NSW Treasurer Daniel Mookhey has presented the Minns Labor government’s second budget, featuring a $3.6 billion deficit and a $6.6 billion investment in social housing and homelessness.
However, the Property Council of Australia has warned the NSW Government’s second Budget will leave the NSW property sector facing a massive $6.38 billion cost hike in the middle of a housing and construction crisis.
The Budget includes the removal of indexation of the NSW land tax threshold, and it will increase the foreign investor surcharge from eight to nine per cent from 2025, and the foreign owner land tax surcharge from four to five per cent, both measures generating an additional $1.68 billion over the forward estimates.
Property Council NSW Executive Director Katie Stevenson said a $4.7 billion cost shift of the Emergency Services Levy (ESL) from insurers to property owners, combined with a $1.68 billion stealth tax hike on land tax and foreign surcharges would cripple the sector’s potential to deliver urgently needed housing.
“This Budget bombshell beggars belief,” Ms Stevenson said.
“It’s a massive cost for property owners and developers facing a once-in-a-generation housing supply and affordability crisis, a critical shortage of industrial land and low vacancy rates, and an already challenging development cost environment.
“The property sector is already responsible for 18 per cent of Australia’s tax receipts – this additional ESL burden, along with increases to land tax and foreign surcharges will only serve to impact the feasibility of the delivery of Housing Accord targets,” Ms Stevenson said.
The Budget included a $6.6 billion investment in social housing and homelessness services and will prioritise at least half of the new homes built for victimsurvivors of family and domestic violence. This program will build 8,400 social homes across the state. 6,200 will be new homes and 2,200 are replacement homes.
The Building Homes for NSW program will restore and fix over 33,500 social homes to make them safe and liveable – the biggest investment in maintenance ever. The $810 million repair and maintenance investment will upgrade 33,500 homes and kick start the new Maintenance Hub launching on July 1 2024.
The budget includes a $527 million investment in front-line homelessness services and $202.6 million to fund a critical maintenance program for Aboriginal Housing to repair and upgrade homes.
This Budget also puts aside $15 million for the partnership with the Community Housing Industry Association NSW (CHIA) to continue the Cadetship Program.
There is also a $35 million boost to Building Commission NSW, $8.4 million for the Rental Commissioner and $11.8 million for the Strata and Property Services Commissioner.
The government has also reserved $200 million in grants for infrastructure to help councils meet their housing targets
Ms Stevenson said the cost and tax hikes took the edge off a broadly positive focus on housing for those most in need and on other Budget measures.
“While the government’s record investment in social housing must be applauded, these additional costs add to the pressures facing the property and construction industry.
“Spending on social housing will help to drive urban renewal and provide stimulus, and the property sector looks forward to playing a role as a key partner in the delivery of these new homes.
“It’s also good to see Budget action on barriers to finance and feasibility in direct response to the calls we have made, and on home builds for essential workers, investment in the planning system, and infrastructure spending for the delivery of new homes in regional NSW and in Western Sydney.
“But now is not the time to increase property costs or cut off access to vital investment in housing. Subjecting more Mum and Dad investors to increased land taxes, making NSW lead the national pack on foreign investor surcharges, and loading the sector up with more costs at this critical time only threatens, rather than supports, more housing delivery,” Ms Stevenson said.