2024 Australian federal budget

Last updated

2024 (2024) Australian federal budget
Australian federal budget 2024-25 logo.png
Submitted to House of Representatives
Presented14 May 2024
Parliament 47th Parliament of Australia
Party Australian Labor Party
Treasurer Jim Chalmers
Total revenueA$711.5 billion [1]
Total expendituresA$734.5 billion [1]
Tax cuts A$1,888 on average [1]
Debt paymentA$23.8 billion [1]
SurplusA$9.3 billion [1]
Deficit A$28.3 billion [1]
Debt33.9% of GDP [1]
Website budget.gov.au
‹  2023
2025›

The 2024 Australian federal budget was delivered on budget night at 7:30pm on Tuesday, 14 May 2024 by Treasurer Jim Chalmers. [2] The budget will dictate how the Australian Government will allocate an estimated A$715 billion across the federal government, and to state and territory governments. [1] It is the third federal budget handed down by the Labor Party since their victory in 2022. The consultation period described the budget as focused on support for Australians and creating a "stronger, more inclusive and more sustainable economy". [3]

Contents

Pre-budget

Predictions and commentary

With global inflation decreasing and markets stabilising, the ABC predicts that the budget will focus less on mitigating the impacts of inflation and instead address "trouble in China, sluggish growth, and the ever-present pressures on government spending." All three 'threats' to the budget have been raised by the International Monetary Fund, with a property-driven slow-down effecting the Chinese economy and its import-export markets and the anticipated recommendations from a number of inquiries across the health and aged care, education and social services sectors. [4] Global consulting firm KPMG anticipates the budget will focus on cost of living challenges, investment in infrastructure, and emission reduction initiatives. [5]

Independent economist Chris Richardson described the government's position as "rolling in cash" as a result of temporary improvements from a stronger-than-expected economy resulting in greater income tax receipts, and higher commodity prices pushing corporate tax revenue up. [6] Richardson however advised against "using temporary good news to spend big", noting that these financial improvements are likely to reduce. During a press conference with the Committee for Economic Development in Australia, Chalmers said there would be no "big cash splashes", in part due to already declining iron ore prices and "softening labour market", and that much of the leading items had already been announced including an expansion of the NDIS, university reforms and aged care changes. [7]

It was forecast that inflation could return to the target band of between two and three per cent, by the end of 2024. [8]

Political importance

Political reporter Brett Worthington surmised in his analysis that the federal budget will likely deliver an overall surplus for the second year in a row with massive political significance. The Australian Labor Party is frequently criticised by the opposing Liberal Party for what is seen as financial mismanagement, however Worthington highlights that the Liberal-led coalition had failed to deliver a single surplus budget during its nine years of power until 2022. [9] [10] The 2023–24 budget was the first federal surplus in 15 years, with a final surplus of more than A$22 billion, an improvement of more than A$100 billion since Labor won the 2022 federal elections from the coalition. [11] [12]

Announcements

On Wednesday 17 April, defence minister Richard Marles announced more than A$50 billion of extra funding for the Australian Defence Force over 10 years, bringing total military spending to 2.4% of the national GDP. Marles also announced the budget would include the re-allocation of an additional A$72.8 billion in planned spending, and an immediate A$1 billion injection to "accelerate long-range missiles and targeting systems, as well as lethal autonomous systems." Included in the conference at the National Press Club was a renewed focus on sea passages throughout South-East Asia and projecting Australia's defence capabilities throughout the region. [13]

Students, welfare recipients and taxpayers were expected to be significant beneficiaries of the budget. Stage three tax cuts and student debt relief had been announced, with welfare support and energy bill relief highlighted in the lead up to the budget. [14]

A 6 May announcement included details on a "Commonwealth Prac Payment" of $319.50 per week, to support teaching, nursing, midwifery and social work students during mandatory unpaid placements for their degrees. [14] In an effort to alleviate the housing supply crisis about $90 million is being spent to cover the education costs of 20,000 people which the government hopes will boost the sector. [15]

Every household will receive a $300 energy bill credit. [16] A rebate of $325 has been allocated towards 1 million small businesses receiving an energy bill. There will be a 10 per cent increase to Commonwealth rent assistance. [16]

$1 billion will be spent on crisis and transitional accommodation for women and children fleeing family violence. [16]

Under the 'Future Made in Australia' program, a $22.7 billion investment aims to support renewable energy manufacturing and exports to help fight climate change. [17]

Financial measures

Balance sheet

It was projected that the budget would provide a surplus for the third year in a row, with a predicted balance of A$9.3 billion. [18] However, the budget was released with a total annual deficit of A$23.8 billion attributed to cost-of-living relief measures and extensions to some time-limited funding. [1] The annual deficit was originally thought to grow to A$42.8 billion for 2025–26, however that figure was revised to A$34.5 billion (representing A$8.3 billion in improvements), and is further predicted to decrease to A$10.1 billion by 2027–28. [16] [1]

The budget includes total government expenditure totalling A$734 billion (26.6% of GDP), an increase from the previous year but projected to reduce from 2025–26 onwards. [19]

Spending and revenue by category

The 2024-25 Budget Snapshot produced by the Parliamentary Budget Office provides a high-level overview of government spending and revenue projected from the budget. Total Federal Budget Spending was 25.97% of Australia's GDP. [20]

