Treasurer Jim Chalmers has delivered a $9.3 billion surplus this year, marking the first back-to-back surplus in almost 20 years, promising to deliver relief to Australians today and tomorrow and help every taxpayer.
Handing down the 2024-25 budget on Tuesday, the treasurer stressed Australia’s future depended on striving for more than simply “muddling through or making do”.
“This budget shows we are realistic about the pressure people face now — and optimistic about the future. It reflects our biggest ambitions and our highest aspirations — to make Australians the primary beneficiaries of a world of churn and change,” Chalmers told parliament.
“Tapping their confidence, compassion and creativity — to manage their pressures and maximise our advantages — to forge a new economy and a new generation of prosperity.”
The treasurer outlined the government’s five main priorities:
- to help with the cost of living,
- build more homes for Australians,
- investments guided by the ‘Future Made in Australia’ plan,
- strengthening Medicare and the care economy, and
- responsible economic management.
Part of the responsible approach to the 2024-25 budget was a focus on paying down debt, the treasurer said, noting that by next year, the government expected the budget to have a deficit of $28.3 billion.
Despite this, Chalmers said, Australia enjoyed a stronger fiscal outcome in every year of the Labor government being in power compared to years prior.
“[This is] an economic plan where growth and opportunity go together; a government and a budget for every Australian,” Chalmers said.
“From delivering a tax cut to every Australian taxpayer to reducing student debt or helping renters; from new energy bill relief (saving the average person $36 a week) to the care economy to a Future Made in Australia; we are easing pressure on Australians while investing in our people, our economy and our future,” he said.
The government’s real spending growth has been limited to an average of 1.4% per year since Labor came into office, representing less than halve the average of the past 30 years and a third less spending growth than the former Coalition government.
The budget also unveiled a total of 96% of revenue upgrades that have been banked.
Chalmers also said Treasury forecasts suggested Australia’s inflation would be lower, sooner, with the RBA’s inflation target expected to be reached by the end of 2024.
“We’ve achieved all of this despite much smaller revenue upgrades and still providing an extra $3 billion to ensure Australians, including our veterans, receive better essential services,” Chalmers said.
“On our watch, the budget is $215 billion stronger over the six years to 2027-28. Gross debt is now expected to pea at 35.2% of GDP in 2026-27 before declining to 30.2% by 2034-35,” Chalmers said.
“This year gross debt will be $904 billion instead of the more than one trillion we inherited — meaning debt in $152 billion lower.”
A stronger budget meant savings of about $80 billion in interest costs over the decade could be achieved, Chalmers added.
“These are the dividends of our responsible economic management. We’ve found $27.9 billion in savings and reprioritisations in this budget and $77.4 billion since the election.”
The treasurer described the budget as one that aimed to speak to everyone, with benefits for every industry, working parent, fairer outcomes at the checkout, and more homes in each state and territory.
Older Australians could look forward to a dignified retirement, the treasurer added, and “jobs of the future” would be delivered to every corner of the country driven by new energy and industry policy.
Balancing cost-of-living measures with economic challenges
The treasurer noted that Australia’s economy was forecast to grow by 1⅓% this financial year, and 2% in 2025-26.
The government’s budget cost-of-living measures were designed to shave ¾ of a percentage point off inflation this year and ½ a percentage point next year, Chalmers added.
Six headline budget measures have been designed to deliver a comprehensive cost-of-living relief in Australia.
They include:
- new power relief policies for individuals and small business to the tune of $3.5 billion;
- freezing the cost of some medicines and supporting their access through community pharmacies to the tune of $3 billion;
- making HECS student loans fairer by backdating to mid-2023 a cap on the student loan indexation (saving the average student around $1,200);
- boosting competition in the economy (with steps towards a mandatory Food and Grocery Code);
- supporting renters ($1.9 billion to increase commonwealth rent assistance maximum rates); and
- a tax cut for every taxpayer.
Other major line items in this year’s budget address Australia’s housing crisis and measures to accelerate the building of 1.2 million new homes within five years from this July. This includes $32 billion for the Homes for Australia plan to clear local infrastructure bottlenecks, provide more housing for students, and fund more social and affordable housing.
The states get $1 billion more in this budget to build more housing sooner, and $3.5 billion will be invested in slashing the red tape tied up with housing build.
Another $89 million in federal money will be put towards delivering 20,00 fee-free TAFE and VET places to train more construction workers.
Accessing suburbs, cities and regions will also be a crucial part of this plan with funds to deliver better transport to all parts of Australia.
The treasurer said supporting Australia’s most vulnerable was a key pillar of the thinking behind the budget because cost-of-living pressures hit those worst off the hardest.
“We’re continuing the freeze on social security deeming rates until 30 June 2025, benefiting over 870,000 people, including 450,000 aged pensioners,” Chalmers said.
“For those who face additional barriers to finding work, we’re providing $41 million to further extend eligibility for the existing higher rate of JobSeeker.
