With a slowing economy still teetering on the edge of a COVID-19 induced recession and at its weakest in 23 years, the Government has a challenge ahead in the lead up to an election year.
Managing inflation will be a top priority in this year’s budget. Inflation peaked at 8 per cent at the end of 2022, reducing to around 4 per cent at the end of 2023. Now sitting around 3.2 per cent in February 2024, persistent inflation has meant high interest rates remain. Many businesses held together by the COVID-19 era temporary insolvency initiatives have since disappeared. But it’s a balancing act; while we are in striking distance of a surplus, we still need to incentivise business and industry without stimulating more inflation.
This budget, we’ll see the implementation of initiatives such as the Stage 3 tax cuts, the payment of superannuation on Government paid parental leave from July 2025, and an increase in Defence spending. Treasurer Jim Chalmers has flagged key areas for spending include the renewable energy transition, education and skills, and health and aged care. However, it’s likely we’ll see minimal measures to address cost of living for households.
While it’s unlikely the Government will switch gears and hand down a big spending budget, the three biggest drivers this year are global uncertainty, cost-of-living pressures, and slowing growth. So what else can we expect to see in the May 2024 Federal Budget?
Join our virtual seminar to gain insight into proposed budgetary spending and its potential impact on Australian businesses, alongside a discussion on the tax implications and how businesses can prepare for them. |
