NSW Budget holds out hope for the reform of inefficient taxes and targets greater equity and opportunity

The 2022-23 Budget holds out hope for the reform of inefficient taxes and also targets greater equity and opportunity for the people of New South Wales.

The NSW Government’s 2021-22 budget deficit is estimated at $16.5 billion, compared to the $8.6 billion it forecast in its June 2021 Budget, which preceded the re-imposition of COVID-related public health measures. However, there is an expectation of the operating balance returning to surplus from 2024-25. Net debt is not expected to exceed 14 per cent of gross state product over the forward estimates period to June 2026.

It is generally better to undertake reform at a time when the state’s finances are in reasonable shape and we welcome the NSW Government’s first steps towards replacing land transfer duty with an annual property tax. The proposal to allow first-time homebuyers from 2023 to opt out of land transfer duty and into the annual property tax is a sensible way of launching the reform journey without compromising the state’s finances.

The NSW Government complements the above reform with its proposal to invest in a shared home equity scheme for certain key workers and other individuals who are finding it difficult to enter the housing market.

We are also very pleased to see the NSW Government leading the way with measures that should support increased economic opportunity for women. The proposals to allow bonus weeks of parental leave for NSW Government employees who share care for the child relatively evenly with their partner, in line with KPMG’s recommended approach, and to invest in the increased supply of affordable childcare facilities should have a particularly beneficial impact.

In parallel, the government is taking the sensible move to support more people in obtaining qualifications to work as early childhood teachers and carers and to support employers in retaining them.

Investment in physical infrastructure remains a strong focus, with capital expenditure of almost $6.5 billion allocated to transport and infrastructure over the forward estimates period. The investment of nearly $600 million over ten years in bushfire management will be welcomed by many in regional areas.

NSW, not to mention the nation, needs measures which will support growth in the productivity of its economy. We hope that the NSW Government’s initial step towards reforming property taxes will lead to further productivity-oriented measures from all tiers of government.

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