On 30 May 2024, Dr. Steven Kennedy PSM, Secretary to the Australian Treasury, delivered a post-Budget address to the Australian Business Economists in Sydney. His discussion encompassed the economic and fiscal outlook for 2024-25, delving into the global economic challenges, such as supply disruptions and geopolitical tensions, that have influenced Australia’s economic activity. Dr. Kennedy provided an in-depth analysis of the domestic economy, noting the moderation of inflation and the slowdown in household consumption. He underlined the necessity for structural reforms in key areas like the National Disability Insurance Scheme (NDIS) and aged care while emphasising the need for robust competition policy to enhance productivity. His address underscored the critical balance between managing inflation, sustaining employment levels, and implementing fiscal strategies that promote long-term economic resilience

Key Takeaways

• The global economic environment is characterised by significant challenges, including supply chain disruptions and geopolitical tensions, which have a profound impact on Australia’s economic activity.
• Domestically, the economy is experiencing a moderation in inflation, coupled with a slowdown in household consumption, which necessitates a careful fiscal approach.
• Structural reforms in critical areas, such as the National Disability Insurance Scheme (NDIS) and aged care, are essential to address spending pressures and ensure long-term fiscal sustainability.
• A robust competition policy is vital for driving productivity growth, enhancing economic efficiency, and promoting long-term economic resilience.
• The balance between managing inflation, sustaining employment levels, and implementing fiscal strategies is crucial for achieving long-term economic prosperity.

The insights shared by Dr. Kennedy paint a complex picture of Australia’s economic landscape in 2024-25. While there are positive signs, such as a recovering budget balance and low unemployment rates, the country must navigate significant challenges, including moderating growth and persistent inflation. Structural reforms in key spending areas and a strong focus on enhancing competition will be essential for sustaining economic resilience. Australia’s ability to adapt to these challenges, particularly in the face of global uncertainty and the pressing issue of climate change, will be vital for securing future prosperity. The Government’s commitment to holistic policy approaches, including fiscal sustainability and regulatory reforms, will play a crucial role in shaping the country’s economic trajectory in the coming years.