NSW Budget 2022-2023 – What the state budget means for business

Posted On June 22, 2022

OVERVIEW

  • A big-spending “Reform Budget”: A Deficit of $16.6 billion for 2021-22 reducing to $11.3 billion in 2022-23 and forecast to still return to surplus in 2024-25 with a slightly improved position of $600 million for 2024-25. 
  • Begins stamp duty reform: Business NSW has long advocated for stamp duty reform phasing out this dreadful tax begins with $729 million over four years for first home buyers.  
  • Payroll tax:  Pandemic payroll tax cuts to be discontinued from 1 July 2022 with the rate returning to 5.45 percent and along with improved employment increasing revenue by $2.3 billion over the forward estimates. 
  • Women and workforce participation: a generational emphasis on boosting skills, workforce participation and educational and business opportunities targeted through a new Women’s Opportunity Statement with benefits across the entire NSW economy.

FISCAL & ECONOMIC OUTLOOK

  • NSW economic growth: The forecast for real Gross State Product (GSP) growth in 2021-22 has been revised to 1.5% (down from 2.5% in the Half-Yearly Review but on par with the 1.4% increase recorded for 2020-21). Growth is projected to sharply accelerate to 4.25% in 2022-23 (up from the forecast of 3.25% in the Half-Yearly Review). After several years of COVID-related volatility, growth is expected to normalise to 2.75% in 2023-24.    
  • Unemployment: The NSW unemployment rate is forecast to end the financial year 2021-22 at 3.75% (a marked improvement compared to the forecast of 5.25% in the Half-Yearly Review). Unemployment is forecast to remain at 3.75% in 2022-23 and further decline to 3.5% in 2023-24. 
  • Inflation: The consumer price index for Sydney is expected to have risen 4% in 2021-22 (a substantial upward revision from 2.5% in the Half-Yearly Review). This figure reflects the recent surge in prices due to a range of factors, including global supply chain constraints and the war in Ukraine which led to higher commodity prices. Inflation in Sydney is forecast to further accelerate to 5.5% in 2022-23 before moderating to 3% in 2023-24. 
  • Budget result & net debt: A fiscal deficit of $11.26 billion is budgeted for 2022-23. This follows an estimated deficit of $16.56 billion for 2021-22. The fiscal balance is forecast to return to surplus in 2024-25. Amid the fiscal deficits incurred in recent years, net debt is forecast to increase to $53.54 billion (7.8% of GSP) in 2021-22 and $78.17 billion (10.4% of GSP) in 2022-23. No improvement in net debt as a percentage of GSP is expected over the forecast horizon to 2025-26, but the Government expects net debt to stabilise at around 14% of GSP by June 2026 and decline gradually over the second half of the decade.

SUPPORT FOR LABOUR FORCE PARTICIPATION

  • Support for women
    • $32 million continuation of the Return to Work program for women looking to return to the workforce
    • $15.2 million over three years to contribute to a whole of government Women in Construction strategy to achieve a goal of women making up 15 per cent of employees in the construction industry by 2030.
  • Support for families with children (through childcare)
    • $5.8 billion over 10 years to introduce universal pre-kindergarten for all children in NSW by 2030
    • $5 billion over 10 years to establish the Affordable and Accessible Childcare and Economic Partnership Fund that will target areas with limited access to childcare centres or where a shortage of childcare places poses the highest disincentive to parents returning to work. It also includes trialling new service models to meet the needs of modern families. 
    • $1.4 billion over four years in preschool fee relief
    • $37.9 million package to support before and after school care for families with no services nearby  
    • It is estimated that these reforms will, within a decade, when delivered alongside the Commonwealth Government’s childcare commitments, see up to 95,000 women enter the workforce or take on more hours – or close to 10,000 women per annum – and reduce the participation gap by up to 14 per cent.
  • Additional jobs in health
    • $4.5 billion investment over four years that intends to relieve pressure on existing staff and ensure an appropriate level of health staffing by recruiting 10,000 staff to hospitals and health services across NSW
    • $1.76 billion boost frontline emergency care that includes recruiting 2,128 new staff for NSW Ambulance and opening 30 more stations. 

