The latest budget from the NSW Government has responded to one of the most challenging periods in our lifetimes, after facing severe drought, the 2019-20 summer bushfires and the COVID-19 pandemic.
While the government have noted that the economic recovery will take time, the Budget optimistically sets out the NSW Government’s goal to kick-start the economy and create jobs. Specifically, the stimulus measures detailed in the budget are anticipated to support the NSW unemployment rate to trend back to 5 ¼ per cent by June quarter 2024.
The spending throughout COVID-19 has resulted in NSW recording a budget deficit for 2019-20 of $6.9 billion, with a projected deficit of $16 billion in 2020-21. However, the NSW Government has announced it has mapped out a course to a projected return to surplus by 2024-25, and predicted net debt will return to around 7 per cent of Gross State Products (GSP) over the medium-term.
While there has been more than $3 billion committed to facilitate the COVID-19 response, the economy was also a key focus of this budget. The Government have noted that keeping businesses afloat is critical to keeping households afloat in order to keep our economy in the best possible shape to bounce back when this health crisis has passed.
This Budget announced a permanent increase in the payroll tax-free threshold from $1 million to $1.2 million which will see 3,500 NSW businesses no longer having to pay payroll tax. The NSW Government also plans to reduce the payroll tax rate from 5.45 per cent to 4.85 per cent from 1 July 2020 for two years. There was also a commitment of $472 million to provide small and medium size businesses, who do not pay payroll tax, with a $1,500 digital voucher for the cost of government fees and charges.
This Budget also extends the land tax COVID-19 relief for landowners to 28 March 2021 in a modified form. To be eligible for relief from 1 January 2021 to 28 March 2021:
- the lease must be a retail lease;
- the annual turnover of the tenant must be less than $5 million; and
- the tenant needs to re-establish eligibility by demonstrating a 30 per cent decline in turnover (15 per cent for non-profits) for the December quarter 2020.
The NSW treasurer further announced that he wanted to replace stamp duty with a smaller annual property tax and that the current stamp duty concession for first home buyers is being replaced with a $25,000 grant, that can either be used towards the purchase or to renovate the property.
Out and About
A program to stimulate spending in the local economy was announced which provides every adult resident with up to $100 in digital vouchers to spend on eating out and entertainment within the state. On top of this the NSW Government will invest $15 million in a partnership with the City of Sydney to help revitalise the Sydney CBD and help business get back on their feet.
Jobs and Infrastructure
The NSW Government announced a record $107.1 billion infrastructure pipeline which is estimated to generate 145,000 jobs directly or indirectly each year. They also revealed the $3 billion Jobs and Infrastructure Acceleration Fund, which will support 20,000 jobs and deliver new and fast-tracked projects across the State. The 2020/2021 Budget has also committed to:
- Additional spending across the State for maintenance and shovel-ready projects;
- Investing $318.6 million over two years in the Skilling for Recovery training package;
- Increasing the apprenticeship intake across Transport for NSW and providing $80 million in support for apprenticeships and cadetships in the community housing and construction sectors;
- Investing $57.4 million over four years to create a landmark Trades Skills Pathways Centre to address skills shortages in the NSW economy and support employment for women; and
- Helping women return to the workforce by introducing grants of up to $5,000 for training and support.
The Care Economy
The care economy is made up of early childhood, community services, social housing, aged care, disability care and personal support all of which have been particularly hard hit by the recession. To assist in revitalising this sector, the NSW Government have promised:
- $17 million for upskilling, mentoring and job matching for people working in the care economy; and
- Up to 20,000 training places to skill people working in aged care to support the growing needs of the sector and $2.5 million to develop a strategic business case for a TAFE aged care centre of excellence training facility.
The NSW Government announced a mental health package of $73 million, providing enhanced services to help those in need during the pandemic. This Budget has committed $169.4 million over four years to provide vital mental health support to ensure more people can find the help they need.
A continued commitment to education within the state has included an $18.9 billion investment in recurrent and capital funding for government and non-government schools in 2020-21, as well as the development of a mid-career entry pathway into teaching for those outside the profession, in partnership with Teach for Australia.
COVID-19 economic response measures (2019-20) have included:
- The creation of a $1 billion Working for NSW Fund to sustain businesses, create cash flow and retain employees across NSW Government and nongovernment businesses.
- Over $6 billion in waived or deferred taxes, fees and levies, including payroll tax and licencing and registration fees to support businesses.
- Targeted assistance to specific industries impacted by COVID-19 shutdowns, including:
- $50 million for arts rescue and restart
- $27.3 million for sports
- $11.6 million to support the taxi industry.
- Additional support to keep vulnerable people safe during the initial stages of the pandemic including:
- $10 million to charities in NSW
- Fee relief for community and mobile preschools
- $30 million to expand the Energy Accounts Payment Assistance (EAPA)
- $34.4 million for a homelessness package
- $29.8 million to protect victims of domestic violence
- $6 million in assistant for refugees, asylum seekers and migrants
- $20.1 million to support international students with temporary crisis accommodation.
Additional support measures include:
- $500 million to support COVID-19 clinics, hotel quarantine, and increased pathology testing and contact tracing;
- $385 million for additional PPE to keep frontline workers safe;
- $30 million for additional emergency department attendances and ambulance calls; and
- Increasing the digital capability in the State’s health system, investing in systems to:
- Track prescribed medicines associated with a high risk of causing harm or dependence.
- Seamlessly manage the more than 70 million pathology tests undertaken every year across NSW Health.
- Invest $45 million to expand telehealth capacity to deliver faster, more convenient care.
- Increase support for palliative care services to provide the best quality care and support for those reaching the end of their life, with $55.9 million over four years.