For me, it is a dreaded time of year. That’s right, it is budget time.

If you know me and have read my posts about the budget in the past, you know that unlike other financial boffs, I don’t get excited. I could not remember the last time I saw the budget live.

To me, it is all a bit pointless. A complete waste of time. Listening to a politician talk is painful at the best of times. Why would anyone want to sit and listen to a politician talk about something he has already ‘leaked’ for 2 weeks is beyond me.

But in Parliament House, there were a bunch of MP’s holding onto each word as if it was oral liquid gold. The wonks? The journalists? The lobbyists? Well, I got the impression they were under some kind of trance. Either that or they were aroused.

And then the experts got so excited that you would think maybe there is a bit more going on than merely being aroused. Summaries are written, everything is analysed to death, and delivered to my inbox within 2 hours. I have never understood the fascination behind the speed required to get me information about a budget that will make no difference to my life whatsoever.

But then this year something came over me. I did watch it. And? Well to be honest I was right. A complete waste of time. And boring. And a bit sad too. That is 30 minutes, I am never going to get back.

It’s sad because Australia has so much potential. We are known as the lucky country and have been riding on that luck for a long time. I fear our politicians, like the politicians in the rest of the world, are too scared to do what is required. They all talk about the long term, but it is all about the next election.

And that is why, in many ways, I can’t be bothered when he talks beyond the next couple of years. Talking about something that will happen in 2028? The budget papers I saw mentioned funding in 2040! This is quite frankly bonkers. He might as well tell me a kangaroo will be our next prime minister.

There is also the tricky situation about what our politicians tell us.

Sir Chalmers said his was a “plan for security, for prosperity, for growth.” The opposition? Well, they said it was “disappointing” and “it was a high taxing and spending budget.” Sir Dutton said it was an “band-aid on a bullet wound.”

Who to believe? Which is why, in my opinion, it does not matter, and that is because, in most cases, it won’t change your life in any way, shape, or form. So, who cares?

Except we should care. And that is because, from a day-to-day perspective it may not make much of a difference. But over time, it makes a massive difference. But as I said, Governments don’t work long term. They work short-term. And that means things such as taxation reform is all speak but never action.

But I am always interested in what our young think. My youngest is 15. After Sir Chalmers stated he had spent $40 trillion dollars on this, my son just asked me a question: ‘Where is the money going to come from?’ Bright kid, my son.

And that, I think, is the problem with this budget. It is spending too much on things that may or may not matter rather than spending it on things that really matter. And at the moment I think we need to spend it on things that really matter.

We, as a country, currently made a surplus or, in layman’s speak, made savings this year of about $9.3 Bn. That is good.

But over the next four years we will spend $110Bn more than we earn. That is bad. We have a debt amount of $904Bn. By 2027, we will have breached the $1 trillion mark. But you won’t see these figures branded about anywhere. Like all borrowings and all debt, it must be balanced, and the debt needs to be good debt, not bad debt. When it comes to wealth, assets, not debt, determine how rich you are. And it does not matter if you are an individual or a country. I am not convinced the debt we will be generating over the next few years will be good debt.

There’s more. There was nothing major to note from individuals apart from a few in certain industries and there was almost nothing for businesses, but somehow, we will be going from a small surplus to a whopping deficit for the next 4 years. I’m not sure how that works for the country.

So, for those of you who would like a no-nonsense review of the budget, here it is:

1. Personal Income Taxes

Stage 3 Tax cuts

This has been talked about for 3 years now. I have no idea why it is featuring again because it was decided ages ago by the previous government. But then again, a tax cut sounds good so it is necessary to tell us how wonderful and brilliant they are even if it was not their idea.

But apparently, we will be paying, on average, $36 less tax per week. That means your first coffee of the day is courtesy of Sir Chalmers, so it is welcomed. But it won’t change your life.

Energy Bills

All households will get $300 off their bills. Sounds great, but it’s a waste of money. Do all households need it? Many will. But most high earning income households don’t. A missed opportunity to help those who really need it because you could give them more and ignore those that can afford it.

HECS – student loan indexation relief

Last year, a 7.1% indexation was applied to student HECS debts, which resulted in a large increase to HECS amounts.

So, Sir Chalmers will wipe off a whopping $3 billion worth of HECS debts for 3 million Australians by lowering the indexation to 3.2% and backdating it to last year. Going forward, the indexation rate will be CPI or the wage price index, whichever is lower.

This will reduce, on average, $1,200 per HECS debt. That’s not bad. Our young are our future, and we all know an educated workforce means a prosperous country, so for the long term, this makes sense.

Renters

We have all heard that rents are crazy.

And this no doubt has affected renters. The answer? Give people more money to pay their rent. In fact, it will cost $1.9 billion to support 1 million households pay their rent bill.

I don’t like this proposal. I think we have a massive problem with rents, but I don’t think this helps. This is simple economics of demand and supply. We need to control immigration and assist with more housebuilding. Giving money to renters does not solve the underlying problem so in my view a waste of money.

Housing

Having just said we need to spend money on housebuilding, Sir Chalmers said he will spend $11 billion to “alleviate” the housing crisis.

$9.3 billion of this amount will be injected into the creation of social housing, whilst $1 billion will be set aside for crisis accommodation for domestic violence-affected Australians and housing infrastructure supply, respectively.

This will assist in reaching the Government’s target to build 1.2 million new homes by 2029.

The domestic violence bit is a nice touch – I like that. But the rest?

Yeah, this all sounds fabulous, but let’s put this into perspective. Last year, we had a net immigration of 659,000 people. Over the next 6 years, it will fall but we have been told it will still be high. Will an additional 1.2 million homes be enough? I do not think it will.

And not everyone wants social housing. So, demand for housing will continue to increase, meaning many will not be able to buy their own home.

2. Small Business Taxes

Instant Assets Write-Off

Businesses that purchased assets for less than $20,000 could write them off in the year purchased. This was due to end on 30 June 2024 but has been extended to 30 June 2025.

Energy Bills

All small businesses will get $325 off their energy bills, too. This will be welcomed by many.

And if you are a small business, that’s it.

Sir Chalmers will tell you they are doing more, such as spending $206 million on the cyber resilience program and giving training to small businesses. But like all things, the government do, they will do it badly and it will be costly. The private sector is doing this for free – IT businesses are giving out free webinars, checklists, and more, so why not let them continue? As I said, spending money on things we may need, not what we really need.

Sir Chalmers will also tell you that he is spending a whopping $22.7Bn on “Future Made in Australia” package, which will help allow small businesses to thrive in the “net zero” space. Err….. no it won’t.

$13.7 Bn will be spent on New Hydrogen Production. Do you know many small businesses in that space? What about the $1.7Bn innovation fund for green metals and investments in producing low-carbon fuel? Yeah, I cannot think of many small businesses in that space either.

And although I agree that these industries need research and investment, it seems the entire budget expense is going here when, in reality, we need to spread it around. This is a bit like knowing we have house that needs renovating and then spending 70% of the budget on a swimming pool.

3. Superannuation

We all know that the government pays for paid parental leave. Now, it will pay superannuation on this, too. This will help build up the balance of those who are temporary out-of-the-workforce during maternity leave. It won’t be much, but I like this.

But before you jump into bed with your loved one for some behind-the-scenes activity, you may want to wait a few months. It does not start until 1 July 2025.

And that’s it, folks. I hope I made this boring budget into a slightly more engaging and interesting summary.

If you want to know more contact Hitesh at hitesh@medisuccess.com.au or call 07 3161 9548.