The pay later budget!

The 2024 budget when viewed over the coming 12 months period is a positive budget, however, longer term it is setting up the economy for tough times.

My review of the budget is focused on the impact it may have on the economy over the longer term.

Let review the highlights:

1. 13 million Australian’s will be getting a tax cut from 01/07/2024. The take home will be a modest $36 per week.  
2. Energy rebates – $300 to each household if you are in Queensland the State Government will provide another $1000.
3. HECS reform – students’ loans will be indexed against the lower of the Consumer Price Index or the Wage price index. It will be back dated providing a benefit of around $1200 for students. Note the students HECS still went just less then it would have been.
4. Superannuation paid on government funded paid parental leave. Note that at this time it will not affect businesses.
5. Housing – government expect to build $1.2 million homes. Given that a number of our largest builders have fallen over this year I am out sure how they expect to achieve this!  
6. Future made in Australia package; I expect this is a bit of hype and will not provide benefit for the masses.
7. Interest rates – this is a contested area. Our view is that interest rates will most likely move up. With inflation continue to hold and given that budget give away we do not expect consumption will slow. The Reserve bank is expecting interest raise of 0.25% each over the coming month. Keep in mine historically interest rate as still very low. The issue is debt levels be historical high and will take many years to correct the situation.
8. The losers in the budget are:
   1. Job Seeker – no increase in payment rates.
   1. Motorists – no cuts to fuel excise
   1. Alcohol taxes stay the same.
   1. Homeowners as interest rates increase.

My view on this budget was focused on the upcoming election looking for votes as the polls have moved against the government in the last six months. When we look further the government has already flag deficits for the following years.

We expect to see unemployment to increase over the coming year.

What does this all mean for investors. The government continues to chase net zero which means the material sector should continue to be profitable as the demand for metals increases to build the wind farms and solar farms. We well be looking for opportunities to pick up investments in:

1. Copper and Gold
2. Construction – Housing
3. Energy – Gas, as it supplies electricity when renewable energy is not available.
4. Battery materials
5. Health Care
6. Property focused on Data centres.

Budget time is a good time to review your holdings with a view to rebalance to ensure the shares held in your portfolio are weighted in line with your risk level.

If you have any questions, please contact our office.

Date 16/05/2024

Grow Your Wealth Pty Ltd

AFSL 403509

51 Thuringowa Drive

Kirwan  QLD  4817

Phone: (07) 4771 4577

Email:        [email protected]

Jason Fittler: [email protected]