The 2024/2025 government budget is here, unveiling winners and losers across various sectors. Households receive energy rebates, low-income renters get increased assistance, and taxpayers benefit from cuts. However, welfare recipients and first home buyers see little relief. Explore the detailed impacts and what they mean for you.
Oh, it's that time of the year again when the government comes out and shares their budget.
The budget reveals everything about how they're going to spend their money, and obviously, it's to benefit us and help the economy.
In this article, we're going to figure out:
So, if you're interested in my thoughts, then definitely keep reading.
Occasionally, we talk about the budget the government announces, whether you're in Australia or maybe overseas. But right now, we've been handed down the 2024-2025 budget, and it's supposed to be a game changer.
As we know, in the current economy, everyone talks about inflation. Now, I'm just going to leave this thought in the back of your mind as we go through this article: to me, it seems like you want to stop inflation by creating more inflation. That's sort of the big takeaway from this.
I'm not saying that you know it's a bad thing, I'm not saying it's a good thing. But I just feel like maybe the solution to the problem is only going to cause a bigger problem later. That's my thought. Let's kick into it.
In this budget that we've been delivered, yes, we have been given tax cuts, which is HUGE and it's something that we're going to definitely address and see how that flows on to property and property prices.
But along with that, we've got:
It's confusing, but let's break it down so it makes a lot more sense.
Now let's see who the winners are:
Number 1: Bill Payers
Households will receive a $300 energy rebate, the budget's biggest surprise sweetener. The scheme, costing $3.5 billion, also includes a $325 rebate for about 1 million eligible small businesses.
Now, do I have a problem with this?
Yes, and the reason I have a problem with this is: Wouldn’t it make more sense to create a longer-lasting solution rather than investing all this money for everyone to just have this rebate upfront?
Because to me, it just seems like the energy companies are going to go: “Oh cool, they got 300 bucks. It doesn't matter if we increase our prices for whatever reason we like.”
So instead, if $3.5 billion was spent on infrastructure and long-term sustainability, I feel like that would address the cost of living crisis a lot more effectively than simply a $300 payment because honestly, in 6 months you're not even going to remember this.
However, in 6 months if you actually had a plan, that $3.5 billion could be used in a better way. *But I'm not a politician, I'm a YouTuber, so what the hell do you care about?*
Let's continue…
Number 2: Low Income Renters
The government will invest $1.9 billion to boost the maximum rates of Commonwealth rent assistance by 10%. This measure will take effect on September 20th, increasing maximum rates to 40% higher than their May 2022 levels.
Okay….40% higher—and that's largely driven by the fact that:
So, obviously, rental pressures.
Now, if we're seeing 10% increases to what would effectively be the Commonwealth rent rate or “rental assistance” as they call it, the question I have is: “How much of this actually flows onto just higher rents?"
I don't know what to think about. Because if everyone gets that as the base payment, then naturally, you could also see a 10% increase in the rents as well.
Yes, short-term looks great on paper; this stuff is looking brilliant.
However, the longer-term effects make the solution to the problem becomes the problem itself.
Now, the next one is probably one that you have definitely been waiting for, and I actually agree with this and I think it was a great plan when they came up with it: the tax cuts.
Number 3: Taxpayers
The government has fulfilled its promise to provide every taxpayer with a tax cut, averaging $36 a week or $1,888 when they lodge their tax returns.
However, while everyone will still receive a tax cut, high-income earners making more than $140,000 would have benefited more under the Morrison government's original plan.
Simply put: Tax cuts mean more disposable income.
Some people will use that because they really need it for essentials.
Some people will use it for wants because now they have extra money—they can go buy a TV or clothes.
Then, some will use the extra funds to invest, and that is probably the right way to do it.
How many people are actually going to do it? I'm not sure. But the idea is that this would then stimulate the economy.
Now, if the economy is shrinking (which to be honest, in most industries in Australia, yes, they are shrinking), that's why per capita we're actually in a recession, and retail figures are absolutely poor.
But because inflation has such a large attention on it right now, it means that nobody really focuses on:
And yes, there's stuff that's going really well and stuff that's not going so well, so money like this could find its way back into retail.
Retail improves, then the economy looks a little healthier.
If this money is used to just simply save or pay down some of your loans, it actually could mean that the economy shrinks even further.
However, if the opposite could occur—if you try to stimulate the economy, we might see that spiral out a little bit because this would be the equivalent of stimulus.
Now, if you go back to the GFC in 2008-2009, Kevin Rudd came out and said: "Hey, everyone gets some money."
