Barton Deakin Brief: NSW Half Yearly Budget Review
On Thursday 25 February, the Treasurer, the Hon Dominic Perrottet MP, released the Half Yearly-Review for the 2020-21 NSW Budget. The Half-Yearly Review is a revision of the annual budget, accounting for any subsequent changes in economic circumstances.
The 2020-21 NSW Budget was handed down on Tuesday, 17 November, 2020. The NSW Budget focused on consolidating the emergency stimulus measures announced in March, and providing the long-term foundations for recovery from the COVID-19 pandemic.
The Review shows a consistent improvement on budget forecasts. The Treasurer noted that the better-than-expected economic performance is a result of targeted and consistent stimulus measures, a proportionate health response, and improved business confidence.
- The economy is forecast to grow by 2.75% in 2020-21, in line with budget forecasts.
- The rate of unemployment stands at 6.0% as at January 2021. Unemployment is expected to fall to 5.0% by 2023-24, 0.25% lower than forecast in the budget.
- The deficit for 2020-21 was revised down to $5.2 billion. This is $1.2 billion less than forecast in the Budget.
- 80% (220,183) of jobs lost due to the pandemic have been recovered.
Treasury expects the economic recovery to continue over the forward estimates, with forecasts for economic activity revised upward for 2021-22 and 2023-24. This is reflected in revisions to the deficit forecasts. The deficit for 2020-21 has been revised to -13.3% (from -16.0%), for 2021-22 to -6.8% (from -5.8%), for 2022-23 to -1.5% (from -2.1%).
Ongoing risks remain. The improved outlook may be undermined by new strains of the virus, vaccine rollout challenges, the impact of federal macroeconomic support, and escalating global trade tensions. The NSW Government is expecting 50% of the population to be innoculated by the end of 2021, and that border restrictions will be eased by the end of the year. However, the recovery in tourism is likely to be gradual, as some restrictions may continue to remain in place for the foreseeable future.
The NSW Government remains committed to delivering on its infrastructure pipeline. The Government forecasts total expenditure of $107.2 billion on infrastructure from 2019-20 until 2023-24. This represents an increase of $115 million relative to the 2020-21 Budget.
The Government remains committed to supporting small businesses recover from the COVID-19 pandemic. Direct financial assistance for small businesses is expected to total $640 million. More than 90,000 grants have been paid to affected small buisnesses and 10,000 businesses have been supported through the business connect program. Grants of $5,000 and $3,000 are available to small businesses on the northern beaches. The government is also delivering on a $50 million support package for the arts sector, $20 million for the revitalisation of the City of Sydney, and a $500 million Dine & Discover stimulus program to support restaurants.
Recovery from the COVID-19 pandemic will be driven by individuals and businesses, spurring the NSW Government to ensure individuals and businesses can reopen, invest, and employ with ease, by simplifying the planning system to reduce assessment times, removing restrictions on opening hours, investing in vocational education, and a whole-of-government approach to digitisation.
The NSW Government is considering phasing out stamp duty by providing homebuyers with the option of paying an annual property tax. The proposed reforms would reduce the cost of purcahsing a home and inject $11 billion into the economy over four years. Consultation commenced on 17 November 2020.
The government will also be removing restrictions on late-night venues in the CBD, with a 24-Hour Economy Strategy in the early stages of implementation.
To read the Half Yearly Budget Review in full, see here.
To read Barton Deakin’s Brief on the 2020-21 Budget, see here.
To view the 2020-21 Budget Papers, see here.
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