Federal government spending by major category
Major categorySpendingPercent of government spending
Social security and welfareA$263 billion36.8%
HealthA$108.9 billion15.2%
General purpose inter-governmental transactionsA$99.9 billion14%
OtherA$60.3 billion8.4%
DefenceA$44.57 billion6.2%
EducationA$38.6 billion5.4%
General public servicesA$30.1 billion4.2%
InterestA$23.9 billion3.3%
Transport and communicationA$17.7 billion2.5%
Fuel and energyA$16.5 billion2.3%
Federal government revenue by major category
Major categoryRevenuePercent of government revenue
Individuals and withholding taxA$335.6 billion47.1%
Company taxA$141 billion19.9%
Goods and services tax A$92 billion12.9%
Non-taxation revenueA$52.6 billion7.4%
Excise and customs dutyA$47.28 billion6.6%
Other taxesA$23 billion3.2%
Superannuation fund taxesA$19.8 billion2.8%

Opposition and crossbench response

The opposition approved of new budget measures that addressed the cost of living. [16] In the days after the budget's release the lack of means testing for the energy bill relief was criticised. [21]

Reception

The Australian Council of Social Service said the budget failed to deliver the solutions needed. [22] The Salvation Army Australia welcomed any assistance at this time of need. [22] The Australian Conservation Foundation welcomed crucial measures that helped the climate. [17]

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References

  1. 1 2 3 4 5 6 7 8 9 10 Chalmers, Jim; Gallagher, Katy (14 May 2024). "Budget Paper 1: Budget Strategy and Outlook" (PDF). Budget 2024–25. ISSN   1326-4133. Archived (PDF) from the original on 30 September 2024. Retrieved 2 June 2024– via The Commonwealth of Australia.
  2. ↑ "Budget 2024-25". Budget.gov.au. Archived from the original on 19 April 2024. Retrieved 20 April 2024.
  3. ↑ "2024-25 Pre-Budget submissions". Treasury . 25 January 2024. Archived from the original on 20 April 2024. Retrieved 20 April 2024.
  4. ↑ Crowley, Tom (19 April 2024). "For the first time this term, inflation may not dominate the budget. What will?". ABC News . Archived from the original on 19 April 2024. Retrieved 20 April 2024.
  5. ↑ Yates, Andrew; Rynne, Brendan; Lum, Alia. "Australian Federal Budget 2024". KMPG Australia . Archived from the original on 20 April 2024. Retrieved 20 April 2024.
  6. ↑ Crowley, Tom (6 May 2024). "Federal budget to haul in extra cash once again, but less than in previous years". ABC News. Archived from the original on 13 May 2024. Retrieved 13 May 2024.
  7. ↑ Roberts, Georgia; Lowrey, Tom (13 March 2024). "'No big cash splashes' in budget, says Chalmers, but more of budget windfalls will be spent". ABC News . Archived from the original on 20 April 2024. Retrieved 20 April 2024.
  8. ↑ Orlando, Adam (14 May 2024). "May Budget 2024: Surplus 'not end in itself' amid inflation focus". mining.com.au. Retrieved 14 May 2024.
  9. ↑ Worthington, Brett (14 March 2024). "As the federal budget approaches, so begins Jim Chalmers's great expectation management game". ABC News . Archived from the original on 19 April 2024. Retrieved 20 April 2024.
  10. ↑ Hurst, David (22 May 2022). "Australia's government is changing after nine years of the Coalition – what happens next?". The Guardian . Retrieved 20 April 2024.
  11. ↑ "Australia posts first budget surplus in 15 years as tax revenues soar". Reuters . 22 September 2023. Archived from the original on 30 September 2023. Retrieved 20 April 2024.
  12. ↑ Vidler, Adam (22 September 2023). "'Biggest surplus ever': Chalmers announces $100 billion budget turnaround". Nine News . Archived from the original on 3 January 2024. Retrieved 20 April 2024.
  13. ↑ Greene, Andrew; Cowley, Tom (17 April 2024). "Richard Marles unveils $50 billion defence spending increase over next decade". ABC News (Australia) . Archived from the original on 20 April 2024. Retrieved 20 April 2024.
  14. 1 2 Jeffrey, Daniel (13 May 2024). "The federal budget is almost upon us. This is what you can expect from it". 9 News. Archived from the original on 13 May 2024. Retrieved 13 May 2024.
  15. ↑ Borys, Stephanie (14 May 2024). "Millions pledged to cover fee-free TAFE to get more workers into housing construction". ABC News. Archived from the original on 13 May 2024. Retrieved 14 May 2024.
  16. 1 2 3 4 5 Roberts, Georgia (15 May 2024). "Opposition to support energy bill relief, other budget measures". ABC News. Archived from the original on 14 May 2024. Retrieved 15 May 2024.
  17. 1 2 Dahlstrom, Michael (14 May 2024). "Federal Budget 2024: Billion dollar detail to make Australia 'better for our kids' future'". yahoo! News. Archived from the original on 15 May 2024. Retrieved 15 May 2024.
  18. ↑ Karp, Paul; Hannam, Peter (14 May 2024). "Federal budget to remain in the black with forecast surplus of $9.3bn for 2023-24". The Guardian. Retrieved 14 May 2024.
  19. ↑ Britton, Alexander (15 May 2024). "The Australian budget is big. Let's break it down". SBS News. Archived from the original on 14 May 2024. Retrieved 15 May 2024.
  20. ↑ "2024-25 Budget Snapshot". Parliamentary Budget Office . 14 May 2024. Archived from the original on 14 October 2024. Retrieved 9 November 2024.
  21. ↑ Crowley, Tom (15 May 2024). "Treasurer says $300 energy bill relief could not have been means tested". ABC News. Archived from the original on 15 May 2024. Retrieved 16 May 2024.
  22. 1 2 Lang, Sydney (15 May 2024). "Social and support sectors react with disappointment to federal budget". SBS News. Archived from the original on 15 May 2024. Retrieved 15 May 2024.
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