In the  2024-2025  Federal Budget, Treasurer Jim Chalmers has emphasised addressing the cost-of-living crisis as the government’s top priority. With inflation persisting and the economy slowing, it’s no surprise that this issue took center stage in the federal budget agenda. Titled “Cost-of-living help and a future made in Australia,” the budget allocated $7.8 billion for relief on top of previously announced changes to stage 3 tax cuts.

“It’s a responsible budget that helps people under pressure today and invests in the promise and potential of a more prosperous future we can make together,” Mr. Chalmers stated upon presenting his third budget. Here’s a brief overview of the cost-of-living relief measures included:

  • Each household will receive $300 in energy bill relief, while Commonwealth rent assistance will increase by 10%.
  • The 2024-25 federal budget aims to curb inflation, alleviate living costs, and strengthen Labor’s economic credentials ahead of the election.
  • Additionally, the budget imposes caps on medicine prices and allocates billions to stimulate investment in renewable industries and energy.

Cost of Living Highlights

  • $3.5bn in new energy bill relief. Rebate of $300 for households – and one million small businesses will receive $325
  • $3.4bn to list new medicines on the PBS
  • Five-year price freeze for pensioner and concession cardholders, so they pay no more than $7.70 for medicines
  • ACCC to undertake a 12-month inquiry into the supermarket sector
  • A separate review of the Food and Grocery Code
  • Consumer organisation Choice to publish quarterly supermarket price comparison reports

Health

  • $2.2bn for aged care, including $531.4m for an extra 24,100 homecare packages
  • $361m to strengthen our mental health system, including a national digital mental health service that will provide free support to 150,000 people a year
  • $227m for 29 extra Medicare Urgent Care Clinics to help keep bulk-billing alive.
  • $13bn injection for public hospitals
  • $319.50 weekly payments for eligible student nurses, midwives and social workers undertaking mandatory professional placements from July 2025

Welfare

  • $41m to further extend eligibility for the existing higher rate of JobSeeker
  • Extending the freeze on deeming rates for 876,000 income support recipients, including 450,000 age pensioners
  • $45.5m to establish an NDIS Evidence Advisory Committee to build more evidence about what works for participants
  • $20m to help people with disability navigate services
  • $5.3m to undertake preliminary work to reform NDIS pricing arrangements
  • $213.8m of recently announced funding to fight fraud and co-design NDIS reforms with people with disability

Super

  • Up to 22 weeks of superannuation payments (12 per cent) for more than 180,000 recipients of commonwealth parental leave payments, starting next financial year
  • Tax on earnings from super fund balances above $3m to rise from 15 per cent to 30 per cent
  • Employers to pay super at the same time as they pay wages from July 2026 in a move that should leave the average worker $6000 better off by retirement

Education

  • $3bn worth of the HECS debt wiped for more than three million Australians, backdated to July 1, 2023
  • $319.50 weekly payments for eligible teaching students undertaking mandatory professional placements from July 2025
  • $350m for fee-free uni-ready courses
  • $90m for 20,000 new fee-free TAFE and VET places and pre-apprenticeships
  • $6.5m for a trial of online age verification tech to stop young people viewing pornography and violent content

Small Business

  • $290m in cashflow support for up to four million small businesses
  • Extending the instant asset write-off; small businesses with a turnover of less than $10m will be able to deduct assets costing less than $20,000 until June 30, 2025

Childcare

Childcare workers, who currently earn $23 an hour, will get a boost to their wages

Law and Order

  • $160m to establish a national firearms register
  • $925m to support people fleeing abusive relationships
  • $11m for an app alerting Australians in real time if somebody tries to use their data to commit fraud

Electricity Bill Relief

Every Australian household will get a tidy $300 rebate on their power bills, and eligible small businesses will receive a $325 rebate — a partial extension of bill relief agreed in negotiations with states and territories last year.

From July, all households will have a $300 credit automatically applied to their electricity bills. Around 1 million businesses will receive a $325 deduction off their bills over next financial year, to be applied in quarterly instalments.

Treasury estimates this will directly redue headline inflation by around half a percentage point next financial year, and argues increased spending from the cash injection will not contribute to broader inflationary pressures. The government says it amounts to a 17 per cent reduction on the average power bill. The measure is one of the key cost-of-living relief items being spruiked by government in this budget.

Renters

Renters win with an additional $1.9 billion funnelled towards increasing the maximum payment of Commonwealth Rent Assistance by 10 per cent – the first back-to-back increase in more than 30 years. It follows a 15 per cent increase in last year’s budget, which takes maximum rates more than 40 per cent higher than in May 2022. However, it comes against record-breaking rent hikes, which soared by 8.6 per cent in the year to March.

