Breaking Down 2024 Federal Budget

Each year, the Federal Government sets out its budget to show where it will spend money on new initiatives, and where the taxes to pay for them come from. Budgets are central to any government’s agenda. They outline its vision for the country and show where its priorities lie.

This year’s budget delivers a number of wins for working people. It also balances a range of competing concerns. Its priorities are easing cost of living pressures today, and seizing opportunities in new manufacturing industries tomorrow. Despite making large spending commitments in both areas, the budget also keeps up the fight to tame inflation. New figures suggest inflation will likely return to a healthy range this year. In addition, the government has improved its debt position – handing down a second straight budget surplus.

An overview of key commitments to address cost of living pressures and develop manufacturing, and other major announcements affecting AWU members, is below.

Cost of living relief

While inflation has begun to ease and wages have started to rise, millions of households continue to struggle with the rising cost of living. To assist working people, the government will deliver a substantial $107 billion in income tax cuts over the next four years. These will focus on relief for low and middle-income earners. All households will also receive a $300 rebate on their electricity bills, with extra support provided to low-income renters.

Income Tax Cuts

What is it?

The government will alter changes to the income tax system planned by Scott Morrison’s government to focus more on relief for low and middle-income workers. Under the amended plan, the tax rate on workers’ first $45,000 of pay each year will be lowered to 16%, from 19% at present.

The government will also reinstate the 37% rate for earnings from $135,000 to $190,000, and slightly lower the income level at which the top tax rate of 45% applies.

What does it mean for you?

The reforms will deliver bigger tax cuts to 84% of workers, and all workers earning under $145,000, than under the Morrison government’s plan. A worker on the average wage will be $1498 better off each year. Unlike the former government’s plan, the reforms also provide tax cuts to the lowest-paid workers (those earning under $45,000).

The changes to the highest tax brackets also preserve fairness in the tax system – ensuring those on higher incomes continue to pay a larger share.

Energy Bill Rebate

What is it?

All Australian households will receive a rebate of $300 on their energy bills over the next year.

What does it mean for you?

This measure will help to ease cost of living pressures for all households. It will do so without increasing inflation; The rebate will be delivered through reduced electricity bills every three months, rather than provided as a separate payment.

Higher Rent Assistance

What is it?

The government will spend $1.9 billion over five years to increase its rent assistance payment by 10%. This is available to low and very low-income people in rental housing. The current maximum payment is $188 per fortnight.

What does it mean for you?

Renters have seen especially large cost of living increases. Rents in capital cities increased by an average of 8.5% in the last year alone (and 5.4% elsewhere). This increase to the rent assistance payment builds on a 15% increase delivered last year. While it will not address rental stress for all, it will provide respite for many of the most vulnerable renters. But further action is required to address high house prices (see ‘Other announcements’, below).

Manufacturing support

The budget delivers the first stage of the government’s ‘Future Made in Australia’ plan to develop new manufacturing industries. Government will partner with the private sector to build new industries where Australia has strong potential, or where it needs to make goods locally to guard against unstable foreign supply chains. This budget will see $22.7 billion invested by government – very large for any budget – with a focus on the hydrogen and critical minerals industries. This is expected to enable tens of billions in further investment from the private sector.

While this is very welcome, it is important that funding comes with strings attached: Government must require that all projects it funds deliver safe, secure and well-paid jobs. The AWU will also campaign for future stages of the scheme to support other promising industries, including low emissions metals and liquid fuels.

It is also that existing manufacturers under pressure from the energy transition receive more support. To build new manufacturing industries, Australia will need to retain and build on its current workforce and capabilities. This must receive more attention in future budgets.

Critical Minerals

What is it?

The government will provide $7.1 billion in tax concessions over 11 years for processing and refining of critical minerals. The budget provides a further $1.2 billion to support targeted mining, processing and refining projects in WA, Queensland and the NT.

What does it mean for you?

Critical minerals are central to the energy transition. They are found in most renewable energy technologies (and other high-value products). Australia has large reserves of many critical minerals and a capable resources workforce, but exports the vast majority as raw materials. Local refining and processing allow Australia to extract greater value and thousands more jobs from these resources. It also enables local production of renewable technologies. The budget will support major new investments in critical minerals processing and refining. It will also allow Australia to compete with other countries that subsidise critical minerals projects.

Hydrogen

What is it?

The government will deliver $6.7 billion in tax concessions over ten years for production of renewable hydrogen. The budget also provides $1.3 billion in new funding for the ‘Hydrogen Headstart’ program – a separate scheme offering financial support to hydrogen producers.

What does it mean for you?

Renewable hydrogen will support much activity in the low emissions economy, often as a replacement for gas. Australia can become a leader in renewable hydrogen: Its high-quality renewable energy resources and favourable geography allow it to produce the product cheaply. The budget will unlock a number of large new hydrogen projects. These will deliver thousands of new jobs, chiefly in construction. This funding will also position Australia well against other countries trying to attract investment in hydrogen.

