NSW Budget 2021: Perrottet announces cash-splashing budget
Drivers will be gouged more for tolls and an extra $50m raked from speeding motorists but the Treasurer stopped short of announcing any road relief in the budget.
NSW
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Motorists will be gouged more for tolls than the rate wages are rising and an extra $50 million more than forecast will be raked from speeding motorists after camera warning signs were removed.
Overall revenue from government-owned toll roads is forecast to increase 8 per cent each year until 2024-25 and the price of a number of tolls, including on the WestConnex, will increase 4 per cent each year.
However, Treasurer Dominic Perrottet on Tuesday stopped short of announcing any new toll relief measures in the state budget.
Revenue from motor vehicle taxes has been revised up by $512.5 million over four years partly because people are not taking up car registration discounts provided under the Toll Relief program.
Unions said that Western Sydney workers would be worse-off with tolls rising faster than a 2.5 per cent yearly pay rise for public servants.
“The only people that are losing in this budget are working people, particularly those in Western Sydney who will be slugged with toll price increases and usage in the coming years,” Unions NSW Secretary Mark Morey said.
Revenue from fines will increase over four years by almost $50 million more than forecast in the half-yearly review.
More than $3.5 billion is expected to be raised from fines in the four years to 2024-25.
Roads Minister Andrew Constance removed warning signs from mobile speed cameras and he will triple the cameras’ operating hours but he has said the policy was about preventing road deaths and denied it was revenue raising.
Labor Leader Chris Minns questioned the forecasts, suggesting they underestimated the amount that would be raised from mobile speed cameras without signs.
The Daily Telegraph this week revealed fines had exploded 1595 per cent since the government removed the warning signs.
IT’S SINK OR SWIM IN DEBT
A Budget cash splash to help families and the economy recover from the pandemic will leave the state facing an eye-watering $104b in net debt by 2024.
Treasurer Dominic Perrottet announced a string of sweeteners for NSW, with no new savings plan, as he continues to prioritise stimulus, jobs and the economy over the budget position, which does have some improvements, however, thanks to bigger than expected receipts from GST, stamp duty and payroll tax — to the tune of an extra $23b.
“From the deepest recession in our lifetime, we are back to growth and back on track,” Mr Perrottet said on Tuesday, declaring the state was “dressed for success”.
Against a backdrop of consumer spending rebounding 15 per cent, dwelling investment up 18 per cent and economic activity back to pre-Covid levels, Mr Perrottet declared the budget offered “more cost of living support than any state budget in the history of our nation”.
This equates to $470m in new cost of living measures, including a $100 learn to swim voucher for every pre school aged child in a program worth $44m.
The budget also posts a record investment in health and education, including the extension of free preschool and a $2.1bn program for 44 new and upgraded schools.
However the Treasurer’s budget speech raised eyebrows in Canberra, where he appeared to criticise his federal counterparts.
“What sets NSW apart from every other state, and the commonwealth, is that we are not just focused on today, we are focused on the future,” Mr Perrottet proudly declared.
His federal colleagues were unimpressed, pointing to more than $300bn in JobKeeper payments dished out to keep NSW businesses afloat. Mr Perrottet’s budget also laid out a fresh focus on local sport communities with $450m invested for new and improved sport facilities across the state and programs for health and activity.
This combines with already announced $100 lunch vouchers for CBD diners and special miscarriage and paternity leave to help families.
There is also a plan to upskill 246 paramedics for intensive care services and a new state of the art ambulance operations centre as they stare down a war over pay.
The infrastructure pipeline spend increases to $108bn with $1.15b to build the Bradfield City Centre — home to the new Aerotropolis — $1.3bn for the Bankstown-Lidcombe Hospital redevelopment and $2.7b for the M6 extension stage 1.
There is $8m set aside to develop a final business case for the suburban stadiums strategy, with a goal to commence construction of the first ground by 2023. NSW has recovered more than 300,000 jobs since the height of the pandemic, with a return to full employment expected by 2024-25.
The budget outlines decreasing deficits over the next three years with a surplus projected in 2024-25.
While the budget posts a slimmer deficit for 2020-21, down to $7.9b, the 2021-22 deficit is in a worse than predicted position, out to $8.6b, but tracks the way to a thin $466m surplus in 2024-25.
Net debt is tracked to climb to a massive $104b — or 13.7 per cent of GSP — in 2024-25. The Treasurer insists this is on track to return to 7 per cent of GSP.
Crucially, the budget notes the risk of a slow vaccine rollout or further delay in international borders opening.
“A further one-year delay in opening of the international border could see the economy 0.9 percentage point smaller and the unemployment rate 1 percentage point higher by 2022-23,” the papers say.
It also warns “uncertainty about the effectiveness of vaccines against new variants could also affect the confidence of governments to reopen their economies”.
The budget papers note geopolitical tensions with China remain a risk, saying there is potential for further escalation causing trade outlook problems.
It also identified the new risk of macro prudential policy tightening in response to soaring house prices to avoid a deterioration in lending standards.
Parts of the budget were warmly greeted by residents, with Collaroy mum Brianna Wise saying the $100 swimming vouchers will be a great help for her family. The mum-of-four has three of her kids enrolled in swimming lessons — Mahalia, 4, Savannah, 8, and Ariella, 6 — costing a total of $200 a month to send them to one session a week.
