NSW budget rides on 'housing tax' windfall

NSW Treasurer Gladys Berejiklian says stamp duty will contribute $30 billion to NSW revenue over 4 years.

"The NSW Coalition government's 2015 budget has a massive 'housing sales tax' windfall from stamp duty arising from the Sydney housing bubble," Susan Price, Socialist Alliance candidate in the recent NSW state elections, said on June 24.

The government expects to reap more than $30 billion in stamp duty in the next four years, but the budget papers note that the cyclical nature of the property market means that revenue source is "inherently volatile".

NSW Treasurer Gladys Berejiklian forecast an overall budget surplus of $2.1 billion for this financial year, the bulk of which will come from stamp duty from the current private home market frenzy in Sydney.

"The Coalition government is heading for a big fall," Price said. "What goes up is highly likely to come down at some point, when house prices in Sydney inevitably suffer a 'correction' from the boom and bust cycle of the capitalist market."

"At the very least, this revenue windfall from stamp duty should be returned to the community by raising the First Home Buyers Grant house price threshold, and by massively boosting investment in public housing to create thousands of new homes for low-income people," Price added.

Greens NSW MLC John Kaye said on June 23: "Treasurer Gladys Berejiklian's first budget is strong on spending cuts that undermine the public sector but weak on new and sustainable revenue measures. The Baird government is relying on the continuation of an unaffordable housing sector for a third of the state's tax revenue.

"NSW has jumped from a minerals boom to a housing bubble. Sooner or later the state has to find a sustainable tax base instead of trying to ride the waves of a boom-and-bust economy and squeezing the life out of the public sector.

"Private prisons, motorways and the for-profit skills industry are the big winners at the expense of public sector workers, disadvantaged communities and the state's future.

"The continued imposition of the efficiency dividend is hollowing $1 billion out of wages and procurement. While it's all smiles for Treasurer Berejiklian delivering her wall-to-wall surpluses, another $1 billion has been ripped off the public sector. It will not be long before the consequences are felt at the front line," Dr Kaye said.

Moreover, the government has begun spending the income from its sale of the state's power industry before the long-term leases have even gone through. And this impending privatisation means an ongoing substantial loss in annual revenue for the government.

Last year electricity grid assets delivered $1.3 billion in dividends. However, due to the recent decision by the Australian Energy Regulator to order electricity price reductions in NSW, the dividends to be paid by these power companies are likely to be cut in future.

This may result in the government receiving considerably less than its forecast $20 billion for lease of its power assets. This hasn't deterred the government from moving to spend its ill-gotten gains regardless.

Included in its allocations from the budget is funding for the controversial WestConnex tollway project. Greens MLA Jenny Leong said on June 23: "Despite widespread criticism of the WestConnex project, and the government's own modelling revealing the project won't reduce congestion, the government has poured another $1.7 billion into this project black hole."

On the education front, the TAFE (Technical and Further Education) system is in deep crisis. The state government's disastrous TAFE changes have driven away more than 30,000 students this year, and at least 2500 TAFE staff have lost their jobs since 2012.

TAFE enrolments have significantly declined since 2012, with overall student numbers plummeting by more than 80,000 in just three years. The number of Aboriginal students and students with a disability attending TAFE has also dropped.

Greens education spokesperson John Kaye said: "TAFE is now set to lose $122 million from its budget this year. In 2015-16, TAFE will have to compete against for-profit corporations and other private providers for 33% of the total vocational education and training budget, up from 27% last year.

"At this rate, TAFE will rapidly fall below the 50% line at which it is no longer the dominant post-school education system," he said.

Perhaps the greatest medium-term looming threat to state budgets is the federal government's plan, announced in its 2014 horror budget, to slash federal grants to public schools and hospitals by $80 billion over the 10 years from 2017.

NSW would suffer about 30% of the proposed cuts, which Berejiklian admits would be "unsustainable". Both federal and state governments would be held accountable by the public if such a brutal hit to vital public services goes ahead.

Price said: "Now is the time for the people of this state to rise up and demand the maintenance and extension of the public sector in the face of a concerted assault by big business and their political agents."

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