Challenging outlook for Illawarra businesses in 2024 budget

Business Illawarra interim director Paula Martin said the local business community was well placed to deliver on the government's green hydrogen and green steel ambitions.

"The $1.7 billion Future Made in Australia fund will help bring clarity to our nation's focus on new industries and the expertise, experience and ability for Illawarra's business community can provide key skills and employment in our nascent green hydrogen industry potential, green metals and clean energy," Ms Martin said.

However, behind the headline figure, Ms Martin said there needed to be focus on the fundamentals that drive business investment and innovation, including lower taxes, energy prices and a flexible industrial relations system.

"If it costs too much to do business here, businesses will simply go overseas. Emerging enterprises will reach their limit here and then move on to friendlier business environments."

The budget includes a $2 billion expansion to the Hydrogen Headstart program and $6.7 billion over 10 years for the Hydrogen Production Tax Incentive, which will help to make renewable hydrogen commercially competitive with other fuel sources.

These initiatives could be a boon for the Illawarra, with the significant hydrogen ecosystem already in place in the region, and the region previously overlooked in the first round of the Hydrogen headstart program, despite making its way into Treasurer Jim Chalmers' 2023 budget speech.

CEO of the Australian Hydrogen Council Dr Fiona Simon said the grants and incentives would pave the way for other green industries, including green steel.

"Hydrogen delivers comparative advantage to Australia not only as a molecule but as the critical pathway to decarbonise hard to abate sectors, and establish new high value exports in green steel, green iron and green ammonia," Dr Simon said.

"This budget reflects that production, technology and jobs are all essential parts of ensuring a future made in Australia for hydrogen."

The budget also included a grab bag of other measures targeted at businesses, including an extension of the $20,000 instant asset write-off and $325 in energy relief for small business owners.

"SMEs in NSW will receive welcome but moderate benefit from the Federal Budget amid challenging business conditions," Ms Martin said.

This year's budget papers also lock in significant wage increases for aged care workers and early childhood educators, something peak social services organisation CEO Nicky Sloan said was needed.

"We know people in those sectors are among those most poorly paid, so we are pleased to see money safeguarded so those wage increases can be met."

While the budget forecasts a surplus for the second year in a row, the outlook over the forward estimates is challenging. Structural deficits will continue from 2024-25, starting at $28.3 billion, and GDP growth is expected to fall to an anaemic 2 per cent in 2024-25.

Business investment growth is also forecast to fall to 1 per cent in 2024-25 while unemployment will rise to 4.5 per cent.

"Members will continue to face a difficult trading environment, however, as GDP growth moderates and business investment slows, while there is still a question mark on how quickly inflation will come down," Ms Martin said.