Policy undertones of the 2024 Australian Federal Budget

“It’s the Economy, stupid.” (James Carville, 1992)

Or so it may seem.

The Albanese Government's 2024 Federal Budget seeks to address immediate pressures of stubbornly high inflation and the cost of living by delivering a modest surplus (albeit with deficits forecast in future budgets), and targeted measures to relieve the hip pocket.

Notable measures include the Stage 3 tax cuts adjusted to benefit middle-income tax brackets, a universal $300 rebate for household energy bills, and forgiving $3bn in university HECS/HELP debt through an adjustment of the FY23-24 indexation rate.

The Opposition’s budget-in-reply was critical of the Government for not doing enough to curb inflation, nor effectively deal with the cost-of-living struggles of most Australians.

However, beneath the usual tussle between Government and Opposition during Budget week, two narratives on the future of Australia emerged, both of which may transform the economy in vastly different directions.

“We are building an economy that will position our people to benefit from the opportunities of the decades ahead… Our $22.7bn Future Made in Australia package will help make us an indispensable part of the global economy” (The Hon. Dr. Jim Chalmers, Treasurer, Budget Speech 2024).

The Government’s narrative for Australia’s identity is embodied in its Future Made in Australia budget measures over ten years, which includes a $1.7bn innovation fund run by the Australian Renewable Energy Agency, $1.4bn in solar panel and battery manufacturing; and $13.7bn in tax incentives for critical mineral producers and green hydrogen.

Notwithstanding the Government’s commitment to a green energy transition, the policy signals interventionist policy to diversify the Australian economy so it is more autonomous and resilient to global disruptions (read, not as reliant on Chinese imports), and subsidised support of industry in regional communities to hasten decarbonisation.

Critically, this is indicative of government leading, as opposed to steering, economic direction and ensuing social outcomes.

“We live in the best country in the world… [and] the best way to empower Australians – to make them masters of their fate – is through home ownership. (The Hon. Peter Dutton, Leader of the Opposition, Budget in Reply Speech 2024)

While Mr Dutton’s echoes oft-repeated Liberal Party philosophy of smaller government, lower taxes, and home ownership, his promise to restore the “Australian Dream” of readily obtainable home ownership by sharply cutting migration is new policy territory for the Opposition (the previous Morrison Coalition Government expanded rapidly the annual migrant intake post the COVID-19 pandemic).

By proposing to liberate Australians from the challenges of finding a home by linking housing availability and affordability with immigration by reducing immigration from 185,000 to 140,000 over two years, the Opposition is retreating from decades-long support for skilled migration to boost GDP and productivity, as championed by Treasury, pro-market economists, and business.

A return to a 20th century battle of ideas?

These two approaches – Labor's activist industry policy and the Opposition placing immigration at the heart of discourse about the allocation of resources- seems like Déjà vu all over again: a return to the policy battles of the 1980s and 1990s.

These solutions can be found also past debates in the 1880s – 1950s between free traders and protectionists, and anti-immigration proponents (sans the racial undertones).

In other words, it’s no longer about the Economy.