Federal Budget
2024-25

Cost of living was the primary focus of the2024-25 Federal Budget. In particular, comprehensive tax rate reduction, energy bill relief, student debt waivers and rent assistance.

Energy bill relief and rent assistance are expected to reduce headline inflation by ½ of a percentage point and Treasury is forecasting this could see headline inflation return to the target band by the end of 2024. 

Although life insurance did not feature as a direct Budget announcement, income increasing measures and financial support means that there is more disposable income that could be allocated to life insurance while the paid parental leave measures mean that account inactivity or insufficiency will be less likely to result in insurance in super ceasing.

Aggregate income

• Real GDP is expected to grow by 1¾ per cent in 2023–24 and remain subdued over the period ahead. Real GDP is forecast to grow by 2 per cent in 2024–25 and 2¼ per cent in 2025–26.
• Moderating inflation, higher wage growth, continuing employment growth and the Government’s cost-of-living tax cuts should support a recovery in household consumption.

Budget bottom line

• Budget surplus of $9.3 billion for 2023-24. Predicted deficits of -$28.3 billion for 2024-25, -$42.8 billion for 2025-26, -$26.7 billion for 2026-27, and -$24.3 billion for 2027-28.
• The treasurer says Labor has saved about 95 per cent of higher-than-expected revenue in 2023-24.
• Wages growth (WPI) is currently at 4.2% (December 2023 – ABS).
• Global uncertainty, persistent cost of living pressures, slowing growth
• Iron ore prices have fallen to $US 119 a tonne (at 8 May 2024).
• Australian population is now at 26.8 million (as at September 2023).
• 14.2 million Australians in work. Unemployment rate of 3.8% (as at March 2024).
• CPI was 3.6% for the 12 months to 31 March 2024 (down from 4.1% in the 12 months to 31 December 2023), but still outside the RBA target rate of 2-3%.
• RBA Cash Rate is currently at 4.35% (at 7 May 2024 – no change since November 2023)  

Personal Income Tax

There’s are the changes to the stage-three tax cuts legislated to come into effect on 1 July 2024.

Under the government's plan, all Australians will receive a tax cut from 1 July 2024, with people earning less than about $146,486 receiving a larger cut than previously planned, and people earning more than that amount receiving a smaller benefit.  This appears to offset the low- and middle-income tax offset that was previously removed.

Under NEW stage three, the tax brackets will look like this from 1 July 2024:

• $18,200 – no tax – No change
• $18,201 to $45,000 – pay a 16% tax rate (3% reduction)
• $45,001 to $135,000 – pay a 30% tax rate (2.5% to 7% reduction)
• $135,001 to $190,000 – pay a 37% tax rate (NIL to 8% reduction)
• $190,001 plus – pay a 45% tax rate – No change

Company tax rates to remain at 25% for small businesses, 30% for all others.

Small Business Asset Write Off

• The Government is extending the $20,000 instant asset write off. Small businesses with annual turnover of less than $10 million will continue to be able to deduct eligible assets costing less than $20,000 until 30 June 2025.

Cost-of-living help

• Electricity assistance with rebates of $300 per household and up to $325 for eligible small businesses
• From 1 July 2024, more than 10 million households will receive a total rebate of $300.
• Eligible small businesses will receive a $325 rebate on their electricity bill.

Superannuation

From 1 July 2024:

• 11.5% SG contributions.
• Maximum super contribution base: $65,070 (Qtr)
• Concessional cap = $30,000
• Non-Concessional cap = $120,000
• General TBC = $1.9 million

From 1 July 2025:

• 12% SG contributions
• Tax on super earnings over $3 million will increase to 30%.

Superannuation - Paid parental leave

• Superannuation will be paid on the 20 weeks of government-funded paid parental leave from July next year.
• Parents of babies born on or after 1 July 2025, will receive 12 per cent superannuation on top of their government-funded parental leave.
• About 180,000 families typically receive these payments annually.

