NSW Budget 2017-18

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Sydney Morning Herald --> Stamp duty revenue, privatisations push NSW to $12b in surpluses

NSW Treasurer Dominic Perrottet has unveiled budget surpluses worth almost $12 billion, underpinned by stamp duty from a booming property market and asset privatisations as well as $23 billion worth of cost cuts.

Treasurer Dominic Perrottet unveils a budget surplus worth almost $12 billion, largely from property stamp duty and asset privatisations. Vision courtesy ABC

Describing his first state budget as "the envy of the western world", Mr Perrottet outlined measures squarely focused on the provision of "social infrastructure".

Apart from the surpluses, his biggest new announcement on Tuesday was more spending on hospitals, with $720 million to upgrade Prince of Wales Hospital at Randwick.

This adds to $632 million for Campbelltown Hospital, $534 million for Tweed Hospital and $576 million for Nepean Hospital and $341 million for Concord Hospital in the budget that has been previously announced.

The expenditure on health comes after the government on Monday said it would spend $2.2 billion over five years on 123 new and upgraded schools across NSW to create 32,000 student places and 1500 classrooms.

Combined with spending promised in last year's budget, it means total expenditure on education infrastructure will be $4.2 billion over the next four years.

Mr Perrottet also announced that from January next year parents will be eligible for a $100 "active kids rebate" per child per year to cover registration and membership fees for sport and swimming lessons.

During his press conference Mr Perrottet defended the size of the rebate, insisting it will "build communities" and declaring it "the soul of the budget".

Small businesses and farmers will also benefit from tax cuts worth $330 million over four years.

From January next year businesses with a turnover of less than $2 million a year will be exempt from paying duties on insurance for work vehicles, professional indemnity and public liability.

For farmers, the duty on crop and livestock insurance will be abolished.

The budget also contains a $1.3 billion "regional growth fund" to create jobs and build regional sporting and cultural infrastructure.

The budget papers confirm a $4.5 billion surplus in 2016-17, forecast to drop to $2.7 billion in 2017-18, $2.1 billion in 2018-19 and $1.5 billion in 2019-20.

The 2016-17 surplus is $856.9 million higher than forecast in last year's budget, thanks largely to stamp duty revenues from the part-privatisation of electricity companies Ausgrid and Endeavour Energy.

The $11.7 billion in actual and forecast surpluses to 2019-20 will be underpinned in part by savings achieved by increasing the efficiency dividend – or budget cut – imposed on government departments from 1.5 per cent to 2 per cent for three years from 2018-19.

This is expected to save $547 million.

Along with existing measures, including the 2.5 per cent cap on public servant wage increases and procurement savings, the government anticipates savings of $23 billion over four years between 2017-18 and 2020-21.

However, the revenue side of the budget has taken a hit due to NSW's share of the GST continuing to fall.

Under the present system NSW's share of GST is set to fall to 25.5 per cent – or by $13.1 billion – by 2020-21.

This is worse that the forecast in last year's budget which said NSW's share is set to fall to 25.9 per cent – or by $10.8 billion – by 2019-20.

The budget papers confirm that under a per capita system of GST distribution pushed for by NSW the state would be $14.7 billion better off in the four years to 2020-21.

They say that net debt, currently below zero at -$7.8 billion, is set to rise to $18.6 billion by 2021, as the government borrows to fund its infrastructure program.

Elsewhere, the budget includes the previously announced housing affordability package targeting first home buyers.

From July 1, first home buyers of existing and new properties costing up to $650,000 will be exempt from paying stamp duty – up from $550,000 and adding existing homes to the scheme.

Buyers of first homes worth between $650,000 and $800,000 will receive stamp duty discounts – up from between $550,000 and $650,000 and again including existing homes.

To help fund the package, the stamp duty surcharge for foreign investors will be doubled to 8 per cent and the land tax surcharge lifted from 0.75 per cent to 2 per cent.

However, the budget papers reveal that property development companies that are foreign-owned but based in Australia will be eligible for a refund on the surcharges if they sell their developed properties within five years.

In his speech to parliament, Mr Perrottet said the budget contained infrastructure spending of $73 billion over the next four years.

"That's the equivalent to building 124 Harbour Bridges – a once in a generation investment that will transform our state forever," the Treasurer said.

Later, during his media conference, Mr Perrottet celebrated the budget's strong position.

"This budget is the envy of the western world!" he declared.

"Not only do we have strong surpluses over the next four years, we have the biggest infrastructure investment going on across this country than every before."

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NSW Budget 2017-18 > https://www.budget.nsw.gov.au/

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Sydney Morning Herald --> NSW budget 2017-18: New trains to help ease overcrowding

The first of 24 new suburban trains for Sydney will arrive late next year as the city experiences unprecedented demand for public transport.

The state budget lacked any new major commitments for public transport as bureaucrats focus on delivering previously announced projects such as the second stage of a new $20 billion metro train line and light rail services.

The government will spend $658 million this year on 24 suburban trains, the purchase of which was announced last June. The total cost of the trains is estimated at $1 billion, and their delivery due to be completed by 2019.

About $170 million will also go towards buying 132 buses to increase the size of the state's fleet, and another 314 to replace older vehicles.

More than $11 billion in capital expenditure on transport – including on roads – this year represents the biggest spend in the state's history.

It will be used to fund major projects such as the second stage of a 30-kilometre metro train line from Chatswood in Sydney's north to the central city and onto Bankstown in the west. About $3.2 billion will go towards the WestConnex motorway this year.

It will be used to fund major projects such as the second stage of a 30-kilometre metro train line from Chatswood in Sydney's north to the central city and onto Bankstown in the west. About $3.2 billion will go towards the WestConnex motorway this year.

Treasurer Dominic Perrottet defended the reintroduction of tolls on the M4, seven years after they were removed.

"In order to build the roads of the future, in certain circumstances they will need tolls on them," he said.

"There is not a bottomless pit of cash."

The government also confirmed it expects a sale of at least 51 per cent of WestConnex to be completed by mid-next year.

The sale will occur five years before construction of the final stage of the 33-kilometre motorway is scheduled to finish. The final section will cost $7.2 billion and connect the M4 and M5 motorways.

As part of the roads budget, $650 million will also go towards upgrades around the new Western Sydney Airport at Badgerys Creek, which is due to open in 2026.

But Labor transport spokeswoman Jodi McKay said it was extraordinary that no mention was made in the budget of the government's plans announced last year for a new metro train line between Sydney's CBD and Parramatta.

"The Premier likes to make these grandiose infrastructure promises but when it comes to crunch time, they're left unfunded in the budget," she said.

The government has said it wants construction to start on the so-called Sydney Metro West by 2021, and for it to begin operating in the second half of the next decade.

While the budget lacked any significant new commitments, $48 million was set aside for a major new underground walkway at Central Station, which will coincide with construction of platforms for the new metro train line from Chatswood to Bankstown.

The total cost of the so-called Central Walk has yet to be revealed.

"We're improving frequencies on key routes, setting up new routes and importantly building the new infrastructure to grow and improve public transport," Transport Minister Andrew Constance said.

Some $25 million has also been set aside in the budget for planning for the Parramatta light rail line, which will be built in two stages.

Despite the massive capital spending on public transport, the state's Auditor-General warned recently that rail patronage growth was outstripping both the government's forecasts and the network's capacity to cope.