NSW Budget 2024 Response: A Mileist Budget for NSW

Dr John Humphreys
30 March 2024

The NSW budget situation has improved over the last year, but this slight improvement hides a large and growing underlying problem. If we remain on our current path, we are heading for economic stagnation in the short-term and a debt crisis in the medium-term.

The government faces the choice between avoiding hard decisions and sleep walking into economic decline, or else making hard decisions now (some of which may not be popular) and setting NSW up for a prosperous future. That will mean cutting back on non-essential government spending, making the health and education sectors more efficient and sustainable, and cutting taxes on productive behaviour to kick-start productivity.

The following submission is split into the following sections:

PROBLEMS
SPENDING
REFORM
GOVERNANCE
APPENDICES

1.1 PROBLEM: Economic stagnation from poor microeconomic policy

Australia is already in a per-capita recession, with the last 12 months seeing a continuous decline in GDP per person. Adding new people to the country means the total GDP number inches upwards, but that is irrelevant for people’s living standards.

Graph 1: Australia’s GDP/capita recession

While this particular recession will hopefully end soon, we have reasons to be worried about our economic future. Prosperity comes from productivity, and the sad truth is that Australia’s productivity levels have stalled over the last eight years.

Graph 2: Australia’s stagnant productivity since 2016

While disappointing and worrying, the stalling of Australia’s productivity should not be a surprise. For the last 20 years Australian governments at both the state and federal level, and from both major parties, have given up on serious productivity reform. They repeat the word “productivity” at every election and budget, but meanwhile taxes continue to drift upwards, thousands of pages of burdensome new regulations are added every year, and energy continues to become less reliable and more expensive.

We desperately need a renewed and serious productivity agenda if we want sustained and sustainable economic growth into the future. Many of the needed reforms are the responsibility of the federal government, but there are some important steps that the NSW state government can take to help boost productivity:

Reduce the artificially high costs on new and small businesses by increasing the threshold at which payroll tax kicks in and reducing business regulations;
Reduce the artificially high cost of housing by increasing the supply of new homes entering the market and removing stamp duty on new homes; and
Reduce the artificially high transport costs for people living and working outside the inner suburbs of Sydney by ending the war on cars.

These microeconomic policies will create a direct benefit to small business, drivers, renters, and first home buyers – but crucially they will also help drive future productivity, which is the only sustainable driver of higher wages and lower prices. More details are provided in section 3 below.

1.2 PROBLEM: Coming debt crisis from poor macroeconomic policy

As mentioned above, the risk of poor microeconomic policy is economic stagnation. In contrast, the risk of poor macroeconomic management is a drift towards a debt crisis. This risk is particularly insidious because the danger builds slowly and can be hard to notice until it’s too late, and yet the consequences can be dire.

The fiscal situation in NSW is worse than it looks for three reasons:

The standard practice at a state level is to focus on the “net operating balance” when reporting on the budget. This metric hides the truth that NSW has a large fiscal (and cash) deficit.
When reporting on debt the standard practice is to focus on “net debt”, but that metric doesn’t include all liabilities (such as bureaucrat superannuation). The more accurate measure of state debt is “net financial liabilities”, and that shows a more perilous situation.
Even if we did address the fiscal deficit and state liabilities, underlying pressures on the state budget are large and baked into the current system. The ageing population and rising demand for health care mean that the status quo is unsustainable.

Last year the NSW government cheerfully announced that they expected the budget to achieve a small surplus of $0.8 billion in 2024/25. Small hypothetical surpluses in the future have a nasty habit of disappearing, but putting aside any scepticism, the government’s own numbers show that the fiscal balance is actually forecast to be a deficit of $10 billion!¹

This stark difference is not confined to that one year. As shown in Graph 3 below, the net operating balance (blue line) is in surplus for most of the last 30 years, while the fiscal balance (orange line) has remained stubbornly in deficit for most of that time.

