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The Government delivered a deficit of $3.6b, a difference from the $0.5b surplus projected in the 2023-24 Half Yearly Review.
General Government expenses are forecast to increase from $120.5b in 2023-24 to $129.1b in 2027-28, with this Budget focusing on delivering funding to healthcare and education capital projects over the next four years. Separately, there is forecasted population growth of 1.2 per cent for 2024-25, while lowered household spending has slowed the State's economy.
In addition, net debt is forecast to reach $105.5b by 2025, projected to further increase to $139.5b in 2028. The unemployment rate is forecast to peak at 4.5 per cent in mid-2025.
$35.6b for public transport infrastructure.
$13.4b to upgrade hospitals and health facilities.
$8.9b to build new public schools and upgrade existing schools.
$5.7b for disaster relief recovery programs.
$5.1b for social housing.
$3.1b in energy transition for all New South Wales consumers.
$207.3m to increase emergency response across the State.
$188.8m including tax rebates to GP clinics.
An additional $5m towards the Service New South Wales Business Bureau, focusing on small businesses.
The Government announced several revenue measures and introduced the Revenue Legislation Amendment Bill 2024 (New South Wales) into Parliament which, if passed, will implement these measures.
The general land tax threshold (currently $1,075,000) and the premium land tax threshold (currently $6,571,000) will remain fixed going forward. This varies from the current regime, where the threshold is indexed annually based on growth in average land values.
Owners of investment properties, holiday homes, and commercial real estate will be most affected, with a greater proportion of properties exceeding the land tax thresholds year on year as land values inevitably rise.
Supporting the change, the Government has highlighted that the removal of indexation brings New South Wales into line with most other jurisdictions (noting that South Australia is the only other jurisdiction that implements a form of indexation) and the current threshold is 50 per cent higher than the next nearest State.
Mirroring similar changes announced in the recent Queensland Budget, the New South Wales Government will increase the surcharge land tax and transfer duty rates applicable to certain foreign owners. The foreign owner land tax surcharge rate will increase from 4 per cent to 5 per cent from the 2025 land tax year. The rate of surcharge purchaser duty will increase from 8 per cent to 9 per cent from 1 January 2025 – contracts entered into (or relevant acquisitions that occur) on or after 1 January 2025 will be subject to the higher rate, except in limited cases (including the exercise of certain options).
The Treasurer has stated that these rate increases should encourage more properties to be made available to New South Wales residents and should ensure that foreign investors are contributing to housing and infrastructure across the State, with the resulting additional revenue to be allocated towards addressing the housing crisis.
The Government has announced that it will waive past unpaid payroll tax liabilities for payments to general practitioner (GP) contractors up to 4 September 2024. After that date, clinics with bulk-billing rates above 80 per cent in metropolitan Sydney and 70 per cent in the rest of New South Wales will receive a payroll tax rebate for contractor GP wages.
This echoes similar GP payroll tax changes announced in the recent South Australian Budget. The New South Wales Government intends the changes to reduce financial pressures on GP practices and incentivise bulk-billing, in turn increasing accessibility and affordability of primary healthcare. The changes are also intended to reduce the strain on hospitals by reducing the rate of presentations at hospital emergency departments. These outcomes reflect the Budget’s focus on easing cost-of-living pressures and improving the health system.
The Budget includes several other revenue measures, with some of them already disclosed earlier in the year.
These measures include increased investment in initiatives aimed at maximising tax compliance. This includes investing in Revenue New South Wales programs to increase land tax compliance revenue, reduce the write-off of tax debts, and increase prosecutions and enforcement.
Following the Government’s 2023 decision to increase coal royalty rates by 2.6 per cent as of 1 July 2024, the Government has announced that the Royalty deduction rate for coal beneficiation will be indexed until 2026-27, at which point it will be fixed at the new, higher rate.
Continuing the focus on health, the Government has announced that it will work with private heath to ensure that private health insurers are paying the correct daily cost of a bed rate for a private patient in a public hospital.
If you wish to discuss the New South Wales Budget announcements, please reach out to a Grant Thornton Partner today.
