21 June 2016
NSW Treasurer Gladys Berejiklian today delivered her second budget – the sixth of the Coalition Government – confirming infrastructure as the priority commitment by announcing record expenditure of $73.3 billion over the next four years. The Treasurer’s ‘congestion-busting’ budget allocates $9.5 billion this financial year for Restart NSW to commence construction of road, maritime and freight projects across the State.
Today’s Budget reveals a surplus of $3.4 billion for 2015-16, and predicts a surplus of $3.7 billion for 2016-17, averaging $2 billion over the forward estimates. The Treasurer declared NSW was now ‘effectively’ net-debt free and confirmed the State as having the strongest budget position of any Australian government.
Economic growth in NSW will continue to outpace the national average, and is forecast to be 3 per cent in 2016-17, before falling to 2.75 per cent in 2017-18. Treasurer Berejiklian highlighted strong jobs growth, with unemployment now the lowest of any state at 5.2 per cent, and said the Government had already delivered on its 2015 election commitment to create 150,000 new jobs in this parliamentary term.
The Government has introduced a 4 per cent surcharge on stamp duty and an additional 0.75 per cent land tax for foreign investors in residential real estate. The new measures will apply from 1 January 2017, and are expected to raise around $1 billion over the forward estimates. These two revenue measures will partially offset the abolition of duties on business mortgages, unlisted securities and the transfer of non-real business assets, which will cost the budget $1.8 billion over four years.
The Treasurer said the greatest fiscal challenge for the State going forward will be to contain expenditure growth to offset revenue losses, driven primarily by NSW’s falling share of the GST. Labelling NSW as a ‘victim of its own success’, the Treasurer announced the State’s share of GST will fall to 81 per cent by 2020-21, down from 95 per cent in 2015-16, and representing a loss to the Budget of $10 billion over the next four years.
- A budget surplus of $3.7 billion in 2016-17 (averaging $2 billion over the forward estimates)
- Net debt projected to be $663.1 million at 30 June 2016
- Economic growth of 3 per cent in 2016-17, falling slightly to 2.75 per cent in the forward years
- Unemployment currently stands at 5.2 per cent
- Expenditure growth of 3 per cent to outpace moderating revenue growth of 2.3 per cent over the forward estimates
- A record spend on infrastructure of $73.3 billion over four years
- Population growth predicted at 1.5 per cent
Key initiatives include:
- The abolition of duties on business mortgages, unlisted securities and the transfer of non-real business assets at a cost of $1.8 billion
- $1.5 billion allocated to the State Super defined benefit scheme to reduce unfunded member liabilities
- $1 billion in additional revenue from the introduction of levies on foreign investment in residential real estate.
Finance, Services and Innovation
Key portfolio initiatives include:
- $415 million ($329 million recurrent and $86 million capital) to continue the rollout of the Service NSW network
- $344 million in new funding to support the Jobs Action Plan payroll tax rebate and Small Business Employment Incentive Scheme
- $241 million to provide shared corporate support and services to government agencies
- $65 million in new funding for the Critical Communications Enhancement Program (CCEP).
Premier and Cabinet
The 2016-17 Budget provides for:
- $142 million ($141 million recurrent funding) to expand the responsibilities of Infrastructure NSW
- $10 million to promote international trade and investment
Transport, Infrastructure, Roads and Maritime
The Transport, Infrastructure, Roads and Maritime portfolios will receive $16.9 billion, which includes:
- $2.9 billion for the development and delivery of WestConnex
- $2.7 billion for the Sydney Metro Project, including property acquisition and ongoing construction in the North West Metro
- $283 million for the construction of NorthConnex to link the M1 and M2 motorways
- $250 million for the taxi industry adjustment package to be provided over 3 years
- $210 million for the Northern Beaches B-line Bus priority project
- $142 for initial Newcastle Light Rail project road works
- $130 million for new heavy rail intercity rolling stock
- $74 million for the construction of roads in the Hunter, including the New England Highway intersections at Maitland
- $58 million to upgrade Warragamba Dam with anti-flooding measures
- $30 million for the purchase of new ferries
Expenditure for Health and related portfolios in 2016-17 total $20.6 billion and include:
- $197 million for prevention and harm minimisation programs to combat drug and alcohol addiction
- $133 million to redevelop Gosford Hospital and construct a new car park
- $126 million for ICT upgrades for NSW Health computer systems
- $99 million for the redevelopment of Westmead Hospital, including a car park upgrade
- $73 million to continue the construction of NSW Ambulance superstations throughout greater Sydney.
Industry, Skills and Regional Development
Key initiatives total $3.6 billion in this year’s budget, which include:
- $500 million over three years to protect Broken Hill’s water supply and construct a pipeline from the Murray River
- $259 million in energy support grant funding for 800,000 NSW households
- $80 million in concessional loans as part of the Farm Innovation Fund to encourage farmers to prepare for droughts in the future
- $38 million to prevent death, injury, illness and disease in workplaces in the mining and petroleum industry
- $25 million to establish a Sydney School of Entrepreneurship to provide students support, training and mentoring to develop innovative businesses
- $23 million from the Coal Innovation Fund to support low emissions coal technology.
Planning and Environment
Over $1.6 billion will be allocated to Planning and Environment initiatives, including:
- $590 million over two years for implementation of the Fit for the Future local government reforms
- $158 million for energy efficiency and renewable energy programs
- $40 million for local councils to upgrade infrastructure in priority development precincts
- $17 million for the Greater Sydney Commission’s implementation of A Plan for Growing Sydney
- $2.5 million to roll out a state-wide container deposit scheme.
The Budget has committed $13.7 billion for Education, which includes:
- $400 million over four years for the Schools Infrastructure Strategy
- $330 million to reduce infrastructure backlog with a focus on priority projects
- $188 million for major projects at 27 government schools
- $75 million in new works at 15 schools throughout NSW.
Family and Community Services
The Family and Community Services portfolio will receive $6.4 billion, including:
- $1.3 billion for the ongoing implementation of the National Disability Insurance Scheme (NDIS)
- $592 million for constructing new and upgrading existing social and public housing
- $188 million for crisis homelessness services and support with a particular focus on homeless youth, refugees and women affected by domestic violence
- $76 million to Community Housing Providers to subsidise vulnerable people leasing in the private rental market
- $53 million in support for Remote Indigenous Housing
Key portfolio initiatives include:
- $3.8 billion over four years for the Prison Bed Capacity Program for an additional 7,000 prison beds
- $185 million for expansion of the Parklea Correctional Centre
- The Government has also committed to a new privatised jail in Grafton with a capacity of 1,700 inmates, however, the funding allocation for this project is commercial-in-confidence.