NSW budget review: Berejiklian boasts about state’s debt

The NSW Treasurer, Gladys Berejiklian, has boasted that NSW has the lowest debt burden of any state in Australia.

NSW Treasurer Gladys Berejiklian. Picture: Tim Hunter

The NSW Treasurer, Gladys Berejiklian, has boasted that NSW has the lowest debt burden of any state in Australia, while at the same time spending more than any other on infrastructure.

The benefit of selling its high voltage transmission business Transgrid last month became apparent in its half-yearly review, with general government net debt projected to fall to just $1.8 billion by June 30 next year.

This doesn’t count the incentive payments from the federal government for selling assets, which will reduce the debt to ­almost zero, nor the proceeds from the next two electricity businesses, Ausgrid and Endeavour Energy, which will be sold next year for about $10bn to $15bn.

Releasing the half-yearly budget review, Ms Berejiklian said: “It’s a very good time to be NSW Treasurer.”

She highlighted NSW’s net debt compared with that of other states. She said only NSW and Victoria had Triple A credit ratings, but Victoria’s general government debt was more than 6 per cent of its gross state product, while NSW’s was only 0.3 per cent.

“The other major difference between Victoria and NSW is our infrastructure spend is at record levels, they are cancelling projects. And they also relied for their surplus position on a grant from the federal government for a project they cancelled.”

Ms Berejiklian said it was rare to have the combination of strong surpluses, nearly zero net debt and record spending on infrastructure and services. “It’s a combination that doesn’t often happen,” she said.

The NSW budget surplus soared to $3.4bn, and the state will accumulate more than $10bn of surpluses over the next four years.

The budget surplus will average $2.6bn over the forward estimates, but drop to $1.8bn in 2018-19 as federal government cuts to health and education funding start to bite.

The budget result is $875m better than predicted in the June budget, thanks to $1.2bn extra in revenue, mainly from stamp duty.

However, Treasury expects the Sydney property market boom to end.

“There are signs the Sydney property market is starting to cool after moves to rein in investor lending growth and recent increases in mortgages rates,” it said.

“Auction clearance rates declined through November and are at their lowest level in almost three years, albeit on still high volumes and there are signs prices have also begun to moderate.”

Despite record stamp duty receipts, coal royalties are expected to be $129m lower because of the falling prices.

Over the forward estimates mining royalties, which in NSW consist predominantly of coal royalties, will be $705m lower than forecast in the June budget.

Treasury said this was because of significantly lower volumes than expected, as well as lower prices, which were only being partially offset by a lower Australian dollar.