Australian Federal Budget 2024-25: Marsh McLennan analysis
Cost-of-living relief was a central focus of this year's Budget, with measures including a new $300 energy rebate for all households and increased support for low-income renters.
Federal Treasurer Dr Jim Chalmers' third budget seeks to provide ‘responsible’ cost-of-living relief without aggravating inflation. The 2024-25 budget, described as a Budget for the ‘here-and-now’, highlights measures aimed at immediate challenges amid global economic uncertainty, such as higher interest rates and ongoing inflation.
Delivering a surplus of $9.3 billion, Dr Chalmers made a promise that relief initiatives would not fuel inflation, calling Australia among the ‘best placed economies to manage these uncertainties and maximise our opportunities’.
Key highlights:
- Cost-of-living measures: Centred on changes to the Stage three tax cuts, this includes energy bill relief for all Australian households, a boost to the Commonwealth Rental Assistance Program, and adjustments to the indexation of HECS and HELP debts.
- Future Made in Australia Act: Aiming to support new and renewable industries in Australia, this includes subsidies for solar panel manufacturing in the Hunter region and an investment in a private firm to build a quantum computer in Brisbane.
- Housing initiatives: Includes 20,000 fee-free TAFE and pre-apprenticeship places to help meet the estimated need for 90,000 additional construction workers required to achieve the Government's target of building 1.2 million homes over the next five years.
- As inflation expectations in the Budget align closely with those of the Reserve Bank of Australia, an immediate impact on Australian equity and bond markets is unlikely.
- Some segments of the resources sector may benefit in the short term from the Government's support for processing critical minerals and developing ‘green’ metals, as a result of the Future Made in Australia Act subsidies.
- While further increases in Government spending resulting in ongoing and growing future deficits will moderate future economic growth (from increased interest costs, inflation, or future higher taxes), we expect markets will have largely priced this in.
- The Government will make superannuation contributions on Government Paid Parental Leave payments from 1 July 2025.
- Contrary to expectations, no further details were provided on the Government’s Payday Super initiative.
- The Budget focuses on skilling Australians for future, priority industries.
- The demand for wage increases is likely to ease, but not disappear.
- There is an opportunity for more comprehensive future workforce planning.
- $888.1 million invested in mental health support, including care for mild mental health concerns.
- Health system investment including a further 29 Medicare Urgent Care Clinics.
- A focus on diversity and equity including $56.1 million in funding for women's healthcare.
- A 2-year freeze on the cost of PBS-listed medications for Medicare card holders and five years for concession card holders and pensioners.
- Additional $2.2 billion for aged care, including $1.4 billion over the next five years to upgrade systems and digital infrastructure to implement the new Aged Care Act in July 2025.
- $531 million will be used to release 24,100 more Home Care Packages in 2024-25.
- $882 million to support older Australians in avoiding hospital admissions, facilitating earlier discharges, and improving transitions to appropriate care.
- The Government reaffirmed its commitment to fund the Fair Work Commission's decision to award a second stage of up to a further 13.5 percent wage increase for aged care workers, covering direct and indirect associated costs.
- The Budget acknowledges the weak and uncertain global economy and heightened geopolitical tensions, highlighting the need to invest in building Australia’s resilience.
- An additional $50 billion in defence spending is a key measure in response to geopolitical tension.
- The Future Made in Australia package commits $22.7 billion to incentives for facilitating Australia’s net zero transition and benefiting from the global energy transition. Additionally, it invests ~$0.8 billion in initiatives to increase resilience to weather and climate-related impacts.
Client briefing webinar: Watch replay
© 2024. All rights reserved. Marsh Pty Ltd ABN 86 004 651 512 ("Marsh"); Mercer (Australia) Pty Ltd ABN 32 005 315 917 (“Mercer”). One International Towers Sydney, 100 Barangaroo Avenue, Sydney NSW 2000.
Marsh and Mercer are businesses of Marsh McLennan [NYSE:MMC] (“MMC”).
This document and any recommendations, analysis, or advice provided by MMC (collectively, the ‘MMC Analysis’) are not intended to be taken as advice regarding any individual situation and should not be relied upon as such. This document contains proprietary, confidential information of MMC and may not be shared with any third party, including other insurance producers, without MMC’s prior written consent.
Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors.
Any modelling, analytics, or projections are subject to inherent uncertainty, and the MMC Analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and MMC, MMC shall have no obligation to update the MMC Analysis and shall have no liability to you or any other party with regard to the MMC Analysis or to any services provided by a third party to you or MMC.
Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.
This document is general in nature only and does not constitute an offer or a solicitation of an offer to buy or sell securities, commodities and/or any other financial instruments or products or constitute a solicitation on behalf of any of the investment managers (including Funds managed by Mercer), their affiliates, products or strategies that Mercer may evaluate or recommend. This document is not intended to be, nor should be construed as, financial product advice. It does not take into account your objectives, financial situation or needs. You should therefore consult a financial adviser before making any investment decision.