What does the federal budget mean for you?
Below is a short summary of the highlights of the 2024 Federal Budget that may impact the Raiz Community, a few things we should all watch out for as the Budget alerts investors to changes in taxation policies, investment incentives and economic forecasts which could impact the stock market and individual portfolios.
General Summary:
- The 2024-25 Federal Budget showcases a surplus of $9.3 billion for the current financial year.
- Australia’s real economic growth is forecast to be 2% in the next financial year and 2.25% in 2025-26.
- Employment growth is expected to slow from 2.25% this financial year to just 0.75% in 2024-25 with a corresponding rise in the unemployment rate to 4.5%.
- The Treasury’s forecasts are more optimistic than those of the RBA on achieving lower inflation, with the headline Consumer Price Index (CPI) expected to fall to 2.75 % by June 2025.
Short-term cost of living relief:
Tax Cuts: The government has said it will provide economic relief in the form of tax cuts and cost-of-living assistance to Australian households through the stage 3 tax cuts, which are scheduled to start on 1 July 2024. The average tax cut from 2024-25 will be $1,888.
Energy relief: The government announced it will provide a one-time $300 energy rebate to every household in the country. $27.7 million will be invested so that consumer energy, including batteries and solar, can be integrated into the grid. A $325 rebate to eligible small business on their 2024-25 energy bills (This is in addition to the state government subsidies already announced for residents of WA and QLD).
Medicines: The price of medicines covered under the Pharmaceutical Benefits Scheme co-payments, which are typically adjusted according to inflation, will be frozen by the government. This freeze will last until 2026 for the general population and extend until 2030 for pensioners and concession cardholders. Pensioners will be around $3,300 better off after the government extends a freeze on increases to the deeming rate for at least another twelve months.
Students Support: The government will cap the HELP (need to write it out) indexation rate to be the lower of either the Consumer Price Index (CPI) or the Wage Price Index – with backdating this relied to all HELP, Vocational Education and Training (VET) Student Loan, Australian Apprentice Support Loan and other student support loan accounts that existed on 1 June 2023.
The government will provide further economic relief to students who will see a reduction in their HECS debt. Students studying teaching, medicine, and social work will become the main beneficiaries. They will be eligible during their compulsory work placements for a $320 payment per week to counter placement poverty.
Parents: The Government will pay superannuation on Commonwealth government-funded paid parental leave for births and adoptions on or after 1 July 2025. Eligible parents will receive an additional payment based on the Superannuation Guarantee, that is 12 percent of their paid parental leave payments, as a contribution to their existing superannuation fund.
Rental Assistance: The maximum rate of money paid through the Commonwealth Rent Assistance payment will be increased by 10 percent from September this year, which will benefit about 1 million recipients already receiving the maximum rate.
Housing: With Australia facing a significant housing crisis due to surging property costs, housing assistance is included in the budget. The government pledged a further $6.2 billion in housing programs as a means of countering the shortages that have increased rents and prices. This will include developers, tradies, and social housing receiving $4.3 billion in housing expenditure. State governments will receive $1 billion to build infrastructure for new homes. A $9.3 billion 5-year social housing deal will see social housing repaired and crisis support improved.
Over $90 million will boost the number of skilled workers in the construction sector and counter the housing shortage. The investment will also create 15,000 fee-free TAFE and VET places and 5,000 places for pre-apprenticeships.
This provides a quick summary on the headlines we thought relevant for the Raiz Community – there is much much more to unpack in the 2024 Federal Budget, but we thought a quick summary for our community would be helpful.
We do like the way the ABC summarises the budget in their Federal Budget 2024: Winners and Losers so feel free to read more.
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