Graph 3: Comparing different budget balances (% of Gross State Product)

The difference between the two numbers comes down to capital spending. The widely reported net operating balance does not include money spent on capital assets while the fiscal balance (and the underlying cash balance) includes spending on non-financial assets. Suffice to say, the money used for capital spending still needs to come from somewhere, so the fiscal balance and the underlying cash balance are more accurate indicators of the budget position, which is why they are used by the federal government.²

The 2023 NSW budget forecast the fiscal deficit over the forward estimates (2023/24 to 2026/27) to be a whopping $45 billion, with no surplus in sight, and that was before the drop in expected GST revenue. The logical consequence is that state government debt continues to rise. The state reported no net debt in June 2018, which rose to $74.9 billion (9.8% of GSP) in June 2023 and is expected to be $101 billion (12.3% of GSP) by June 2025.

While commonly reported, the net debt figure hides the true size of the problem because it doesn’t factor in all state liabilities, most importantly including superannuation payments for bureaucrats. Using the more accurate measure of “net financial liabilities” shows that NSW already had debt of $69.1 billion (11.4% of GSP) in June 2018 despite reporting no net debt, and that rose to $165.5 billion (21.5% of GSP) in June 2023 and is expected to be $194.9 billion (23.7% of GSP) by June 2025.³

Graph 4: Different measures of NSW state debt (% of Gross State Product)

Debt doves will respond that the above-mentioned debt levels are sustainable and that we should not be worried. They are half correct – the current debt is manageable. Implicit in this argument is the idea that we can blithely stumble up to the edge of a debt cliff and then reverse course at the last minute. Such thinking is painfully naïve.

To continue with the debt cliff metaphor, the truth is that we can never know exactly what level of debt is unsustainable, so we are stumbling towards the cliff edge blindfolded. Further, the government of the day does not have perfect control over debt fluctuations, so we are stumbling towards the cliff edge both blindfolded and drunk. It may be true that we are not yet at the edge, but obviously we would be wise to stop stumbling in that direction.

Another refrain from debt apologists is that the rising state debt is benign because the borrowing has been largely used to fund productive capital assets. Again, this argument is only half correct. From a financial perspective, the fact that some government projects are productive is only relevant if the government plans to run them like a profitable business. In most cases that simply isn’t true. Debt apologists will argue that the unprofitable capital may spark a productivity boom with second order benefits to the budget, yet the stagnant levels of productivity show that such a strategy is not working. There is no avoiding the conclusion that NSW debt is a growing problem.

Changing direction on debt is not an easy task. Even if we look past the common habit of politicians to eagerly champion new spending projects (especially in the lead up to elections), the budget faces automatic pressures that will drive up the deficit. The ageing of the population and rising demand for expensive health services mean that NSW government spending is growing faster than the NSW economy. Obviously, that is unsustainable.

This is not a new problem and it’s not unique to NSW. Ageing population and shrinking birth rates are being noticed across most of the world, with countries such as Japan and Russia already seeing population declines, and a growing chorus of researchers worried about the wide-ranging implications. The 2021 NSW Intergenerational Report forecasts that NSW government health spending will rise by 5.4% each year, much faster than any realistic estimate for economic growth. This situation will be made even worse if politicians continue adding new spending projects, the ageing population undermines the tax base, or productivity remains stagnant. The consequence will be ever-rising debt and deficits.

We cannot know exactly when the debt will become unsustainable, but if it continues to climb then eventually the situation will spiral out of control. Interest payments will make up a growing part of government spending, causing the government to borrow more simply to pay the interest. Government debt will be downgraded, making it harder for the state to borrow money, which drives up interest rates further. The debt crisis could easily trigger a financial crisis, cause a sudden cut to government spending, spill-over into other states or the federal government, and spark a broader economic and political crisis.

These are the sort of upheavals that can undo a prosperous society. At the beginning of the 20th century Argentina was one of the richest countries in the world, but a series of financial disasters have seen the country drop to a middle-income country with average incomes 80% lower than Australia. That is a cautionary tale about what we should aim to avoid.