Other Superannuation changes

• The ATO will receive $187 million in funding to strengthen its ability to detect, prevent, and mitigate fraud against the taxation and superannuation systems.
• $60 million over 4 years from 2024-25 financial year to increase the Productivity, Education and Training fund to support activities such as the changes to payday superannuation.
• $2.7 million over 4 years from 2024-25 to support the SuperStream Gateway Network Governance Body to manage the integrity of the Superannuation Transaction Network.

Future Made in Australia agenda

A dedicated $1 billion in subsidies, grants and other forms of support will go to boost the domestic production of solar panels in Australia. As part of a budget package designed to rival the Biden administration’s Inflation Reduction Act, the Australia Renewable Energy Agency (ARENA) will consult with industry to design and deliver the initiative.

Australia will invest $466.4 million to partner with PsiQuantum and the Queensland government to advance Australia’s quantum computing capabilities.

The already announced critical minerals and northern Australia infrastructure funds will be drawn down to deliver$1.2 billion package of loans and grants to priority critical minerals projects, including Arafura Rare Earths and Gladstone-based Alpha HPA.

2024 National Defence Strategy

• The Government is investing $765 billion over the next decade, $330 billion to deliver a rebuilt Integrated Investment Program (IIP) to support the Australian Defence Force (ADF).
• $50.3 billion over the decade to uplift the ADF’s preparedness including through long-range strike capability and accelerating the modernisation of the Royal Australian Navy’s surface combatant fleet.

Public service

• The Government will save $1 billion over 4 years through further cuts to outsourcing to consulting and contracting firms.

Education

• HECS/HELP – Recalculation of indexation to the LESSER of CPI and WPI, with backdating to 1 June 2023.
• Commonwealth Prac Payment – 1 July 2025 – Student teachers, nurses, midwives and social workers will receive a $319.50 weekly payment during their mandatory placements under a new cost-of-living measure.  Designed for 68,000 university students and 5,000 vocational education and training students undertaking mandatory workplace placements as part of their courses.
• Investment of $88.8 million over 3 years to support 20,000 free TAFE places, including pre-apprenticeship programs.

Leaving Violence Program

• The Federal Government will spend $925 million over 5 years from 2023-2024 to assist women seeking to escape violent partners.
• Women seeking to escape violent partners will get access to up to $5,000 in new emergency support payments and assistance, part of national cabinet’s response to Australia’s escalating domestic violence crisis.

Western Sydney

• $1.9 billion for infrastructure in Western Sydney.
• $100.0 million to enhance public transport
• $20 million for extension of the railway line.

Victoria

• An extra $3.3 billion for construction of Victoria’s North-East Link toll road.
• $437.3 million to upgrade suburban roads in south-eastern and northern Melbourne3

Future Drought Fund

• Investing $519 million over 8 years into the Future Drought Fund for programs that help farmers and regional communities prepare for and mitigate the effects of drought, as well as building climate resilience.

Medicare Levy – Low Income Threshold

From 1 July 2023 to 30 June 2024

Money laundering protections

• A crackdown on the potential for dirty money being used to buy homes in Australia will be stepped up. The Government will spend $168 million over four years from 2024-2025, expanding anti-money laundering reporting obligations to real estate agents, lawyers and accountants.

Construction

• An investment of $88.8m over three years to support 20,000 free TAFE places, including pre-apprenticeship programs
• $1.8 million to deliver streamlined skills assessment of 1,900 potential migrants from comparable counties, in an effort to increase a pipeline of skilled workers in the construction and housing industry.

