What’s in the budget? Here’s every announcement that you’ll hear about later today
- by Admin
- May 13, 2024
Treasurer Jim Chalmers will hand down his third budget on Tuesday night, but has been tempering expectations for weeks in the lead-up, warning Australians not to expect a “cash splash”.
Inflation remains a key challenge for the government, and we already have a pretty good idea of how Mr Chalmers plans to use his budget to provide cost-of-living relief while also trying to jump-start a slowing economy and navigate growing uncertainty overseas.
Here are the measures we already know about before the treasurer reveals all at 7:30pm AEST.
Short on time?
There’s been no shortage of announcements in the lead-up to the budget. If you’re interested in a specific topic, tap on the links below to take you there:
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The bottom line
Will the budget be in surplus or deficit?
- The budget will deliver a surplus of $9.3 billion for the 2023-24 financial year, making it the second consecutive budget surplus in almost two decades
- That said, the following three financial years are all forecasted to have larger deficits than previously expected in December, but the size of each deficit is not yet known
- Overall, the treasurer says Australia’s total debt has been reduced by $152 billion in the 2023-24 financial year, and the budget will benefit by a $25 billion boost in revenue upgrades
What does the budget mean for inflation and interest rates?
- The treasurer has repeatedly said he’s kept inflation in mind when crafting this year’s budget, and is confident that the measures won’t contribute to it
- In fact, Treasury predicts inflation will fall to 2.75 per cent by December — well before the Reserve Bank’s most recent forecast for the end of 2025 — due to yet-to-be-announced budget measures taking pressure off inflation
- For what it’s worth, RBA governor Michele Bullock wasn’t too concerned about the upcoming budget last Tuesday, saying she would wait to see its impact first, but she said the treasurer reassured her that he was focused on curbing inflation
Cost-of-living relief
The reworked stage 3 tax cuts form the centrepiece of the government’s budget. They were announced in January, legislated in February and come into effect on July 1.
The changes to tax cuts originally legislated by the Morrison government mean that all Australian taxpayers who earn more than $18,200 (that is, more than the tax-free threshold) will get a tax cut.
Before Labor’s changes, the original stage 3 tax cuts were skewed more heavily to higher-income earners.
A person with a taxable income between $45,000 and $120,000 will receive a tax cut of $804 more come July 1 under the revised stage 3 changes compared to the Morrison government’s tax plan.
However, the government has hinted at other cost-of-living measures, with the treasurer calling the tax cuts the “foundation stone” of broader assistance.
Among those measures appears to be energy bill relief (in addition to what some states have already announced), with the treasurer pointing out that last year’s measure curbed living costs and eased inflation.
Adjustments to rent assistance also seem likely, as do increases to JobSeeker and the aged pension.
Education, training and HECS changes
The biggest announcement in this area is the wiping out of $3 billion worth of HECS debts triggered by last year’s indexation of 7.1 per cent.
It means student debts will be lowered for more than 3 million Australians, with the average student receiving an indexation credit of about $1,200 for the past two years.
The debt relief will also apply for apprentices who owe money through the VET Student Loan program or the Australian Apprenticeship Support Loan.
Speaking of university, the government is aiming to tackle “placement poverty” by providing financial support to students to help make ends meet while they complete practical hands-on training as part of their course.
Under the scheme, those studying nursing, teaching or social work will receive a Commonwealth Prac Payment of up to $319.50 a week, but they will be subjected to means testing.
Similarly, apprentices willing to learn clean energy skills as part of their trade will be eligible to receive up to $10,000 in payments. The scheme already exists, but the government has broadened the eligibility to include apprentices in the automotive, electrical, housing and construction sectors based on industry feedback.
Universities will also be required to stop a surge in the number of international students, as part of the government’s broader plans to cut annual migration levels back to 260,000 a year — much to the concern of peak education bodies.
Another $90 million will be put towards 15,000 fee-free TAFE and VET places to get more workers into the housing construction sector, with an extra 5,000 pre-apprenticeship places provided from 2025.