1.3 PROBLEM: Three paths forward

Theoretically there are only three paths forward for the NSW budget:

We continue stumbling drunk and blindfolded towards disaster, accept the inevitable collapse, and hope that something better is built from the ashes;
Attempt to increase taxes to pay for the rising costs, but that is effectively impossible given the current federal-state relations, and even if possible it would be unwise as it would further decrease productivity and prosperity; or
Get government spending under control, so that we can both balance the budget and allow for targeted tax cuts that will drive greater prosperity for all.

The only responsible course of action is to reduce government spending, and that is the path advocated by the Libertarian Party.

The high tax option is neither possible nor desirable. As outlined in section 1.1 above, productivity levels are already stagnant across Australia, and that is largely caused by the large and rising levels of tax and regulation. Most of the rising tax burden in Australia comes from automatic tax increases at the federal level, with bracket creep and other structural factors causing tax revenue to increase by roughly $10 billion every year over-and-above the normal increase we would expect from inflation and population increase. Adding further tax increases will compound these productivity problems. Boosting productivity will require that we head in the other direction and look for ways to lower the tax burden.

The above tax debate in Australia is important, but realistically that debate is mostly relevant for the federal government. Even if the NSW government wanted to pursue an economy-killing agenda of stifling taxes, the mundane reality of the situation is that all state governments (including NSW) simply don’t have access to growth taxes. This makes the above discussion somewhat moot, as the NSW government doesn’t even have the hypothetical option of taxing themselves out of trouble.

That only leaves the third option – getting government spending under control.

While necessary, we accept that reducing government spending is politically difficult. Beneficiaries of government schemes have a large and concentrated benefit, while the costs are dispersed widely among the general public. This means that advocates for big government have both the means and the incentive to run large political campaigns to defend their handout, and they will be eagerly supported by the powerful bureaucratic class. Most politicians take the safe option, and government spending spirals upwards.

Nonetheless, cuts in government spending are inevitable. Either they will be done carefully and thoughtfully by a responsible government, or they will be suddenly forced on society after years of stagnation followed by a crisis. The following sections outline some suggestions for how to get government spending under control.

2.1 SPENDING: Focus on core issues; scrap the rest

The state government has grown into a massive organisation that intervenes in nearly all parts of our life. This is a mistake.

By trying to do everything, the state ends up doing nothing properly, and yet continues to grow larger and more powerful. When a government project fails, that is taken as evidence that they need more funding; when a government project succeeds, that is taken as evidence that they need more funding. The result is a sprawling bureaucracy that employs hundreds of thousands of people and controls large chunks of our society, and yet remains largely unaccountable.

The government should focus on a small number of key tasks:

Ensure people have access to hospitals and basic medical care;
Assist parents with the cost of educating their children;
Maintain law and order; and
Coordinate infrastructure projects.

The proposals in this paper do not cut funding for health, education, or police. That said, the approach taken with these core functions needs to be updated so that they become fiscally sustainable and more efficient in providing high quality outcomes. Most other government tasks should be wound back or ended.

Afuera!

2.2 SPENDING: Sustainable healthcare

There are two truisms about healthcare policy in NSW (and across Australia) – the current system is unsustainable and must be changed, and yet health reform is considered an untouchable “third rail” of politics and so change is near-impossible.

This situation is echoed in a quote by the greatest living economist, Thomas Sowell:

The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.

Health spending makes up the largest (by far) spending priority in the NSW budget. This spending is growing at an unsustainable level, and yet there has been no real effort to get health spending under control, since any attempt at reform will be met with a withering political scare campaign and spooked voters.

This paper offers a proposal that aims to achieve all the following:

Ensure people still have free access to all the services they have come to expect;
Improve healthcare quality through choice & competition; and
Create a healthcare funding model that is fiscally sustainable in the long run.

This would be achieved by converting current hospitals (and health regions) into mutual societies that charge a fee for membership. NSW residents would then be issued with a health voucher that is enough to pay for membership, which ensures they can continue to get the exact same free services they get today.

At first glance this reform may seem underwhelming. Not much would change in the short term, but this new approach would put the NSW healthcare system on a new path.