Housing sector

Developers, tradies and social housing providers will benefit from $4.3 billion worth of new housing expenditure. The initiatives include an extra $1 billion to state governments to build infrastructure for new homes, $1.9 billion in extra concessional financing for providers and charities to help deliver new social and affordable dwellings, and almost $840 million for housing in remote Northern Territory communities.

Visas will be fast-tracked for 1900 migrants to work in housing construction.

Elderly

Pensioners will benefit the most from the government’s move to freeze the cost of medicines on the pharmaceutical benefits scheme. PBS co-payments are normally tied to inflation, but the government will freeze prices until 2026 for the general population, and until 2030 for pensioners and concession cardholders; 60 per cent of PBS prescriptions go to that group.

Local pharmacies will benefit from the removal of a $1 optional co-payment on PBS medicine sales. The optional discount is commonly taken up by sector giants such as Chemist Warehouse, and has been used to grow market share. The discounts will be phased out through adjustment to indexation.

A single age pensioner will be about $3300 better off after the government extended a freeze on increases to the deeming rate for at least another year.

Engineered stone

The stone products, which can cause serious illnesses if not cut properly, will be largely banned in the country from 1 July 2024 and the budget provides $32.1 million to stop importers bringing in the material.

Social Services

Around 4,700 single JobSeekers who are unable to work more than 14 hours a week will have their payment raised to the higher payment rate, currently available to single recipients with children and those aged 55 and over who have been on the payment for nine months or more. It means they will receive an additional $54.90 per fortnight from September, according to the government.

The government will also continue to freeze the deeming rates for another year. If the government had lifted the deeming rates, it would have meant 876,000 income support recipients, more than half of whom are on the aged pension, likely would have seen a fall in welfare payments.

And around 31,000 carers will be given greater flexibility to undertake work, study or volunteer from March next year, with existing weekly limits on participation hours shifted to be counted over four-week periods instead.

Another $1.8 billion over three years has also been committed to frontline staff at Services Australia, to help manage claims and clear backlogs.

Tradies

A tax break that makes it easier for tradies to claw back the price of a brand-new ute has been extended for another year.

The popular instant asset write-off scheme allows small businesses with an annual turnover below $10m to claim a tax deduction on new equipment (such as a new ute, an oven, or a coffee machine) up to the value of $20,000.

It was extended in last year’s budget for the current financial year, but the legislation has stalled in parliament amid calls to increase the threshold to $30,000.

Student Debts

People with HELP debts, VET student loans and Australian Apprenticeship Support Loans and other student loans will have their debts reduced as the federal government changes how the loans accrue interest.

Pending a legislative change that must be passed through parliament, student debts will grow each year at the rate of either the consumer price index or the wage price index — whichever is lower.

This change will also be backdated to June last year, meaning loans for that year will grow at the lower wage index rate of 3.2 per cent instead of the 7.1 per cent inflation rate they were measured at. Debt repayments won’t change, but it means for someone with a $25,000 debt it will be $1,120 smaller than without the change.

Women

The largest measure most closely targeted to supporting women was already announced by the federal government ahead of the budget.That’s an almost $1 billion commitment to make a $5,000 payment for women fleeing violent relationships permanent in the budget, a scheme first trialled by the Morrison government.

Another $1 billion will be put towards crisis and transitional accommodation for women and children fleeing domestic violence. Superannuation will also be paid on Commonwealth-funded paid parental leave from July next year, a measure that will help to close the gap in men’s and women’s savings at retirement.  That will cost another $1.1 billion over four years, and $623.1 million each year after.

 High Income earners

High-income earners are a budget loser, even though they are due to receive income tax cuts from July, because those people are strictly worse off compared to last budget.

Because of the federal government’s changes to the already legislated stage three tax cuts, people earning a taxable income of more than $146,000 will receive a smaller cut than previously set out in the budget. The highest income earners will pay $4,529 less income tax from July — but those people were previously expecting to pay $9,075 less from that date.

Overall it is a reduction in forecast benefit to those taxpayers when compared to the last federal budget.

Tax payers

From July 1 every taxpayer will receive a tax cut following changes announced by the federal government earlier this year.

It means workers in every tax bracket will pay less income tax. Stage 3 tax cuts were already legislated to take effect in July, but the government broke an election promise not to amend them in order to rebalance the cuts to more greatly benefit lower-income workers. In short, the Albanese government’s reforms mean anyone earning less than $146,000 taxable income will receive a bigger cut than previously legislated, while anyone earning over that will receive a smaller cut.

The reforms reduce the 19 per cent tax rate to 16 per cent, reduce the 32.5 per cent tax rate to 30 per cent, raise the threshold at which the 37 per cent tax rate applies from $120,000 to $135,000 and raise the threshold at which the highest rate of 45 per cent applies from $180,000 to $190,000.

Source: ABC, AFR, Treasury Budget Summary

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How can we help? if you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.


General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.