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In his third budget announcement on Tuesday evening, Treasurer Jim Chalmers emphasised a dual focus on aiding struggling Australians and fortifying the nation's future. Central to discussions were alleviating the cost of living pressures and managing inflation, with the government pledging measures to reduce both, while exercising fiscal prudence.
With over $24 billion allocated for new expenditures over the next five years, a significant portion will be spent within the next 12 months to reduce everyday costs such as electricity bills, rents and medical expenses. Despite this significant spend, Treasury forecasts anticipate a decrease in inflation to 2.75% by the end of the fiscal year, down from 3.6% in 2024, with a projection of being below 3% by Christmas.
Households will experience relief through various measures including energy bill rebates and upcoming tax cuts. Commencing July 1, 2024, over 10 million households will automatically receive a $300 energy bill rebate annually, with four rebates of $75 for those paying their bills quarterly. Furthermore, the stage three tax cuts, set to benefit all taxpayers, particularly low and middle-income earners, are expected to inject an average of $1,888 annually, or approximately $36 per week, into taxpayers' pockets.
Additionally, the Government plans to raise the Medicare levy low-income thresholds, ensuring individuals and families below these higher thresholds are fully exempt from paying the levy.
Funding has been allocated to include superannuation contributions in government-funded paid parental leave. Projections expect this will increase the retirement savings of working parents who have taken up the government's paid parental leave scheme by an estimated $4250 on average, over the next four years.
Small businesses are also in line for assistance, with around 1 million expected to receive a $325 rebate in 2024-25 towards their energy bill. The $20,000 instant asset write-off threshold for small businesses will be extended for another 12 months until June 30, 2025, under simplified depreciation rules, encouraging investment in eligible assets.
Students stand to benefit from a $3 billion reduction in student debts, achieved by indexing HECS and HELP debts to the lower of the consumer price index, or the wage price index and backdated to June 2023. Approximately 3 million graduates will receive an average reduction of $1,200 in their student loans due to this measure. This will result in a revenue decrease of $239.7 million for the government from 2023-24 to 2027-28.
