Millions of Australians have been eagerly waiting to see how the federal budget will impact their wallets, and now some of the details are finally here. In a pre-budget speech by Treasurer Jim Chalmers, he outlined the government’s economic roadmap for the coming year.
With global uncertainty and revenue forecasts, choices had to be made. Here’s a look at the key takeaways shaping Australia’s financial future.
Firstly, it’s important to note that this budget is somewhat unexpected. The original plan was to skip this budget in favour of an early election, but Mother Nature had other ideas. The arrival of ex-Tropical Cyclone Alfred threw a spanner in the works, delaying the election and necessitating this budget announcement.
Now, what can you expect? Treasurer Chalmers has promised ‘meaningful and substantial’ cost-of-living relief, which is music to the ears of many struggling with rising prices. However, he’s also made it clear that this relief must be ‘responsible’ and not fuel inflation further. It’s a delicate balance to strike, and all Australians are eager to see how it will play out.
The budget is expected to show a cash deficit of $26.1 billion, with revenue reductions totalling $11.3 billion over the next four years. Despite this, Chalmers has emphasised that the deficit will be much smaller than what was inherited from the previous government, showcasing what he calls ‘responsible economic management.’
Wages increased by 0.7 per cent in the December quarter, marking the slowest quarterly growth since March 2022, with annual wage growth reaching 3.2 per cent, while inflation saw a slight uptick. Unemployment remains low, which is a positive sign, but the overall picture is one of cautious optimism.
One of the most significant announcements for many is the proposed cap on Pharmaceutical Benefits Scheme (PBS) scripts at $25 from January 1. This could mean substantial savings for those with chronic health conditions, with the government estimating that four out of five PBS medicines will become cheaper as a result of the budget’s $689 million investment.
‘Cheaper medicines is another way we are helping with the cost of living while putting downward pressure on inflation—our number one focus. With cheaper medicines, more free GP visits and a stronger Medicare, we say to Australians, “We’ve got your back”,’ said Prime Minister Anthony Albanese.
Energy bill relief is also on the agenda, with bills expected to rise by up to 9 per cent from July. While Chalmers hasn’t committed to extending the $300 energy rebate announced for 2024, he has promised more cost-of-living help in the budget. This is crucial as electricity prices are a significant burden for many, particularly those on fixed incomes.
The budget will also reflect the economic impact of Alfred, with an estimated ‘immediate hit to GDP’ of up to $1.2 billion. This could mean ‘upward pressure on inflation,’ affecting building costs and prices for everyday items like fruit and vegetables.
On the international front, the budget will address the ongoing effects of trade tariffs, with Treasury modelling suggesting a minimal direct impact on GDP but potentially larger indirect effects.
Chalmers has stated that Australia’s response will focus on ‘more resilience, not more retaliation because more and higher tariffs will harm, not help our workers, our businesses, our industries and our economy.’
Finally, there’s a bit of mystery. With many of Labor’s key election policies already announced due to the Alfred disruption, there will be provisions in the budget for policies to be revealed during the campaign. This means ‘fewer surprises on budget night’ but potentially significant announcements down the line.
What does all this mean for you? It’s a mixed bag. The budget promises some relief for cost-of-living pressures, but with the caveat of fiscal responsibility. The cap on PBS scripts is a clear win for those with regular medication costs, and any energy bill relief will be welcomed. However, the overall economic landscape remains uncertain, and you must stay vigilant about how these changes will affect your day-to-day life.
We invite you to share your thoughts on the upcoming federal budget. What are your concerns? What measures would you like to see? Your insights are valuable. Join the conversation in the comments below.
Also read: Treasurer Chalmers promises support as energy prices bite
