2024-25 Federal Budget

2024-2025 Federal Budget highlights

The Australian economy is on a narrow path. Economic growth is slowing under the weight of higher interest rates, as the RBA is focused on returning inflation to the 2%-3% target range - without doing too much damage to the labour market. In this process, a significant share of the Australian community is enduring a large rise in the cost of living, while some households are doing very well.

Major Policy Announcements

One of the cornerstones of the Budget is the Future Made in Australia strategy, with an investment estimated at $22.7 billion over the next decade. The Budget states that “this plan is about maximising the economic and industrial benefits of the net zero transformation and securing Australia’s place in a changing global economic and strategic landscape.”

For Individuals

To counter the cost of living the redesigned income tax cuts are similar in scale to the initially proposed Stage 3 income tax cuts, but with the focus shifted down to low-middle income earners. The initial Stage 3 income tax cuts were estimated to cost the Budget $105.7 billion from 2023/24 – 2027/28.
$3.5 billion will be spent on new power bill relief. This measure was widely expected but the scope has been widened since last year’s announcement on energy subsidies. From the first of July 2024, the government will provide rebates of $300 to every household in Australia.
The government would spend $1.9 billion to enhance Commonwealth Rent Assistance (CRA) by 10%, building on last year's 15% increase.
The government has supported tertiary educations students by changing the indexation of student debt, this change will be backdated to the 2023 year, estimating that this will reduce the current outstanding value of student debt by $3.3 billion, a student with the average debt of $26,500 will receive a credit worth $1,200 on their outstanding debt.
The Government has announced an $6.2 billion in new initiatives to assist in building more homes. $1 billion will be made available to the states to unblock utility and infrastructure bottlenecks that is preventing housing being built.
The Government will spend $3.4 billion over five years for additional listings in the Pharmaceutical Benefits Scheme (PBS), including treatments for certain types of heart disease and breast cancer.

For Businesses and Institutions

The government will introduce the Future Made in Australia Act and establish a National Interest Framework to identify priority industries that will guide the government’s investments worth $22.7 billion.

Key policy implementations as part of the Future Made in Australia include:

- A new ‘front door’ for priority project approvals $6.7 billion production tax incentive for the production of renewable hydrogen
- $1.7 billion to promote net zero innovation, including for green metals and low-carbon fuels.
- $1.5 billion to strengthen battery and solar panel supply chains.
- $7 billion production tax incentives for the processing and refining of critical minerals.
- $566 million to map Australia's geological potential to support net zero transition.
- $88.8 million for 20,000 new training places relevant to construction.
- $466 million to advance Australia's quantum computing capabilities.
- $449 million for advanced satellite data on climate, agriculture, and natural disasters.
- $290 million to extend the $20,000 instant asset write-off for small businesses.
- $10.8 million to support the mental and financial wellbeing of small business owners, and $519 million from the Future Drought Fund for farmers and rural communities.
New power bill relief will also extend to small businesses with approximately one million small businesses will receive $325.
Funding towards the government’s infrastructure investments is flagged to increase by $2.9 billion over 5 years from 2023/24. Western Sydney is a key beneficiary of increased spending, as well as Southeast Queensland. The government still commits to an over $100 billion pipeline over the next 10 years.
In the budget the Government also announce it will “provide $20.5 million to the Fair Work Ombudsman to help small businesses understand and comply with recent workplace relations changes.”

Fiscal policy in a high inflation environment

CommBank’s Chief Economist Stephen Halmarick discusses the highlights of the May 2024–25 Federal Budget and what they mean for various industry sectors.

