Federal budget 2024-25: information for small businesses

On Tuesday the Federal Government released the 2024-25 Budget containing several new measures for small business. Key announcements for small businesses include:

• The extension of the $20,000 instant asset write-off for depreciating assets until 30 June 2025
• A $325 energy bill relief rebate for eligible small businesses
• The removal of 457 nuisance tariffs on a range of imported goods from July 1 to help reduce compliance costs
• Investment into 20,000 free TAFE places in courses relevant to the construction sector, in addition to the 300,000 fee-free TAFE places in areas of priority skills.
• Extension of the Small Business Debt Helpline and a free and confidential financial counselling service for small business owners.

For more information on the Budget’s small business measures, view the Small Business Budget Statement factsheet.

Business conditions remain weak

Tuesday’s Federal Budget also provides updated economic forecasts, with growth expected to remain subdued over the forecast period. Real GDP is forecast to grow by 2 per cent in 2024–25, and 2¼ per cent in 2025–26. The cash rate is assumed to gradually ease from around the middle of 2025 to reach 3.6 per cent by the middle of 2026.

Results from the Commission’s monthly Momentum Survey show that business confidence remains subdued amidst challenging trading conditions, including rising costs, weaker customer demand, staff shortages, compliance burdens, and higher interest rates.

Confidence levels have trended downward throughout 2024, reaching a record low in April (23 per cent). According to the survey, business conditions are now lower than when NSW first entered lockdown, when confidence was 24 per cent in April 2020.

Weak household spending, high interest rates and elevated inflation have resulted in lower growth and higher insolvency rates. March saw a record high of 1,137 business insolvencies nationally, up from 968 in February and 555 in January of this year according to data from the Australian Securities and Investment Commission.

Impact of Budget on interest rate outlook

The Budget contains policy measures targeted reduce headline inflation by ½ a percentage point, which is now expected to return to the Reserve Bank of Australia’s 2-3 per cent target band earlier than expected. 

The impact of these measures on interest rates will depend on a range of factors, including the impact of the Budget on underlying inflation (which excludes volatile items and provides a clearer view of longer-term inflation trends). Prior to the Budget, some market economists predicted interest rates may not fall until 2025.

Deficits of $28.3 and $42.8 billion are forecast for 2025-26 and 2024–25 respectively.