The NSW government has delivered a $4.5 billion surplus in Tuesday’s budget – $500 million more than expected, thanks to a privatisation push that includes the part sale of the electricity grid and the sale of the Land Titles Registry, as well as stamp duty income from a booming property market.
But with such a strong financial position, it is disappointing to see that no substantive action has been taken to progress the government’s net zero 2050 climate target, nor to address the affordable housing crisis – two of the state’s most urgent challenges.
The NSW economy is now outpacing economic growth in the rest of the nation for the first time in 26 years, and has negative net debt of -$7.8 billion, the lowest level on record.
“With our budget firmly in the black and NSW back as the nation’s strongest economy, our Government is ensuring the benefits reach every corner of this state,” Premier Gladys Berejiklian said.
“This budget continues record investment in schools, hospitals and health infrastructure, while providing more financial support for first homebuyers to enter the market than ever before.”
We’ve already reported on the $4.3 billion “housing affordability” package, which includes:
- Cutting stamp duty for first homebuyers on homes up to $650,000 and discounts up to $800,000, effective 1 July 2017 (a measure critiqued for its propensity to add to housing prices)
- Abolishing stamp duty charged on lenders’ mortgage insurance (again considered inflationary)
- Doubling the foreign investor surcharge from four per cent to eight per cent on stamp duty and 0.75 per cent to two per cent on land tax (probably a good move)
- Removing stamp duty concessions for investors purchasing off the plan (also positive)
- Committing $3 billion in infrastructure funding to accelerate the delivery of new housing (positive)
- Expanding complying development to some medium density housing typologies (potentially positive)
- Greater use of independent panels for councils in Sydney and in some regional areas (a fast track option loved by d
While welcomed by many, some measures, the stamp duty cut in particular, has been heavily criticised for its potential to add demand pressure and raise house prices. A lack of action on affordable housing was also criticised.
Social housing minister Pru Goward said there would also be $218 million in capital maintenance expenditure committed to upgrade existing social housing developments, $198 million for Specialist Homelessness Services, $152 million to improve Aboriginal housing and an additional $20 million over four years to provide an extra 120 transitional accommodation units and support packages for rough sleepers.
With such a large budget surplus, however, it is disappointing to see there hasn’t been more support for new supply of affordable and social housing.
NSW Federation of Housing Associations chief executive Wendy Hayhurst wondered how much of the $4.5 billion surplus was going to be used to address the 100,000 shortfall in affordable housing places.
— Wendy Hayhurst (@WendyHayhurst) June 19, 2017
Housing advocacy group Shelter NSW said the budget offered “almost nothing” for low-income renters living in rental stress.
“Each year the budget warns that the stamp duty windfall from the state’s unstoppable inflationary housing market is set to end. The following year sees the record revenue roll in again.” executive officer Mary Perkins said.
“But each year the budget fails to use these record funds and the growing surplus to provide an ongoing program to deliver the 130,000 social and affordable housing homes urgently needed to fill the gap of low-cost rental housing in this state.”
The Labor state opposition recently raised the bar with its affordable housing policy that would see a 15 per cent inclusionary zoning target for affordable housing on rezoned land, rising to 25 per cent on state-owned land.
The property industry is also up in arms that given the large budget surplus, it is still facing increased taxes. Expansion of State Infrastructure Contribution Scheme to 10 new areas announced in the housing affordability plan would raise an additional $545 million in revenue.
“In a budget that trumpets an upgraded surplus of $4.5 billion this year, $2.7 billion next – and solid surpluses in the out years – it is disappointing to find that half a billion dollars of new taxes could be imposed on the property industry to fund the extra infrastructure investment foreseen in the government’s housing affordability plan,” Property Council NSW executive director Jane Fitzgerald said.
Again climate change is largely absent from this budget, with no mention on how the government will move towards its “aspirational” net zero target by 2050.
