2024-25 Federal Government Budget
An understanding of the 2024-25 Federal Government budget can be found by reading:
The Australian Financial Review 19-page budget lift out,
“Federal Budget 2024–25 Report” prepared by the Tax Institute
“Federal Budget Summary 2024-25” prepared by the Australian Institute of Company Directors.
A summary of the AFR opinions is not positive for inflation and interest rates:
Phillip Coorey reports “Restraint disappears: For his first two budgets, Jim Chalmers showed admirable restraint when it came to spending. This time, however, he’s like a bloke who successfully dieted for two years but crumbled after someone shoved a bucket of KFC under his nose. A cynic might describe it as a short-term shameless vote-buying exercise.”
John Kehoe states “Pressure on RBA: The people who should be most worried about this profligate budget are Reserve Bank governor Michele Bullock and home loan borrowers. Every household will get a $300 energy rebate and while Labor says this will cut inflation, every economist disagrees.”
Steven Hamilton, assistant professor of economics at George Washington University and visiting fellow at the Tax and Transfer Policy Institute at the ANU opines: “This is the most irresponsible budget in recent memory: They call it a ‘‘budget’’ for a reason; it’s meant to constrain government decision-making. To force governments to make room for their spending priorities. To make tough choices between all the wonderful things they want to do. But in his third budget, Treasurer Jim Chalmers appears to have been unburdened by such concerns. For my money, this is the most irresponsible budget in recent memory. The fiscal stance would be eye-opening in ordinary times. During an inflation crisis with the Reserve Bank on the precipice of further rate increases, it’s downright reckless.”
Warren Hogan, chief economist at Judo Bank, under the headline “Expect RBA to tap the rates brakes again says: The Treasurer can say it until he is blue in the face, but Australia’s fiscal settings as revealed in last night’s budget will not help bring down inflation.”
In short, I see the budget exhibits outrageous spending, certainly not setting ourselves up for a positive future (10 years of deficits), not designed to address economic and social problems, not crafted to build productivity, or defend a nation, but built for a singular purpose – to win an election.
Most would agree the Treasurer has to balance the cost-of-living pressures on many Australians (and buy votes) and the need to reduce inflation and interest rates. This budget appears to favour the former.
Some key measures impacting our clients include:
Labor has committed an extra $16.5 billion over 10 years to new and existing road and rail, although my reading of those projects is that little will impact regional NSW.
$300 energy rebate for all Australian households and $325 for every small business.
CO2 agriculture emissions – A new $64 million 10-year program will aim to reduce emissions from agriculture and land clearance.
A new-generation molecular imaging scanner that better detects smaller lesions and doubles its capacity to 5000 scans has won $20 million of federal support as part of a joint funding package for the newly opened Paula Fox Melanoma and Cancer Centre.
The asset write-off provisions for assets costing less than $20,000 have been extended, although the measures from last year’s budget are still to be legislated.
Tax breaks for sweet potatoes – A 1.5 per cent levy on sweet potatoes is to be reduced, with the marketing component of 1 per cent to be abolished.
And very positively and bizarrely – Tax-free rugby world cups – Income from the men’s (2027) and women’s (2029) rugby world cups will be exempted from tax. Australian Rugby needs all the assistance it can get.
As the Tax Institute put it: “In a Budget where the tax system appeared to be an afterthought, there was a lack of meaningful movement on a host of tax issues.” The detailed report from the Tax Institute is attached.
Peter Debus is a Chartered Accountant (FCA), Chartered Tax Adviser (CTA) and a member and of the Institute of Company Directors (GAICD). He is a Director at PrincipleFocus.