Tax changes
While we can expect to hear more about the stage 3 tax cuts, it seems likely that the government will unveil other changes to tax in the budget to encourage business investment.
One such change will be the extension of the government’s instant asset write-off scheme for small businesses for another year, allowing businesses with a turnover of less than $10 million to claim $20,000 from eligible assets.
However, the same measure from last year’s budget is still yet to pass parliament — and businesses are urgently calling on them to pass the measure before it expires on June 30.
Housing
In addition to spending more to attract skilled workers in the housing and construction sectors, the government is also tipping billions of dollars into building new homes across the country.
It’s estimated the government will be putting roughly $11.3 billion towards housing, as the government works to deliver its promised 1.2 million new homes by 2030.
$1 billion 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 $9.3 billion 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 $400 million of federal homelessness funding each year, matched by the states and territories.
Another $1 billion 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.
The government has also committed to consulting with universities to construct more purpose-built student accommodation.
Overall, the funding announcements for housing build on the $25 billion already committed to new housing investments, with $10 billion of that in the Housing Australia Future Fund, which is designed to help build 30,000 social and affordable rental homes.
The government says the housing funding measures will also help take the pressure off the private rental market, which is experiencing record-low vacancy rates and surging growth in weekly rent prices.
Future Made in Australia
Aside from the revised stage 3 tax cuts, the revival of local manufacturing is the other centrepiece of the government’s budget this year.
The Future Made in Australia Act (which is often referred to without the “act” on the end) is bringing together a range of new and existing manufacturing and renewable energy programs under one umbrella, totalling in excess of $15 billion.
In other words, the government is putting serious taxpayer money towards supporting local industry and innovation, especially in the renewable energy space.
A number of measures have already been announced (or re-announced), including:
- $1 billion for the Solar SunShot program to increase the number of Australian-made solar panels
- $2 billion for its Hydrogen Headstart scheme to accelerate the green hydrogen industry
- $470 million to build the world’s first “fault-tolerant” quantum computer in Brisbane, matching the Queensland government’s contribution
- $840 million for the Gina Rinehart-backed mining company Arafura to develop its combined rare earths mine and refinery in Central Australia
- $230 million for WA lithium hopeful Liontown Resources, which is also partly owned by Gina Rinehart
- $566 million over 10 years for Geoscience Australia to create detailed maps of critical minerals under Australia’s soil and seabed
- $400 million to create Australia’s first high-purity alumina processing facility in Gladstone
- $185 million to fast-track Renascor Resources’ Siviour Graphite Project in South Australia
- A $1 billion export deal to supply Germany with 100 infantry fighting vehicles, manufactured at Rheinmetall’s facility in Ipswich
Health and aged care
All up, the government is spending an extra $8.5 billion on health and Medicare in this year’s federal budget, with $227 million of that put towards creating another 29 urgent care clinics.
Millions of dollars are also being poured into medical research, including $20 million for childhood brain cancer research, and a $50 million grant for Australian scientists developing the world’s first long-term artificial heart.
Another $49.1 million is being invested to support people who have endometriosis and other complex gynaecological conditions such as chronic pelvic pain and polycystic ovarian syndrome. The funding will allow for extended consultation times and increased rebates to be added to the Medicare Benefits Schedule.
As for aged care, the government hasn’t announced anything specific for the sector, nor has it outlined its response to the Aged Care Taskforce report that was delivered in March.
Paid parental leave
Parents accessing the government-funded paid parental leave scheme will be paid superannuation in addition to their payments from next July.
Under the current program, a couple with a newborn or newly adopted child can access up to 20 weeks of paid parental leave at the national minimum wage — however that figure will continue to rise until it reaches 26 weeks in July 2026.
The plan, which Labor will take to the next election, would see superannuation paid at 12 per cent of the paid parental leave rate, which is based on the national minimum wage of $882.75 per week.
The cost to the budget is not yet known, however a review commissioned by the former government estimated that paying super on top of paid parental leave would cost about $200 million annually.
