NSW ‘Mini Budget’
This paper provides a summary of the NSW Government ‘mini budget’ released on 6 April 2004.The mini budget is a precursor to the full budget announcement to be made on 22 June 2004.
It is worth noting that the mini budget is a ‘budget’ in name only and has more of the characteristics of a series of policy announcements than a budget (ie, it does not contain the range of fiscal and economic reports required in a full budget).
This occasional paper covers major changes to the revenue, expenditure and savings measures, as outlined in the Treasurer’s speech to the Legislative Assembly.
The information in this paper is not exhaustive and while every effort has been made to ensure accuracy at the time of print – Hawker Britton does not guarantee the accuracy of all information.
More detailed information A number of papers were released with the mini budget.
- Mini Budget Overview 2004 (Treasurer media release)
- Mini Budget Full Speech 2004 (Treasurer’s speech to the Legislative Assembly)
- Stamp Duty Charges (Treasurer media release – including tables detailing benefits to first home owners, comparative tables and information on principal place of residence test)
- Land Tax (Treasurer media release)
- Savings Measures Summary (Treasurer media release including summary of savings)
- Increased Funding Summary (Treasurer media release)
- $600 million Health Funding (Minister for Health media release)
- $241 million Mental Health Funding (Minister for Health media release)
- Education Funding (Minister for Education and Training media release)
- Department of Infrastructure, Planning and Natural Resources changes (Minister’s media release)
- Coal Industry Royalties (Minister for Mineral Resources media release)
- Crown Land Management (Minister’s media release)
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- A stamp duty of 2.25% will be applied on the value of the investment property (principal place of residence (or farm) test applies – details available in media release above) when it is sold, providing the vendor’s resale value exceeds the original purchase price by 12%. This measure will apply from no later than 1 July and is subject to the passage of legislation.
- A Premium Property Tax will be applied as a marginal stamp duty rate of 7% on the part of the value of the property that exceeds $3 million. This will replace the existing tax which applies to homes with a land value exceeding $1.97 million.
- The existing $317,000 land tax threshold and 1.7% rate will be abolished. This system will be replaced with sliding scale land tax between 0.4% - 1.4%. The scale will operate as follows:
- land valued at less than $400,000 will be subject to a land tax of 0.04%;
- land valued between $400,000 - $500,000 will be subject to a land tax rate of 0.6%; and
- land valued above $500,000 will be subject to a land tax rate of 1.4%.
Under a new system, to be introduced progressively from 1July 2004, Crown land will be leased at market rates. Under the new system perpetual leases will be encouraged to convert their leases to freehold by purchasing the remaining portion of the State’s interest in the lease. Perpetual leaseholders will have two years to convert to freehold, before market rents apply.
From 1 July the NSW Government will abolish flat rate royalties for coal and replace them with ad valorem (value based) royalties.
The existing prescribed rate of $1.70 per tonne of coal produced –which has not been increased since 1981 – will be replaced with a system which will closer match the rate of royalties with coal costs.
The rates will be as follows:
- 5% for deep underground mines
- 6% for underground mines
- 7% for open cut mines
This compares with a flat rate of 7% in Queensland.
$300 million for passenger rail, including:
- $1billion over 6 years for five rail clearways, creating 14 ‘sectorised’ rail lines
- $1.5billion over six years for an extra 498 suburban carriages.
Increase of funding by $356 million, which will fund the recent pay rise to teachers in full and assist the roll out of smaller class sizes, including the recruitment of an additional 800 teachers.
Additional funding of $572 million in 2004-05 has been allocated to NSW Health, with an extensive capital works program in the next year valued at $600 million. Key aspects are listed below.
- $120 million allocated for new works, including $9.8 million to enable new projects to proceed to tender including:
- Richmond Mental Health Clinic at Lismore;
- Griffith Hospital Emergency Department; and
- Clinical Information Systems. As well as, an additional $8 million to progress small rural hospital redevelopments.
- $20.5 million for additional equipment and services at both regional and major Sydney based hospitals.
- $10 million for the establishment of new laboratories.
- $3 million for a new incident monitoring system.
- $7.6 million for additional refurbishment and new facilities at three major hospitals in Sydney.
- The Department of Community Services will receive a $41 million funding increase over the next 12 months.
- The Department of Ageing, Disability and Home Care funding will rise by $88 million over four years. Savings Measures
- Cap spending on the North West Transit Way at $80million a year – delaying its completion for 12 months.
- Reducing the operating subsidy to the STA by $20 million.
The size of NSW Health’s administration services unit will be reduced, including further cuts to the North Sydney head office of NSW Health. These cuts are in line with the Government’s move towards shared services provision to assist in the removal of service duplication.
Savings from Portfolio Changes:
1. Department of Primary Industries
Following last the creation of the Department of Infrastructure, Planning and Natural Resources, the NSW Government has continued its consolidation of agencies responsible for regulating and supervising land.
A new super-ministry, the Department of Primary Industry will be created by the amalgamation of the Department of Agriculture, NSW Fisheries, the Department of Mineral Resources and State Forests. It is understood that pending the appointment of a new Director General, the Department will be managed by a committee of the three existing Directors General and the office of the senior minister, Ian Macdonald.
The Department of Environment and Conservation will be required to provide additional support to and work more closely with the Catchment Management Authorities, DIPNR and the new department of Primary Industries.
The Waterways Authority will be reformed and its land management functions moved to the Department of Lands
2. Department of Women
The Department for Women will be abolished and replaced with an Office of Women to be located within the Premier’s Department.
Closure of Overseas Government Offices:
- The NSW government representative office in Tokyo will be closed.
- The NSW Tourism office in London will be closed.
- Business assistance grants and other Department of State and Regional Development programs will be reduced by $2.5 million in 2004-05, with a total cut of $6 million the year after.
- The 1.3 billion roads capital works program will be reduced by $50million, each year for two years.
- The NSW government will now charge the full cost of undertaking complex development approvals for major developments handled by the Department of Infrastructure, Planning and Natural Resources ratherthan local councils.
- Government advertising, printing and publications services will be suspended or abolished saving of $81 million. NSW Health and the Department of Education and Training to be exempt from these cuts
- The Carnivale Multicultural Arts Festival will be cancelled.