Federal Budget - May 2024

Budget spending blitz to win back the punters

The Albanese Government has unveiled a multi-billion-dollar Budget spending spree, delivering cost-of-living relief for families and tax breaks to power Australia’s green future, as it banks on a pre-election interest rate cut to woo voters. 

Every household will receive $300 off their energy bills under Treasurer Jim Chalmers’ third Budget which the Treasury forecasts will reduce inflation as it provides much needed relief for struggling families.

The Budget – delivered by Dr Chalmers to an enthusiastic parliamentary chamber – includes spending of nearly $23 billion towards powering Australia’s green future. This includes nearly $14 billion to be pumped into green hydrogen and critical rare minerals, although the first round of funding won’t start until 2027.

He also announced cheaper medicines and a cap on prescription costs – costing $3 billion – as the Government reaches out to millions of vulnerable Australians.

Tough economic conditions frame the Budget

While economic commentators criticised a lack of structural reform, the Treasurer confirmed the Budget was in surplus to the tune of $9.3 billion. This is his second surplus in succession, the first time this has been achieved in two decades.

But the Budget deficits are forecast to soar to $122 billion over the next four years as the Commonwealth embarks on a spending spree to fund aged care, health, defence, and the ballooning costs of the NDIS.

Mr Chalmers conceded the Budget was being framed at a time of “fraught and fragile” global conditions.

Economic growth is now forecast to come in at 1.75 per cent this year, rising to 2 per cent in 2025/26. As a result, unemployment is forecast to rise to 4.5 per cent next year.

Government banks on cost-of-living reliev to boost its pre-election stocks

The Budget has been handed down at a time when the national mood is grim, with nearly 80 per cent of people fearing energy bills will be higher in the next 12 months, according to the latest SEC Newgate Mood of the Nation survey.

The Government’s $300 in energy bill relief will be made available to all families while around 1 million small businesses also receive a further $325 rebate. Shadow Treasurer Angus Taylor immediately seized on the payment saying it was necessary as Labor had failed on its election promise to cut energy bills by $275.

In his Budget speech, the Treasurer described his budget as delivering “responsible relief” that will reduce inflation.

University student loans will be made fairer while the Government is also promising support for Australia’s army of house renters.

Tax breaks for green industries

The Budget includes $13.7 billion in production tax offsets for green hydrogen and processed critical minerals in a bid to make Australia a magnet for the trillions of dollars being pumped into global renewable energy.

A further $1.7 billion will be pumped into new industries such as renewable fuels as the Government tries to fend off a Greens’ push to win over young voters angered by a lack of action on climate change.

Battle for housing

Doubling down on its strategy to address the housing crisis, the Government has included $6.2 billion of additional spending for new measures to boost housing supply via social housing investment, infrastructure improvement, and student accommodation.

Part of the Homes for Australia Plan, the additional spend will take the Government’s commitment to $32 billion, in its efforts to build 1.2 million new homes over the next five years.

The Budget receives mixed response

The Opposition slammed the Budget as “reckless” and offering little in the way of structural reform. “We have a 16 per cent increase in spending over two years and the economy is only going out close to 7 per cent, so that is spending growing at double the pace of the economy, and that takes you to a $43 billion structural deficit in two years’ time. That is inflation,” said Shadow Treasurer Angus Taylor.

Key cross bench Senators David Pocock and Jacqui Lambie were also critical of the $300 energy relief rebate for all families, with Senator Lambie declaring “we’re just chucking money left, right and centre”.

Business Council of Australia CEO, Bran Black, welcomed the bill relief for struggling low income households but said the BCA “…remain concerned about the potential inflationary impact of a catch-all approach.”

The Federal Treasurer will now spend the coming weeks selling the Budget to the public, where the true test for the Budget will play out and the extent to which it delivers real cost of living relief will be tested.

On Thursday night the Leader of the Opposition will deliver the Budget in Reply to Parliament.

Contacts

To discuss the opportunities that this Budget presents for you, please contact:

Steve Lewis, Senior Adviser, Communications, SEC Newgate – [email protected]

Claire Bremner, Partner, Communications, SEC Newgate – [email protected]

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