NSW is set to pump billions into housing and infrastructure as the state seeks to address housing affordability challenges and drive its economy forward.

But a surge in spending means that the state now expects deficits for the next four years whilst net debt is expected to reach $140 billion by 2026/27.

On Tuesday, the NSW Government released its State Budget for 2024/25.

A key focus is housing and infrastructure.

In terms of housing, the Government will invest a record $5.1 billion over the four-year forward estimates period to deliver 8,400 new public homes across the state.

Of these, half will be allocated to women and children who are fleeing family violence.

The budget also includes $1 billion for critical maintenance in up to 33,5000 existing homes as well as $527.6 million for emergency housing and homelessness support services.

Next, the budget includes $650.1 million to build essential worker housing to help ensure that those such as nurses, teachers, police officers, paramedics and firefighters are able to afford homes which are close to where they work.

This includes $450 million for a build-to-rent program aimed at key workers across Sydney along with $200.1 million for key health worker accommodation across rural and regional NSW.

Finally, the budget will support delivery of up to 30,000 homes in well-located areas as a result of release of surplus land for new housing.

This follows a government audit that has identified an initial 44 sites which are owned by government but are not being used and are suitable for housing.

The Government will explore options to accelerate the delivery of housing on surplus sites where housing is to be developed in partnership with the private sector.

(the budget contains a record investment in social housing)

Meanwhile, the budget will invest $116.5 billion in public infrastructure over four years.

This includes:

• $72.3 billion on transport and roads; including $13.7 billion for Sydney Metro West, $7.9 billion for Sydney Metro – Western Sydney Airport, $.7 billion for the Western Harbour Tunnel Upgrade, $3.3 billion for Sydney Metro City and Southwest, $3 billon for Connecting Sydney Roads, $527 million for the Newell Corridor Upgrade, $466 million for the Regional Roads Fund and $430 million for Parramatta Class Ferries.
• $13.8 billion for hospitals and healthcare facilities, including $1.3 billion for the new Bankstown Hospital, $1.0 billion for the Nepean Hospital and Integrated Ambulatory Services Stage 1 and 2, $740.0 million for the Liverpool Health and Academic Precinct, $669.8 million for the Statewide Mental Health Infrastructure Program and $438.0 million for the Shoalhaven Hospital Redevelopment.
• $9.8 billion for schools and educational facilities, including a $1.4 billion investment to fund planning and delivery of 34 new and upgraded schools; and
• $3.6 billion for energy infrastructure, which is primarily associated with the Transmission Acceleration Facility which aims to speed up delivery of power lines and other infrastructure by funding early work in renewable energy zones.

Whilst the housing and infrastructure commitments are welcome, the budget reveals that the state’s financial position has deteriorated.

When last year’s budget was released, the Government forecast a deficit of just under $8 billion in 2023/24 followed by surpluses from 2024/25 onward.

However, the 2023/24 deficit is now expected to come out at almost $10 billon, whilst deficits are now expected for the remainder of the four-year forward estimates period.

Meanwhile, net debt of $96.8 billon in 2022/23 was previously expected to be less than $120 billion by 2026/27 as at the last budget but is now expected to reach $139.5 billion or 14.2 percent of GDP by this point.

Furthermore, much of the money to pay for the increased housing expenditure will come from increases in revenue from stamp duty ($4.1 billon) and land tax ($5.6 billion) which are associated with higher dwelling values.

Indeed, the Government expects to raise $1.5 billon over four years by no longer indexing the land tax threshold and instead freezing it at 2024 levels – a measure which it believes will impact around 30,000 of the 180,000 people who currently pay land tax.

Building industry lobby groups cautiously welcomed the budget.

In a statement, Master Builders Association NSW Executive Director Brian Seidler said that the budget delivers a ‘much needed boost that will help to alleviate supply barriers in new home building’.Seidler especially welcomed the record investment in social housing, focus on build-to-rent projects, release of public land and speeding up of approval processes as well as infrastructure investments especially in Western Sydney and around the new airport.

But he cautioned that the building industry continues to face challenging operating conditions (on account of cost increases) and a desperate need to increase skills and training.

“Treasurer Daniel Mookhey has rightly put housing at the centre of the budget and recognised that until we build the homes and infrastructure NSW so desperately needs, we will struggle to combat broader economic and cost of living challenges …,” Seidler said.

“… Today’s Budget has a number of positive measures that will help our efforts concerning NSW’s housing accord targets.”

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