Budget 2024/25: Short term cost-of-living fixes and tiny steps toward our clean industrial future.
How a people’s government prioritizes its spending says a lot about who we are as a society and a nation. The 2024/25 budget is no exception. This budget provides twice as much for Defence than it does for Future Made in Australia (its plan to reindustrialise the workforce, deliver a net zero economy and co-invest to help make Australia a renewable energy export superpower).
Like many of us, I was hoping the Federal Treasurer Jim Chalmers would provide more than sugar fix to the cost-of-living crisis with systemic support people doing it rough across our nation. According to a recent Anglicare report on Rental Affordability in Greater Sydney and the Illawarra, of 10,735 private rentals advertised (on the Snapshot weekend in 2024), only:
- 7 were affordable and appropriate for a family with 2 children on JobSeeker
- 11 were affordable and appropriate for a couple on the Age Pension; and
- 14 were affordable and appropriate for a single person on the minimum wage.
- None were affordable and appropriate for a single parent on Parenting Payment.
So much more needs to be done to increase social and affordable housing, raise the rate of (not just the eligibility of those to access) JobSeeker and provide more secure housing for all renters.
And why are we celebrating a surplus?
The Government turned its second annual surplus last night, boasting the budget being $9.3b in the black. Economists’ and media fixation on government budget surpluses miffs me. Governments are not households, and aiming for a surplus shouldn’t be a goal in its own right – being responsible economic managers, is what is important.
GDP growth is meh, employment is full, wages are not keeping up with the cost of living, we have a housing availability and affordability crisis, businesses and households are not spending, we are sleepwalking through a climate catastrophe and geopolitically, things are woeful. Governing is complex, sure; but right now, doesn’t seem the best time to be smug about turning a handsome government budget surplus. I am no accountant but… if the Government has moolah in the credit column of its balance sheet, it’s because businesses and individuals don’t. I know which way I would prefer the ledger to go.
This budget shows there is some sensible government spending with a push to up government spending on infrastructure and other construction activities. But what we don’t see in this budget is more effort to systemically reduce household operating costs such as through dispatching more energy efficient products, solar and storage; simply a welcome sugar hit of $300 on a year of smaller energy bills.
I do recognise that Australia is currently close to full employment and so fiscal expansion makes us very susceptible to inflation. This truism has been largely heeded by the Government in this budget, where we see a focus on (a) skills development and living support for current and future needed occupations – electricians, nurses etc., and ‘future payments’ committed via the (forthcoming) Future Made In Australia Act which would see production tax credits only realised once projects are up and earning revenue.
I would have liked to have seen a little less surplus and a significantly larger pledge to invest in Australia’s reindustrialization. So much of that, done well, would squarely contribute to economic growth, increased productivity and help put us on a sustainable footing to remain internationally competitive in a rapidly decarbonising global economy.
Is it inflationary?
According to the Treasurer, no. In my opinion, this budget is better regarded as anti-deflationary. With businesses and households spending lessening, but with our mineral exports holding steady, it’s important for the government to lean in and provide some spending to keep the economy moving. Accordingly, measures such as the $300 for smaller energy bills, despite these not making any long-term structural improvements to energy delivery or security, are reasonable measures for households and the economy.
Cost of Living Relief
INCOME TAX: 84% of taxpayers (and 90% of women) will receive a bigger tax cut than they would have under the previous LNP Government; on average this is $36 a week. Each Australian taxpayer who earns over $18,200 will receive a tax cut. Medium earners (between $45,000 to $120,00) will receive a tax cut of $804 more come July 1. The revised Stage 3 tax cuts come into effect on July 1.
MEDICINE COSTS: The $3b invested into making medicines cheaper shall also assist those reliant on regular and more expensive medications. Price caps are also being introduced on PBS medicines.
For pensioners, there is a freeze on the cost of medicines for pensioners for the next five years.
ENERGY BILLS: Every household shall enjoy $300 lower energy bills paid quarterly over the 12-month period from July 1, 2024. It’s claimed that this shall cut bills by 17% on average. This initiative totals $3.5b over 12 months.
Our Climate
The Government makes large of its Future Made in Australia $22.75 billion over the next 10 years. Many clean energy lobby groups have welcomed it, but financial and energy analysts have criticised it for being too modest considering the rapidly changing trading environment in which Australia’s export goods and services find themselves. The amount is nowhere near commensurate with the USA’s Inflation Reduction Act, no matter how you measure it (per capital, unit of GDP, per unit of export etc.). In fact, this amount is barely half the new investment in Defence over the same period, despite the Australian Security Leaders Climate Group demonstrating that climate change is Australia’s biggest security risk. Some of the initiatives under this banner have been ‘recycled’ and reannounced.
The prudent aspect of some of this spending exists in the production tax credits which apply only once an eligible industrial process or facility is operational and generating income. This bakes-in the government’s commitment towards green industry and shores up the efficacy of public funds towards to the investments for which they are intended. It also means that funds aren’t necessarily adding to the precarious inflationary environment in which we currently find ourselves in 2024.
Snowy Hydro Limited, the corporation, will receive another $7.1 billion over four years to continue construction of Snowy 2.0, much of which will be provided as a loan. Let’s see the interest being charged on that!
Housing
The government is working to deliver 1.2 million new homes by 2030 through its Homes for Our Future Plan (I hope we have the skilled workforce to get this done).
$1b will be spent on crisis and transitional accommodation for women and children fleeing family violence and youth through the National Housing Infrastructure Facility, which is re-allocated funding.