The AWU believes Australian-made hydrogen should support Australian manufacturing and local needs. We will campaign to ensure that government-backed schemes prioritise projects that supply the domestic market.

Metals and liquid fuels

What is it?

The budget provides $1.7 billion to fund early-stage work in select manufacturing areas including low emissions production of metals, such as iron and aluminium, and green liquid fuels.

What does it mean for you?

Clean metals and fuels are two emerging, strategic industries where Australia has both the natural and human resources to be a leading player. While early-stage funding for these activities is a good start, it is unlikely to be sufficient. The AWU believes there is a case for much larger supports and will be advocating further action.

Solar Manufacturing

What is it?

The budget provides $835 million over ten years to aid development of local solar manufacturing capabilities, including via grants and production subsidies. Most details of the program’s design and delivery remain unclear.

What does it mean for you?

The program is chiefly intended to boost Australia’s energy security. With limited capability to produce solar panels locally, Australia is vulnerable to supply chain disruption. The scheme will also deliver some manufacturing jobs, including in the Hunter region. But its modest scale means it likely cannot support the growth of a major industry. That said, many solar manufacturers are also eligible for other, larger government support programs.

Defence Manufacturing

What is it?

Australia will spend $50.3 billion over ten years to fund new spending commitments associated with its defence strategy and investment program.

What does it mean for you?

The budget marks an especially large commitment to defence – taking defence spending much higher than the level planned by the former government. It will support significant local manufacturing of defence assets and technologies over the next decade.

Other Major Announcements

Super on Paid Parental Leave

What is it?

Paid Parental Leave (PPL) provides working parents with 20 weeks of leave payments (rising to 26 by 2026), at a rate equivalent to the minimum wage, after the birth or adoption of a child. One parent per couple may claim PPL. The budget will expand PPL to provide superannuation on PPL payments. Parents will receive super equivalent to 12% of their PPL.

What does it mean for you?

As most PPL is claimed by women, many women currently receive no super in the months after the birth or adoption of a child. This contributes to lower retirement savings for women – an issue this measure will help address. Based on the current minimum wage, the scheme will provide $2,118 in super for a parent taking the full 20 weeks of PPL.

Housing Investment

What is it?

As well as increasing rent assistance (see above), the government will provide $4.3 billion for other housing-related scheme. This will go to a range of programs including $1 billion to build housing-related infrastructure, and a further $1 billion to house women leaving violence.

What does it mean for you?

High house prices drive cost of living stress for some and prevent others from buying a house at all. The failure of housing developers to keep pace with the rising population is a major driver of high prices.

This budget takes government funding for housing to $32 billion over ten years. Much of this will support the construction of new housing, particularly for low and very low-income people. The government wants to see 1.2 million new homes built by 2030. Despite much higher government support than under the Coalition, experts agree that this remains unlikely.

Transport Investment

What does it mean?

The budget provides $16 billion over seven years to build over 70 infrastructure projects, including 65 new projects, notably:

  • $3.3 billion for Melbourne’s North East Link road
  • $1.9 billion for various new road and rail projects in Western Sydney
  • $1.2 billion for rail connecting the Sunshine Coast and Brisbane.
  • $1.4 billion for various rail projects in Perth

What does it mean for you?

The budget provides a respectable contribution to new transport infrastructure, supporting more liveable and more productive cities and regions. This will also provide for thousands of jobs in civil construction.

Aged Care Funding

What is it?

The government will provide an additional $2.2 billion over five years for the aged care industry. This will include $1.2 billion to upgrade and maintain digital systems, and $531 million to deliver home care packages for a further 24,100 people.

What does it mean for you?

The last Coalition Government underinvested in the health and care industry and its workers. This budget builds on the $11.3 billion provided last year for a 15% wage rise for underpaid aged care workers. This year’s measures will further help improve the industry and address issues created by years of underfunding.

Net Zero Economy Authority

What is it?

The Net Zero Economy Authority (NZEA) is a new government agency that will help workers and communities that have powered Australia for generations to seize opportunities in the energy transition. It will assist workers at high-emitting sites set to close to access new employment and support. It will also deliver programs for communities affected by closures. Its initial focus is on coal and gas-fired power stations.

This budget provides $340 million for the NZEA. Employers will receive $10,000 for every worker they take on from a closing facility. It also provides $134 million for support programs for workers affected by closures but not working in closing facilities directly.

What does it mean for you?

Australia has seen what happens when we don’t plan for industry transition, and we know coal power is on a path to closure. The NZEA will have an important role in supporting workers and communities to navigate these events. This budget provides reasonable early-stage funding for these activities.

/Public Release. View in full here.