Business groups have applauded $30 billion of infrastructure spending and business tax cuts announced in yesterday’s budgets for New South Wales and Queensland.
While big payroll tax cuts in NSW and smaller cuts in Queensland have grabbed most of the headlines, the big infrastructure spending packages will please business groups that have lobbied hard for increased spending.
Queensland Treasurer Andrew Fraser promised to spend $17 billion of capital works next year to boost government services such as roads, health services, electricity, water, ports and rail. South of the Tweed River, his NSW counterpart Michael Costa announced he will spend $13.9 billion next year and $57.6 billion over the next four years. Most of the money will go towards new trains, power, water and road upgrades.
The president of NSW Business Chamber, Ian Penfold, said the budget was good for business and would help insulate NSW from external economic pressures. “This is the trifecta for NSW – payroll tax cuts of $1.9 billion, a record $57 billion infrastructure budget and increased funding of key government services.”
Australian Industry Group’s Queensland director Chris Rodwell welcomed the government’s big infrastructure package and also applauded a review of the state’s property tax structure, which included reductions in stamp duty and land tax. The land tax threshold for individuals will decrease from $1200 to $500 for individuals and from $2250 to $1450 for companies. “A two speed economy is currently operating in Queensland and the reform to land tax and payroll tax will help ensure the state maintains its competitive edge as a place to do business.”
But completing infrastructure projects looms as big headache for officials in both states. Labour and raw materials costs continue to spiral and cost blowouts are already biting in Queensland, where the estimated cost of the state’s 20-year infrastructure plan has increased by $25 billion in the last 12 months to $100 billion.
The NSW Government expects economic growth to slip from 2.5% to 2% in 2008-09. The picture is more rosy in Queensland, where the state’s booming resources sector will help boost growth from 3.75% to 4.25%.
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