The huge surplus of $3.3bn for the 2017-18 financial year, announced by NSW Treasurer Dominic Perrottet on Thursday, is good news for the NSW economy. However, the state government’s reliance on property taxes to boost the budget bottom line cannot continue, per the Property Council of Australia.
“Treasurer Perrottet has announced a massive surplus and the NSW economy is full steam ahead, but a lot of this money is being drawn from the pockets of families every time they buy a home through stamp duty, over $9.1 billion worth over the year; it is not sustainable and simply increases the cost of housing,” said Jane Fitzgerald, NSW executive director for the Property Council of Australia.
“Growth and investment are welcome and stamp duty concessions for first home buyers is a good start, but we need to look at whether our reliance on stamp duty is sustainable in the long term and if other revenue options are available to safeguard the budget against the ups and downs of the property market - our State’s budget should not be at the mercy of stamp duty revenue.
“Over the forward estimates, forecast revenue is $2.0 billion higher than at the Budget with most of this coming from the strong property market. Added to this the fact that cost of the 13,672 first homebuyers that received stamp duty concessions and exemptions worth $197.0 million was partly offset through land tax revenue - homebuyers always pay.”
Moving forward, experts say NSW needs a more sedate residential market. Furthermore, the state cannot allow the funding of critical social infrastructure to suffer because of its reliance on property taxes.
“We call on Treasurer Perrottet to quarantine a portion of the stamp duty revenue to spend on critical social infrastructure in Sydney’s growth areas; currently households in growth areas in our west and south west are experiencing higher housing costs due to the cost of new infrastructure being met through levies placed on new housing,” Fitzgerald said.
“[U]sing stamp duty revenue for social infrastructure could reduce pressure on these households.”
“The State Government has recently stepped away from funding local infrastructure by scrapping the Local Infrastructure Growth Scheme and the cap on Section 94 levies, expecting local government and the community to fund the gap. In the context of this good economic news, now is the time to step up and support the financing of local infrastructure.
“We congratulate the Treasurer on getting the best from the NSW economy, but now it’s time to take the next step and future proof revenue so that our State’s social infrastructure is not put at risk through an over reliance on property taxes.”
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