2024/25 Budget Snapshot for Business
Seven Word Summary: The impact of government budgets on business.
It’s that time of year, again — both the Federal Government and WA State Government handing down their respective budgets.
Both budgets indicate a strong economic position in the short-term, focusing on easing cost of living pressures faced by households and businesses.
“How will these budgets impact you and your business?”
So glad you asked. Here’s our take…
As the economy starts to show signs of improving following the COVID-19 pandemic, inflation and cost of living remain a key focus for both the Federal and WA State Government.
The latest Treasury figures suggest that the inflation rate will moderate to below 3% per annum in 2024-25 and beyond.
The Federal Budget has delivered significant cost of living measures, aimed to ease the burden of high inflation that has hit the pockets of consumers and businesses.
The cost-of-living relief plan includes:
1. Tax cuts for every Australian: from July 1, all 13.6 million Australian taxpayers will receive a tax cut, aimed to ease cost of living pressures felt by ‘middle Australia’. These tax cuts are a redesigned version of the stage 3 tax cuts delivered by the previous Coalition Government.
2. Energy relief: $3.5 billion in energy bill relief will delivered to households and small businesses. From July 1, more than 10 million households will receive a total rebate of $300 and small businesses will receive $325 on their electricity bills throughout the year.
3. Rent assistance: $1.9 billion over 5 years will be delivered to increase the Commonwealth Rent Assistance by 10%, aimed to tackle the pressures of the rental crisis.
4. Cheaper medicines: $3 billion in funding to deliver cheaper medicines, improve patient health outcomes and secure a strong community pharmacy sector.
5. Student debt support: $3 billion in student debt through the Higher Education Loan Program will be wiped, supporting 3 million Australians.
In addition, the WA State Government has delivered cost of living support for Western Australians and their businesses.
The cost-of-living measures include:
1. Energy relief: $400 electricity credits will be delivered to all households and more than 90,000 small businesses across WA worth $492 million. An additional $734 is eligible to support pensioners and $1,086 for eligible families.
2. Free public transport: $41 million worth of free public transport has been delivered for school-aged students, saving a family with 2 children up to $560 a year. Public transport will also be free for everyone on Sundays and during the summer period next year.
3. Students: $103 million for the WA Student Assistance Payment, with $250 for each high school student and $150 for each primary school and kindy student.
What about measures for small and medium sized businesses?
Both the Federal and WA State budgets have significant measures that may impact your business.
The Federal Budget delivers a range of key initiatives for businesses, with the main winners being Australia’s manufacturing and mining industries.
Future Made in Australia: $22.7 billion will be invested over 10 years to boost manufacturing and green energy investment through the new Future Made in Australia program. In addition, there are further initiatives which include:
1. A $1.7b Future Made in Australia Innovation Fund, to develop new industries such as green metals and low carbon fuels, with $520m allocated for net zero trade and engagement.
2. $13.7b in production tax incentives for green hydrogen and processed critical minerals.
3. $566m to map the geological potential of Australia to improve critical minerals and groundwater mapping.
4. $835.6m to establish solar panel manufacturing in Australia, and $549m to support battery manufacturing to assist the net-zero transition.
Skills and training: The Federal Government has delivered $1.8 million for streamlined skills assessments for around 1,900 migrants from comparable countries to work in Australia’s housing construction industry. An investment of $88.8 million has been included for 20,000 fee-free TAFE, Vocational Education and Training, and pre-apprenticeship program places to train more construction workers.
To assist the net-zero transition, the Budget includes $500 million to build skilled workers in priority industries such as clean energy and construction and manufacturing and supporting women in the workforce.
Instant asset write-off: Businesses with turnovers up to $10 million will also be able to write-off assets for another year of up to $20,000. The Opposition have outlined their plans for the instant asset write-off to be increased to $30,000 and made permanent, if elected at the next election.
The WA State Budget also includes a number of key initiatives that impact businesses.
Manufacturing and clean energy: Regional WA will receive $26.4 million for clean energy manufacturing, including for standalone power systems and wind turbine manufacturing. In addition, there is $500 million to prepare land in both Perth and regional WA for industrial use, including for renewable hydrogen projects and critical mineral processing.
A further $200 million will be spent on common user infrastructure for critical minerals processing. To deliver development-ready land, the WA State Government has invested $35 million in the Goldfields and Kimberley. Streamlining approvals is a welcome outcome from the Budget, with $36.4 million to cut green tape for major projects across WA.
Skills and training: The Group Training Organisation Wage Subsidy Program will be expanded, with a $21 million investment to help boost the construction industry. This includes an additional 150 places for apprentices that will be funded and made available immediately. There will also be $1,000 cash bonus payments to support apprentices under the Apprentice Tool Allowance, a $52.3 million investment.
Both the Federal and WA State Budget have returned strong short-term positions on the back of WA’s booming iron ore royalties, but the main concern is the Federal Government’s large deficits in the near future.
With a key focus on cost-of-living relief for consumers and businesses, we believe that the main focus from here must remain on returning inflation back to the target band and supporting Australian businesses to be competitive on the global stage.
Ready to continue the conversation?
From politics to policy at every level, Seven Patterns helps leaders and organisations to engage with and navigate the machinery of government, to identify potential implications and opportunities.
Reach out for perspectives that are bespoke to your business.
Let’s talk — hello@sevenpatterns.com