Future thinking should be shared. With that in mind our team publishes insights weekly to help keep you in the (k)now.


Hewison Private Wealth - Insights
Hewison Insights

24/25 Budget Review

Andrew Hewison
Managing Director and Partner
15 May 2024

The Government has forecast a surplus of $9.3 billion for the 23/24 financial year (this basically suggests that Australia earned more in revenues, than we spent).

Not to get too excited, because federal treasurer, Jim Chalmers, will forecast bigger budget deficits over the next four years than predicted, as they plan to spend more than Australia will earn.

The budget has very limited implications for financial markets. Most of the new spending initiatives and tax cuts were flagged in the lead up to budget night and even the future deficits are relatively small in comparison to gross domestic product.


Some brief highlights of the Federal Budget include:

  • Business tax incentives to lure foreign capital, along with an extension of the instant asset write-off scheme for small businesses. This will allow small businesses to write of the purchase of assets valued up to $20,000 until 30 June 2025.
  • Approximately $11.3 billion will go towards housing in various forms. Some of this funding is being directed towards housing for women and children fleeing domestic violence, and other measures target social housing and homelessness. The budget also funds additional training to target more people being qualified for the construction sector via fee-free TAFE courses.
  • A significant centrepiece of the budget is the “Future Made in Australia” agenda. The government is allocating funds, mainly via tax incentives, to support investment in renewable hydrogen and the refining of critical minerals.
  • As part of its focus on national security, the budget allocated $50.3 billion over the next ten years to implement the 2024 National Defence Strategy.
  • Paid parental leave: Super will be paid on the 20 weeks of Government-funded parental leave from July 2025, costing more than $600 million. Parents of babies born post 1 July 2025 will receive 12% super on top of their Government-funded parental leave.
  • The cost of living was a firm focus of the Treasurers speech and budget. Key items announced to help Australians cope with the high cost of living are:
      • Extension of the energy rebate for another year, providing all households with a $300 rebate towards their energy bills and a $325 rebate for small businesses on their energy bills.
      • Freezing of the deeming rates for pensioners for another twelve months, increases in rent assistance for those on benefits, and an increase in the JobSeeker Payment for those with a partial capacity to work.
      • Freezing the Pharmaceutical Benefits Scheme (PBS) which usually rises with inflation. A five-year freeze will also be applied to pensioners accessing the PBS.
      • Students will get some relief with the indexation of HECS debt being changed. This will save students $3 billion in debt, and future debts will be indexed by the lower of Consumer Price Index and the Wage Price Index.

To support the budget surplus, the Government has identified $27.9 billion in savings, of which $14 billion will be sourced from paring back the growth of the NDIS.

The question is, what is there to get excited about from financial planning & wealth creation perspective?

Based on what we know…not a lot at this stage:

The modified stage three tax cuts will come into play from July 1. Summary below:

  • Earn $100k, save $2,179 per annum
  • Earn $150k, save $3,729
  • Earn $200k and above, save $4,529
    (Above figures do not include Medicare levy and other deductions)

The budget made no significant mention of the new super tax on member balances exceeding $3 million from mid-2025. Much more on this at another time, but just remember, this proposed change includes taxing UNREALISED capital gains.

Current inflation sits at around 3.6%, and the Government forecasts inflation to fall throughout 2024 back to within the RBA’s target range of 2%-3%.

However; there is a sizeable issue with that forecast – the RBA doesn’t agree! They have forecast inflation rising to 3.8%.


Why the difference?

The energy rebate to all Australians and small businesses will reduce energy costs, which is one of the major influences on the headline inflation rate.

Many economists have begun calling out the Government for manipulating the figures, and some believe giving away more money will only make inflation worse.

The issue for the Government is that they do not control interest rate decisions. That is the RBA’s role and if they calculate inflation differently it could result in an interest rate rise, not a fall, later this year or early next.