Both the Liberal and Labor parties have engaged in a spending war to sway voters for this week’s State Election. According to Fairfax, the Coalition has pledged around $28 billion in commitments, much of it in health and education, whereas Labor’s election pledges total nearly $24.0 billion.
So, no matter which party wins this weekend’s election, there will be a big increase in Budget expenditure.
Problem is, this spending binge will come as stamp duty receipts are crashing. In the year to January 2019, stamp duty receipts had declined by $1.4 billion (20%) over the past year and by $1.6 billion (22%) since stamp duty receipts peaked in October 2017:
Since then, Sydney dwelling values and transaction volumes have plummeted further, down 13.75% and 44% respectively since peak:
The pre-Election Budget outlook was hilariously optimistic with regards to stamp duty receipts, forecasting only a modest and temporary pullback:
This comes despite Sydney already experiencing the second worst housing correction on record, with more to come:
The NSW Budget has already been written down by $8 billion over the forward estimates, and this will certainly have to be revised much lower.
Given the massive spending commitments, the NSW Budget is facing a potential crisis.
unconventionaleconomist@hotmail.com