Read the report

Key focus areas

Infrastructure/Housing

The Government has announced an $6.2 billion in new initiatives to assist in building more homes. $1.0 billion will be made available to the states to unblock utility and infrastructure bottlenecks that is preventing housing being built.
- $423.1 million will be provided to the states over five years to support social housing and homeless services.
- The first $500 million annual disbursement from the $10 billion Housing Australia Future Fund (HAFF) will be made in 2024/25.
- The Government will spend $1.0 billion of its National Housing Infrastructure facility for crisis and transitional accommodation for women and children, and youth fleeing domestic violence.
- $88.8 million will deliver 20,000 fee free TAFE and VET courses relevant to construction. $1.8 million will be spent to deliver streamlined skills assessments for around 1,900 migrants who wish to enter the Australian construction industry.
- Funding towards the government’s infrastructure investments is flagged to increase by $2.9 billion over 5 years from 2023/24. Western Sydney is a key beneficiary of increased spending, as well as Southeast Queensland The government still commits to an over $100 billion pipeline over the next 10 years.
Manufacturing
- As part of the Future Made in Australia policy package $88.8 million for 20,000 new training places relevant to construction, $1.7 billion to promote net zero innovation, including for green metals and low-carbon fuels and $1.5 billion to strengthen battery and solar panel supply chains.
- $134.2 million to better prioritise approvals for renewable energy projects of national significance, and support faster decisions on environment, cultural heritage and planning approvals., working with the states and territories through the Energy and Climate Change Ministerial Council to accelerate electricity grid connections.
Health
- The Government will spend $3.4 billion over five years for additional listings in the Pharmaceutical Benefits Scheme (PBS). Including treatments for certain types of heart disease and breast cancer.
- $2.8 billion is provided to boost access to essential health services and take the pressure off hospitals. A significant portion of this spending is targeted at older Australians to avoid hospital admission.
- Mental health also received a $888.1 million injection over eight years with the majority of this being used to establish a national low intensity digital mental health service that is free of charge and free of need for referral. It is expected to be up and running by January 2026. National Disability Insurance Scheme (NDIS) The government has forecast savings of $14.4 billion over the next four years due to reforms undertaken to slow the growth of the scheme. The reduced NDIS spending is the largest saving over the forward estimates to the budget bottom line.
Technology & Cyber
- As part of the Future Made in Australia policy package $466 million to advance Australia's quantum computing capabilities
- The government has previously announced a large $330 billion investment in the National Defence Strategy. In this Budget an additional $5.7 billion has been allocated to this strategy over the forward estimates.
- This Budget commits $288.1 million to support Australia’s Digital ID System. A National Robotics Strategy will also be released to promote the responsible production and adoption of robotics and automation technologies for advanced manufacturing in Australia.
Rural & Agriculture
- As part of the Future Made in Australia policy package $519 million from the Future Drought Fund for farmers and rural communities, $449 million for advanced satellite data on climate, agriculture, and natural disasters, and $566 million to map Australia's geological potential to support net zero transition.
- $10.8 million to support the mental and financial wellbeing of small business owners, will also help rural communities.
Education
- In the budget the government stated it wiil “commit $1.6 billion over 5 years, and an additional $2.7 billion from 2028–29 to 2034–35 to reform the tertiary education system and deliver Australia's future workforce. This includes $1.1 billion for reforms to university funding and tertiary system governance.”
- Over $500 million will be provided for skills and training in priority industries and to support women’s participation in these sectors.
- Broadening access to university from January 2026, needs‑based funding will provide per student funding contributions for under‑represented students.
- The Budget also provides $88.8 million to deliver 20,000 fee free TAFE and VET courses relevant to construction. $1.8 million will be spent to deliver streamlined skills assessments for around 1,900 migrants who wish to enter the Australian construction industry and investing $55.6 million to establish the Building Women’s Careers program to support women’s participation in key industries including clean energy and advanced manufacturing.

The Economists’ view

For 2023/24 the Budget is now expected to be in surplus by $9.3 billion (0.3% of GDP), up from the December 2023 MYEFO estimate of a deficit of -$1.1 billion (0.0% of GDP) and the original estimate of a deficit of -$13.9 billion (-0.5% of GDP). This will be the second year in a row of budget surplus for Australia – a good outcome and a significant contrast to the ongoing large deficits in most other major economies.

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