Australia: Government announced the 2023/24 Federal Budget – UOB

UOB Group’s Lee Sue Ann reviews the recently unveiled 2023/24 Federal Budget.

Key Takeaways

“The Labor government unveiled its Federal Budget 2023-24 late Tue (9 May) – the second budget since winning power in May 2022. These cost of living measures include AUD3bn of energy bill relief, AUD3.5bn on Medicare bulk billing incentives, AUD4.9bn for an across-the-board Jobseeker increase and increasing rent assistance by 15%. Other areas of focus include Medicare, improving aged care services and supporting the energy transition through incentives to small business for green investments and a AUD2bn Hydrogen Head Start program to develop the industry.”

“Australia’s GDP is expected to grow below trend over each of the next two years at 1.5% in 2023-24 and 2.25% in 2023-24. Inflation, which is currently at 7%, is forecast to fall to 3.25% next year. This inflation level returns to the Reserve Bank of Australia (RBA)’s target band for 2024-25. Real wage growth of 0.75% is expected for the year to Jun 2024, which is up half a point since the Oct budget. Unemployment is expected to rise from current lows to 4.25% by 202324 and 4.5% by 2024-25.”

“The AUD14.6bn suite of measures to help with the high cost of living are over four years. Threatening to eclipse the cost-of-living relief package was the surprising fact of the budget surplus, coming in at AUD4.2bn this financial year. This is the first surplus in 15 years, and the first since the 2007-08 Global Financial Crisis. The small surplus is a vast improvement from the AUD36.9bn deficit that the government predicted in its mini-Budget 2022-23 in Oct.”