Big-spending budgets for NSW and QLD shrug off inflation concerns and target cost of living pressures
Today was a fiscal blockbuster with the Perrottet and Palaszczuk governments in NSW and Queensland announcing big-spending budgets as a response to growing global economic storm clouds.
Both budgets shrug off inflationary concerns, with NSW addressing a range of cost of living and social concerns while Queensland addressed its revenue issues with new taxes, including a mental health levy and new coal royalties.
Less than 9 months out from the NSW State election, first-time Treasurer Matt Kean has shifted gears to a fourth term reform agenda with a left-leaning focus on productivity, women’s economic status, education and early learning. The centrepiece structural reform is giving eligible first home buyers the choice of stamp duty or annual land tax, making it easier to get into the market. There is a swathe of measures to take cost of living pressure off NSW families.
North of the Tweed, where the Palaszczuk Government is not due for another election until October 2024, Treasurer Cameron Dick has delivered a more traditional Labor budget. With another record spend on health and education, delivering on election commitments and the first rounds of funding to deliver the 2032 Brisbane Olympics Games taking centre stage – it’s become clear where the government is keen to leave their mark.
NSW optimistic on growth and debt
Despite global uncertainties, rising inflation and interest rates, NSW is expecting strong economic growth of 4.25% for 2022-23, up from 1.5% this year. It is also forecasting historically low unemployment of 3.5% (down from 4% now) by the June quarter next year. This remains a big spending Budget with a deficit of $16.6 billion for the current year, reducing to $11.3 billion next financial year, with a return to surplus expected in 2024-25.
- $33 billion investment in health including recruiting more than 10,000 full-time staff to hospitals, NSW Ambulance and health services. This includes $2.4 billion over 10 years to attract doctors and nurses to rural and regional hospitals and $3.0 billion for 51 new and upgraded hospitals.
Education and Early Learning
- $2.0 billion recurrent investment in TAFE NSW and $640.3 million for training and further education.
- $1.6 billion for 23 new and upgraded schools.
- $5.8 billion over 10 years towards the establishment of universal pre-kindergarten for all children in the year before school by 2030.
- $1.4 billion over four years to provide affordable preschool.
Cost of Living
- More than $7.2 billion in cost-of-living measures, including the new Energy Bill Buster Program and Back to School program.
- $1.3 billion to expand the Regional Growth Fund, in addition to the $2 billion already funded, to continue supporting communities in regional NSW.
- $2.8 billion for housing including $728.6 million for tax reform to help new homebuyers enter the market, and $350 million for new and upgraded social housing.
Jobs of the Future
- $252.4 million ($703.4 million over four years) for the Future Economy Fund which will be NSW’s first dedicated fund to target the end-to-end stages of business growth – from R&D and commercialisation, through to industry growth, investment attraction and maturity.
- $1.2 billion to establish the Transmission Acceleration Facility, to unlock investment in the electricity system and build new renewable energy zones.
- $250 million over five years for grants to businesses to competitively manufacture components for renewable energy infrastructure, electrolysers, electrification of plant, and electric vehicles.
- $128 million for the Energy Buster program to help households cut energy bills by installing rooftop solar and energy efficient appliances.
- $3.3 billion for sustainability and the clean economy.
- $130 million Critical Minerals Activation Fund to attract mining and processing investment. This will help the State’s supply of valuable critical minerals and hi-tech metals for jobs in regional areas.
Transport and Infrastructure
- $112.7 billion four-year infrastructure program. This includes:
- $500 million towards a new Fast Rail
- $680.5 million for Parramatta Light Rail Stages 1 and 2 to continue construction of the Light Rail
- $2 billion for the Sydney Metro City & Southwest project
- $218.9 million over the next seven years to support the bus fleet move to zero emissions technology
- $39.8 billion for public transport and roads.
Major investments in public transport include:
- $12.4 billion over the next four years for Metro that will link Parramatta to the Sydney CBD.