FIRST HOME BUYERS AND HOUSING SUPPORT 

  • Start for stamp duty reform: $729m set aside over four years to allow first home buyers purchasing property worth up to $1.5m to opt for an annual property tax, instead of up front stamp duty. The property will not be locked into the scheme if sold, with the annual tax will be $400 plus 0.3% of the land value. Legislation will be introduced later this year, with eligible home buyers to opt in from 16 January 2023.
  • Shared equity scheme: $780 million over two years to assist key workers,  singles over 50 years of age and single parents with a child or children under 18 years old into the property market. The Government will take a maximum equity contribution of 40 per cent for a new home and 30 per cent for an established home. Participants must have a maximum gross income of $90,000 for singles or $120,000 for couples, and a minimum deposit of 2 per cent of the purchase price. The maximum value of the property that can be purchased under the scheme is $950,000 in Sydney and regional centres including the Central Coast, Illawarra, Lake Macquarie, Newcastle and the North Coast of NSW, and $600,000 in other parts of NSW.
  • Regional housing: $174 million for 271 new homes for key workers in regional ; $149.8 million to deliver 200 new and 260 upgraded homes for First Nations communities; and $33.8 million for the Regional Housing Development Program to overcome data gaps and coordination and planning barriers to secure a pipeline of housing supply in Regional NSW.

SKILLS & INNOVATION 

Support for biomedical innovation: $150 million for the Sydney Biomedical Accelerator Complex in Camperdown and $49.6 million for the Viral Vector Manufacturing Facility at Westmead

Advanced manufacturing: $261.9 million to establish an advanced manufacturing industry accelerator hub in Bradfield providing specialist equipment and workspaces.

Support for training: $82.7 million over four years to deliver an extra 70,000 fee-free training spots. This investment will deliver new apprentices, trainees and full qualifications to help people get skilled for in demand jobs such as builders, hairdressers, carpenters, chefs, electricians and in the critical early childhood, aged care and disability care sectors.

Review of TAFE training model: $81.4 million in recurrent expenses for TAFE to undertake an end-to-end review of its training model to inform the redesign of training program development and delivery. (Note: this was a recommendation contained within the Business NSW Pre-Budget Submission)

Careers NSW: $25.1 million in recurrent expenses to continue to expand Careers NSW. (Note: this was a recommendation contained within the Business NSW Pre-Budget Submission)

Institutes of Applied Technology: An additional $108.5 million over four years (in addition to the existing $222.5 million commitment) for the NSW Government’s two TAFE NSW Institutes of Applied Technology (IAT) (Digital Technology at Meadowbank; Construction at Kingswood). Both appear to be behind schedule as they are both now expected to open ‘in early 2023’. It is disappointing that no new IATs were announced.

FIRST HOME BUYERS AND HOUSING SUPPORT 

  • Start for stamp duty reform: $729m set aside over four years to allow first home buyers purchasing property worth up to $1.5m to opt for an annual property tax, instead of up front stamp duty. The property will not be locked into the scheme if sold, with the annual tax will be $400 plus 0.3% of the land value. Legislation will be introduced later this year, with eligible home buyers to opt in from 16 January 2023.
  • Shared equity scheme: $780 million over two years to assist key workers,  singles over 50 years of age and single parents with a child or children under 18 years old into the property market. The Government will take a maximum equity contribution of 40 per cent for a new home and 30 per cent for an established home. Participants must have a maximum gross income of $90,000 for singles or $120,000 for couples, and a minimum deposit of 2 per cent of the purchase price. The maximum value of the property that can be purchased under the scheme is $950,000 in Sydney and regional centres including the Central Coast, Illawarra, Lake Macquarie, Newcastle and the North Coast of NSW, and $600,000 in other parts of NSW.
  • Regional housing: $174 million for 271 new homes for key workers in regional ; $149.8 million to deliver 200 new and 260 upgraded homes for First Nations communities; and $33.8 million for the Regional Housing Development Program to overcome data gaps and coordination and planning barriers to secure a pipeline of housing supply in Regional NSW.

