The NSW government has delivered a $4.5 billion surplus in Tuesday’s budget – $500 million more than expected, thanks to a privatisation push that includes the part sale of the electricity grid and the sale of the Land Titles Registry, as well as stamp duty income from a booming property market.
But with such a strong financial position, it is disappointing to see that no substantive action has been taken to progress the government’s net zero 2050 climate target, nor to address the affordable housing crisis – two of the state’s most urgent challenges.
The NSW economy is now outpacing economic growth in the rest of the nation for the first time in 26 years, and has negative net debt of -$7.8 billion, the lowest level on record.
“With our budget firmly in the black and NSW back as the nation’s strongest economy, our Government is ensuring the benefits reach every corner of this state,” Premier Gladys Berejiklian said.
We’ve already reported on the $4.3 billion “housing affordability” package, which includes:
- Cutting stamp duty for first homebuyers on homes up to $650,000 and discounts up to $800,000, effective 1 July 2017 (a measure critiqued for its propensity to add to housing prices)
- Abolishing stamp duty charged on lenders’ mortgage insurance (again considered inflationary)
- Doubling the foreign investor surcharge from four per cent to eight per cent on stamp duty and 0.75 per cent to two per cent on land tax (probably a good move)
- Removing stamp duty concessions for investors purchasing off the plan (also positive)
- Committing $3 billion in infrastructure funding to accelerate the delivery of new housing (positive)
- Expanding complying development to some medium density housing typologies (potentially positive)
- Greater use of independent panels for councils in Sydney and in some regional areas (a fast track option loved by d
While welcomed by many, some measures, the stamp duty cut in particular, has been heavily criticised for its potential to add demand pressure and raise house prices. A lack of action on affordable housing was also criticised.
Social housing minister Pru Goward said there would also be $218 million in capital maintenance expenditure committed to upgrade existing social housing developments, $198 million for Specialist Homelessness Services, $152 million to improve Aboriginal housing and an additional $20 million over four years to provide an extra 120 transitional accommodation units and support packages for rough sleepers.
With such a large budget surplus, however, it is disappointing to see there hasn’t been more support for new supply of affordable and social housing.
NSW Federation of Housing Associations chief executive Wendy Hayhurst wondered how much of the $4.5 billion surplus was going to be used to address the 100,000 shortfall in affordable housing places.
Housing advocacy group Shelter NSW said the budget offered “almost nothing” for low-income renters living in rental stress.
“Each year the budget warns that the stamp duty windfall from the state’s unstoppable inflationary housing market is set to end. The following year sees the record revenue roll in again.” executive officer Mary Perkins said.
“But each year the budget fails to use these record funds and the growing surplus to provide an ongoing program to deliver the 130,000 social and affordable housing homes urgently needed to fill the gap of low-cost rental housing in this state.”
The Labor state opposition recently raised the bar with its affordable housing policy that would see a 15 per cent inclusionary zoning target for affordable housing on rezoned land, rising to 25 per cent on state-owned land.
The property industry is also up in arms that given the large budget surplus, it is still facing increased taxes. Expansion of State Infrastructure Contribution Scheme to 10 new areas announced in the housing affordability plan would raise an additional $545 million in revenue.
“In a budget that trumpets an upgraded surplus of $4.5 billion this year, $2.7 billion next – and solid surpluses in the out years – it is disappointing to find that half a billion dollars of new taxes could be imposed on the property industry to fund the extra infrastructure investment foreseen in the government’s housing affordability plan,” Property Council NSW executive director Jane Fitzgerald said.