The New South Wales Government yesterday released the final result for the 2013-14 State Budget, which revealed a surplus of $1.247 billion driven by a huge lift in stamp duty receipts on the back of the booming housing market. The result is a huge turnaround from the $329 million deficit originally forecast for 2013-14.
The General Government Sector Budget Result was a surplus of $1.2 billion, and the Net Operating Balance of the Total State Sector was a surplus of $2.8 billion.
The improvement over the original 2013-14 Budget forecast largely reflected stronger than anticipated state revenues and an unexpected additional $1.2 billion in Commonwealth grants, including significant amounts re-profiled from 2014-15.
Revenues in 2013-14 benefited from additional one-off monies from the Commonwealth Government for infrastructure projects and an increase in stamp duty revenue as a result of strong growth in the residential and commercial property sectors and receipts from large one-off business asset sale and lease transactions.
As a result, General Government Sector revenues grew by 9.8 per cent in the year and expenses grew by 4.6 per cent from 2012-13.
General Government Sector revenues were $66,005 million, $3,432 million better than the original Budget. This is largely driven by higher stamp duty revenue as a result of strengthening growth in the property sector during the year, as well as a significant prepayment of Commonwealth National Partnership grants, principally for road projects…
Taxation was $840 million better than the original Budget. This was largely due to an increase in stamp duty of $1.1 billion due to stronger than expected growth in the residential and commercial sectors, and receipts from large one-off business asset sales and lease transactions. This was offset by fewer than expected land tax assessments ($191 million) and lower payroll tax receipts ($248 million). The lower payroll tax receipts reflected weaker than expected wage and employment growth…
The positive effect of the booming New South Wales housing market is clearly illustrated in the next chart, which plots both the number of housing transfers and stamp duty receipts on a rolling annual basis:
Incredibly, the number of transfers rose by 37,950 in the year to June 2014, whereas the stamp duty receipts on residential transfers increased by a whopping $1,426 million (see next chart).
I hope the New South Wales Government enjoys the ride, because the inevitable downturn will wreak havoc on the state’s finances.