“People who can only work up to 14 hours a week will see their payment increase at least $54.90 a fortnight,” he said.
How the Future Made in Australia and a plan to attract more investment in key industries will equip us for the future
The Future Made in Australia plan was unveiled by Prime Minister Anthony Albanese some weeks ago and is the centrepiece in several budget measures cross-cutting portfolios. According to the treasurer, the plan offers the parameters to invest in transformational opportunities.
The plan deals with the renewable energy sector, as well as defence capabilities, and Chalmers said it was important Australia did not miss the chance to grow with industries as the pace of change around the world accelerated.
“If we hang back, the chance for a new generation of jobs and prosperity will pass us by — and we’ll be poorer and more vulnerable as a consequence,” Chalmers said.
“In a world of rapid economic change and heightened strategic competition, investing in modern defence industries serves our economic and national security interests,” he added.
Future Made in Australia budget line items include $13.7 billion in production tax incentives for green hydrogen and processed critical minerals, a $1.7 billion innovation fund to develop new green metals and low carbon fuel industries, $520 million to advance deals with partners in the region concerning net zero trade, and $566 million for mapping the geological potential of the country.
Meanwhile, National Defence Strategy funding will see $50.3 billion invested over a decade.
The budget’s other economic resilience and supply chain investments focus on manufacturing the next generation of solar panels, investing in battery production, realising the potential of Australia’s critical minerals value chain, and backing the world’s first commercial-scale quantum computer.
“Treasury is now forecasting inflation could return to target earlier, perhaps even by the end of this year. At the same time, around 780,000 jobs have been created under this government — a record for any first term,” Chalmers said.
“This is stronger jobs growth than in any major advanced economy. Real wages are growing again for the first time in almost three years.”
“Business investment is now expected to record its longest annual expansion since the mining boom.”
In the education portfolio, $500 million was set aside to invest in skills-priority industries such as clean energy, construction and manufacturing, as well as to support women finding work in these fields.
Amid a global context with with “fraught and fragile” conditions, the budget underscored the impacts of lingering inflation in North America, slowing growth in China and “tepid” growth in Europe.
“We have an envied combination of moderating inflation, record new jobs, near-record participation, real wages growth, the lowest-ever gender pay gap, and expanding business investment,” Chalmers said.
“Annual inflation has more than halved from its peak in 2022 and is now lower than anticipated in the mid-year update but we know people are still under the pump.”
The budget also noted that global supply changes were fragmenting with escalating tensions in the Middle East and persisting conflict in Ukrainian territory because of Russian military aggressions.
Chalmers reassured voters that “despite everything coming at us”, Australia remained one of the best economies placed to respond to uncertainty and maximise opportunities. But doing so meant calling on everyone to “put their shoulders to the wheel”, he said.
“Uncertainty combines with cost of living pressures and higher interest rates to slow our economy.
“Slower growth means a softer labour market, with unemployment expected to rise slightly to 4.5% next year, even as we create tens of thousands of new jobs,” Chalmers said.
Equity emphasis and a plan to claw back migration numbers in 2024-25
Taking into account the pressures caused by population growth, Chalmers said the government had decided to halve the number of 2023 overseas migrants in 2025.
Budget investments to deliver a stronger Medicare ($227 million for 29 Medicare urgent care clinics) and care economy, more mental health support ($361 million to strengthen the mental health system), and better aged-care options ($2.2 billion to implement some royal commission recommendations, $1.2 billion to improve systems and keep aged care accessible, and $531 million to give 24,000 older Australians more choice with a home care package) were also of primary concern.
The federal government will also give $469 million to work with the disability community, states and territories under the NDIS and “crack down on fraud and exploitation”.
“We will work with the community and across the parliament to fund the future services people need and deserve. Over the last decade, the NDIS has delivered life-changing support for Australians with disability. All of us in this place take pride in it — and all of us must take responsibility for securing its future,” Chalmers said.
“[We are] working with national cabinet to put participants at the centre of the scheme, and design and fund additional foundational supports outside of it, and ensuring every dollar invested in the NDIS goes to those who need it most.”
The treasurer said the way Australians looked out for and cared for one another was one of the most important things about the country. As more people lived longer, however, the demand for aged-care services was growing, and the nature of services needed was changing too.
For those working in the care economy, Labor’s budget topped up the $11.3 billion funded last year to further fund an award wage increase for the sector. Similarly, a wage increase has been provisioned in the budget for childhood educators.
At a press briefing ahead of delivering his budget-night speech, Chalmers said that every single budget was designed with caution and nuance. However, he said, this budget was primarily concerned with restraint, reform, relief and renewal.
Australia was in a position to forge the future if it shaped bigger opportunities for itself, Chalmers said.
“We have an envied combination of moderating inflation, record new jobs, near-record participation, real wages growth, the lowest-ever gender pay gap, and expanding business investment,” the treasurer said.
“Annual inflation has more than halved from its peak in 2022 and is now lower than anticipated in the mid-year update but we know people are still under the pump.”
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