NSW budget: Government to sell port of Newcastle
(Translation of this article appears in Arabic section)
New South Wales Treasurer Mike Baird has handed down a cautious third budget, focusing on roads, rail and housing¸ as the Government continues its drive to rein in expenses and cut wage costs.
The budget papers contained few surprises, with most new measures having already been leaked to the media.
The headline announcement will see the Government continue its privatisation of the state's ports.
The world's largest coal port, the Port of Newcastle, is the latest to go under a 99-year lease to fund the "Rebirth of Newcastle" to revitalise the state's second largest city.
Budget deficit for 2013-14 at $329 million
Accounting changes mean return to surplus will be in 2015-16
99-year lease of Port of Newcastle, privatising the world's largest coal port
$340m of funds raised from lease to be spent on "Rebirth of Newcastle"
$59.7bn infrastructure program over four years
North West Rail Link to cost $8.3 billion, with trains running in 2019
WestConnex motorway to cost $1.8 billion over four years
$1.2bn on hospital upgrades including at Campbelltown, Hornsby and St George Hospital
$220m to fund higher patient numbers at hospitals
$14bn education budget for 2013-14 including $530m on five new public schools
Economic growth for 2012-13 revised up from 2pc to 2.5pc
Employment growth revised up to 1.5pc
"This budget sets New South Wales apart from governments across the world: it slows expense growth, accelerates spending on infrastructure and reduces net debt - an extraordinary trifecta in the light of the challenges we face," Mr Baird said in his budget speech.
"We have spent two years fixing the mess, but with this, our third budget, we turn securely towards the future."
The lease of Newcastle Port will fund a new light rail to run into the city centre between Wickham and Newcastle, replacing the end of the existing heavy rail line that will now terminate at Wickham.
There are no details on the windfall expected from the lease, but the Government has allocated $340 million towards the city revitalisation plan from the deal, which comes after the $5 billion long-term lease of Port Botany in Sydney and Port Kembla on the NSW south coast.
Mr Baird says the plan will reinvent Newcastle as a modern city. He insists the jobs of workers currently employed at the port will be protected.
"In the 30-year period of the opening up of the Australian economy to international competition, perhaps no other city has been asked to make more painful adjustments than Newcastle," he said.
"Today, Newcastle's time has come."
2012-13 deficit revised down
The 2012-13 deficit has been revised to a smaller-than-expected $374 million, half of the $776 million deficit forecast in the half-yearly review.
The state is expected to return to a surplus of $829 million in 2014-15, but a change to accounting standards means the actual return to surplus will be delayed for a year, until 2015-16.
The new standard for calculating superannuation earning will cut interest from nearly 9 per cent to just over 3 per cent, but Mr Baird says the change does not affect the state's fiscal position.
The deficit for 2013-14 will come in at $329 million, which is $94 million less than was forecast in the half-yearly review.
The state's weak economic growth for this financial year has been revised higher, from 2 per cent to 2.5 per cent, and employment growth was also better than expected at 1.5 per cent.
Mr Baird says total employment in the state grew by 128,900 in two years, surpassing the promise of 100,000 new jobs in his first term.
Infrastructure spending will come in at $59.7 billion over the four-year forward estimates, with the bulk to be spent on road and rail projects.
Payroll tax threshold lifted
Another key measure announced today will see the Government raise the threshold at which businesses must pay payroll tax from $680,000 to $750,000 from July 1 at a cost of $96 million over the next three years and Mr Baird says he hopes it will spur jobs growth.
As part of the Jobs Action Plan, the Government will also extend the payroll tax rebate and end indexation of payroll tax, bringing it in line with all other states.
"This means around 1300 businesses that would have paid payroll tax in 2013-14 will not be liable for the tax," Mr Baird said.
"Furthermore, businesses that continue to pay the tax will be more than $3,000 better off as a result of the one-off increase to the threshold."
The state's health spending will be boosted by $884 million, plus an additional $1.2 billion on upgrading and redeveloping hospitals across the state in Peak Hill, Port Macquarie, Bega, Blacktown-Mount Druitt, Hornsby and the Northern Beaches.
As previously announced, the government will spend $220 million to boost hospital services, including surgery for an extra 3,000 patients and 69,000 emergency department admissions.
'Innovative' funding model for WestConnex project
The government also unveiled what it calls an "innovative" financing model to fund the WestConnex road project, as private investors burnt from previous toll road projects shun new initiatives.
Mr Baird says the 33-kilometre motorway will cost $1.8 billion over four years, with $111 million of that to come in 2013-14.
Under the plan, the Government will establish a company to build the initial sections of the motorway, and once usage levels and toll income is determined, it will open those stages to private investors. The Government expects to retain about 25 per cent ownership of the road by the time it is completed.
"Financial markets have changed significantly since the GFC," Mr Baird said.
"We have seen a marked reduction in both the amount of the private capital available and the level of risk the private sector is prepared to take."
NSW to reap benefits of Gonski reforms
Education Minister Adrian Piccoli says students in NSW will reap the benefits of the national Gonski education changes, with the state's schools to receive an additional $5 billion of federal and state funds between 2014 and 2019.
The state will boost education spending by $524 million to $13.95 billion in 2013-14.
$530 million will go towards building five new public schools in Sydney, on the lower north shore, at Spring Farm, The Ponds, Strathfield and Crows Nest, and Mr
Piccoli announced just under $1 billion would go to the state's non-government schools.
"The reforms currently underway in NSW are already consistent with the direction of the Gonski Report," Mr Piccoli said.
"The additional $5 billion for NSW schools during 2014 to 2019 will deepen and accelerate the education reform agenda in NSW, for the sole purpose of improving student results in schools."
$19 billion in public sector savings
The Government says a two-year extension of the efficiency dividend along with a public sector wage cap will save $19 billion in the six years to 2016-17.
It has heralded the first reduction in public sector employment since 2002, with growth in employee expenses halving from 6 per cent to 3 per cent.
"Our efficiency dividend, labour expense cap and other measures will save New South Wales taxpayers almost $19 billion in the six years to 2016-17," Mr Baird said.
The budget will also include $302 million to speed up new home building across the state, including $141 million for up to 42,900 new homes in Sydney and the Hunter region. It will also extend the $15,000 first homebuyers' grant for new homes by two years until January 2016.
"The budget demonstrates conclusively that this Government's commitment to repairing the state's broken infrastructure is not about words - it's about actions," Mr Baird said.
"The tough decisions we have made are beginning to bear fruit."