2024 Federal Budget Breakdown
Written by: Danny Grigg | Accounting Team
On 14 May 2024, the Treasurer delivered the 2024 Federal Budget. What were some of the policies announced and what does this mean for you?
Cost of Living Pressure
A hot topic at the present is the cost-of-living pressure.
The Treasurer announced several policies to help ease the cost-of-living pressure on Australians, including:
- Tax cuts;
- Power bill relief;
- Support for renters;
- Cheaper medicines;
- Supporting students;
- A fair go for consumers;
- Growing wages; and
- Enhancing support services.
Tax Cuts
All 13.6 million Australian taxpayers will receive a tax cut, on average this will mean an extra $36 per week!
Tax brackets and changes:
- The current tax-free threshold of $18,200 remains;
- For the $18,201 to $45,000 tax bracket, the tax rate has decreased from 19% to 16% for each $1 over $18,200. If you earn $40,000 a year your tax saving will be $654;
- For the $45,001 to $135,000 (previously $120,000) tax bracket, the tax rate has decreased from 32.5% to 30% for each $1 over $45,000. If you earn $100,000 the tax saving is $2,179;
- For the $135,000 (previously $120,000) to $190,000 (previously $180,000) tax bracket, the tax rate remains at 37% for each $1 over $135,000. If you earn $150,000 the tax saving is $3,729; and
- For the $190,000 (previously $180,000) tax bracket, the tax rate remains at 45% for each $1 over $190,000. If you earn $250,000 the tax saving is $4,529.
The tax cuts mean that Australians will keep more of what they earn, with the increases in take-home pay reducing the disincentive to take on more hours.
It is expected that the tax cuts will lead to an increase in the supply of labour by around 930,000 hours a week or an equivalent of 25,000 full-time jobs. This increase is expected to be driven mainly by women and individuals in the low to middle-income range of $25,000 to $75,000.
There has also been an increase in the Medicare Levy low-income threshold. This will mean more than 1 million low-income taxpayers will continue to be exempt or pay a reduced Medicare Levy rate.
Energy Bill Relief
From 1 July 2024, it is expected that more than 10 million households will receive a rebate of $300 on their electricity bills. Also, eligible small businesses will receive a rebate of $325 on their electricity bills.
Support for Renters
It was announced the Government would provide $1.9 billion over five years for Commonwealth Rent Assistance to increase the maximum rates by a further 10%.
This builds on the 15% increase in September 2023 and takes the maximum rates to over 40% higher than in May 2022. This will impact on Australians receiving social security benefits such as Age Pension, Carer Payment or Disability Support Pension, Austudy or Youth Allowance, Parenting Payment and Jobseeker Payment.
Cheaper Medicines
The Government is working on the Eighth Community Pharmacy Agreement to deliver cheaper medicines, improve health outcomes and to secure a strong community pharmacy sector.
This will be supported by up to an additional $3 billion in funding. As part of this agreement, there will be a one-year freeze on the maximum PBS patient co-payment for everyone with a Medicare card and a five-year freeze for pensioners and other concession cardholders. Usually, the maximum co-payment for patients increases with inflation each year.
Due to these changes, pensioners and concession cardholders will pay no more than $7.70 (plus any applicable manufacturer premiums) for up to five years.
Supporting Students
There will be debt relief for everyone with a HELP debt, VET Student Loan or Apprenticeship Trade Support Loan.
This will provide relief for everyone with HELP and other student loan debts. The indexation rate has previously been based on the Consumer Price Index (CPI) and is applied to the balance of the debt on 1 June each year. The Government announced that the indexation will now be based on the lower of the CPI or the Wage Price Index. This will be backdated to debts/loans that existed at 1 June 2023. On an average debt balance of $26,500 at 1 June 2023, the savings would be $1,190 for the 2023 and 2024 years.
A Fair Go for Consumers
The Government is examining pricing and competition in the supermarket sector.
As a part of this, they appointed Dr Craig Emerson to review the Food and Grocery Code. Dr Emerson’s interim report recommended the Code be mandatory and major breaches receive penalties of up to 10% of turnover. Since then, the Government has directed the ACCC to undertake a 12-month inquiry into pricing and competition in the supermarket sector to ensure Australians are paying a fair price for groceries.
Growing Wages
The Government is standing up for low-paid workers and has committed to funding the Fair Work Commission’s decision to increase award wages for aged care workers.
They have also committed to providing funding towards a wage increase for the early childhood education and care workforce. Details are still to be finalised following the Fair Work Commission processes that are currently underway.
Enhancing Support Services
The Government is boosting support for Australians facing acute and urgent cost-of living pressures.
They will provide $138 million over five years to meet the demand for crisis support which includes emergency relief. The government’s Financial Wellbeing and Capability Activity program supports over 580,000 clients and women make up over 60% of this figure.
There has been a freeze on the social security deeming rates for financial investments, which will keep these rates at current levels until 30 June 2025. This freeze will benefit 876,000 recipients of social security benefits including 450,000 aged pensioners.
There is also support for students who need to give up paid work during on-the-job placement which is a requirement of their course. This will impact more than 73,000 students in the nursing, midwifery, teaching and social work sectors. Students will receive a Commonwealth Prac Payment of $319.50 per week for the duration of their placement. The intention of this is to alleviate the monetary burden on students during placement and increase the retention in courses for sectors that are experiencing shortages.
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