Federal Budget 2024-25: What you need to know

May 16, 2024 | Accounting & Tax, LBW News

Treasurer Jim Chalmers handed down the 2024-25 Federal Budget last night, forecasting a surplus of $9.3 billion this financial year. This is the second year in a row the Albanese Government has delivered a surplus, but forward estimates show double-digit deficits for the next four years, including a deficit of $28.3 billion for next financial year.

Easing cost of living pressures was at the forefront of this year’s Budget, but it wasn’t the only priority. Recent months have shown inflation to be more stubborn than expected, and the Government was facing plenty of pressure not to do anything that would inflame it.

The result is a Budget that the Government claims “strikes the right balance between keeping pressure off inflation, delivering cost-of-living relief, supporting sustainable economic growth and strengthening public finances.”

Below, we break down some of the key measures and what they might mean for you.

Stage-three tax cuts 

Perhaps the most high profile plank of the Albanese Government’s cost of living relief plan, the reworked stage-three tax cuts hope to extend the benefits offered to middle Australia beyond what they were slated to receive in the Coalition’s original version. 

Starting 1 July, the 19% tax rate (which applies on incomes between $18,201 and $45,000) will be reduced to 16% and the 32.5% tax rate (which applies on incomes between $45,001 and $135,000) will be reduced to 30%.

Higher income earners can also expect some relief under the plan, with the Government increasing the threshold for the 37% tax rate from $120,000 to $135,000, and the threshold for the 45% tax rate from $180,000 to $190,000.

Income thresholdTax rate
0 – $18,200Tax free
$18,201 – $45,00016%
$45,001 – $135,00030%
$135,001 – $190,00037%
Over $190,00045%

Energy bill relief

The other big news is the Government’s plan to provide $3.5 billion in energy bill relief, with rebates of $300 to be delivered to more 10 million households and $325 to go to around one million small businesses. This along with certain other support measures are expected to lower headline inflation by around 1/2 of a percentage point in 2024-25, according to the Government’s estimates.

Cheaper medicines

The Government will implement a freeze on increases to the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment, which will last one year for Medicare card holders and five years for pensioners and other concession cardholders. According to the Budget papers, this means that no pensioner or concession card holder will have to pay more than $7.70 on their co-payment (plus any applicable manufacturer premiums) until 2030.

Housing

Major investment in housing is also on the agenda, with the Government announcing a suite of measures aimed at boosting housing supply and making cities and regional communities more liveable. Some of the more notable measures include:

  • A further $1 billion to help the states and territories build housing in well-located areas, with a focus on clearing obstacles to greater housing supply by supporting better shared facilities and essential services.
  • A $423.1 million boost to the National Agreement on Social Housing and Homelessness, which will bring the total cost of the five-year program to $9.3 billion.
  • An extra $1 billion will go to the National Housing Infrastructure Facility to help provide housing for women and children fleeing family violence and for youth.
  • An additional $1.9 billion will go to community housing providers and other charities to provide new social and affordable homes via the Housing Australia Future Fund and National Housing Accord.
  • Foreign investor fees on the purchase of established Build to rent developments will be lowered.

The Government will also allocate $88.8 million to help kickstart the careers of thousands of construction workers, which it hopes will help fulfil its target of building 1.2 million homes by 2029. Around 20,000 places in TAFE and VET courses will be fee-free, on top of the 355,000 free TAFE places delivered last year.

Aged care

Approximately $2.2 billion will go towards supporting aged care, which the Government hopes will show the beleaguered sector it’s serious about implementing some of the recommendations from the Royal Commission into Aged Care Quality and Safety. It includes: 

  • $531.4 million towards funding an extra 24,100 Home Care Packages for older Australians who wish to live in their home for longer 
  • $110.9 to implement the Aged Care Regulatory Framework and continuing to invest in the Aged Care Quality and Safety Commission
  • $1.2 billion to improve digital infrastructure across the sector, including funding to support the implementation of the new Aged Care Act 
  • A commitment to fund an increase in the award wage of aged care workers, once the final Fair Work Commission determination on the increase is made. 

HECS debt

The Government will wipe around $3 billion from student debts by capping the HELP indexation rate to be the lower of the consumer price index or the wage price index. This will be backdated to June 2023, meaning that last year’s 7.1% indexation — which was the source of much distress for many — will be decreased to 3.2%.

It’s estimated that around 3 million Australians will see their student debt go down as a result of the changes, with the average student expected to receive an indexation credit in the range of $1,200 for the past two years. 

