NSW state budget 2024: 30,000 new homes pledged amid ‘unprecedented intervention in housing market’
New South Wales has been promised 30,000 new homes including 8,400 public housing dwellings under what the treasurer, Daniel Mookhey, says is the state’s largest ever investment in housing.
The Minns Labor government has revealed in its second budget that it will make what it describes as an “unprecedented intervention in the housing market” by using surplus public land for 21,000 new homes and spending $5.1bn on public housing that will be built and managed by Homes NSW.
Mookhey had flagged housing would be at the centre of the state budget for the second year in a row, as the government races to meet its national commitment to build 377,000 new homes by 2029.
The government says at least half of the new public housing homes will be reserved for victim-survivors of domestic violence, which follows an earlier pledge of $230m for domestic violence services.
Aside from housing, the other significant announcement was that GP clinics in Sydney that bulk bill at least 80% of their patients – 70% anywhere else in the state – will not have to pay payroll tax for the doctors they employ as contractors.
With bulk-billing rates at their lowest in 10 years, the government will spend $77m on the rebate in an effort to placate GPs and make it cheaper to visit the doctor.
The treasurer had also warned NSW residents that record public debt and other economic pressures meant government spending would need to be restrained. The government’s hopes of a surplus have evaporated; the budget will be in a $3.6bn deficit in 2024-2025 and is expected to remain in the red until at least 2027.
Stripped of what the treasurer says amounts to $11.9bn from the GST “rip-off”, the NSW budget will remain in deficit out to at least the 2027-28 financial year. Mookhey said had NSW maintained its recent GST share, the state would have returned to a modest surplus of $300m by next financial year.
Mookhey described the budget as one of “must-haves” rather than “nice-to-haves” when he presented it to journalists on Tuesday.
The government has also agreed to waive $104m worth of existing payroll tax debts accrued by doctors, ending a long-running dispute with peak bodies the Royal Australian College of General Practitioners and the Australian Medical Association.
A decision by Revenue NSW in 2018 that GPs were eligible for payroll tax sparked successive court challenges from doctors, as well as warnings from the RACGP that more than 400 clinics would have to close if they were forced to pay their outstanding debts.
The NSW government will spend about $8.7bn in the next financial year on other “cost of living support measures” including $10,000 grants for eligible first home buyers, $350 rebates for the electricity bills of concession card holders as well as a one-off relief payment of up to $300 to go towards the energy bills of all households.
Mookhey told journalists on Tuesday NSW’s financial pressures and the ongoing problem of inflation meant the government could not afford any “callous spending”.
The treasurer previously said the latest GST allocation would “almost certainly” result in the state losing its AAA credit rating.
The government says it is also dealing with the “consequences of record public debt”, which reached $132.9bn, or 17.1% of the state’s gross domestic product, in June 2023. It says this is more than 500% higher than the level of debt NSW reached during the global financial crisis in 2009-10.
The cost of capping the price of black coal at $125 a tonne will cost NSW taxpayers $884m in the 18 months to the end of June, with an equal amount tipped in by the commonwealth government. In the year to this month, the tab for NSW alone will be $588.6m – or more than double the $238.9m allocated over four years in the 2024-25 budget for the government’s consumer energy strategy to encourage smarter energy use in homes.
The government will spend on a 10.5% pay increase, including superannuation, for more than 400,000 public sector workers over the next three years after scrapping the Coalition-era cap on their wages in 2023.
It is relying on containing overall wage expenses by slashing the number of executive staff within the public service. The total amount of government spending is projected to grow just 1.7% a year in the four years to 2027-28, well below the estimated annual inflation rate for Sydney of about 2.7%.
By contrast, the government estimates the amount it spends on public sector wages to grow by 3.2% a year.
Helping to keep the finances on a road to repair will be a $10.7bn jump in forecast revenues over the coming four years compared with estimates made in the mid-year review. Extra stamp duty from a recovering property market and more land tax from lifting and freezing the tax-free threshold will deliver the bulk – at $9.7bn – of that revenue upgrade.
Higher thermal coal prices and export volumes are also forecast to lift royalties by almost half a billion dollars, adding to extra revenue after last year’s royalty revision.
Accounting tweaks to pool the state’s investment funds into a new “OneFund” is also expected to deliver “higher, risk-adjusted returns” of $1.6bn over the forward estimates.
The opposition leader, Mark Speakman, criticised Labor for “squandering” the increase in revenue on “union wage deals”.
He said he was not opposed to nurses and teachers getting a pay rise but they should have been funded through “productivity offsets”.