About 180,000 families access the government paid parental leave payments each year.
Domestic violence
The federal government has pledged almost $1 billion to combat violence against women, including permanent funding to help victim-survivors leave violent relationships, and a suite of online measures to combat online misogyny and prevent children from viewing pornography.
The $925.2 million will go towards permanently establishing the Leaving Violence Program over five years, after it was established as a pilot program in October 2021 known as the Escaping Violence Program.
The program will provide 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.
While the funding has been broadly welcomed, survivors and advocates want to see more investment.
The package also includes funding to create a pilot of age verification technology to protect children from harmful content, including the “easy access to pornography” online, which the government says will tackle extreme online misogyny that is “fuelling harmful attitudes towards women”.
Defence and foreign affairs
The federal government is planning to spend an extra $50 billion on defence over the next decade, meaning Australia’s total defence spend will be equivalent to 2.4 per cent of its gross domestic product (GDP) within 10 years.
All up, the government is planning to invest a total of $330 billion through to 2033-34, which includes the initial cost for the AUKUS initiative to purchase nuclear-powered submarines.
Part of that $50 billion will be spent on upgrading defence bases across northern Australia, with $750 million to be allocated in the budget for the “hardening” of its bases in the coming financial year.
More than $1 billion of that funding will also be spent on an immediate boost on long-range missiles and targeting systems.
In the Pacific, Australia has committed $110 million to fund development initiatives in Tuvalu, including an undersea telecommunications cable and direct budget support.
The government has also pledged $492 million to the Asian Development Bank to provide grants to vulnerable countries in the Asia-Pacific.
Environment
The only dedicated announcement for the environment so far is the scrapping of the waste export levy, also known as a “recycling tax”.
The proposed $4 per tonne levy was first legislated by the Morrison government in 2020 in a bid to reduce and regulate waste exports, after China announced it would no longer handle Australian rubbish.
Waste industry players had been concerned that once the levy was introduced in July, it would have caused more waste to be sent to landfill instead of being recycled.
The scrapping of the waste export levy is part of Australia’s broader move to manage its own waste.
Infrastructure
A slew of funding commitments have been made around the country, including a $1.9 billion funding commitment for upgrades in Western Sydney, ranging from road improvements to planning projects and train line extensions.
The government is also putting $3.25 billion towards Victoria’s North East Link, which is being built between the Eastern Freeway and M80 Ring Road in Melbourne.
Ahead of the Brisbane Olympics in 2032, the government is also chipping in $2.75 billion to fund a Brisbane to Sunshine Coast rail link, matching the amount promised by Queensland Premier Steven Miles. (That said, $1.6 billion had been previously announced by the federal government.)
Also in Queensland, the Bruce Highway will receive $467 million for upgrades, while Canberra will receive $50 million to extend its light rail.
A proposed high-speed train line between Sydney and Newcastle will also receive $78.8 million to deliver a business case for the project.
The government will also put $21 million towards the creation of a national road safety data hub.
Additional announcements
There are several other funding commitments the government has made in the lead-up to the budget that don’t fit neatly into the categories above.
The government will spend $161.3 million on creating a national firearms register, which will give police and other law-enforcement agencies near real-time information on firearms and who owns them across the states and territories.
The money will be spent over four years to establish the register, and comes after state and territory leaders agreed to set up the register in December last year. The government has described the register as the biggest change to Australia’s firearm management systems in almost 30 years.
Another $166.4 million will be spent on expanding anti-money-laundering reporting obligations, requiring real estate agents, lawyers and accountants to report dodgy transactions in a move that will bring Australia in line with the rest of the developed world.
And ahead of the 2032 Brisbane Olympic Games, the government has given the Australian Institute of Sport (AIS) a $249.7 million funding boost to upgrade its facilities to support local athletes.
The government has also committed to a $107 million support package for farmers, after announcing it will end Australia’s live sheep export trade by 2028.
Farmers and regional communities will also benefit from a $519.1 million funding boost to the government’s Future Drought Fund.
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