bill Barnacle, his first mate Sam Sawnoff and crewman Buncle are shipwrecked. After Bill stops a starving Buncle from eating Sam, the iceberg cracks and produces Albert, a rude, everlasting magic pudding who demands that they continue to eat him. Buncle runs off with the pudding and claims it as his own, but the ice breaks and he falls into the sea. Bill and Sam manage to rescue the pudding, and after briefly mourning the apparent loss of Buncle, they choose to protect it from thievery.
Ten years later, a young koala named Bunyip Bluegum discovers that he is not an orphan and sets out on a quest to find his parents, Meg and Tom Bluegum. Bill and Sam agree to help Bunyip after the latter stops an attempt by the pudding thieves to steal Albert. After Albert runs off, desiring to challenge anyone to catch him, Bunyip tries to ask a bandicoot with a watermelon for help. Initially avoiding the question, the Bandicoot tells Bunyip that the only one not afraid to reveal the answer is the frog on the log.
As Bunyip and the others set out to find the frog on the log, Buncle is revealed to be alive and living underground with slaves, including Bunyip's parents bringing him food while he waits for the pudding thieves (his nephew Watkin and his friend Patrick O'Possum) to bring him Albert. After foiling another attempt by the thieves, Bunyip falls into a creek where he dreams about his parents, before meeting the frog on the log. The frog tells him to solve a riddle to find the place where they were last seen: "Where two gums meet, yet stand alone, there's plenty of water, but dry as a bone". The pudding thieves finally succeed in stealing Albert by starting a fire as a distraction, but the pudding owners find their house, and Bunyip lures them outside before escaping with Albert.
Later, as Albert mocks him, Bunyip loses his temper and kicks Albert into two interwoven trees, soon coming to realize that they solved the riddle and found the right place, two gum trees overlooking a valley with a dam that feeds water into a town called Tiralu. As the pudding owners head to the town, the thieves open the dam before heading after them. The water floods the town, but Bunyip uses Albert to fill sacks and make a dam. The grateful residents celebrate, but when Bunyip explains his quest, the townspeople take them to the entrance of Buncle's underground lair, saying no one ever comes out. Bunyip is ready to give up on finding his parents, but Albert slides down inside in his bowl, followed by Bunyip, Bill and Sam. Inside, Buncle is berating the thieves when Albert bounces into his lap. Buncle has the thieves thrown in with the slaves before celebrating the capture of the pudding.
The pudding owners arrive and Bunyip and Bill free the slaves while Sam distracts Buncle by dressing as a woman. Bunyip eventually realizes that one of the freed slaves is his parents, Meg and Tom, and the Bluegum family reunites. The pudding owners then attempt to rescue Albert from Buncle, and as he tries to eat Albert, they demand Albert for a double serving, intending to give Buncle the double. As Albert splits, his good and evil half fight, quickly growing bigger until breaking out of the cavern. Buncle then demands for 'all the puddings in the world', but unwittingly falls into one of the Albert's mouths to be spat far away. Albert splits into millions of puddings before turning back to normal and falling back into his bowl and back to Earth. Assuming he's dead, Bill and Sam mourn their loss, but Sam's tears revive Albert, and all rejoice.
Later, Bill, Sam, and Albert are living peacefully with the Bluegums, Rumpus and Wattleby, as the two pudding thieves try to get Albert for themselves, only for the pudding owners to thwart them once again. Meanwhile, Buncle has been flown back to the South Pole, finding himself stranded in the middle of the sea on an ice block, where he bemoans his defeat and falls unconscious as the ice block floats away.
