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JBWere’s CIO View: 2024/25 Federal Budget

Sally Auld, Chief Investment Officer | JBWere

The Treasurer handed down his third Budget tonight and delivered a second consecutive surplus. However, the good news is short lived; structural challenges force the budget into deficits across the forecast horizon. There is little in the Budget that addresses this issue, nor Australia’s lacklustre productivity performance. In the short-term, the Budget places fiscal and monetary policy at cross purposes given the stance of fiscal policy is clearly expansionary.

Important Notice: This content has been published on the website on 14 May 2024 and reflects our view at the time of publishing, however views and commentary may change after this date. This document has been authorised for distribution in Australia and New Zealand only. It may not be reproduced, adapted, transmitted, distributed or reproduced in any form by any process without the written consent of JBWere Limited. For more information, visit or contact a JBWere adviser today.

Advice contained in this article comprises general financial advice only and has been prepared without considering your objectives, financial situations or needs. Before acting on any advice contained in this article, you should consider whether the advice is appropriate for your circumstances. 

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Key Points:

  • The 2024/25 Budget is centred around two key themes – cost of living relief and the “Future Made in Australia” initiative. These themes relate to the realities of the domestic political context – a Federal election sometime in the next year and an electorate still struggling with cost of living pressures – as well as the realities of the global geo-political context, now defined by a focus on economic sovereignty, nationalism and supply chain security.

  • Key measures for households in the Budget include the Stage 3 tax cuts, rental and energy bill assistance and a freeze on PBS co-payments. Elsewhere, there is additional funding for housing and infrastructure and $23bn over a decade for the Future Made in Australia program.

  • The Budget forecasts a modest surplus for the current financial year, but a return to deficits throughout the forecast horizon. In this context, the disappointment in the Budget is a lack of willingness to tackle the longer-term challenges facing Australia and our fiscal outlook, namely the need for comprehensive tax and spending reform and measures to lift productivity growth.

  • For financial markets, there are some takeaways: 1) the Budget underscores the “higher for longer” narrative for front-end rates, given it is unlikely to lower core inflation measures and also adds to aggregate demand in the economy; 2) all else equal, this may provide some near-term support to the currency, given expectations of easing in other G10 economies; 3) sectors such as Consumer Discretionary, Real Estate, Materials and Communication Services should benefit from the Budget; but 4) if Treasury’s forecasts for slower nominal GDP growth are realised in coming years, this may suggest some downside to aggregate earnings expectations for the ASX200.

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