Australian Federal Budget 2024-25: Marsh McLennan analysis

Expert analysis and key insights from the  Marsh McLennan group of companies on how the Australian Federal Budget 2024-25 will impact businesses.

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.

The Budget in detail

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