Local control over hospitals = since NSW residents are now members of their local hospital (or health region) they would have a direct say in how their hospital is managed. Members could vote on their local hospital board or nominate to join the board themselves. This direct democratic feedback would improve accountability, and the local control means that each hospital can make the best decisions for their specific situation.
Competition and choice = people would have the option to join any nearby hospital that they can realistically access for regular appointments. Each hospital would also have the option to offer different membership levels, with a required minimum level that matches what exists today, but the possibility of a range of additional options. This gives people more choice, and that would create competitive pressure for hospitals to improve and innovate to attract more members. All hospitals would still be required to provide services to all people in an emergency or when needed.⁴
Better targeting = by directly funding people to join the hospital (instead of the hospital itself) it becomes possible to better target the health subsidy to those most in need. The health voucher could be higher for people in rural and remote regions, and lower for people with high incomes, though the value of the voucher should only be reduced slowly for high-income people to ensure that it does not dramatically increase their effective marginal tax rate.
More sustainable = by means-testing the health voucher, the healthcare system becomes more sustainable. As incomes rise over time, some people with the capacity to pay will take out hospital membership at a level higher than the voucher. This would mean more private money goes to the hospital system while still ensuring that those most in need are able to get all the same services that they expect under the current system.

This reform would fundamentally shift the decision-making power from the centralised state bureaucracy down to the local hospital. While the decentralised system would still require administrators and bureaucrats at the hospitals, it would no longer make sense to have a large and centralised bureaucracy in Sydney meddling in choices of those hospitals. The role of the NSW government would shift from directly controlling hospitals to simply providing health vouchers and setting minimum standards.

2.3 SPENDING: Improve education through choice

Education spending makes up the 2nd largest spending area for the NSW government, though it doesn’t have the same unsustainable growth rates as exist with the healthcare system. Nonetheless, the current education system shares some of the same problems, with excessive centralisation and limited choice leading to poor outcomes and unhappy parents.

The voucher solution outlined above for the healthcare system is arguably even more applicable to education. Indeed, school vouchers have been at the centre of education policy debates for several decades now, and there is a large and growing body of evidence to show that they produce results, especially for high-risk students.

NSW schools should be converted into “independent public schools”. These would be run as mutual associations controlled by their members/customers, who are the parents of the children who attend that school. Those parents should have the option to vote on the board or nominate for the board themselves, and the local school board should have the freedom to make their own decisions. This local control and direct democratic feedback will improve accountability and allow the school to make the best decisions for their circumstances.

Parents would receive a voucher that is sufficient to cover the cost at an independent public school, ensuring that no parents will be worse off after this reform. Over time there would be a range of different schooling options provided, including some cheaper schools charging less than the voucher (leaving money left over for extra-curricular activities), and some schools offering extra services at higher fees. As with the health voucher, the education voucher can be targeted to people with greater need (such as those in rural and remote areas) and have a very gradual means-test so that high-income people receive a smaller voucher.

Unlike the hospital voucher, which had to be used to buy hospital membership at a fixed minimum level, the education voucher should be given to all parents of school-age children, who can then make their own decision about whether to join an independent public school, private school, for-profit school, or pursue home-schooling.

One difficulty with this policy is that school funding in Australia is currently split between both state and federal governments. The ideal solution is to fix our broken system of federation (discussed later), and the second-best option would be for the federal government to provide education block grants to the states and then NSW could put that money towards the education voucher. In the meantime, to ensure this reform does not create an unaffordable increase in education spending, the NSW government should introduce a system to claw-back the value of the voucher when it is used at schools that receive significant federal government funding.

Beyond childhood education, TAFE NSW should be converted into a government business that operates without government subsidy. People unemployed for over three months should be given access to a “continuing education voucher” that can be spent acquiring recognised qualifications, either at TAFE or any other education provider.

2.4 SPENDING: Protecting life, liberty and property

Perhaps the most essential function for the NSW government is to maintain a justice system that protects life, liberty, and property. This paper does not propose to increase or decrease funding to the police, but rather to change their priorities away from victimless crimes & misdemeanours towards violent crimes & theft.

