The state budget takes modest steps to deliver more homes in the intransigent Sydney suburbs where people want to live the most, using a tax on construction.
The primary objective of the NSW 2023 budget is to help solve one of the state’s great social problems: the cost of housing.
“Housing is a fundamental need and foundational to a person’s quality of life,” Budget Paper No. 1 states next to a chart showing mortgage costs, as a proportion of income, passed 30 per cent this year for the first recorded time in NSW.
NSW Treasurer Daniel Mookhey. Louie Douvis
The government’s primary medium-term objective appears to be to make housing less expensive.
Most of the state’s infrastructure investment is being spent, directly or indirectly, facilitating more supply.
Of the $116 billion budgeted for infrastructure over four years, $78 billion is for public transport. Roads and train lines will help create new suburbs, including around the Western Sydney International Airport. Landcom, the state property developer, will get about $300 million extra to build almost 4700 new homes too.
Sydney’s urban sprawl will continue. But the budget takes steps, albeit modest ones, to deliver more homes in the intransigent Sydney suburbs where people want to live the most, and residents are most determined to keep them out.
Under a tax proposed by the previous Coalition government and enacted by the present Labor one, developers are forecast to contribute $1.5 billion over four years for roads, parks, hospitals, schools and other urban infrastructure.
The money from the so-called housing and productivity contribution slugged on developers will be spent on the region in which it is raised, according to the NSW Treasury, which should create a virtuous cycle: more Sydney apartments will raise more money for more infrastructure in Sydney, which should facilitate even more housing.
The primary argument deployed by the most selfish councils – think Hunters Hill, Mosman, Inner West and Woollahra – is not that they oppose housing, but that they lack schools, parks and other services for them. Anyone who has lived in a non-low-density city – and waited a few minutes for an almost-empty ferry at Balmain East Wharf – will understand the dishonesty.
Nonetheless, the political reality is that buying off councils may be the least-controversial way to overcome restrictive planning rules, which have created a national housing shortage that is the primary financial concern of almost any Australian under 30.
The Minns government has other options available. It could have decided to continue with the planned abolition of stamp duty on home sales. The signature policy of the previous premier, Dominic Perrottet, switched to a regular, modest land tax. Given time, it might have increased housing supply through cheaper property transactions.
The unfortunate decision was well timed by the Labor government. A surge in Sydney home prices is forecast to raise $2 billion more in taxes this financial year than last. Expressed another way, homebuyers are so desperate they are expected to voluntarily hand the NSW government $11.7 billion this financial year for the privilege of obtaining property.
Which is why Treasurer Daniel Mookhey is able to predict that he will deliver a budget surplus in 2024-25, thus claiming the mantle of fiscal responsibility.
Upon such boasts is sacrificed good policy.
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