By finance reporter Justine Parker
Updated
New South Wales Treasurer Mike Baird has handed down a cautious third budget focussing on roads, rail and housing¸ as the Coalition 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 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.
"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 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. And he insists that 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."
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 percent 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.
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 dollars over the next three years and Mr Baird 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 3000 patients and 69,000 emergency department admissions.
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 33km 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."
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 is heralded the first reduction in public sector employment since 2002, with growth 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."
Topics: state-parliament, budget, nsw, sydney-2000
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