Good people are no longer pleased to see a police officer, because of the legitimate worry that the police are focused on giving fines for misdemeanours and monitoring our bad habits, rather than keeping the peace. This creates a growing tension between the police and public, which makes life more difficult for everybody except violent criminals.

The government should rebalance our justice system so that there is a lighter touch used against the vast majority of peaceful people, stricter penalties against people who genuinely are a threat to peace and prosperity, and a chance for redemption for those who can be redeemed. This should include:

Legalise free speech, so that the police and courts aren’t expected to enforce speech codes and defend hurt feelings;
Legalise people managing their own land, so that the police aren’t chasing down property owners for removing or planting the wrong tree;
Legalise cannabis, so that we aren’t wasting everybody’s time in a futile and expensive attempt to ban a widely used drug;
Legalise vaping, so that police aren’t wasting their time pushing vapers into the black market or back to more harmful cigarettes;
Legalise backyard businesses, so the police aren’t shutting down the kids’ lemonade stands, hassling productive people, or preventing useful neighbourhood services;
Introduce a constitutional amendment to ban unreasonable search and seizure;
Police should focus on nudging better behaviour before resorting to fines when it comes to misdemeanours and victimless crimes, with the goal being fewer fines; and
Increase speed limits and remove unmanned government cameras to decrease the number of people being caught in the road revenue-raising traps.

On the other side:

Increase penalties for physical assault and theft, not as a form of retribution against current criminals, but rather to change the incentives for future criminals;
Allow people to use all force necessary to defend themselves, both because that is morally right, and also because it creates a disincentive for criminals;
Police should always side with a person being harassed or assaulted in public, rather than forcing the victim to “move on” in the face of an angry crowd;
Require people who steal or destroy property to compensate their victims; and
First-time offenders should be given the opportunity to pursue work-based punishments that add value to the community and build skills and work habits.

2.5 SPENDING: Efficient infrastructure

The remaining core role for the NSW government is infrastructure, and specifically to ensure we have access to reliable energy, water, and transport. Unlike most of the economy, these sectors cannot easily be improved through the usual approach of increasing choice and competition since they are natural monopolies.

If these sectors are run as private monopolies, then they will be efficiently supplied, but at an inefficiently high price to consumers. If they are run by government then the price can theoretically be set more accurately, but the result will be cost blow-outs, low quality, or both. This has been the experience in NSW, with infrastructure projects regularly announced with much political fanfare and then subsequently running over-budget, over-time, and with variable quality.

There is no silver bullet, but there are ways to improve efficiency and effectiveness:

Conduct an audit into infrastructure project planning and costing methods, with the goal of improving cost and time forecasts;
Switch to reporting the fiscal balance (or underlying cash balance) in the budget so that infrastructure spending is included in the budget bottom line instead of being hidden “off budget” where cost blow-outs receive less scrutiny;
Set aside a larger contingency reserve for all infrastructure projects (until forecasts improve) and include that reserve in the total cost assessment;
Move all existing infrastructure and new projects (except toll-free roads) into public non-financial corporations for everyday management, with the role of government limited to setting priorities, injecting capital, and facilitating new projects ⁵;
Only fund new infrastructure projects if they:
1. cannot be funded directly by the private or PNFC sectors ⁶;
2. pass an independent benefit-cost assessment; and
3. are affordable within the budget.

When it comes to energy infrastructure, the government should be narrowly focused on facilitating (though not owning) cheap and reliable baseload power, such as coal-fired, gas-fired, and nuclear power generators. The final decision about nuclear energy should be left up to investors, but the NSW government can help by ensuring there are no bureaucratic, legal, or coordination barriers. Energy is too important to be left up to political fads, and the moral vanity projects motivated by global boiling hysteria should be ended.

2.6 SPENDING: Cut back on government subsidies

While this paper maintains spending on health, education & justice (as outlined above), there are many other areas of government spending that should be scaled back or removed.

Government advertising – Afuera!

