NSW budget 2024: Oh, the irony: Property boom comes to Treasurer’s rescue

It’s no small irony the centrepiece of Treasurer Daniel Mookhey’s second budget - a $5bn social housing boost - is funded by the very thing fuelling the housing crisis, Sydney’s roaring property market.

It is no small irony that the centrepiece of Treasurer Daniel Mookhey’s second budget - a $5 billion social housing boost - is being funded by the very thing that is fuelling the housing crisis: Sydney’s roaring property market.

Once again, rising property prices have come to the Treasurer’s rescue, in the form of a surprise windfall in stamp duty receipts and land tax revenue.

Over four years, NSW will get a whopping $5.6bn more in land tax revenue than it was expecting just six months ago. That has been helped along by the government freezing the land tax threshold at 2024 levels, which will raise some $1.5bn.

Treasurer Daniel Mookhey after delivering the NSW Budget in Sydney. Picture: Newswire / Gaye Gerard

Stamp duty receipts have been revised up by $4.1bn since December’s half-year review due to increasing property prices and the number of homes being bought and sold.

The two taxes are the driving force behind an overall tax take that will be $10.7bn higher over the next four years than was forecast in December.

That is almost equal to the amount of money NSW is losing in its GST share ($11.9bn) following an unprecedented cut to our slice of the pie.

For months, Mookhey has been insisting that cuts to GST revenue from Canberra have left the NSW budget in a pallid state.

So keen was Mookhey to blame the Commonwealth Grants Commission for the state of his books that he even tasked NSW Treasury with forecasting what the budget bottom line would be but for the GST cuts.

Minister for Finance Courtney Houssos addresses the media in Sydney on Tuesday. Picture: Newswire / Gaye Gerard

Those figures reveal that even if NSW had received every cent we were expecting, Mookhey’s budget bottom line would have been $2.7bn worse off next financial year than he forecast last September.

Without the GST cuts, Mookhey would have delivered a $1.9bn deficit next financial year, compared with a $844 million surplus.

Liberal Treasury spokesman Damien Tudehope has long been accusing Mookhey of using cuts to GST to hide his budget mismanagement.

The fact that increased revenue will make up all but $1.2 billion of the money NSW lost from the Commonwealth over the next four years will only strengthen his argument.

While Mookhey is right to argue that NSW was “ripped off” when the Commonwealth Grants Commission cut our share of GST revenue; the funding model is unfair and is funnelling bucket-loads of money interstate for political gain.

However, it would be wrong to blame deficits as far as the eye can see on lost GST revenue alone.