The Australian Taxpayers’ Alliance was disappointed, yet not surprised to watch the NSW budget, handed down by state Treasurer Dominic Perrottet on Wednesday, echo the mistakes of the federal and Victorian budgets with reckless spending and unnecessary deficits for years into the future.
“The improvement in the economy would have shown improvement in the budget balance if the government had been able to control their addiction to new spending projects,” said Australian Taxpayers’ Alliance Chief Economist Dr John Humphreys. ” The natural improvement would have seen the deficit shrink to $3 billion in 2021/22, and then return to surplus in 2022/23, which would have been an appropriate outcome given the circumstances. This was a massive lost opportunity.”
“Unfortunately, the government has continued to use COVID as an excuse to embark on an unprecedented spending spree, leading to an eye-watering deficit of $8.6 billion in 2021/22, and then continued unnecessary deficits in 2022/23 and 2023/24.” Dr Humphreys went on to explain that over 90% of the new budget spending was unrelated to the pandemic.
“There is little to say about tax policy. The government will cut stamp duties on electric vehicles, but this small tax cut is more than offset with several other small tax increases. Perhaps the best news is that the government has resisted the urge to follow Victoria’s example by introducing a series of large tax increases.”
Continuing to find elements of hope amidst an otherwise bleak document Dr Humphreys pointed to partial deregulation of the taxi industry as another small step forward in the budget. “Most of the credit for this change should go to Uber and other ride-share apps, and the deregulation should have happened decades ago, but better late than never.”
The Australian Taxpayers’ Alliance notes that state net debt is projected to increase substantially, from $19 billion up to $104 billion over five years. It is possible that the government is correct in its claims that this will be manageable if they can get the budget back under control and interest rates stay low. The realities of Treasurer Perrottet’s fifth budget indicate that those are both dangerous assumptions.