Key Points
- The government has made several key funding announcements ahead of the upcoming federal budget.
- The stage three tax cuts will be a key feature of Tuesday’s budget.
- Funding has been allocated to tackle domestic violence and changes have been made to student debts.
On Tuesday night, news outlets will be discussing the ‘winners’ and ‘losers’ from the federal budget.
Treasurer Jim Chalmers will deliver the budget in Canberra on Tuesday, but the government has already made several funding announcements that provide insight into what the 2024-25 budget will include.
Here’s what we know so far.
The big picture
A second surplus is still the goal in 2023/24.
The mid-year budget review had forecast a deficit of $1.1 billion this financial year, narrowing from the $13.9 billion forecast in last year’s budget but Chalmers said the government was “still shooting” for a surplus.
Chalmers has said the budget would put downward pressure on inflation.
“The budget will put downward pressure on inflation, not upward pressure on inflation. Our budget will be part of the solution to the cost-of-living pressures, not part of the problem,” he said.
back to within the Reserve Bank of Australia’s (RBA) target range of 2-3 per cent by December, almost one year earlier than the bank had forecast at its May meeting.
Inflation currently stands at 3.6 per cent for the year to the March quarter,
The modelling predicts inflation will drop to 2.75 per cent by December, before a further drop to 2.5 per cent by the end of 2025.
Stage three tax cuts
One of the most talked-about elements of the budget has been the which will come into effect from 1 July.
The overhaul will deliver savings for all taxpayers, with people on low and middle incomes receiving the largest cuts.
Workers earning $150,000 or more will still get a tax cut, but it will be more modest than what was offered under the initial package.
The average tax cut is forecast to be $1,888 in 2024–25 compared to 2023-24 settings.
The reformed stage three tax cuts will come into effect from July 2024. Source: SBS News / Kenneth Macleod
Housing
Australians have been feeling the effects of a lack of housing, especially social and affordable housing.
The government is set to unveil an $11.3 billion housing package as part of the upcoming budget.
The plans will be focused on achieving the target of 1.2 million new homes set by the government for the end of the decade — a target the National Housing Supply and Affordability Council has forecast the government won’t reach.
The government plans to invest $1 billion towards the development of crisis and transitional accommodation housing for families fleeing domestic violence.
Another key part of Labor’s plans will be a $9.3 billion boost over five years towards social housing.
A little more than $90 million of the upcoming budget has already been set aside to help boost the number of skilled workers needed in the construction and housing sector.
The funding will go towards fee-free TAFE courses and pre-apprenticeship programs to try to provide the skilled workforce needed to increase housing supply.
Cost of living
The government has again been under pressure to lift income support payments.
The reworked stage three reform package is expected to be the main source of cost-of-living relief but other targeted measures are expected, which could include energy bill discounts.
Chalmers said the government and budget are “all about ensuring Australians earn more and keep more of what they earn”.
“We know people are under pressure and that’s why our wages policies and tax cuts for every taxpayer are so important,” he said.
“This is all part of a big focus in the budget on helping to ease cost of living pressures.
“Decent wages and bigger tax cuts for more people are a big part of helping people earn what they need and deserve to provide for their loved ones.”
The budget will also reveal costings
Around 180,000 families a year receive government-funded paid parental leave payments, which from 1 July 2025 will include an extra 12 per cent paid to a superannuation fund.
Students and HELP debt
The budget will bring some relief for students and people with student debt.
On 5 May, Education Minister Jason Clare announced the government will cap the Higher Education Loan Program (HELP) indexation rate, eliminating about $3 billion of student debt.
The capped rate will ensure indexation matches either the consumer price index or wage price index, whichever is lower.
The government will also introduce payments for student teachers, nurses and social workers during their compulsory work placements done as part of their studies.
The government has also hinted at allowed by universities as it aims to cut net migration.
Domestic violence
Funding to support women leaving violent relationships will be a key initiative of the May budget as Australia grapples with a national crisis.
On 1 May, following a snap National Cabinet meeting, the government committed to over five years to establish the Leaving Violence Program.
Those eligible will be able to access up to $5,000 in financial support along with referral services, risk assessments and safety planning.
The commitment builds on an existing $2.3 billion in measures put in place by the Albanese government.
Falepili Union with Tuvalu
Ahead of the budget, Foreign Minister Penny Wong has announced further commitments to the Australia-Tuvalu Falepili Union.
This will include investments of more than $110 million from Australia to address Tuvalu’s immediate priorities.
This includes $50 million in 2024-25 to support Tuvalu to secure its first undersea telecommunications cable and $19 million in extra support to extend the Tuvalu Coastal Adaptation Project.
It will also include $10 million in immediate budget support and $15 million for a new National Security Coordination Centre in Tuvalu.
National firearms register
Following a National Cabinet meeting in December, Prime Minister Anthony Albanese and state and territory leaders agreed to implement a national firearms register.
The register will allow law enforcement agencies to access information about guns owned in all states and territories, and $160 million in funding will be spread across four years.
Almost $100 million will be spent on upgrades to systems operated by states, $30 million will be spent on building the national register, and a similar amount will be put aside for upgrades.
Future Made in Australia Act
The Future Made in Australia Act involves deploying public funds to help viable zero-carbon industries so they can attract more private investment.
Albanese has described the large-scale industrial policy as a “rebuild” of “Australia’s industrial base”.
The policy will consolidate existing programs including Hydrogen Headstart ($2 billion), Solar Sunshot ($1 billion), the Critical Minerals Fund ($4 billion) and National Reconstruction Fund ($15 billion).
Funding described by the federal government as being part of a “Health Research for a Future Made in Australia” package has also been announced ahead of the budget.
The majority of a $1.89 billion investment is set to go towards a Medical Research Future Fund which will have a number of focus areas including cancer, health inequities, women’s health, chronic pain and alcohol and other drug treatment.
Military and defence
In April, , including a $50 billion increase in defence spending over the next decade.
Treasurer Jim Chalmers will hand down the federal budget on Tuesday. Source: AAP / Mick Tsikas
This increase in annual funding will mean the Defence budget will grow to more than $100 billion by 2033-34, and the Albanese government’s investment in the defence portfolio will mean overall funding will reach $765 billion over the decade.
Drought fund
An extra $519.1 million will go into the Commonwealth’s future drought fund to help regional communities get ready for dry times.
The fund aims to provide tools for farmers to manage drought on their properties and bolster their capacity to withstand climate change.
As part of the boost, $235 million will go towards drought resilience programs, while $137.4 million will be channelled into measures to help producers with business planning and financial literacy.
Trials for new solutions to drought mitigation will also be funded with a further $120.3 million.
– With additional reporting by the Australian Associated Press.