Should be completely removed, except for a central website that provides transparent information about all government activities.

Transport subsidies – Afuera!

End the subsidies to public transport. This will increase the cost of transport for people who use trains, buses, and ferries (mostly in Sydney), but it will end the inefficient and unjust fleecing of non-users (mostly rural and regional).
Some of the funds previously used to subsidise transport should be provided to all NSW residents as a transport voucher, which can be used to pay for mass transit, road tolls, private vehicle costs, or any other purpose. Apply a light means test.
Transport services should not be run by a government agency – but rather by self-funded government businesses (i.e. NFPCs) or the private sector. The infrastructure assets used by each transport provider should be owned by that transport provider.⁷
Transport providers may still apply to the Department of Infrastructure for capital injections and assistance to build new infrastructure projects.

Environment activism – Afuera!

Remove all climate change related subsidies, schemes, payments, projects & grants.
Most genuine environmental problems are about proper enforcement of clearly defined property rights. This should be managed through a “Property Rights” section within the Premier’s Department.
Replace most other environmental spending with block grants paid to local councils in proportion to their population.

Industry policy – Afuera!

It is an open secret that industry policy doesn’t work. The primary reason it exists is to allow politicians to transfer money to concentrated groups of people who will then remain politically loyal. Subsidies should never be paid directly to any industry.
If the government wants to address cost of living for residents, that should be done by giving funds or a voucher directly to the residents and allowing them to make their own spending decisions.

2.7 SPENDING: Cut back on government agencies

State government departments (sometimes called “portfolios”) should be scaled back from the current 12 down to five departments. For more detail see the Appendix A, but briefly the five departments should be:

Premier
Finance
Justice
Infrastructure
Cost of living (financial support for health, education & transport)

This would mean abolishing most of the departments that currently exist, including:

Cabinet = combined back into “Premier’s Department”
Health = health voucher managed by “Cost of Living”
Education = education voucher managed by “Cost of Living”
Transport = assets in “Infrastructure” or PNFCs, and voucher in “Cost of Living”, but much of this spending should be abolished and replaced with user-pays
Environment = assets in “Infrastructure”, some regulation moved to the property rights section of “Premier”, but much of this spending should be abolished
Regional NSW = partly move to “Infrastructure”, but mostly abolished
Enterprise = partly moved to “Finance” or “Premier”, but mostly abolished
Customer Service = moved to “Cost of Living” or “Finance” or abolished

In addition to the 12 current departments, there are also 24 executive agencies, 21 separate agencies, 17 government businesses, 4 government banks, 50 more agencies listed in the NSW Budget, and dozens more set up within the departments… together creating an impenetrable patchwork of suffocating bureaucracy. Some of these agencies should remain, some should be merged or have their tasks transferred to other agencies, a few should be converted into PNFCs, but many should simply be shut down. Afuera!

Appendix B to this submission provides some initial suggestions for agencies that should be abolished, including the Public Service Commission, Destination NSW, Multicultural NSW, Create NSW, and the Environmental Trust. A forensic review of the hundreds of government agencies would quickly find dozens more, and we recommend such a review. An eye-wateringly long list of government agencies (Appendix C) should be at least halved.

The category of “separate public service agencies” exists to allow some government agencies to operate with limited political interference. While this sounds appealing, the danger of this model is that it creates centres of state power that have little accountability. These agencies should either be converted into normal government agencies, included in government departments, or shut down.

The above changes would involve a significant reduction in the size of the NSW bureaucracy. Such a change is nearly impossible because of the massive power of the politically connected and wealthy bureaucratic class. This fact simply reenforces the need for drastic change, because it should be intolerable to have a bureaucratic ruling class with that much power – and given their power is only increasing, the task will only become more difficult the longer we wait.⁸

In particular, there should be a dramatic decrease in the number of bureaucrats whose job is to proactively investigate the public, develop new policies, or running organisations. Investigations should only occur if there is a complaint, the role of policy development should be done by politicians and their staff and organisations are best run by private business, non-profits, or state businesses (PNFCs).