The government has also committed to providing $9.3b to states and territories under a new five-year agreement to combat homelessness, assist in crisis support, and to build and repair social housing — including $400m of federal homelessness funding each year, matched by the states and territories. Unfortunately, it’s these “federal-state accords” that get tied up in process and keep sorely needed funds to flow from the government’s coffers to the sectors where new construction needs to take place urgently.
Another $1b will be given to states and territories to build other community infrastructure to speed up the home-building process, including roads, sewerage, energy, and water supplies.
Overall, the funding announcements for housing add to the $25b already committed to new housing investments, with $10b of that in the Housing Australia Future Fund, which is designed to help build 30,000 social and affordable rental homes. The soil is turning very slowly on this initiative from last budget.
Families
From July, parents accessing the government-funded paid parental leave scheme will be paid super in addition to their payments. About 180,000 families access the government paid parental leave payments each year.
Nothing worthy of reporting on childcare (but some still feel the love from the last budget).
Mental Health
It’s a tiny $111m a year for additional mental health services (and as Dr Monique Ryan, Independent member for Kooyong, reminds us, that pales in comparison to the $14.5b a year in fossil fuel industry subsidies).
The new funding goes largely towards a national digital mental health service to be available to 150,000 Australians per year.
Those living with a disability or two
Spending on NDIS has been slashed by over $14b. Instead $469m has been allocated to crack down on fraud in the Scheme. No further comment, except that my late nephew Bodhi Boele who, with his older brother Kai, campaigned hard to stand up the NDIS – and he would not be impressed.
Renters
The maximum amount Commonwealth Rental Assistance paid to individuals will be increased by 10% from September, which should benefit around 1 million people already receiving the maximum rate. This investment is valued at $1.9b. Supply considerations aside, this should help in a small part to helping a few more renters into homes (current maximum payment for a single person receiving rent assistance is $188.20 a fortnight, and $125.47 for a single person in a share house – this means an increase of around $19 a fortnight for a single person).
Small business owners
It’s Groundhog Day for the instant asset write-off, with items of $20,000 or less (for businesses with less than $10m in yearly turnover) continuing until the middle of next year. Interestingly the measure promised in last year’s budget is yet to pass parliament! One million small businesses shall also receive a $325 deduction on their bills over the next financial year in quarterly instalments.
Women
To be clear, this is the LAST time I am committing commentary about family and domestic violence (FDV) measures under the heading “women”. FDV is a whole of society scourge.
According to NSW Police, nearly nine out of every 10 call outs are related to family and partner altercations. I regularly have local parents share concerns about their primary school sons espousing the Andrew Tate trope. Female secondary teachers tell me that since returning to face-to-face teaching (post Covid), they have experienced increased gender-based vitriol, and even aggression from male students – some have expressed that they no longer feel safe in the classroom. Young, educated men in our area tell me that they don’t understand why they are being unfairly targeted as “privileged white men” whilst buckets of public funds and programs go into female sport, academic scholarships, and other affirmative action measures. Yet nine in 10 people experiencing domestic violence are women. Bradfield, NSW, and Australia? We have some work to do for our women, and our men, and for everyone else outside these two categories.
Back to the budget – the government has pledged $925.2m will go towards the Leaving Violence Program over five years, providing eligible victim-survivors with an individualised support package of up to $1,500 in cash and up to $3,500 in goods and services, plus safety planning, risk assessment and referrals to other essential services for up to 12 weeks.
These funds also cover a suite of online measures to combat online misogyny and prevent children from viewing pornography.
Seniors
Increases to the aged pension will not take place until 2026 (earliest). An additional 24,100 homecare packages will be funded by $500m.
Youth
Nought. Truly. There must be something in the papers, but I couldn’t find it. Same for the Environment.
Health
The Government continues to conflate health and aged care in its policy announcements and budgeting ignoring the opportunity for ‘life stages’ planning and programs as well as potentially mitigating “program gaps” such as NDIS not being available to anyone over 65.
Spending is up $227m towards creating another 29 urgent care clinics; and all up an extra $8.5b on health.
Students
Thanks to the outstanding advocacy work of the federal crossbench, this budget includes the previously announced wiping out of $3b of HECS debts triggered by last year’s indexation of 7.1 per cent. This initiative impacts 3 million Australians at an average of $1200 indexation credit added to accounts for the last two years of payments. According to the ABC, the debt relief will also apply for apprentices who own money through VET Student Loan program or the Australian Apprenticeship Support Loan.
The Government has failed to repeal the crazy loadings applied to humanities courses but is providing a Commonwealth Prac Payment of up to $319.50 a week for students enrolled in nursing, teaching, or social work. This payment is means tested.
Job Seekers
Single people who are unable to work more than 14 hours a week shall have their payment raised to the higher payment rate. This will apply to around 4,700 individuals 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.
Defence and foreign affairs
The federal government is planning to spend an extra $50b on defence over the next decade, meaning Australia's total defence spend will be equivalent to 2.4 per cent of its GDP within 10 years.
All up, the government is planning to invest a total of $330b through to 2033-34, which includes the initial cost for the AUKUS initiative to purchase nuclear-powered submarines; $1b of that funding will also be spent on an immediate boost on long-range missiles and targeting systems.
The government has also pledged $492m to the Asian Development Bank to provide grants to vulnerable countries in the Asia-Pacific.
Are you a winner or a loser?
As always, check out how you and your family fares with the ABC’s analysis of the budget winners and losers here.
Nicolette Boele, May 15, 2024
Sources:
ABC
Anglicare.org.au
Australian Security Leaders Climate Group
Budget Papers 1 & 2
Budget Overview
The Guardian Australia