Federal Budget 2024 wrap up

The federal budget, a key event in the government's calendar, was unveiled last night for the fiscal year 2024-25. This essential document details the government's financial strategies, specifying how it will collect and allocate public funds across various sectors such as infrastructure, healthcare, education, and defence.

Starting on a positive note, the budget reports a $9.3 billion surplus for the 2023/24 financial year, showcasing a fiscal environment where revenue has outpaced spending. This achievement marks the first instance of consecutive surpluses since the global financial crisis in 2007-08, a significant financial milestone. However, the outlook changes dramatically for the next year, with a projected $28.3 billion deficit that hints at tougher economic times ahead.

Summary on major cuts and new spending

- Energy Bill Relief: $3.5 billion over three years to reduce energy costs for consumers.

- Pharmaceutical Benefits Scheme: $3.4 billion over five years to expand access to new and amended drugs.

- Prescription Medicine Pricing: Up to $3 billion over five years to freeze prescription medicine prices.

- Tax Cuts: $1.3 billion over five years for income tax reductions across all taxpayers.

- Aged Care Reform: $2.2 billion over five years to implement recommendations from the Royal Commission into aged care.

- Rent Assistance: $1.9 billion over five years to increase Commonwealth rent assistance.

- Renewable Industries: $19.7 billion over ten years to boost renewable energy sectors.

- Parental Leave Superannuation: $1.1 billion over five years to fund superannuation contributions on government-funded parental leave.

- Wage Increases: Specific allocations for wage increase in aged care and childcare sectors.

The WINNERS

Tax payers

- 13.6 million taxpayers will see an average of $36 per week ($1,888 annually) pay increase thanks to tax cuts, aimed at offering cost-of-living relief.

- While the tax cuts are extended to all taxpayers, high-income earners making more than $140,000 per year will receive a smaller benefit compared to what would have been under the previous government's plan.

Households

- Households will see some energy bill relief with $300 automatically credited to electricity bills across the country. Unlike last years scheme that applied only to low-income households, this year’s relief applies to all.

Renters

- The Commonwealth Rent Assistance program will be enhanced with a significant 10% increase, marking the first consecutive raise in over 30 years. This adjustment involves an additional allocation of $1.9 billion, aimed at supporting renters amidst record-breaking rent hikes, which have escalated by 8.6% over the past year.

- For context, the average recipient currently pays about $590 in rent every fortnight and receives around $158 in assistance, with amounts varying by household type and rent levels.

Women

- Women’s health will see over $160 million with significant allocations including more than $50 million for maternity care and $49 million to address complex conditions like endometriosis.

- Additional funding is provided to support women and families dealing with miscarriages and $1 million is allocated over two years for a Professional Development course for health workers called "Managing Menopause."

- Investments in women's safety are also prioritised, with funding for women's shelters and the expansion of the Leaving Violence Program, which offers up to $5,000 in financial support to women fleeing domestic violence.

Those suffering from mental health

- The budget commits an eight-year, $888.1 million package to enhance mental health services in Australia, featuring the launch of a free "low-intensity digital service" set to become available from January 1, 2026. This service can be accessed without a referral, with an estimated 150,000 people expected to use it annually.

- To address moderate to severe mental health needs, the government also plans to establish a network of walk-in Medicare Mental Health Centres by June 30, 2026.

Parents

- Finally, we will be seeing a much needed $1.1 billion over five years to fund superannuation contributions on 20 weeks of government-funded parental leave. Starting from July next year, the initiative will grant parents of babies born after July 1, 2025, a 12% superannuation top-up on their parental leave benefits, benefiting approximately 180,000 families each year.

Students

- The technical education sector will see $89 million allocated for 20,000 additional fee-free TAFE and VET places, aimed particularly at training trade trainees and construction workers.

- There is an allocation of $350 million for fee-free university courses, further expanding access to higher education and supporting students in acquiring necessary skills without the burden of additional debt.

Those with student debt

- In recent years HECS debts have been growing faster than wages. To combat this the budget includes a $3 billion relief for 3 million university students.

- We’ll see the budget introduce a policy to cap HECS-HELP debt indexation to the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI), ensuring that debt does not outpace wage growth.

- CPI and WPI, which are used to measure the movement in prices of goods and services and wages respectively, are assessed quarterly in March, June, September, and December. This new indexing method will also retroactively correct the previous year's significant debt increase- a win for those with student debt! 

Small business:

- The $20,000 instant asset write-off is a tax benefit that allows small businesses to immediately deduct the cost of eligible assets up to $20,000, rather than depreciating them over time. Extended until June 30, 2025, at a government cost of $290 million, this measure supports small businesses in investing in new or upgraded equipment by providing immediate tax savings.

- While households will receive a one-time $300 credit to their electricity accounts, small businesses are eligible for a slightly higher amount of $325.

The LOSERS

Big businesses

- Outside sectors exposed to the green transition, the budget offers little new to excite Australia’s big businesses. 

Reserve Bank of Australia

- An extra $24 billion will be tipped into the economy over four years. These risks fuelling price pressures, putting pressure on the RBA’s mission to tackle persistent inflation.

National Disability Insurance Scheme (NDIS)

- The government plans to eliminate automatic funding top-ups for National Disability Insurance Scheme (NDIS) plans once participants use all their allocated funds. This measure aims to control the rapid cost increase of the NDIS, which is currently the second largest budgetary pressure after national debt. The government seeks to reduce NDIS spending growth by $14.4 billion over the next four years through these reforms, pending approval from parliament.

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