What departments and agencies that remain should have their offices relocated to regional centres outside of Sydney. This will both decrease their social access to political power and help to share the economic impact of bureaucratic wages with the regions.

3.1 REFORM: Cut the cost of housing

The sustained steep increase in rents and house prices is causing financial and social stress. Some price rises are natural and inevitable, but in the case of housing the high prices are an artificial result of supply bottlenecks and high levels of urbanisation.

The most direct way that the NSW government can boost supply is by reducing the cost of putting a new house on the market by removing stamp duty on newly built houses. The focus should be on new houses, not new homebuyers, as that is the most efficient way of increasing supply to the benefit of homebuyers and renters. This will have two consequences:

Most obviously, the total cost of buying a newly built house will decrease. Given that old houses sell on the same market as new houses, this will also put downward pressure in all house prices, even though old house sales will continue to have stamp duty applied.⁹
The increased demand for new houses (vis-à-vis old houses) will push new house prices up slightly, though less than the total new house cost would be without the stamp duty exemption. This will increase the return on new housing development, and therefore increase the incentive to build new houses.

Secondly, the NSW government should introduce a modified version of the Cameron Murray’s HouseMate proposal ¹⁰. Specifically, the NSW government should begin housing development projects on current state-owned land, and then sell government houses (including those already owned by the NSW Land and Housing Corporation) at discounted prices to young families. The NSW government should also lobby the federal government to accept the HouseMate proposal of allowing people access to their superannuation balance to fund their house deposit and loan repayments ¹¹. We reject the idea of acquiring additional state land for this project or the provision of government loans.

Third, as outlined below in section 3.3, we propose a rebalancing of transport policy that removes the bias towards Sydney and makes it more affordable for families to live comfortably in rural and regional NSW. If some people respond to these changing incentives, then that will marginally shift housing demand away from unaffordable Sydney.

Finally, since many of the barriers to increasing house supply come from local councils, this paper recommends fundamental reform to how councils operate. As outlined in section 4.1 below, we suggest removing the power of councils to prevent greenfield developments, and linking council “infrastructure & environment” funding to their population levels so that they have an incentive (though not requirement) to allow higher density living.

3.2 REFORM: Cut costs for small & new business

The payroll tax threshold should be increased so that more small businesses are exempt from the payroll tax system. The NSW payroll threshold is currently the 3rd worst out of eight Australian jurisdictions at only $1.2 million ¹². This means that the NSW payroll tax system catches many new and small businesses. The payroll tax threshold should be raised to at least $2 million.

In addition, business regulation should be made voluntary for micro-businesses with fewer than five employees. These businesses should be required to prominently display their regulatory status so that consumers can make an informed decision, but they should not be fined or shut down by the government based on regulatory concerns until/unless they grow larger than micro-business size. This change would effectively legalise things such as the cliché childhood lemonade stand, backyard businesses, and pop-up market stalls.

Cutting taxes and regulations for small business is not just a policy to help small business owners. By removing barriers to entry, this policy encourages more people to start businesses and ensures more small businesses can stay open. This creates more choice for consumers, more job opportunities for workers, and more competition in the market which drives productivity and puts downward pressure on prices.

This payroll tax reform also helps to offset the unequal burden of regulation, which have a disproportionately larger impact on small businesses as compared with large businesses.

3.3 REFORM: Cut the cost of driving & end the war on cars

Having independent transport such as a car or motorbike gives people a degree of freedom and independence that cannot be achieved solely through public transport. It is also the only option for the many people who don’t live near mass transit. Despite this, previous governments from both sides of politics have waged a subtle but continuous war on cars as they steadily raise the costs of driving while subsidising alternatives. This should end.

Ending the war on cars would involve the following policies:

Abolish stamp duty on car purchases ($1.1 billion)
Abolish the annual registration fee on vehicles ($3.1 billion)
Remove the parking space levy ($0.1 billion)
Remove private transport operators levy ($0.1 billion)
Increase speed limits
Remove unmanned traffic cameras

The only remaining car-related cost from the NSW government should be road tolls in Sydney, which provide a return on road investments and help to manage congestion.

