Today the NSW Government handed down its 2016-17 Budget. The NSW Budget sets out how the Government raises revenue, where the money is spent, and what the Government thinks will happen to the NSW Economy.
The NSW Business Chamber Policy and Advocacy team were in the budget lock up to undertake an analysis of what the budget will mean for business and how the changes will impact our members.
Set out below are the key budget measures and the overall financial position of NSW.
Budget Position and Forecast
Government finances are in a strong position with a record surplus of $3.7bn forecast for 2016-17 or 0.7 per cent of Gross State Product (GSP).
- Despite the record surplus in 2016-17, surpluses are expected to moderate to between $1.3bn and $1.6bn between the years 2017-18 and 2019-20. This reflects declining revenue growth as NSW’s share of GST revenue and national partnership payments fall.
- Gross State Product is forecast to grow at an above trend 3 per cent in 2016-17 and 2 ¾ per cent in 2017-18 – boosted by low interest rates, a low Australian dollar, strong population growth and a strong pipeline of public infrastructure and housing construction.
The Budget confirms the Government’s earlier commitment to remove a number of stamp duties which will help save NSW businesses $400 million a year.
- These taxes include duty on business mortgages; unlisted marketable securities; and non-real business transfers. Removing these taxes will help encourage mergers, acquisitions or restructures which improve efficiency and business viability.
- There are no changes to payroll tax in the Budget. Instead, payroll tax receipts are expected to grow, on average, by 5.3 per cent each year between 2015-16 and 2019-20.
- Disappointingly the Budget also continues its over-reliance on stamp duty which is expected to approach $10bn over the forward estimates, despite the Chamber’s calls to return stamp duty bracket creep.
- The Budget also confirms a 4 per cent stamp duty surcharge and 0.75 per cent land tax surcharge for foreign property buyers, which is expected to generate more than $1bn over the next four years.
Jobs, Education and Training
The NSW Government will invest $13.7 billion in schools education and $2.6 billion in skills and training over the 2016/17 year. Key items announced as part of the budget include:
- $100 million for the ‘Smart, Skilled and Hired’ initiative targeted at training up young people in the construction and disability sectors
- The Jobs Action Plan, which provides payroll tax rebates for businesses which hire new staff, will be refocused to businesses of under 50 employees while increasing the rebate from $5,000 to $6,000.
- $25 million to open a Sydney School of Entrepreneurship.
- A $2.4 billion investment in new and upgraded schools in areas where student numbers are growing, including the new Inner Sydney High School, Parramatta Public School and improvements to Arthur Phillip High School.
- $1.8 billion in funding for TAFE, in addition to $786 million on the contestable VET sector so that students have the option of choosing a private provider for their training.
Roads and Infrastructure
The Budget includes a record $73.3 billion over four years to deliver key infrastructure projects and improvements.
- $2.9 billion for WestConnex including widening and upgrading the M4, building additional M5 capacity and getting the M4-M5 link ‘shovel-ready’;
- $485 million for Western Sydney roads to support the new Western Sydney Airport and growth areas;
- More than $2.1 billion to continue upgrades of regional roads including the Pacific Highway;
- $3.7 billion for water and wastewater projects across regional and metropolitan NSW.
The Budget includes a record $10.5 billion for public transport across metropolitan and regional NSW. Key items include:
- $2.7 billion in funding for the Sydney Metro projects (Sydney Metro Northwest and Sydney Metro City and Southwest);
- $277 million to continue delivery of the CBD and South East Light Rail and planning and preparatory work for the Parramatta Light Rail and Newcastle Light Rail;
- Over $300 million allocated to enhance the bus network across NSW and to continue planning for the B-Line bus rapid transit linking the Northern Beaches to the CBD.
The Budget confirms no new infrastructure or transport initiatives for regional NSW. The Budget does however confirm the ongoing commitment of 30% of the Restart NSW fund (circa $6 billion) for regional NSW which will include: $2 billion for freight corridors, $1 billion for Regional Growth Roads and $1 billion for Regional Water Security. Funding for these projects will progress once the proceeds from the long term lease of 49% of the states poles and wires are received.
- $24 million over four years (including $15 million in new money) on the Mobile Black Spots Program to resolve regional mobile ‘black spots’.
- $27 million to support economic development in communities affected by the Murray-Darling Basin Plan
- The $100 million ‘Smart, Skilled and Hired’ initiative targeting youth unemployment in regions including the Central Coast, New England and the North Coast
- Capital funding over four years for a new 1,700 bed prison facility at Grafton.
NSW Business Chamber