Waterford Financial Services – Budget Update

A business woman in an office

Waterford Financial Services – Budget Update

The recent budget contains several key initiatives that affect us all as Jim Chalmers attempts to walk the line between providing much needed cost of living relief without working at cross-purposes to the RBA and further stimulating inflation.

Let’s explore a high-level overview of how the budget may impact you and your financial planning journey.

Key Budget Highlights:

Current Surplus with Future Deficits

This year’s budget is expected to show a $9.3 billion surplus due to revenue windfalls from high personal and company tax revenue but set to slide into deficits in the medium term with a $28.3 billion deficit in 2024-25 & a $42.8 billion deficit in 2025-26 due to a slowing global & domestic economy and increased government spending.

Cost-of-Living Support

Labour has promised to broaden energy bill relief to include payment of $300 per year to all households and $325 per year to eligible small businesses, to increase the maximum rental assistance payment by a further 10% and amend the way that student loans are indexed to be the lower of the Consumer Price Index & the Wage Price Index.

Social Security & Aged Care

Welfare recipients were a focus in the budget and will benefit from an extension of the freeze on deeming rates, increased work flexibility for those on the Carer Payment, cheaper medications with $3 billion given to community pharmacies and $6.2 billion on Medicare, and $2.2 billion put towards aged care reforms & Royal Commission recommendations.

Taxation

Key initiatives on the taxation side include the extension of the $20,000 instant asset write off for small businesses, increases to low-income thresholds for the Medicare levy, and no changes to recently legislated 2024FY tax rates.

Superannuation

The government announced the introduction of 12% Superannuation to be paid on government-funded Paid Parental Leave entitlements to help close the super gender gap from 2025-26FY. Contribution caps were not announced in the budget, but it is worth mentioning that they will be indexed at the start of 2024-25FY and there will be increased opportunity to contribute to super to boost retirement savings.

Housing

There have been significant investments in housing, and crisis accommodation, including incentives for universities to build more student accommodation and $89 million put towards the training of 20,000 new tradies & home builders to put downward pressure on housing costs.

“Future Made in Australia” Initiatives

$22.7 billion has been put towards a mix of protectionist policies designed to take advantage of opportunities in the evolving global trade market and foster domestic industry that either support decarbonisation or increase economic resilience and security.

Economic Projections:

  • Real GDP Growth: Expected to grow modestly over the next few years at between 2% and 2.5%.
    Inflation and Wages: Inflation expected to fall within RBA target range by the end of 2024 and wages growth stabilizing at 3.25%.
  • Unemployment and Migration: Unemployment increasing to 4.5% over the next few years, net immigration falling to 260,000 and population growth down from 2.4% to 1.4% due to lower net immigration.
  • Public Debt: Expected to remain elevated at 35% of GDP and begin falling next decade.

Take Control of Your Financial Future

It is important to consider how these changes could impact your personal situation.

Contact us today to take control of your financial future and better understand how to navigate the shifting economic & regulatory landscape.

Complimentary Financial Health Check: Book a meeting.

Email: info@waterfordfinancialservices.com.au

Phone: 02 4961 5095

Please note, any proposed measures are subject to amendment and are not yet law. None of the above information considers your personal situation, it is general information and should not be construed as financial advice.