The Budget shows an expected surplus in the underlying cash balance for 2023-24 of $9.3 billion, a $10.4 billion positive turnaround from the 2023-24 mid year forecast. Higher commodity prices and personal income tax receipts contributed heavily to this minor surplus. The Federal Government’s net debt is expected to remain reasonably stable as a percentage of GDP at between 20 and 22 percent over the forward estimates. Inflation is forecast by Treasury to moderate to below 3 percent per annum for 2024-25. Part of this is driven by the various initiatives outlined in the Budget.
On the climate and energy front, the Future Made in Australia – Making Australia a Renewable Energy Superpower package includes $19.7 billion over ten years from 2024-25 to support investment in renewable hydrogen, green metals, low carbon fuels, critical minerals and supporting clean energy manufacturing. The Budget includes two major tax credits that provide long term production support — the Hydrogen Production Tax Incentive and the Critical Minerals Production Tax Incentive.
The Budget has also confirmed revisions to the Stage 3 tax cuts. Notably, the new tax rates target low and middle income earners. The new tax rates retain the 5 marginal thresholds with the 19 percent tax rate reduced to 16 per cent and the 32.5 per cent tax rate reduced to 30 per cent. The government has sought to further address bracket creep by increasing the taxable income thresholds for 37 percent and 45 percent rates.
Overall, the Budget’s measures on energy and personal tax aims to provide households with more confidence that cost-of-living pressures will abate. Ultimately, propping up sustainable economic growth in the coming years.
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