“We live near the beach so it’s something I want them to learn,” Ms Wise said.
The vouchers will also help when her youngest Isaiah joins his sisters in the pool.
“My eldest is going quite well in swimming so I wanted to put her in a second day but the expenses hold you back. I’m really happy with this announcement because anything that helps with family costs is a good thing.”
INFRASTRUCTURE
Some of the massive building projects in NSW’s record $108.5 billion infrastructure pipeline faced being put on hold during the pandemic, Treasurer Dominic Perrottet has revealed – but now they are back bigger than ever before.
Unveiling details of the huge spend, including 44 new and upgraded schools and just over a billion dollars to kickstart a new city near the second airport in western Sydney, the Treasurer said consideration was given last year to rolling back major projects “early in the pandemic”.
But the Berejiklian Government “held the line” and “that was the right decision based on where we sit today”, Mr Perrottet said.
The unprecedented $108.5 billion capital works program over four years includes three new metro lines, WestConnex and major safety road upgrades across the state. There is also $828 million for the Sydney Football Stadium Redevelopment, $750 million for the new Sydney Fish Markets and $355.2 million in remaining costs for the Barangaroo precinct.
On the education front, the money includes $2.1 billion over the next four years in building expenditure on 44 new and upgraded schools, bringing the total capital spend on infrastructure to $7.9 billion for 210 schools.
It includes boosts for Liverpool Boys and Girls High, a new high school at Edmondson Park and a new selective high school in Sydney’s southwest.
NSW Health alone gets $10.8 billion of capital investment over the four years to 2024-25, which includes the new $300 million Rouse Hill Hospital.
And $1.15 billion will be spent on the new Bradfield City Centre, Australia’s first 22nd century city, as part of the new Western Sydney International Airport.
EDUCATION
Almost $200 million will be spent “super-charging” a major overhaul of the NSW education curriculum, which will go online to make it easier for teachers to access.
According to Treasurer Dominic Perrottet, it is the first major rewrite of the school curriculum in 30 years.
About 200 syllabuses will be reformed by 2024, but under the extra budget money the website portal will go live in Term 4 this year with the new K-2 English and Mathematics syllabuses.
Mr Perrottet said the lessons will be updated and streamlined.
Education Minister Sarah Mitchell said the new curriculum portal was being built from the ground up and was a “critical part of the most significant curriculum reform in a generation”.
She said teachers would benefit from explicit guides and resources already tested in the field.
“The new curriculum will benefit students, it will streamline their classroom content and it will be taught in a way we know works,” she said.
“The NSW Curriculum reform is about delivering the knowledge and skills students need to succeed, and it is all backed up by evidence.
“The new portal will help teachers integrate syllabus materials and deliver lessons driven by the latest research and resources, meeting the needs of our students in a way we have never been able to do before.
“(It) will save time for teachers, improve clarity and make the implementation of the syllabuses even easier.”
A further $125 million will be spent beefing up the supply of new teachers through a new “Teacher Supply Strategy”, recruiting new teachers from existing professions and fast-tracking them.
Overall, the education budget comes in at $24.4 billion, with $20.5 billion on schools, $2.9 billion on skills and $725 million on early childhood education.
And $8 million will be spent partnering up with singer Dolly Parton’s charity United Way Australia to give out free books to needy children.
HOUSING
The great Sydney house price boom is tipped by NSW Treasury to peak in late 2021, with house prices having surged by over 20 per cent during the pandemic.
Residential prices are forecast to remain “materially higher” over the next four years.
While no price collapse is forecast, sales activity is forecast to come off the boil, partly because the elevated prices will have “priced out more potential buyers”.
There were a record 23,000 sales across NSW in March, up on the 16,000 average of the past four months of March.
Treasury did warn “a risk has emerged more recently with the potential for macroprudential policy tightening in response to soaring house prices”.
“The risk of prudential tightening is not insignificant,” it noted.
Stamp duty revenues could drop by $735 million in the next year if prices were to fall by 10 per cent.
While Treasurer Dominic Perrottet described Sydney as the “confidence capital of Australia”, his departmental forecasters acknowledged the international economic recovery would remain “precarious” while the pandemic is ongoing.
The budget papers forecast stamp duty will peak in the upcoming budgetary year at $11.4 billion. It is up from the surprise $9.3 billion windfall in the current year, and almost double the $6.9 billion in 2020.
However, due to the forward shift in buying, the next three years will see stamp duty revenues fall to initially $10.9 billion, then $10.1 billion, and back to $9.2 billion by 2024-25.
The historic rollercoaster nature of stamp duty revenue is in part the reason why the NSW Treasurer has signalled his intention to shift from the upfront stamp duty cost for buyers towards an annual land tax on every property owner.
There was no date given for the phased introduction to a wider annual land tax. There was no tweaking to any housing grants with some $1.2 billion going to the benefit of first home buyers.
The number of first home buyers was up annually by more than a third. The papers noted the current strength in the housing market, in terms of price growth and new construction, was mainly reflected in houses rather than units.
It said renovation activity had been strong as households have redirected money earmarked for overseas holidays into improving their houses.
“For now, these factors have been more than sufficient to offset the impact of weaker population growth,” it advised.
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