Home Property Australia NSW geared for growth but tax reform still needed

NSW geared for growth but tax reform still needed

  • June 23, 2015

NSW geared for growth, but tax reform still needed

The NSW economy is geared for growth off the back of an infrastructure boom but will be better placed to sustain momentum through reforming state taxes, says the Property Council.

Handing down her first budget, NSW Treasurer Gladys Berejiklian (pictured) announced $68.8 billion in funding over four years for a range of projects, including Sydney Metro, Parramatta Light Rail, bus rapid transit and roads.

These projects will be kick-started through a $590 million down-payment from windfall tax receipts – and doesn’t yet include the $20 billion expected to be raised through privatisation of electricity assets.

The Property Council’s NSW executive director Glenn Byres welcomes these “game-changing” infrastructure projects.

“This is a good budget that makes the right choices on the infrastructure needed to underpin the growth and liveability of our cities,” Byres says.

“Commitment to a new rail station at Barangaroo will help consolidate Sydney’s standing as a global city by servicing Australia’s largest urban renewal precinct and surrounding areas.”

The budget directs an additional $400 million to the Housing Acceleration Fund to fast-track infrastructure for new housing, as well $19 million to seed the Greater Sydney Commission. Both decisions have been welcomed by industry.

“NSW is enjoying the benefits of surging stamp duty revenue and booming property markets – and the NSW Government has correctly prioritised support for housing construction,” Byres says.

“The Budget also makes clear that NSW is highly dependent on stamp duty, which makes homes less affordable and acts as a ballooning cost to the economy.”

Stamp duty revenue has doubled in the past four years – rising from $3.6 billion in 2011-12 to $7.2 billion this year. Three quarters of the revenue raised comes from residential transactions.

“Stamp duty now accounts for over one quarter of all state tax revenue and is poised to top $8 billion in 2017-18,” Byres explains.

“Stamp duty is a rollercoaster tax and while NSW is enjoying the highs right now thanks to the government’s efforts to drive the economy, there is a need to guard against downside risks.

“We hope NSW continues to step up in the national tax reform debate and begin shifting away from inefficient taxes that hurt housing affordability and the economy,” Byres concludes.