2024/25 Federal Budget Overview

The Federal Budget has been released, and for the current financial year, it is once again in surplus, albeit by a smaller margin than last year: $9.3 billion. This is better than the deficit which was forecast in last year’s budget. However, forecasts are showing four consecutive deficits beyond this financial year, which are estimated to push gross debt over $1 trillion in 2025-26.

Many of the headline items have already been announced or leaked, so some are being heated back up to make us feel good. Notably, budgets are always framed around winners and losers, thanks to the media, and various groups may be better or worse off. Still, some of these win/loss categorizations might raise an eyebrow because ultimately, they’re done by political journalists and economists. Two groups somewhat removed from the realities of daily life in Australia!

Always with forecasts, be they investing or economic, they could be better or worse, so they need to be taken with a grain of salt when they look beyond a quarter or half year. Last year the budget forecast inflation fell to 3.25% this year, the last quarterly reading sat at 3.6%. Close, but we await the next CPI reading.

Cost of Living

The government will extend its energy bill relief to all households, at a cost of $3.5 billion. Last year’s scheme applied only to low-income households, but this year all households will receive a one-off $300 rebate, while small businesses will be eligible for $325.

This is in addition to various state schemes, the most notable in Queensland where the state government is knocking off $1000 off all energy bills, and Western Australia where there’s a $400 saving. Other states have low-income rebates.

The government has said this won’t be inflationary, even suggesting it will reduce inflation. This may be true if it removes inflation from energy prices (probably the intent of the rebate), but if you’ve got an extra $1300 in your pocket via electricity savings, as in Queensland’s case, it may well get pumped straight back into the economy through spending!


These changes were announced some time ago now, but very simply, from 1 July 2024:

The 19% tax rate will be reduced to 16%.

The 32.5% tax rate will be reduced to 30%.

The income threshold above which the 37% tax rate applies will be increased from $120,000 to $135,000.

The income threshold above which the 45% tax rate applies will be increased from $180,000 to $190,000.

Almost everyone sees a cut, except for those in the tax-free threshold, who pay no income tax. Earners in the higher thresholds are getting a tax cut that’s now less than was previously in the Stage 3 cuts. For those in the middle, sharp minds may recall the Low & Middle Income Tax Offset which disappeared in 2022-23. For income earners in those income brackets, it’s a case of moving closer to where they were a couple of years ago.

The main difference for those earners, is the LMITO came when a person’s tax was done. These tax cuts will be seen in their regular pay packets.


Aside from energy rebates, pensioners will likely see the most benefit from the government’s move to freeze the cost of medicines on the pharmaceutical benefits scheme. PBS co-payments are normally tied to inflation, but the government will freeze prices until 2026 for the general population, and until 2030 for pensioners and concession cardholders. 60% of PBS prescriptions go to seniors and concession cardholders.

Deeming rates are held at 0.25% at the lower end and 2.25% at the higher end for another year. The deeming rate usually moves in line with the RBA cash rate, but was frozen in 2022 in a bid to ease cost of living pressures. This is said to help around 450,000 seniors.

Aged Care

$531 million for another 24,100 Home Care Packages in 2024–25. This will help reduce average wait times and enable people to age at home if that’s their preference.

$110 million over four years will support an increase in the Aged Care Quality and Safety Commission’s regulatory capabilities.

The Government is providing $87 million for workforce initiatives to attract nurses and other workers into aged care.


There’s up to 22 weeks of super payments for the recipients of Commonwealth parental leave payment, starting in the next financial year.

Unfortunately, the tax on earnings on super balances above $3 million has not been amended.


The budget will knock $3 billion from HECS/HELP debts for 3 million university students. Essentially indexation of debts is no longer done using annual inflation, but annual wage growth. This is also revisionary and takes into account last year’s 7.1% increase, this will be revised to 3.2%. This should put some people in credit if they made final payments in the recent financial year.

However, the timing of indexation calculations remains unchanged. People with HECS/HELP debts generally pay them off during the year, but the payments are not applied until after people do their tax post June 30, while indexation is calculated on June 1. The quirk is while students have paid down debt, the indexation is then applied on money they’ve already paid off.


Developers, tradespeople, and social housing providers will benefit from $4.3 billion worth of new expenditure on housing There is an extra $1 billion for state governments to build infrastructure for new homes, there is also $1.9 billion in extra concessional financing for providers and charities to help deliver new social and affordable dwellings. There is nearly $840 million for housing in remote Northern Territory communities.

Visas will be fast tracked for 1900 migrants for housing construction, which is a positive because constructions skills are now needed.

Renters will have an additional $1.9 billion put towards increasing the maximum payment of Commonwealth Rent Assistance by 10%. This is the first back-to-back increase in more than 30 years, with a 15% increase in last year’s budget. Renters are one of the groups placed in the winner’s basket by the media. This might be true if we ignore the context of record-breaking rent increases, which soared by 8.6% in the year to March, and a record low vacancy rate of 0.7%! One suspects they’d just prefer a less competitive and less stressful rental market.

Instant Asset write off.

This one has been extended again for small businesses with an annual turnover of less than $10 million. They will be eligible to immediately deduct the full cost of eligible assets costing less than $20,000 until Jun 30, 2025.


When looking at budget documents it’s always humorous to have last year’s documents handy. Last year’s budget suggested net overseas migration for the 22/23 year was increasing from 235,000 to 400,000, it ended up being 528,000! In last year’s budget the 23/24 was forecast at 315,000, that’s now revised to 395,000. Next year is forecast down to 260,000, as it was in last year’s budget, so it will be an interesting figure to keep an eye on.

Next time you hear “housing crisis” remember the increases in rental assistance won’t mean much with a vacancy rate now under 1% and building approvals at decade lows. It’s nice the government is planning a supply response, but it looks wildly ambitious, and they’ve got a lot of roofs to catch up on given forecasts blew out so significantly.

This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs

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