Healthcare

Medicare will also receive a boost, with the Government pouring $2.8 billion into the system to ensure it can continue to meet Australians’ healthcare needs. Some notable measures include:

  • $882.2 million to help older Australians avoid hospital admission, be discharged earlier and facilitate the transition to other appropriate care.
  • $227 million to increase the number of Medicare Urgent Care Clinics and boost support for regional and remote clinics. 
  • $90 million to boost the number of health workers by making it easier for international health practitioners to work in Australia.
  • $49.1 million to help people with endometriosis and / or other complex gynaecological conditions (such as chronic pelvic pain and polycystic ovary syndrome) and $56.1 million over four years for improving access to sexual and reproductive healthcare.
  • $20 million for childhood brain cancer research.
  • $141.1 million will be earmarked for research and services supporting those with chronic health conditions.
  • $825.7 million will ensure continued testing, vaccination and antiviral treatment of COVID-19
  • An additional $3.4 billion will be invested over five years for new and amended listings on the Pharmaceutical Benefits Scheme.
  • An $881.1 million commitment to be delivered over eight years as part of the Government’s pledge to provide better access to mental health care. 

Higher education

In a bid to combat ‘placement poverty,’ the Government will be introducing a payment for student teachers, nurses, midwives and social workers, who often have to undertake several months’ worth of unpaid work as part of their course. The payment, which will be means tested, will be a maximum of $319.50 per week.

Small businesses

The Government’s instant asset write-off scheme will be extended for another year with a boost of $290 million, giving businesses with annual turnover of less than $10 million the chance to claim up to $20,000 from eligible assets. The Government will also commit $10.8 million to provide financial and mental health support to small business owners, in light of the impact that cost of living pressures and inflation have had on the cohort.

Support for renters

The Commonwealth Rent Assistance program, which is a fortnightly supplement available to welfare recipients who rent, will increase by 10%. This builds on the 15% increase from September 2023 and marks the first back to back increase outside of inflation in three decades. 

Future Made in Australia 

Local manufacturing will receive a shot in the arm via the Government’s flagship Future Made in Australia initiative, which will allocate $22.7 billion towards improving regional trade, investing in new technologies and modernising industry and education. To ensure Australia doesn’t fall behind in the road to net zero, significant investments will also be made in the renewable energy sector, including: 

  • A $6.7 billion production tax incentive for the production of renewable hydrogen.
  • $1.7 billion to go to the Future Made in Australia Innovation Fund and extending funding for the Australian Renewable Energy Agency by another ten years.
  • $1.5 billion to bolster battery and solar panel supply chains through production incentives.
  • $134.2 million to better prioritise approvals for important renewable energy projects.
  • $15.7 million to streamline foreign investment and help attract foreign capital flows.
  • $17.3 million to mobilise private sector investment in sustainable activities.
  • $27.7 million to help integrate consumer energy resources like batteries and solar into the grid.

Support for new parents

The Government-funded paid parental leave (PPL) scheme will be modified so parents accessing the scheme can receive superannuation in addition to their payments. The changes hope to address the low super balances many women find themselves with later in life, which are often attributed to taking time off work to raise children.

Currently, couples who have recently had or adopted a child and meet the eligibility criteria can access up to 20 weeks of paid parental leave set at the minimum wage. The number of weeks will increase by two week increments in July each year until it reaches 26 weeks in 2026. If super is added to the equation, it would be paid to parents at 12% of the PPL rate. 

Domestic Violence

As part of its pledge to address the crisis of domestic violence, the Government will commit $925.2 million over five years towards establishing the Leaving Violence Program. The program will provide up to $5,000 in financial support to eligible victim-survivors of domestic abuse — consisting of up to $1,500 in cash and up to $3,500 in goods and services — and will be indexed annually to make sure the payment can meet the rising cost of living.

Disability

The Government has committed to providing an additional $468.7 million to support the NDIS, following the $732.9 million allocated in the 23-24 budget. $226.7 million will also be used to fund a new employment program supporting Australians with disability.

Digital safety and AI

  • $288.1 million over four years to support the initial delivery of the Digital ID system and support more Australians to realise Digital ID’s economic and privacy benefits.
  • $39.9 million over five years for the development of policies and capability to support the adoption and use of artificial intelligence technology in a safe and responsible manner.
  • $7.9 million over two years to support online safety including $6.5 million in 2024-25 to develop a pilot of age assurance technologies to protect children from harmful online content.
  • $67.5 million over four years from 2024–25 (and $8.6 million per year ongoing) to continue to combat scams and online fraud through the introduction of mandatory industry codes to be established under a Scams Code Framework and increased use of the secure eInvoicing network.

Please note: These proposed policy measures and the information relating to them have been sourced from the 2024-25 Budget papers. As many have yet to be passed as legislation they may be subject to change.

This article provides general educational information only. The content does not take into account your personal objectives, financial situation or needs. You should consider taking financial advice tailored to your personal circumstances. LBW Business + Wealth Advisors is an Authorised Representative of LBW Wealth Pty Ltd ABN 56 652 382 128 AFSL 534569. Please call 03 5221 6111 for more information on our available services.

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