COST-OF-LIVING RELIEF 

  • Toll relief: $520 million in new toll relief over two years (maximum annual benefit of $750 per customer). Small businesses are eligible. 
  • Energy bill relief: $128 million Energy Bill Buster program that allows eligible households to receive an upfront lump sum contribution towards a solar system or home appliance upgrade. Small businesses are not currently eligible. 

ENERGY & ENVIRONMENT 

  • Fast-tracking renewable energy: Creation of a $2.6 billion Transmission Acceleration Facility, but still no transparency over the estimated cost-to-business impacts of the rest of the Roadmap.
  • Implementation of bushfire inquiry recommendations: $315.2million to complete recommendations of the NSW Bushfire inquiry, with $191 million allocated to the Rural Fire Service (RFS) to help keep NSW communities safe through vital hazard reduction works, maintenance of strategic fire trails and the procurement of new fleet.
  • SES: $132.7 million towards SES infrastructure, resources and staffing, with new funding including over $50 million to upgrade 18 critical priority Unit facilities across NSW. This will also see SES presence in Northern Rivers increased, with new Incident Control Centre to be built and staffed in Lismore.
  • Ecotourism: $56.4 million investment to deliver a new 4-day ‘Dorrigo Escarpment Great Walk’ to increase access to a rainforest and attract an extra 200,000 visitors to the mid north coast.

INFRASTRUCTURE & TRANSPORT 

  • The aggregate infrastructure pipeline has reached $112.7 billion of which $76.7 billion is from transport infrastructure. New infrastructure announcements are much smaller in scale than recent years, reflecting the infrastructure capability pipeline having reached capacity.
  • Parramatta Light Rail Stage 2: $602.4 million over the first phase of the project committed to start works and commence detailed planning process
  • Fast rail: $274.5 million towards the first stage of the Northern Corridor, helping build two new electrified rail tracks between Tuggerah and Wyong, new platforms and station upgrades, and new bridges including over the Wyong River and safeguarding future fast rail connections to the north and south. Co-funded with Commonwealth for a total value of over $500 million.
  • City Circle modernisation: $660.6 million over four years for planning and enabling works to replace railway signalling system approaching end of life with modern digital technology in central Sydney areas.
  • Western Highway Upgrade: $3.2 billion for continuation of works duplicating the Great Western Highway, up from $2.0 billion in previous Budget
  • WestInvest program: Funding for WestInvest was expanded to $5.0 billion during the pandemic. This funding is being allocated to six types of community infrastructure across Western Sydney
    • Green and open spaces
    • School modernisation
    • Community infrastructure including sports and recreation facilities
    • Arts and cultural facilities 
    • High street activation
    • Local traffic programs

SUPPORT FOR REGIONS 

  • Snowy Mountains Special Activation Precinct: Establishment of new SAP in the Snowy Mountains following model used in Parkes, Wagga Wagga. Moree, Williamtown and Narrabri. $391.3 million made available to support Snowy Mountains SAP. 
  • Regional Growth Fund: an injection of $1.3 billion, which includes funding for a range of measures such as tourism development projects and job creation.  
  • Regional housing: $174 million for new homes to clear waitlist for key workers in regional and remote NSW; $149.8 million to deliver new homes and upgrades in First Nations communities; and $33.8 million for the Regional Housing Development Program.
  • Attracting health workers: $883 million investment to provide incentive programs for healthcare staff; increased training positions for nurses and medical interns; additional rural generalist and procedural training positions; career development and secondment opportunities for healthcare workers based in regional, rural and remote NSW; increased Aboriginal nurse cadetships; and HECS incentive package for allied health professionals.
  • Farm business resilience: funding of $17.1 million to continue the Farm Business Resilience Program (a joint initiative with Commonwealth Government) until 2024 and the Rural Financial Counselling Service. The Business Resilience Program includes free business coaching, farm tours, workshops, networking events and a series of online resources that provide advice on various aspects of a farming operation.

SMALL BUSINESS 

  • Women in small business: $5.4 million to provide fee-free TAFE NSW Women in Business courses (over four years) and $2.0 million in grants to industry associations and chambers of commerce to run professional networking programs for women in small business.
  • Women-led start-ups: establishment of a $10 million venture capital fund (‘Carla Zampatti Fund’) to invest in early-stage women-led start-ups.