The NSW Government’s 2005/06 budget is a mixed bag of more property tax set to erode the State’s business attractiveness interwoven with welcome increases in infrastructure spending.
The Property Council of Australia says the Government’s failure to abolish vendor tax combined with an increase in the land tax rate faced by business reveals a lack of genuine interest in promoting economic prosperity and protecting NSW jobs.
“The increased infrastructure spend is welcome, but the vendor tax handbrake is still firmly on,” said Ken Morrison, NSW executive director.
“Despite six months ago predicting a $700 million budget surplus for 2005/06, none of it was spent on tax cuts.
“Instead business will pay more in land tax and the nation’s dumbest tax – vendor tax – remains.
“Vendor tax is a revenue failure that has cost the Government millions in lost purchaser duty, reduced the hard won savings of thousands of property investors, driven residential vacancy rates to a five year low and is set to cost thousands of construction jobs in coming months.
“NSW continues to have lower economic growth than the national average.
“The high property taxes are unsustainable.”
On the expenditure front, the Property Council has welcomed the Government’s $8.2 billion spending on infrastructure in 2005/06, some $1 billion more than was spent in 2004/05.
“Today’s announcement of an increase in spending of $1 billion on capital works is good news,” Mr Morrison said.
“While the projects announced today are welcome there is still a crying need for an infrastructure program to underpin Sydney’s growth and competitiveness.”
The Property Council has long advocated that the NSW Government has the capacity to increase their spending on public infrastructure using responsible levels of debt funding. Research by the Allen Consulting Group, commissioned by the Property Council shows that the NSW Government had capacity to fund up to $5 billion worth of new public infrastructure using public debt without impacting the State’s AAA credit rating.
“We welcome today’s announcement that the Government will fund almost a quarter of next year’s capital works program using debt.
“The decision to increase public debt to fund this investment is right – it makes economic sense and it has public support. We think more could still be done.
“Recent polling shows that a majority of NSW taxpayers want to see a bigger investment in public infrastructure and they are comfortable with the Government using debt to fund it.”
“Overall we are pleased that the Government has moved away from their debt phobic attitudes and is starting to embrace borrowing to deliver much needed public infrastructure,” Mr Morrison said.
Ken Morrison, NSW Executive Director, 02 9033 1906 or 0412 233 715