- $5.1 billion over the next four years towards the Metro City and South West between Chatswood and Bankstown to provide a direct link with a new tunnel under the harbour.
- $8.4 billion over the next four years to deliver the Sydney Metro to Western Sydney Airport.
Road projects to receive significant funding include:
- $4.1 billion over four years for planning the Western bypass, Harbour tunnel and Beaches Link.
- $2.3 billion over four years to upgrade the Princes Highway.
- $1.2 billion towards completing the M4-M5.
- $3.2 billion over four years to upgrade the Great Western Highway.
Sunshine state back in the black
During the height of pandemic, Treasurer Dick’s plan was to borrow to support jobs and industry. The theory was that this would increase the economic pie, and that a larger Queensland economy would help repair the budget. Pleasingly for Queenslanders, the budget is back in the black, with the Treasurer announcing a $1.9 billion surplus for 2021-22. Looking ahead however, net debt is expected to increase to $19.77 billion in 2022/23.
Queensland’s domestic economy is 7.8 per cent larger than it was pre-COVID and 206,000 extra people are employed since the start of the pandemic.
Coal royalties will be unfrozen, and a new sliding scale implemented. There will also be a new mental health levy to be paid by the top 1 per cent of Queensland businesses.
Key Queensland Budget measures
- $23.6 billion for frontline health services and healthcare infrastructure, including $9.8 billion for a funding program to expand the capacity of the state’s health system.
- Funding for a total of 2,509 additional hospital beds across the state.
- $1.6 billion for mental health services over five years.
- $750 million for a new, world class stand-alone cancer hospital in Brisbane.
- $35.5 million to support the development of a locally based vaccine manufacturing industry in Queensland.
Energy and Resources
- $48 million over two years to advance early works on the Borumba Pumped Hydro Energy Storage project, also to support a state-wide search for a second potential pumped hydro energy storage site.
- $1.41 billion to improve the state’s electricity supply.
- $17.5 million over four years for grants to explorers under the Collaborative Exploration Initiative, supporting the search for new economy minerals.
- $10 million over two years for airborne and ground-based geophysical surveys.
- Five new schools to be built by 2026.
- 675 more teachers and 200 more teacher aides.
- $80.6 million over three years to support students with disabilities.
- $13.3 million to expand the Share the Dignity in Queensland Schools initiative, which provides free period products to all state schools.
Infrastructure and State Development
- $3.5 billion pipeline of new rail projects over and above Cross River Rail, said to support more than 5,000 jobs.
- $300 million for the Toowoomba to Warwick pipeline.
- $200 million for two funds that will build essential infrastructure needed to unlock more residential lots in new communities.
- Funding for 1,200 new social and affordable homes through a commercial partnership between community housing provider Brisbane Housing Company and the Queensland Investment Corporation.
- $150 million to deliver a new 10-year trade and investment strategy.
- $2 billion to cover the wages of another 8,000 public service workers.
- $363 million over five years to support victims of domestic and family violence.
- $60 million over four years to the Brisbane’s Olympic Games organising committee to start the work of planning for the Games.
- $254.2 million over four years to support Stadiums Queensland’s operations and maintenance of the state’s major sporting stadiums and high-performance venues in the lead up to Brisbane 2032 Games.
- $66.4 million over four years to help tourism operators.
In these uncertain times, state leaders are tasked with future-proofing their states while also juggling record debts. Today’s Budgets from Queensland and NSW provided interesting insight into where they’re going and how they’ll get there.
Jodie Brough, Partner and Sydney Office Head, SEC Newgate Communications – [email protected]
Jamin Smith, Partner and Brisbane Office Head, SEC Newgate Communications – [email protected]
Clint McGilvray, Partner, SEC Newgate Communications – [email protected]
Jeremy Vine, Associate Partner, SEC Newgate Communications – [email protected]
Nick Story, Account Director, SEC Newgate Communications – [email protected]
Finn McCarthy, Senior Consultant, SEC Newgate Communications – [email protected]
Alistair Coleman, Consultant, SEC Newgate Communications – [email protected]
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