New South Wales families will be handed $150 vouchers for every child enrolled in school just months out from the state election as part of treasurer Matt Kean’s big-spending, Labor-like budget.
The $193m cash injection can be used on uniforms, stationery and books during term one of 2023, just ahead of the government going to the polls in March to seek an unprecedented 16 years in power.
It builds on almost $40bn in new spending measures unveiled in a flurry of pre-budget announcements targeting young families and women, with Kean vowing to boost participation in the workforce and unlock $3 for every $1 spent.
For a state that generates a third of Australia’s economic output, the budget predicts generally favourable conditions after years of volatility caused by Covid disruptions and climate-related chaos from bushfires and floods.
While describing NSW as having “strong momentum”, aided by the lowest jobless rate in decades, the economy is still forecast to slow sharply from a buoyant 5.5% growth in the coming financial year to 1.75% the following year.
Kean said his budget would deliver a surplus within three years while delivering “transformational reform” for the state.
“Reform to give our children the best start to life; reform to make owning your own home easier to achieve; and reform to break the barriers to women’s opportunity in this state,” he said.
“There is always a better future if we choose to reach for it and in this budget we make that choice – we choose to invest in transformational reform to build a better, brighter future for everyone.”
Now was the time to act, he said, after women demanded change on the back of the advocacy of former Liberal staffer Brittany Higgins and the 2021 Australian of the Year, Grace Tame.
“It is an economic imperative that we respect, hear and empower women in the workplace because their brilliance, contribution and creativity are things that we should be backing,” he said.
He denied that the pre-budget vouchers for families, along with other cost-of-living measures including $320m in toll relief, were designed to win votes at the election.
Stamp duty in the firing line
The NSW premier, Dominic Perrottet, also used the budget to start winding back the state’s reliance on stamp duty, which he recently called the “worst tax” and a handbrake on home ownership.
First homebuyers buying properties under $1.5m will be able to choose between paying stamp duty or an annual $400 property tax plus 0.3% of the property’s land value.
“We want to lower the barriers to owning a home for first homebuyers seeking a place of their own,” Perrottet said.
The premier said he wants to scrap stamp duty entirely in favour of an annual tax for all buyers but insisted it was not possible without the assistance of the federal Labor government to make up for the tax shortfall. The federal treasurer, Jim Chalmers, has so far declined to assist.
Kean said the government was “testing the waters for tax reform in NSW”.
First homebuyers will be able to apply for the option from 16 January next year, after legislation is introduced to parliament later this year.
The government has also made a broader $2.8bn investment in housing to fast track critical infrastructure, free up land for development and introduced a $780m two-year pilot shared equity scheme to help single parents and key workers buy a home.
While more than 50,000 families are on the social housing waitlist, no new money was pledged in the budget to build new houses and instead $300m will go towards upgrading 15,800 homes to extend their lifespan and make them more accessible for elderly and disabled people.
Despite successive economic shocks from the pandemic, the war in Ukraine and inflationary pressures, the budget forecast a return to surplus within three years helped by $1.4bn in revenue measures, including changes to consumption and betting tax rates, and $645.8m in savings measures.
The tapering of temporary Covid measures will also help the state’s bottom line.
Deficit more than doubles this year
The deficit for the current financial year is set to more than double to $16.6bn from just over $7bn in 2020-21, and still be $11.3bn in the red in the fiscal year that is about to start.
The projection of a cash surplus by 2024-25, at $601m, is built on several positive factors, such as higher GST payments swollen by inflation, and an increase of almost $4bn in mining royalties over the four years.
Against that, the budget projects spending on government salaries will rise just 2.9% on average – lower than the wider wage price increase, and a growing “efficiency dividend” as services get squeezed.
Women and children born over the coming decade would be some of the biggest winners, with a host of major investments in early childhood education and care totalling $16.5bn over the decade.
The government will spend $5bn in the next 10 years to make childcare more affordable and accessible by encouraging operators to expand into “childcare deserts” including Sydney’s western suburbs and a further $5.8bn will go towards introducing an extra year of schooling for all kids by 2030, in lockstep with Victoria.
Healthcare will also receive a major boost with $33bn going to recruiting more than 10,000 full-time equivalent staff across hospitals, the ambulance service and allied health services over four years.
Public sector workers will see a raise in the wage cap from 2.5% to 3%, although unions say this has not gone far enough and represented a cut in real wages with inflation at 5.1% and the Reserve Bank governor, Philip Lowe, saying it could hit 7% before the end of the year.
Frontline healthcare workers will also receive a one-off payment of $3000.
A further $1.2bn has been pledged for a transmission acceleration facility to make it easier for renewables to enter the grid and $715.8m has been pledged to assist the Indigenous communities including through Closing the Gap initiatives.
