On December 18, 2024, Treasurer Jim Chalmers and Finance Minister Katy Gallagher released the Mid-Year Economic and Fiscal Outlook (MYEFO), reflecting the Albanese Government’s focus on fiscal discipline, cost-of-living relief, and long-term economic resilience.
Key Takeaways
Budget & Fiscal Position
- Forecasted deficit of $26.9bn for 2024-25, though $20bn better than 2022 projections.
- Budget not expected to return to balance until 2034-35.
- Cumulative deficits over four years are $22bn worse, peaking at $46.9bn in 2025-26 before improving.
Economic Growth & Inflation
- GDP growth expected to rise to 1.75% in 2024-25 (from 1.4% in 2023-24), driven by household consumption.
- Inflation moderating: CPI expected to fall to 2.75% in 2025, within the Reserve Bank’s target range.
- Gross debt stabilizing at 36.7% of GDP by 2027-28, with a long-term decline to 31.4% by 2035.
Labour Market & Wages
- Over 1 million jobs created since May 2022; unemployment expected to rise modestly to 4.5% by 2025.
- Wage growth at 3.5%, above the pre-pandemic average (2.7%), with real wages set to improve as inflation eases.
Government’s Economic Strategy
- Identified $14.6bn in savings to ensure budget sustainability.
- Improved the budget position by $200bn over six years compared to the previous Coalition Government.
- $5.5bn in policy decisions taken but not yet announced.
Key Policy Commitments
✅ Cost-of-Living Relief – Energy bill subsidies, tax cuts, student loan relief, and social housing energy programs.
✅ Early Childhood Education – $5bn to expand access and increase workforce pay.
✅ Housing Supply – “Help to Buy” and Build-to-Rent incentives to ease housing and rental pressures.
✅ Aged Care – $5.4bn for home care programs and residential aged care sustainability.
✅ Structural Reforms & Investments –
- Strengthened Medicare with increased health funding.
- $1.2bn for net-zero transition and energy infrastructure modernization.
- Gender equality initiatives, legal aid funding, and reducing the gender pay gap.
Bottom Line
Despite economic pressures, the Government is prioritizing fiscal responsibility, economic resilience, and social investments while balancing cost-of-living relief with budget sustainability.
