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.

Get all the insights in JBWere’s The CIO View: Budget 2024