These numbers show why Sydney’s housing market is truly cooked

If you need any more proof that the property market is cooked in Sydney — last week crowned the world’s second most unaffordable city and a place where the median house price is $1.6m and climbing — then look no further than Tuesday’s NSW Budget.

For months we’ve been hearing Treasurer Daniel Mookhey slam the “absurd” GST carve-up that he says has robbed NSW of $11.9b over the next four years, and the pre-messaging ahead of Tuesday was that residents of the premier state would be foolish to expect any sugar.

And even though the bottom line was not quite so bleak as expected, Mr Mookhey referenced at least five times the decision by the Commonwealth Grants Commission to bring down the share of GST takings that NSW receives in a press conference during the budget lockup.

This injustice is the reason why the residents of Australia’s premier state aren’t getting the same juicy handouts in the form of car rego discounts and excessive power rebates that their neighbours to the north and south recently received in the Queensland and Victorian budgets.

Instead, the only substantial new sweetener unveiled in Mr Mookhey’s “careful” second budget was 30,000 new homes including $5.1b on social housing.

And what’s paying for this injection given the heavyweight assault from the Commonwealth? The out of control housing market delivering $10.7b more than what was predicted six months ago, including $3.7b in land tax revenue.

Since he’s a politician, Mr Mookhey has been very happy to be able to keep up his prolonged attack on the GST changes and has blamed the decision for the current threat to the State’s AAA credit rating by Moody’s Investor Service due to successive deficit.

A decision in March to cut the NSW take from 92c of every $1 of GST earnings to 87c has driven the State’s share to its lowest levels since the introduction of the tax in 2000 and NSW Treasury calculations have put the cost at $11.9b over forward estimates.

The Federal government and some economists have cast doubt on the maths used but Mr Mookhey was at pains to point out that even the States that are now outstripping NSW in the GST take are on board with his numbers.

“The fact that we have other states agreeing with NSW, that NSW is on track to get its lowest share of GST since after the introduction of the GST means that, I think that the forecast methodology that is being applied by Treasury... remains accurate,” he said.

So aggrieved has he been that Mr Mookhey used his budget speech to lob another grenade at Victoria, which due to its dud economy has been treated far more generously in the GST carve-up.

“If NSW was still getting back the 92 cents from every dollar in GST paid in the state, the budget would be returning to surplus next year,” he said in his budget speech.

“In fact — NSW could have expected cumulative surpluses over the forward estimates worth $1.9b.

“The Grants Commission has cost NSW more in lost revenue than COVID-19 did…

“Here is how to appreciate the magnitude of the Commission’s decision for our essential services: $11.9b is enough money to hire an additional 16,000 police officers. Here is why I say the system is unfair. For every dollar that Victoria will give to the smaller states next year, NSW will give upwards of four.

“We refuse to respond to the Grant Commission’s absurdity by imposing austerity on NSW. That would lead to misery.”

And if the whole GST deflection didn’t hit hard enough, Mr Mookhey was also delighted to be able to take a swing at the “callous” spending of his predecessor Matt Kean for the record spending that he was still working to rectify.

“The fact is that my predecessor was the biggest spending treasurer Australia has had since the 1970s of any political persuasion, of any government,” he said.

“In one budget, he spent more than most treasurers spend in four and that is part of the reason why NSW has had an explosive level of expense growth, an explosive level of debt growth, all of which took place at a time of high inflation.

“The fact that I have been able to demonstrate how you can get the balance right between making the investments we need to in our critical services at the same time we’re stabilising the state finances, at the same time we’re taking pressure out of the economy, demonstrates that you can be balanced when you’re having to make tough decisions.”

Interestingly, Mr Kean chose budget Tuesday to unveil the end of his long political career, making no apologies for the timing of his announcement.

“What I wanted to do is make sure you’re aware of what’s going on as soon as possible. That’s why I’m standing here today,” he told reporters.

“But nothing will overshadow the most shocking budget in modern history.

“Daniel Mookhey has broken the budget. He’s left us with a decade of deficits. He’s blamed everyone but himself. I mean, the next excuse we’re going to hear is: ‘The dog ate my surplus’.”