New South Wales is set to receive 30,000 new homes, including 8,400 public housing units, in what Treasurer Daniel Mookhey claims is the state’s largest housing investment ever. The Minns Labor government announced in its second budget an “unprecedented intervention in the housing market,” utilizing surplus public land for 21,000 new homes and allocating $5.1 billion for public housing managed by Homes NSW. Mookhey had previously indicated that housing would be a central focus of the state budget for the second consecutive year as the government aims to fulfill its national commitment to construct 377,000 new homes by 2029.
In addition to housing, another key announcement is the exemption of payroll tax for GP clinics in Sydney that bulk bill at least 80% of their patients, and 70% in other parts of the state, aiming to alleviate the financial burden on doctors and reduce costs for patients, with the government allocating $77 million for this rebate.
Mookhey also cautioned that record public debt and other economic challenges necessitate restrained government spending, with the state projected to remain in deficit until 2027. He noted that the loss of $11.9 billion from the GST “rip-off” has contributed to the prolonged deficit, suggesting that retaining its recent GST share would have resulted in a modest surplus of $300 million by the next financial year. Describing the budget as focusing on “must-haves” over “nice-to-haves,” Mookhey presented it as a necessary response to current financial pressures.
The government has also agreed to forgive $104 million in payroll tax debts owed by doctors, resolving a longstanding conflict with the Royal Australian College of General Practitioners and the Australian Medical Association. This dispute began in 2018 when Revenue NSW determined that GPs were subject to payroll tax, leading to multiple court challenges and warnings from the RACGP about the potential closure of over 400 clinics if required to pay the debts.
Over the next financial year, the NSW government will spend about $8.7 billion on “cost of living support measures,” including $10,000 grants for eligible first home buyers, $350 electricity bill rebates for concession card holders, and a one-off relief payment of up to $300 for all households’ energy bills. Mookhey emphasized the need for prudent spending due to financial pressures and inflation.
Addressing the issue of public debt, which stood at $132.9 billion or 17.1% of the state’s GDP as of June 2023, the government highlighted that this is significantly higher than during the 2009-10 global financial crisis. The cost of capping black coal prices at $125 per tonne will cost NSW taxpayers $884 million by June, with a matching contribution from the federal government. For the current year, NSW alone will spend $588.6 million on this measure, which is more than double the $238.9 million allocated over four years for the consumer energy strategy to promote smarter energy use.
The government will also provide a 10.5% pay increase, including superannuation, for over 400,000 public sector workers over the next three years, following the removal of the Coalition-era wage cap. To manage overall wage expenses, the government plans to reduce the number of executive staff in the public service. Total government spending is expected to grow by just 1.7% annually until 2027-28, below the projected annual inflation rate for Sydney of around 2.7%. In contrast, public sector wage expenses are expected to increase by 3.2% annually.
The government anticipates a $10.7 billion increase in forecast revenues over the next four years compared to mid-year review estimates. This revenue boost will mainly come from extra stamp duty due to a recovering property market and increased land tax from adjusting the tax-free threshold, contributing $9.7 billion. Additionally, higher thermal coal prices and export volumes are expected to raise royalties by nearly half a billion dollars. Pooling the state’s investment funds into a new “OneFund” is projected to yield “higher, risk-adjusted returns” of $1.6 billion over the forward estimates.
