Federal budget 2024: Surplus forecasts and superannuation changes unveiled

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Treasurer Jim Chalmers delivered the Albanese government’s third federal budget on Tuesday evening (14 May), touting a balanced approach in an environment of cross-currents.

The Treasurer has forecast a surplus of $9.3 billion for this financial year on the back of “responsible economic management”. 

The surplus, although a reversal of the government’s previously forecast $1.1 billion deficit, will be wiped out by government spending on things deemed “unavoidable”, such as its Future Made in Australia Act, with the Treasurer predicting a period of larger-than-anticipated successive deficits will ensue. 

“Pressures on the budget [will] intensify after that, rather than ease,” Chalmers said. 

“We are expecting a deficit of $28.3 billion in 2024–25. But a stronger fiscal outcome in every year, compared to when we came to government.”

The government’s second successive surplus, after it announced a $22 billion surplus last year, has made room for cost-of-living relief and investments in the future, the Treasurer said.

“The budget will ease cost-of-living pressures, not add to them, and incentivise investment in a Future Made in Australia,” Chalmers said.

He also said the government banked 96 per cent of revenue upgrades in the 2023–24 financial year, including through $77.4 billion in savings and reallocations of funds.

Chalmers noted a significant improvement of over $215 billion spanning the six years leading to FY27–28 compared to the pre-election economic and fiscal outlook. Additionally, he said, the economy is poised to surpass forecasts outlined in the midyear economic update.

Changes to super

On the superannuation front, budget measures were mostly reserved for previously announced tweaks, including payday super and paid parental leave. The $3 million super cap and changes to non-arm’s length expenditure weren’t mentioned. 

Payday super plus paid parental leave

Starting from 1 July 2026, employers must pay superannuation at the same time they pay salary and wages to employees.

This change aims to give employees better visibility and control over their entitlements and helps the Australian Taxation Office (ATO) in recovering unpaid superannuation.

The ATO will receive $40.2 million to improve its ability to match data and take action against cases of underpaid super.

Moreover, the Treasurer announced that $1.1 billion for parents accessing the government-funded paid parental leave scheme will be paid superannuation in addition to their payments from next July.

Under Labor’s proposal, super will be paid at 12 per cent of the paid parental leave rate with about 180,000 families said to benefit on an annual basis.

Super recovery program

The government said it will recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

This will achieve efficiencies of $13.0 million over four years from 2024–25 (and $29.9 million over the medium term) through an expected increase in tax receipts of $63.1 million over four years from 2024–25 (and $114.4 million over the medium term), with $44.4 million over four years from 2024–25 (and $96.9 million over the medium term) expected to be paid to superannuation funds.

Additional funding

The government also said $187.0 million will be allotted over four years from 1 July 2024 to the ATO to strengthen its ability to detect, prevent, and mitigate fraud against the tax and superannuation systems.

Missed opportunities 

While super-related announcements were thin, there were notable absences in the government’s budget, with many of the industry’s recommendations from pre-budget submission overlooked.

The Association of Superannuation Funds of Australia (ASFA) issued a total of five recommendations in its pre-budget submission, with just two actioned by the government.

The government heeded ASFA’s first recommendation – introducing SG on paid parental leave in order to reduce the retirement savings gap between females and males, as well as its recommendation to launch a review of the treatment of superannuation payments owed by insolvent employers.

The recommendations that were overlooked included increasing the upper threshold for the low income superannuation tax offset.

ASFA also recommended extending CGT rollover relief – that already applies at the fund level – to the product/option level. The association said that extending CGT rollover relief would not only help reduce the stock of underperforming products but also would be expected to increase efficiencies and reduce costs to members, thereby improving member outcomes.

Moving members and account balances to higher performing options also would generate additional superannuation fund taxation from the higher investment returns achieved, ASFA said.

Other budget recommendations made by ASFA and ignored by the government include making it easier and more attractive for fund members to take up retirement income streams.

The association said this could be done with regulatory relief for calculators and retirement projections for account balances in the retirement phase, as well as with government funding for preparation and publication of data in regard to varying cohorts of retirees and those approaching retirement.


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