The NSW budget announced this week has revealed that spending on infrastructure projects will receive a multi-billion-dollar boost.
NSW’s debt is forecast to soar to $105 billion by 2023-24 as record borrowing to fund its $30 billion infrastructure pipeline continues to ramp up in the hopes it will drive job creation and reduce the state’s unemployment rate, which is on track to hit 7.5 per cent this year.
NSW Treasurer Dominic Perrottet said the budget had made targeted investments to turbo-charge jobs over the next five years with up to 270,000 people expected to return to the workforce by mid-2024.
“The risk of long-term economic damage is too great if we do not take action, so we are taking advantage of record low interest rates and a strong balance sheet to turbo-charge our recovery.
“This budget includes measures to chart a course back to surplus by 2024-25, and a strong economic recovery will support that goal,” Perrottet said.
Employers will get a major recovery boost with $2.8 billion in payroll tax cuts including increasing the threshold from $1 million to $1.2 million to lower the cost of creating jobs, while a $5 million program will help small businesses apply for tenders.
Some businesses that are under the payroll tax threshold will also receive $1,500 vouchers to cover government fees.
The NSW government has also outlined major plans to push further into its shovel-ready infrastructure splurge, promising to spend more than $107.1 billion over the next four years to spur economic growth by generating upwards of 145,000 jobs per year.
The state received more funding than any other state for new projects as part of the federal budget earlier this year, securing some $2.7 billion, with $1.8 billion going to the proposed Sydney Metro-Western Sydney Airport rail line.
As part of the state budget, a further $30 billion will be spent in the next 12 months, including $18.2 billion on transport, $2.1 billion on health and $1.2 billion on education.
A further commitment of $650 million to the first stage of the $2.4 billion Parramatta light rail in Sydney’s west has also been made, as the first tracks of the transport project are currently being laid.
Upwards of $200 million will be provided for upgrades at railway stations with $43 million towards regional trains in Dubbo, $35 million to improve spots south west Sydney’s Heathcoate Road and $44 million towards the upgrade of Picton Road in the Illawarra.
The state government will also place $8.7 billion towards regional roads and transport, with most major highways around Sydney receiving investment.
Nearly $3 billion has been earmarked to build new or upgrade existing hospitals and healthcare facilities across the state.
As part of the upgrades, stage two of the $1 billion redevelopment of Penrith’s Nepean Hospital will be fast-tracked with a new intensive care unit, among other facilities.
The NSW government will also spend more than $812 million on building or upgrading social housing, with upwards of 1,300 dwellings planned to help create jobs while attempting to bridge the demand for affordable housing.
It comes as the Victorian government looks to spend $5.3 billion on social housing.
Regional schools have also been provided $650 million for new infrastructure.
The NSW government has also proposed a shift away from stamp duty to an annual property tax based on land values.
Buyers will be given the choice between the two, with the property tax option locking in all future owners of the site to the annual levy.
Stamp duties on the transfer of property, on average 4 per cent of their entire value of the property in government stamp duties, are the second-largest source of state tax revenue and generating 24 per cent of state tax revenue.
Real Estate Institute of Australia president Adrian Kelly said the reform would have “knock-on” benefits to the economy and needed to be preserved moving forward.
“Whilst reforms in the budget may prove to be a promising start, replacing one tax with another does not solve the long-term problem Australia’s property market is facing.
“Stamp duties on conveyances are inconsistent with the needs of a modern tax system and should be replaced with a more efficient means of raising revenue,” Kelly said.
Just as it did to the federal budget, the pandemic has smashed the public finances of the nation’s largest state, turning an expected surplus into a $16 billion deficit.
The NSW government said it expects the budget position to improve steadily by the middle of next year.
Perrottet has predicted the state will be back in surplus by 2024, describing this year’s budget as one “equally focused on reform, to forge a brighter future for our people”.
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