It’s free stimulus money, right? So they went out and gave all this money.
People would spend it, the stores would make profits, and the profits meant that people could hire more people and you'd restart the economy.
That’s effectively what's happening here, except we have inflation as a problem.
So, when you have inflation, you really want things to slow down and contract.
That's why it's so difficult to be a Treasurer or an economist right now because nobody knows actually how things could break.
Obviously, something is going to break. It's not a matter of “if,” it's a matter of “when,” and based on that is how we go and say: "Oh well, if the economy crashes, that means property prices have to go down.”
It doesn't really have to work like that.
Let's go and see who else will be winners in this budget.
Number 4: Australians who need prescription medication
I like that pharmaceutical benefits scheme will cap the cost of prescription medications at $31.60 for the next year, and will freeze the cost of prescriptions for pensioners and Concession card holders at $7.70 for the next five years.
Number 5: Age care workers
The government has committed to boosting wages for direct and indirect age care workers, with the exact amount to be determined once the Fair Work Commission hands down its decision.
Number 6: Childcare Workers
Now. Childcare workers have also been promised a wage increase, however, no specific figures were given.
But again, at a very base level, when income goes higher for people they can either:
These effects trickle through the economy and into asset prices as well.
Number 7: Women
Women are also big winners in this year's budget. The budget includes several measures particularly aimed at women.
One of the biggest costs will be paying superannuation on paid parental leave, amounting to: $1.1 billion over the four forward estimate periods, with annual costs reaching $623 million from July 2028.
The government is also investing in:
Number 8: Small Businesses
Small businesses also benefit from the budget. The $20,000 instant asset write-off, which was slated to end on June 30th this year, will be extended for another 12 months.
Additionally, 1 million small businesses will benefit from the $325 energy rebate, provided they meet the eligibility criteria.
Now we're going to cover the really high-level losers and how it may affect you because it is very important when we talk about housing.
Why? Because some of the stuff they've said in this budget really blows my mind.
Number 1: Welfare Recipients
Now, some of the losers are welfare recipients. Despite loud calls for the government to increase welfare payments, people on JobSeeker and Youth Allowance won't receive any increases.
Their rates will remain at $55 and $45 a day, respectively.
Number 2: First Home Buyers
First home buyers are also among the losers, as no additional measures have been announced for them. The budget reiterates Australia's need for more housing stock.
A total of $6.2 billion has been allocated to building more homes through various schemes, with federal, state, and territory governments committed to: Constructing 1.2 million homes by 2029-2030 under the National Housing Accord.
However, I'm pretty sure that's not going to happen…but, okay.
Number 3: Migrants
Migrants are also among the losers in this budget.
The government is determined to reduce the net migration intake from 528,000 last year to 260,000 next year.
They said this reduction is necessary to alleviate pressure on the housing market.
Now, it's time to rant, guys. I'm going to keep it flat.
Why would you introduce so many migrants in the first place to create the problem, and then not have enough houses, and now you're saying: well, we'll halve them by 50%?
When you look at the long-term averages, 260,000 is still a lot.
And when you think about the fact that we have a dire situation right now, 260,000 on top of what we already have is still going to put more pressure on the housing market!
On the flip side, you're saying: “Yes, we're promising 1.2 million homes.”
If you're actually going to make 1.2 million homes, you'd probably say: “Well, yeah, let the migrants come in because we've got enough housing.”
But, when you don't have enough confidence in building the 1.2 million, you’ll be like: “Maybe we should address migrants.”
There might be a bit of an agenda going on here, but here are my concluding thoughts.
I make a lot of jokes and nobody should take me seriously at this point.
What I am worried about is: How much of this is actually a long-term solution rather than a short-term solution?
Yes, you can go out and say: “Well, yeah, next year, we'll just have fewer migrants come in.”
But we have a problem now, and yes, we can go and build 1.2 million homes by 2029 and 2030, but the numbers that you're actually getting right now are so low.
When you couple that with:
You’ll find yourself in a bit of a pickle.
You can go and promise the world, but unfortunately, it seems like a bit of a nothing burger. That's my personal opinion.
Yes, there are going to be smaller winners, and it might directly influence you to the point you’ll say: "Well, hey, actually this budget's great for me."
But, you might be one of those few who go: "This actually screwed me over."
To recap, the government's newly released budget unveils both winners and losers, with measures aimed at addressing various economic challenges.
However, the long-term effectiveness of these solutions remains uncertain, leaving room for questions about their impacts on the broader economy.
So I hope you guys have realised and learned something from me in this article.
Catch you soon!
Thanks, guys!
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