NSW Budget 2019-20

The NSW Budget for 2019-20 was handed down by Treasurer Dominic Perrottet on Tuesday 18 June. The Budget focused on meeting the Government’s election commitments and continuing the high investment in infrastructure with $93 billion spread across health, education and transport projects.

The record infrastructure investment includes $55.6 billion on road and rail, including $6.4 billion for Metro West, and continuing the government’s strong record of investment in transformative rail infrastructure. The budget also sees $7.3 billion on education and $10.1 billion on health infrastructure.

A smaller surplus of $802 million in 2019-20 and averaging $1.7 billion in forward years is part of what can be described as a sensible budget, but one that is also a product of lower revenue with a further $173 million write down of stamp duty revenue for 2018-19. Though there was little acknowledgement of the downturn in the residential sector, it is a positive sign that there were no new taxes announced given the downturn and reduced stamp duty revenue.

Despite this, the Property Council’s view is that the NSW Government must prioritise examining the cumulative impact of existing fees, taxes and charges imposed by state and local government. Combined with the slowdown in the residential sector, the existing fiscal regime is a major, and worsening, impediment to housing affordability in NSW, especially in Sydney, the Hunter and the Illawarra.

The announcement of a Federal Financial Relations Review led by David Thodey AO is also welcomed and it is hoped that this review will reinvigorate the conversation between states and the Federal Government over current funding arrangements to deliver a roadmap to more sustainable funding arrangement and greater financial autonomy for NSW.

Here is summary of key budget measures:

 

 

F2017-18 (outcome)

F2018-19
(forecast)

F2019-20
(forecast)

F2020-21  (forecast)

 F2021-22

(forecast)

Real State final demand (%)

3.4

2.5

2.5

2.5

 

Sydney consumer price index (%)

2.0

1.75

2

2 (2.25)

2.25 (2.5)

Unemployment (%)

4.8

4.5

4.5

4.5

4.5

 

F2018-19 (revised)

F2019-20
(estimate)

F2020-21
(forecast)

F2021-22

(forecast)

F2022-23

(forecast)

Surplus/deficit ($m)

802

1,016

1,227

2,002

2,599

Infrastructure investment ($m)

 

27,739

23,849

22,671

18,775

Stamp Duty collected ($m)

7,374

6,887

7,721

8,565

9,038

Land Tax collected ($m)

4,225

4,538

4,606

4,556

4,578

 

Taxes and Levies

Stamp duty:

o    Transfer duty revenue is expected to be $7.4 billion in 2018-19, $173 million lower than forecast at the 2019 Pre-election Budget Update;

o    Total transfer duty revenue is forecast to decline to $6.9 billion in 2019-20, rising to $8.565 billion in 2021-22;

o    Residential property transfer duty revenues are expected to grow at an average annual rate of 8.8 per cent over the four years to 2022-23;  

o    From 1 July 2019 transfer duty thresholds will be indexed to the Sydney Consumer Price Index.

Foreign investor transfer duty surcharge:

o    From 1 July 2019, retirement visa holders will be exempt from foreign investor surcharge. This policy brings NSW into alignment with the other states;

o    There are no other changes.

Land tax:

o    Expected to be $4.2 billion in 2018-19;

o    Forecast land tax has been reduced by 334.9 million over the three years to 2021-22;

o    Residential land values are forecast to decline by 9.0 per cent in 2019;

o    Commercial land values are forecast to rise by 2.0 per cent in 2019;

o    Land tax is forecast to grow by 2 per cent in the four years to 2022-23.

Infrastructure

Total expenditure of $93 billion on infrastructure over the four years to 2022-23 including:

- $10 billion for 29 new and upgraded hospitals and health facility projects;

- $6.8 billion for over 190 new and upgraded schools, before and after school care;

- $55.6 billion for road and rail projects including $6.4 billion for Sydney Metro West.

 

Other transport infrastructure expenditure over the next four years, include:

- $561 million for the Parramatta Light Rail Project;

- $480 million for upgrades to Mamre Road and Mulgoa Road;

- $1.2 billion for the continuation of the North West Metro;

- $450 million committed to ease congestion at key traffic bottlenecks.

Planning

o    $315 million ($1.3 billion over 4 years) towards the provision of infrastructure to support growing communities and local councils through Local Infrastructure Growth Scheme, Special Infrastructure Contributions and Voluntary Planning Agreements;

o    $101 million for the development of major urban renewal projects to transform and unlock economic potential in growth centres that drive housing, employment and public benefits including Parramatta North and Redfern Waterloo District;

Skills and Workforce

o    From January 2020, 70,000 fee-free traineeships will be provided to young job seekers through Smart and Skilled Vocational Education and Training (VET) providers.

Hunter

o    $54 million in 2019-20 for the Maitland Hospital construction;

o    $37 million towards Nelson Bay Road improvements;

o    $16.7 million in 2019-20 for the Manning Base Hospital redevelopment;

o    $104.6 million to continue construction of the M1 Pacific Motorway widening between Tuggerah and Doyalson interchanges, and the Kariong and Somersby interchanges (in partnership with the Federal Government).

Illawarra

o    $55.9 million for the Shellharbour Hospital Redevelopment Stage 1;

o    $168.5 million for the continued construction of the Albion Park Rail bypass;

o    $150.1 million for the continued construction the Berry to Bomaderry upgrade;

o    $9 million in 2019-20 for the completion of Bulli Hospital Aged Care Centre of Excellence.

Western Sydney

o     $561 million for 2019-20 towards Parramatta Light Rail Stage 1, linking Westmead and Carlingford to the Parramatta CBD;

o    $404 million towards upgrading the Northern Road between Narellan and Penrith;

o    $286 million in 2019-20 for the Stage 1 of the Westmead Hospital Redevelopment;

o    $196.2 million in 2019-20 for the Nepean Hospital and integrated ambulatory services Redevelopment.

o    $145.3 million towards planning and preconstruction activities for the Western Sydney Infrastructure Plan   

For more information, please contact nswadvocacy@propertycouncil.com.au