— Matthew Trigg (@Trigg) June 20, 2017
One of the only mentions of climate change is $119 million from the Climate Change Fund to help boost energy security and help households and businesses save money and energy, as well as $1.1 million to “complete final actions in the Renewable Energy Action Plan”.
The Australian Industry Group welcomed the budget, but said more support for energy efficiency was needed as business energy costs increased.
In good news the government said $1.8 billion would be committed to environment and heritage, including:
- $184 million going to the Environmental Protection Authority for projects including $3.4 million to introduce a Container Deposit Scheme
- $34 million to upgrade national park facilities
- $44 million for private land conservation ($240 million over five years)
- $41 million to assist local councils to prepare and implement coastal and floodplain management plans
- $29 million to conserve Aboriginal and historic heritage
- $41 million to upgrade public parklands and gardens
Developers might be able to pay a fee for environmental destruction
In not so good news the government is still pushing through with “reform” to biodiversity legislation, which the Environmental Defenders Office says “represents a serious backward step for environmental law and policy in NSW”, and could see developers allowed to pay money in lieu of providing actual biodiversity offsets.
Organisation Save Sydney Trees is calling on the community to make a submission to reforms, which close Wednesday 21 June.
Transport – and the winner is … roads
Roads are a big winner in an infrastructure package that will see $72.7 billion committed over the next four years, including $7.2 billion for stage 3 of WestConnex and $3.5 billion for the Pacific Highway upgrade.
Other road funding includes $648 million for road upgrades to support Western Sydney airport at Badgerys Creek; $548.5 million to the Regional Road Freight Corridor program and $264 million for measure to reduce congestion, including a Smart Motorways program for the M4.
Public transport is getting $12.1 billion in new infrastructure
Public transport funding commitments include $4.9 billion to Sydney Metro City and South West and $4.0 billion for Sydney Metro Northwest.
There is $658 million for 24 new suburban trains and extra services.
The budget also sees $1.5 billion for the bus network, which includes the purchase of 170 new buses – 134 replacements and 42 additional. Additional capacity will mean an extra 3300 services a week.
“This is not just about adding more services, but also allowing for future growth,” transport minister Andrew Constance said.
Health is a big budget winner, with $7.7 billion to be spent over the next four years, which represents an additional $2.8 billion spend.
There will be a $720 million for a Randwick Hospital Campus upgrade, $632 million to upgrade Campbelltown Hospital, a $341 million upgrade for Concord Hospital and $534 million to fund a new hospital at Tweed Heads in the Northern Rivers.
An additional $1 billion will be spent on health services, with $100 million over four years to improve palliative care services in regional NSW.
The school system has been in the spotlight, with the government accused of failing to keep up with population growth.
The government has committed an extra $1.6 billion over the forward estimates for education infrastructure, bringing the total to $4.2 billion. This will be used to build or upgrade more than 120 schools, which will provide 2000 more student places and 1500 new classrooms.
Premier Gladys Berejiklian said it was the biggest NSW government investment in education infrastructure in history.
“In this year’s budget, we are committing more funding to the construction of new schools and more school upgrades than Labor did in their last 11 years of office combined,” she said.
Treasurer Dominic Perrottet said the projects would ensure NSW could keep up with population growth.
“This historic investment means the children of NSW will have access to world-class education in world-class facilities for decades to come,” he said.
Education minister Rob Stokes said a new specialist unit, School Infrastructure NSW, would be responsible for planning, delivering and maintaining the program of capital works.
Other building work
A number of other major building projects received funding, including:
- $244.3 million over five years to upgrade the Art Gallery of NSW
- $190 million over four years for the Sydney Opera House renewal program
- $186.9 million over four years to rejuvenate the Walsh Bay Arts Precinct
Parramatta Road will also see $123 million for an Urban Amenity Improvement Program, which Urban Taskforce chief executive Chris Johnson said was “positive input to help drive the renewal of this corridor”.