Women’s Health

• $56.1 million over 4 years in initiatives that will improve access to sexual and reproductive healthcare for women, including support for women’s health services on miscarriages, pre-term or early-term births, stillbirths, early pregnancy and menopause and the delivery of personal care products to women in rural areas.
• Building women's health into the foundations of Medicare with a $49.1 million investment for higher Medicare rebates to see a gynaecologist for complex conditions like endometriosis, new breast cancer medication and a $56.5 million investment for new Medicare services for midwives to provide before and after birth consultations.  
• July 1, 2025, women suffering from the debilitating disease will have longer specialist consultations of 45 minutes or more covered under Medicare.  Previously, an initial gynaecologist appointment received an $81.30 rebate which covered only 10 minutes of a gynaecologist’s time. From 1 July 2025, Medicare will cover $168.60 for an initial appointment, and $84.35 for follow-up appointments, compared to the previous rate of $40.85.  This funding will provide about 430,000 more services to help women across the country with complex gynaecological conditions.
• Following the government’s latest commitment, the Albanese Government has now poured $107 million into endometriosis care over the past 2 Federal Budgets.

Strengthening Medicare and care

• $2.8 billion to strengthen Medicare  
• Investing $227 million in establishing a further 29 Medicare Urgent Care Clinics taking this total up to 87.
• $882.2 million to assist state and territories to provide hospital outreach to communities.
• $3.4 billion for new and amended listings on the Pharmaceutical Benefits Scheme.
• $531 million will be used to fund an additional 24,100 home care packages in 2024-25 aimed at reducing average wait times and to support people to age at home should they prefer.
• $2.2 billion for improving the aged care system.
• $37 million for the My Aged Care Contact Centre to assist people seeking information and access to aged care.
• The Government will provide $888.1 million over 8 years from 2024–25 (and $139.8 million per year ongoing) to respond to the Better Access evaluation and to strengthen Australia’s mental health and suicide prevention system.Funding set aside towards increased aged care and childcare wages.

Medicare Urgent Care Clinics

• There will be 29 urgent care clinics funded by an additional $227 million package, in addition to the government’s existing $8.5 billion health budget.  This is in addition to the 58 existing urgent care clinics.

Pharmaceutical Benefits Scheme

• PBS patient co-payment for everyone with a Medicare card will freeze at $31.60 per prescription, and a five-year freeze for pensioners and other concession cardholders at $7.70 per prescription.

Commonwealth Rent Assistance

• The Government will provide $1.9 billion over five years from 2023–24. 
• Increase in Commonwealth Rent Assistance by an additional 10 per cent from 20 September 2024.  This will support nearly one million households and help relieve rental stress among low-income households.  
• Total increase for single parents or couples with one or more children, the maximum rate has increased by over $70 per fortnight since May 2022. 

JobSeeker

• Jobseeker Payment eligibility for higher rate to be extended to single recipients with an assessed partial capacity to work between zero and 14 hours per week. 
• This increase, coupled with a higher rate of Energy supplements means that there will be an increase in payment of $54.90 per fortnight for these recipients.
• Base rate of payment will be indexed.

Deeming Rates

• The Government is continuing the freeze on social security deeming rates for financial investments at their current levels for a further 12 months until 30 June 2025.
• The lower deeming rate will remain at 0.25%, while the higher deeming rate will remain at 2.25%.
• This is anticipated to assist around 876,000 income support recipients.

Housing

• New housing investment of $6.2 billion bringing the amount to a total of $32 billion.
• An additional $1 billion to help states and territories build more homes.
• More student accommodation.
• $16.5 billion additional funding for infrastructure projects to connect our cities and towns

Future Made in Australia

• $22.7 billion to become a renewable energy superpower and strengthen our economic resilience
• Subsidies, grants and other forms of support will go to boost the domestic production of solar panels in Australia. As part of a budget package the Australia Renewable Energy Agency (ARENA) will consult with industry to design and deliver the initiative. 
• $1.1 billion to reform higher education and support future productivity
• $466.4 million to advance Australia's quantum computing capabilities
• $27.7 million to develop priority reforms to ensure that consumer energy resources, including rooftop solar, household batteries, and electric vehicles.
• Subsidies, grants and other forms of support will go to boost the domestic production of solar panels in Australia. As part of a budget package the Australia Renewable Energy Agency (ARENA) will consult with industry to design and deliver the initiative. 

Equality measures

• $925.2 million for victim-survivors leaving violent intimate partner relationships
• $1.1 billion to pay superannuation on Government-funded Paid Parental Leave

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