“There are signs that deteriorating conditions in the housing market are having a stronger-than-expected negative impact on consumer spending and dwelling approvals,” Treasury said.
A property obsession
In proof that Sydneysiders really are obsessed with property prices, the Treasury has downgraded its growth forecast for this financial year from 2.75 per cent, the expected national average, by 25 basis points. The cut may sound small but is a fairly hefty trim in just two months.
To maintain growth, the state economy will have to rely more on businesses buying new machinery and selling products overseas and less on people buying houses, apartments and things to put inside them.
The shift in economic emphasis makes it even more important that the next government can drive business investment.
The immediate budgetary consequences aren’t huge. One of only two state budget surpluses (the other is in Tasmania) will be about a quarter of a billion dollars smaller this year, which isn’t so bad given Victoria, Queensland and Western Australia each have more than $20 billion in debt.
But the minor slowdown has given the Labor opposition an extra line of attack in the surprisingly close state election campaign, which has two-and-a-half weeks left.
Alternative narrative
Labor’s treasury spokesman, Ryan Park, is trying to create the impression that the government has a budget hole that will need to be filled by selling more government assets.
Mr Park links falling stamp duty from fewer property sales with the state-funded reconstruction of Allianz Stadium and refurbishment of ANZ Stadium at Sydney Olympic Park. Together, he asserts, they create a fiscal gap that will be filled by privatisation.
“We have a government who is … obsessed with giving away our income-producing assets at a time where men and women right across NSW are crying for their schools and their hospitals to be improved and upgraded,” Mr Park said Tuesday.
Of course, the $24 billion politically contested sale of state assets is a reason Sydney and the rest of NSW can afford a $90 billion four-year infrastructure upgrade that includes new rail lines, highways, hospitals and schools.
“Everywhere you look, there is something happening in NSW,” said Treasurer Dominic Perrottet about 30 minutes after Mr Park’s press conference.
The business community would love more privatisations, which could raise more money for investment in civic (instead of commercial) services. But Mr Perrottet wants the matter out the political debate.
“The government has no plans in that space at all,” he said.
As for the budget hole, a provision for rebuilding Allianz Stadium was included in the last budget, Mr Perrottet said, which means it is reflected into the surplus forecasts signed off by Treasury independently of the government this week.
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