On 21 June 2022, The New South Wales (NSW) Treasurer, the Hon. Matt Kean MP announced the 22/23 NSW State Budget.
This big-spending “Reform” Budget means a deficit of over $11 billion for the state, with the Government expecting a return to surplus by 2024-25.
With the plan to overhaul the Stamp Duty System, payroll tax is set to become the largest source of taxation revenue from 2022-23 with the COVID payroll tax cuts to be discontinued from 1 July 2022, returning to the pre-pandemic rate of 5.45 per cent.
Below is snapshot of the measures announced that will impact our clients.
Economic Growth The NSW economy is expected to grow at an above-trend pace on average across the forecast horizon to 2025-26, supported by strong near-term momentum in the labour market and the resilient state of aggregate balance sheets. As measured by State Final Demand, growth in the domestic economy is expected to be 2¾ per cent in 2021-22. This is the same as was expected at the time of the 2021-22 Half‑Yearly Review, despite the impacts of the Omicron outbreak and floods.
Unemployment The State’s unemployment rate has trended to historically low levels, with 4 per cent recorded in May. The unemployment rate is expected to remain near historic lows and at or below the level consistent with full employment (around 4 per cent) for the forecast period.
Wages A tight labour market is expected to drive higher wages. For the public sector, the new wages policy provides for higher remuneration increases of 3.0 per cent in 2022-23 and 2023-24. An additional 0.5 per cent is on offer in 2023-24 for employees who contribute substantially to productivity-enhancing reforms.
Inflation Strong growth in the demand for goods during strained global supply and tight labour markets has driven up inflation across the developed world. Higher energy and dwelling construction prices have also contributed to increased inflation. Annual headline inflation in Sydney was 4.4 per cent through the year to the March quarter 2022, its highest rate since 2008. This was lower than the national figure of 5.1 per cent and lower than that experienced in similar major international economies. The rate of inflation is expected to ease eventually but will remain higher than pre-pandemic levels across the forecast period.
Net Debt The 2022-23 Budget projects a stabilisation of net debt at around 14 per cent of GSP by June 2026, with net debt gradually declining towards the end of the decade. This is consistent with the Government’s commitment to a sustainable and diversified infrastructure pipeline that supports a strong and resilient infrastructure sector. An improving operating position will aid debt repair and bring net debt levels down in the decade’s second half, supporting balance sheet resilience. The 2022-23 Budget projects net debt as a percentage of GSP at lower levels over the forward estimates, at 13.0 per cent of GSP in June 2025. This is lower than the previous projection in the 2021-22 Budget, where net debt was projected to be 13.7 per cent of GSP in the same period.
Boosting Household Budgets
This Budget provides a range of new cost of living measures that leave more money for families at the end of the week. In 2022-23, more than $7.2 billion in new and existing rebates, concessions, and cost of living measures are available to households to help with everyday expenses.
Toll relief $520 million over two years to deliver a new broad-based Toll Rebate Scheme where, every quarter, eligible individuals and small business customers will receive a 40 per cent cash rebate for every dollar spent on tolls once they have reached a minimum of $375, saving NSW drivers up to $750 a year, while Sydney’s toll scheme is comprehensively reviewed
Back to School program $193 million to provide $150 to every NSW school child towards the cost of school supplies in 2023, including school uniforms and shoes, bags, textbooks, lesson resources and other stationery.
Affordable and reliable energy $128 million over eight years to help eligible households reduce their gas and electricity bills by providing technology solutions, including solar panels or high-efficiency appliances
Women’s opportunities and early childhood education $1.3 billion in supporting women in business, women entrepreneurs and significant investment in early childhood education and care reforms to help increase women’s workforce participation and improve children’s developmental outcomes.
Supporting regional communities $98 million for a two-year pilot towards a $250 prepaid Regional Apprentice and Uni Travel Card for university students and apprentices in regional New South Wales each year to ease the cost of travel.
This Budget provides $2.8 billion to help expand the supply of homes across New South Wales, helping first home buyers own a home, clearing the waitlist for essential worker housing in regional New South Wales, and investing in the long-term sustainability of our social and First Nations housing.
Stamp Duty Reform Changes to the NSW property tax system will give first home buyers purchasing a property up to $1.5 million the choice of either paying stamp duty or an annual property tax.
Shared Equity Scheme, The NSW Government, will contribute up to 40 per cent of the purchase price of a dwelling in exchange for an equivalent equity share in the dwelling to assist eligible single parents with dependent children, singles older than 50 years and key worker first home buyers to purchase their own home. The gross income of the household must be no more than $90,000 for singles and $120,000 for couples and the purchaser must have a minimum deposit of 2 per cent of the purchase price, with no lenders mortgage insurance required.
This Budget commits record investment in the NSW health workforce to ease pressure on existing health workers and support the delivery of quality health care.
Jobs in Health $4.5 billion to recruit staff to hospitals and health services across the State.
Frontline Emergency Care $1.76 billion boosts for recruiting new staff for NSW Ambulance and the opening of 30 more stations
Education and Innovation
University of Newcastle $18.2 million co-investment towards the development of the University of Newcastle campus in the Gosford CBD.
Training Support $82.7 million for Fee-Free Vocational Education and Training to support a further 70,000 students to access apprenticeships, traineeships and other high-priority training.
Careers NSW $25.1 million to expand the Careers NSW pilot, providing comprehensive careers and education advice to NSW schools.
Institute of Applied Technology $108.5 million to continue the rollout of IAT pilots, bringing together industry, Vocational Education and Training and higher education providers.
Future Economy Fund $703.4 million to drive growth in emerging high-value industries such as digital technology, medtech and the clean economy.
Energy and the Environment
New Business Grants $300.0 million over ten years to provide grants for new business activities to competitively produce low emissions materials, green chemicals, hydrogen, power fuels, clean fuels and agricultural materials and $250 million over five years for grants to businesses to competitively manufacture components for renewable energy infrastructure, electrolysers, electrification of plant, and electric vehicles.