Posted on June 28, 2012 by

NSW Budget 2012-2013 – An overview

On 12 June 2012 The Hon. Mike Baird MP Treasurer of New South Wales delivered the New South Wales 2012 – 2013 Budget (the Budget).

The Budget promises to get ‘on with the job of building a stronger New South Wales’ through new packages that ‘will revitalise the housing and construction sector’ and responsible investment in the State’s infrastructure needs.

Briefly, the Budget result for 2012-13 is forecast to be a deficit of $824 million. Budget surpluses are then forecast for the financial years 2013-14, 2014-15, and 2015-16. These surpluses will average $674 million per annum.

This Budget aims to constrain expense growth, slow the growth in Government debt and return the Budget to surplus, whilst simultaneously reducing the infrastructure gap and introducing reforms to improve the State’s economy.

This fiscal strategy is underpinned by the objective to retain the State’s triple-A credit rating.

The Budget proposes the following packages and investments in relation to development and infrastructure:

• Building the State Package
• Increased infrastructure investment
• Environmental Expenses

Building the State Package

The Building the State Package (the Package) aims to provide half a billion dollars for additional housing infrastructure, accelerates the release of up to 76,000 new housing lots, remove blockages in the development approval process, better target incentives to boost housing construction and deliver the most generous first homebuyer scheme in the country for new homes.

The Package provides $561 million for additional infrastructure to stimulate housing supply.

$181 million will be allocated to first round high priority infrastructure projects, under the Housing Acceleration Fund. This will accelerate up to 76,000 new lots. The Council areas in which these infrastructure projects have been identified are:

• The Hills
• Blacktown
• Camden/Liverpool
• Hornsby/Paramatta
• Port Macquarie Hastings
• Wyong
• City of Sydney
• Wollongong

A further $300 million will be allocated for future rounds of infrastructure projects under the Housing Acceleration Fund, and funded from the sale of property assets identified by the Property Asset Utilisation Taskforce.

Additional funds ($30 million over five years) will be allocated in interest concessions under the Local infrastructure Renewal Scheme. This allocation is on the basis that:

• the subsidy rate is reduced from 4% to 3% for successful applications beyond the first round of the scheme, and
• an additional eligibility criterion be implemented, namely that infrastructure directed to enabling new housing be given priority.

$50 million has been allocated to an UrbanActivation Precinct Program that provides incentives for local Councils to build essential infrastructure.

The Package focuses on the current housing incentives schemes, by more than doubling the First Home Owner’s Grants to $15,000 from 1 October 2012 for purchases of new properties up to $650,000. The First homebuyer transfer duty exemption is also increased to apply to properties up to $650,000.

In addition to acceleration of new home construction, the Package supports new initiatives being implemented by the Department of Planning and Infrastructure:

1. $13 million in funding in the 2012-13 financial year will be allocated to clear the backlog of remaining development applications lodged under the now repealed Part 3A of the Environmental Planning and Assessment Act 1979.
2. $2 million per annum, from the 2012-13 financial year and throughout the forward estimate periods, will be allocated to ‘resolve systemic planning impediments’. This will involve ‘moving from annual to monthly reporting of dwelling completions and developing model to test the commercial feasibility of plans.’
3. $5 million per annum, from the 2012-13 financial year and throughout the forward estimate periods, to improve infrastructure planning and delivery.
4. Spending $75 million in 2012-13 to acquire land for regional open space and transport corridors.
5. Spending $8 million in 2012-13 to help local governments finalise Standard Instrument LEPs.
6. ‘Spending an additional $5 million in 2012-13 on the Planning Panel’s review of the State’s planning system.’
7. ‘Spending $3million in 2012-13 to establish a gateway process for implementing strategic regional land use plans, conclude plans for the Upper Hunter and New England North West regions and release plans for the Central West and Southern Highlands regions.’
8. ‘Spending $1 million in 2012-13 expanding exempt and complying development codes to include multi-unit housing, and increasing the range of commercial and industrial developments eligible for 10-day complying development approval.’

The Government will also create a new Growth Delivery Entity, Urbangrowth NSW, by merging Landcom and the Sydney Metropolitan Development Authority. This entity ‘will
have a new focus on managing and coordinating urban renewal in strategic and complex sites.’

Minister Hazzard said ‘Urbangrowth NSW will continue the Government’s 10,000 housing lots program; coordinate and deliver lead-in infrastructure and service provision to development areas; plan and fast-track urban renewal projects to unlock further private sector investment – providing more housing choice and affordability.’

It is expected that UrbangrowthNSW will initially focus on the Sydney Metropolitan Region, with a view to expanding to regional areas over time.

Increased infrastructure investment

The Budget has allocated $61.8 billion on infrastructure spending over the four years to 2015-16.

The infrastructure investment set out in the Budget is funded by:

• ‘Disposing of assets that are not part of core public service delivery and whose market price is above retention value.’
• This includes the long term lease of the desalination plant and the proposed lease of Port Botany and Port Kembla, together with the sale of the residual generation assets and the Cobbora coal mine.
• Proceeds from these transactions, after taking into account debt on the assets, will be transferred to RestartNSW.
  • ‘RestartNSW has been established to fund infrastructure projects that will enhance the State economy and assist mining-affected communities’.
  • RestartNSW is administered by the Treasury and will fund projects that have been recommended by InfrastructureNSW.
• In addition to disposal of assets, the Government will examine the potential securitisation of some of the residual revenue stream from NSW Lotteries.
• The Government will also work with State Super to enhance their portfolio allocation through investment in NSW infrastructure assets.
• In addition, the Government will create an Infrastructure Financing Unit to deliver innovative infrastructure financing options. The unit will be created within Treasury.

Major infrastructure investment to 2015 – 16 includes:

1. Transport infrastructure: Expenditure has been allocated to upgrades of the Pacific Highway (in partnership with the Commonwealth Government), the Hunter Expressway, the Great Western Highway, Princes Highway, Hume Highway, and Central Coast Highway. Expenditure has also been allocated to
   North West Rail Link, South West Rail Link and the Northern Sydney Freight
   Corridor.
2. Rail transport infrastructure: Extension to the Sydney light Rail system
3. Health: Hospital upgrades, developments and expansions including Blacktown/Mt Druitt Hospital, Hornsby/Ku-Ring-Gai Hospital, Missenden Mental Health Unit at Royal Prince Alfred Hospital, South East Regional Hospital in Bega, Parkes and Forbes and Tamworth Hospital.
4. Education: Investment in 28 major school projects and 27 major TAFE projects
5. Law and order: Investment in new police stations and upgrades
6. Disabled services accommodation: Investment in development of alternative accommodation for people with a disability
7. Electricity: Investment in electricity infrastructure to ensure reliability electricity supply
8. Water and Wastewater: Investment in water and wastewater infrastructure

Environmental expenses

Environmental reforms of significance are briefly mentioned in the Budget papers.

The Environment Protection Package continues the investment made in the 2011-2012 budget of $103 million over five years until 2015-2016.

A focus of this package is controlling the threat of weeds, feral animals, bushfire and biodiversity, both in national parks and on private land, with the package contributing $2 million towards a total of $71 million for weed, pest and bushfire control in national parks in 2012 – 13.