2024 Federal Budget Update
Chalmers on a reform holiday while the ‘frogs’ are being warmed up in the ‘frypan’.
This year's Federal Budget does not give me a lot on which to report. If it were not for such a rainy start to the year, one could have been forgiven for thinking the Federal Treasurer, Jim Chalmers, spent the first half of the year on an extended summer beach holiday.
Looking past the fluff of the short-term announcements, Chalmers’ long-term vision for the future of Australia appears to be focused on government interventions funded by a structural budget deficit of around two per cent of GDP.
Chalmers' rationale for the government’s interventionist policy and deficits is that left-leaning governments of America, France and Canada are doing it, so Australia can't be left out!
It's my observation that younger Australians have been distracted for the past decade by climate change, social justice, and Bitcoin. We have collectively taken our eye off the main game that underpins everything – the productivity of the Australian economy.
Now paying the price for not paying attention, younger workers have been slowly warmed up like the ‘frog in the frypan’. Not realising until it is too late, they are being ‘cooked’ by falling GDP per capita, declining real living standards, high inflation, and unaffordable housing. On top of this, we have a tax system that is overly reliant on taxing productive Australians who derive their income from labour rather than capital.
A young Paul Keating warned 38 years ago that without ambitious reform, Australia would become a “Banna Republic”. This warning rings true again today. The world is changing, and the tax system needs to keep up.
I hope Chalmers can return from his reform sabbatical and, like Keating did back in 1986, make the case for ambition change to make the country more productive and competitive, thus raising living standards for all Australians.
Key Federal Budget announcements:
(source: The Tax Institute, Federal Budget 2024-25 report)
Extend the small business $20,000 instant asset write-off by 12 months until 30 June 2025.
Change the government-funded Paid Parental Leave (PPL) scheme for births and adoptions. On or after 1 July 2025 eligible parents will receive an additional payment based on the Superannuation Guarantee (12 per cent of their PPL payments) as a contribution to their superannuation fund.
A $300 electricity rebate to all Australian households and a $325 rebate to eligible small businesses on 2024-25 bills.
Change the indexation rate for HELP debt loans to be the lower of the consumer price index (CPI) or the wage price index (WPI) in a given year. incentives, inducements or commissions from any such referrals.