Summary
For the second year in a row, the government expects to deliver a budget surplus. This wasn’t a big surprise as for many years, politicians tend to leak the headline news.
While this is great news, a combination of tax cuts from 1 July 2024, energy rebates and tax credits for energy and critical minerals sees a forecast budget deficit in 2025 of $28.3bn and deficits in the years ahead.
While some economist’s fear that the budget will add to inflation risks, many also believe it will have little or no impact. There was much analysis about the $300 energy rebate and the objective of engineering the inflation rate down given energy is a key input into the inflation calculation. The hope is that where a deposit of $300 into bank accounts might lead to increased spending and inflation pressure, a reduction in an energy bill will not have the same impact.
Key Points
While the list below is not exhaustive, we provide some of the key takeaways from the night.
Cost of living
- A $300 per energy bill rebate for every household – not means tested.
- A 10% increased in Commonwealth rental assistance from 20 September 2024.
- Freeze on co payments on PBS medicines.
- Tax cuts from 1 July 2024 (see below) and increased income thresholds for medicare levy.
Aged Care
- An additional 24,100 home care packages will be made available in 2024-25.
- $2.2bn to be spent over five years to deliver key aged care reforms from the Royal Commission into Aged Care Quality and Safety which was handed to the government in 2021.
- Deferral of the new Aged Care Act to 1 July 2025.
- $65.6m to be spent over four years to attract and retain aged care workers.
Women’s measures
- Providing financial assistance for victim-survivors leaving a violent partner.
- A commitment to addressing gender-based violence in higher education.
- Investment in women’s health across the life course.
Social Security
- A freeze in the social security deeming rates for age pensioners and those of income support payments.
- Single individual eligible for JobSeeker payment a partial capacity of <14 hours per week will receive an increase.
Superannuation
- From 1 July 2025, recipients of government funded paid parental leave will also receive super guarantee contributions.
- Indexation of contributions limits are not a budget measure – refer to our previous article.
- There was no update on the reduction of tax concessions for those with $3m in super.
Taxation
- Stage 3 tax cuts will take effect from 1 July 2024.
Small Business
- Continuation of the small business instant asset write-off of $20,000 for the 2024-25 financial year.
- A $325 energy rebate for qualifying small businesses.
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This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from a financial planner who can consider if the strategies and products are right for you.
