Treasurer Perrottet’s state ‘Future Fund’

NSW Treasurer Dominic Perrottet is set to announce a state ­“Future Fund” worth up to $4 billion in tomorrow’s budget.

“While we’re very happy in NSW to (see) foreign investment, we want to see the people of NSW come first,” says Mr Perrottet. Picture: AAP

NSW Treasurer Dominic Perrottet is set to announce a state ­“Future Fund” — based on the federal model and worth up to $4 billion — in ­tomorrow’s ­budget to safeguard for a “rainy day”.

Mr Perrottet will also use the state budget, his second as Treasurer, to trumpet the success of housing affordability measures, with a surge in first-home buyers coinciding with a cooling of interest from foreign ­investors.

The budget will show that the number of foreign homebuyers has almost halved since the NSW government doubled the foreign investor stamp duty surcharge last year. Receipts from the stamp duty measure are to be downgraded by almost $150 million in the budget.

And a move last year to grant stamp duty concessions to first-home buyers on the purchase of “existing homes” has also delivered results, with the number of purchases by first-home buyers on properties worth less than $800,000 growing from 6 per cent to 27 per cent.

Mr Perrottet is also expected to announce a Future Fund worth between $3bn and $4bn after having consulted former federal treasurer and Future Fund chairman Peter Costello.

Mr Perrottet would neither confirm nor deny the measure last night.

The Australian understands that the budget surplus for 2017-18 will be about $3.5bn, but the 2018-19 surplus will be about $1.5bn — down from $2bn predicted in the Treasurer’s mid-year review.

Surpluses in the forward years are likely to average $1bn — lower than in the past few years, as the Treasurer moves to show voters that the Coalition government is not hoarding their money ahead of the state election due next March.

Since July 1 last year, more than 30,000 first-home buyers have entered the market. This followed the expansion by Mr Perrottet of the first-home owners grants from new homes to include existing ones.

In the three months to May, the number of foreign buyers fell from 1092 to 575. The budget has therefore revised money anticipated to be collected from the surcharge from $352m to $211m in 2018-19.

Revenue from the measure for November 2017 to April this year was about 70 per cent of that in the corresponding period a year earlier.

Tighter lending rules on investors instituted at the federal level have also reduced the number of foreign buyers, as has a crackdown by Beijing on money leaving China.

“While we’re very happy in NSW to (see) foreign investment, we want to see the people of NSW come first,” Mr Perrottet said.

“As a treasurer, I’m happy to lose revenue on stamp duty if it means more families can step into their first home.

“The Premier committed to tackling housing affordability as one of her top priorities (when she became leader in January 2017) and she has delivered. We’re happy to see the people of NSW get into homes first.”

After Premier Gladys Berejiklian, the then treasurer, ­announced the foreign investor surcharge in the 2016 budget, she described it as a revenue-raiser, not a method of addressing housing affordability.

“We didn’t introduce it ­because it affects affordability — it’s because it was an extra revenue-raiser for the state,” she said last year.

But the opposite appears to have resulted. Under the system, those people who can prove they have been in Australia for 200 days during the past year do not have to pay the 8 per cent surcharge.

As well as the surcharge, ­foreign homeowners pay an extra 2 per cent annual land tax after Mr Perrottet lifted it last year from a 2016 rate of 0.75 per cent.

Last year, the NSW government abolished stamp duty for first-home buyers on new and existing homes worth up to $650,000, with stamp duty ­reductions for properties worth between $650,000 and $800,000.

NSW Treasury sources said Victoria had not experienced a slowdown in foreign investment in that state despite instituting a similar tax. The Victorian surcharge is slightly lower, at 7 per cent.

NSW budget measures so far announced include a cut to ­payroll tax, a 10 per cent point of consumption tax to target online gambling and a $150 gift hamper to families for each baby born.

Another measure to tackle the cost of living seems likely. Last year, the government offered $100 vouchers to encourage take-up of children’s sport.

The federal Future Fund, worth more than $100bn, was ­established in 2006 by the ­Howard government to cover public sector superannuation ­liabilities.