In his Budget Speech, Treasurer Jim Chalmers summarised the key elements of the 2024-25 Budget as:
“This Government and this Budget delivers for every Australian:
- A tax cut for every taxpayer.
- Wages growth in every industry.
- A better deal for every working parent.
- A fairer go at every checkout.
- New help with energy bills for every household and small business.
- Stronger Medicare in every community.
- More homes in every state and territory.
- More opportunities in every TAFE and University.
- A dignified retirement for older Australians.
- Energy and industry policies that help bring the jobs of the future to every corner of our country.
- An economic plan where growth and opportunity go together.
- A Government and a Budget for every Australian.”
Federal Budget 2024 Policy decisions – Summary
Stage 3 tax cuts
The Government’s changes to the Stage 3 tax cuts are a key element of the Budget. They broadened the benefits of the original tax cuts, halving the tax break for wealthier taxpayers and increasing the benefits for those with lower incomes. The changes cut the bottom tax rate, which applies to incomes below $45,000, from 19 to 16 per cent. That will give a tax cut of up to $804 annually to all tax filers, including those on higher incomes. At the same time, Stage 3 tax cuts for higher earners are reduced. The result is that people with taxable incomes of less than about $146,486, or nearly 90 per cent of all tax filers, will get either the same or a more significant tax cut. In contrast, 10 per cent with higher incomes will get more minor tax cuts than those under the original Stage 3.
Cost of living
The Budget’s key new cost-of-living measure is a new energy bill relief payment, extending existing energy relief measures. From 1 July 2024, the Budget provides rebates of $300 to every household and $325 to around one million small businesses. The Budget Papers say this “is expected to directly reduce headline inflation by around ½ a percentage point in 2024–25 and is not expected to add to broader inflationary pressures.”
The budget also provides relief for renters by increasing maximum rates of Commonwealth Rent Assistance by an additional 10 per cent, at a cost of $1.9 billion over five years from 2023–24. This increase will support nearly one million households. The Budget also continues the freeze on social security, deeming rates at their current levels for 12 months until 30 June 2025. This will benefit around 876,000 income support recipients, including around 450,000 aged pensioners.
Education
Ahead of the Budget, the Government announced changes to higher education funding, reducing the indexation of accumulated student contribution debts and backdating the new system to 2023. The government estimates that about $3 billion in indexation debt will be cancelled, which will help about 3 million Australians. It also announced a new ‘Commonwealth Prac Payment’, which will provide a student payment of $319.50 a week for higher education students while on clinical and professional placements.
Future Made in Australia
The Budget provides some more detail about the Government’s ‘Future Made in Australia’ plan, though many will believe it remains vague.
Housing
The Budget includes another $1 billion to help states and territories build more housing sooner and an additional $1.9 billion in loans to help develop 40,000 social and affordable housing units. The Treasurer said, “We are providing $1.9 billion to increase the maximum rates of Commonwealth Rent Assistance by a further 10 per cent.” This is in addition to a 15 per cent increase in the previous Budget.
Federal Budget 2024 Outcome – Summary
Treasurer Jim Chalmers forecasted a second successive surplus – of $9.3 billion – in Tuesday’s budget. He promised cost-of-living relief without fuelling inflation while trying to reshape the economy with its Future Made in Australia industry package. After producing a record $22.1 billion surplus in their first budget, Dr Chalmers and Finance Minister Katy Gallagher unveiled a $10.5 billion improvement in the budget bottom line from what they were forecasting in the mid-year Budget update and a $54 billion turnaround on what was expected at the 2022 election. However, the surplus will likely disappear in the coming financial year as a forecast fall in commodity prices, a softer jobs market, and a wage slowdown reduce tax receipts.
Economic growth and inflation forecasts
The Budget says economic growth will remain subdued over the forecast period. Real GDP is forecast to grow by 2 per cent in 2024–25 and 2¼ per cent in 2025–26.
Inflation is forecast to fall from 6.0 per cent in 2022-23 to 3 ½ per cent in 2023-24, 2 ¾ per cent in 2024-25 and 2025-26, and 3 ½ per cent the following two years.
Conclusion: An underwhelming budget, especially for small businesses, seems to involve a lot of talk but little action.