As outlined in section 2.6 above, we proposal a removal of subsidies for mass transit (mostly in Sydney), and instead a transport voucher that could be spent on any type of transport, including petrol and/or tolls.

3.4 REFORM: Lower taxes

The above three sections have already argued for a series of tax cuts, including:

Increase the payroll tax threshold to support small business
Remove stamp duty on new homes to help homebuyers & renters
Remove various car-related taxes and fees to help drivers

The other significant tax cut promoted in this paper is the removal of the insurance tax. Insurance is an unambiguous good, and there is a strong case that people are already under-insured. Removing the insurance duty ($1.6 billion) and the health insurance levy ($0.2 billion) will allow people to make the best insurance decision for themselves without being penalised by the government.

Most government taxes and fees are not hypothecated towards specific spending, and given the fungibility of money, any nominal hypothecation is functionally irrelevant. Therefore, the names of all taxes and levies should be related solely to the nature of the tax, and not dressed up with dishonest sympathetic-sounding names.

Most taxes should be reduced or abolished, but there are a few productive reforms that would have the side-effect of increasing government revenue:

Legalising vapes would shift the vaping industry from the black market into a regulated and taxable market to the benefit of consumers, legal producers & sellers, and the government budget ¹³;
Moving undeveloped land from local councils to the state government (as suggested in section 4.1 below) and applying state land tax in place of council rates will increase state government revenue;
Less regulation on gambling will increase gambling tax revenue; and
Require state-owned universities to pay a dividend back to the state government.

The NSW government should abandon the false promise of using sovereign wealth funds (such as NSW Generations Fund) as source of ongoing revenue. These funds only exist due to previous overtaxing or borrowing, are a risky and inefficient way to fund government spending, and they concentrate too much economic power in the hands of already over-powered bureaucrats. Government funds should be wound down by requiring 200% of annual returns be returned to the budget every year until the funds are empty.

A large part of NSW revenue comes from the federal government and is therefore out of the hands of the NSW government. As outlined in section 4.3 below, this paper argues that the NSW government should engage with the federal government to regain its financial autonomy, though we recognise that is a long-term project.

4.1 GOVERNANCE: Improving local councils

Australia doesn’t really have three levels of government. Local councils are basically just bureaucratic arms of the state government, imposing additional costs and hassles while mostly failing to add value.

The only good rationale for having local councils is to provide a community-level governance structure to coordinate community level problems. Such an idea has merit, but this is not achieved by the status quo, and it will be even less likely with amalgamated super-councils.

If local councils are to remain, they should be reconceptualised as a type of body corporate for local communities, with council rates being equivalent to body corporate fees. In many cases that will mean that local councils should become even smaller. Any geographically contiguous area of a minimum size (including intentional communities and large pre-existing body corporates) should be allowed to split from their current council and manage their own governance structure if they can show supermajority support amongst the property owners in that area.

Like a body corporate, decisions about the council budget should be decided at a council AGM, so that all ratepayers can have a direct vote on the budget. Each property in the council should come with associated rights of council membership, as determined by the council. Councils should also have the option to take primary responsibility for maintaining safety and enforcing regulations in their area by electing or appointing their own sheriff.¹⁴

The area of local council control should be limited to developed land and council-run green spaces, and should not include federal land, state land, or undeveloped private land. The purpose of local councils should be to provide basic services and manage conflict between the people already in that area. Undeveloped land falls outside that purview and should instead be managed by the NSW Infrastructure Department. Instead of paying rates to local council, owners of undeveloped land should pay a land tax to the state government. Once the land is developed, the new properties can either be incorporated into a nearby local council (at the discretion of that council) or else establish a new local governance structure.

This division of responsibility means that local councils will maintain their control over planning rules regarding existing developments, but they are not able to block greenfield developments that have state government approval.

The NSW government should provide investment and environmental block grants to each local council in proportion to the number of people living in that area (not the number of ratepayers). This provides an incentive to create more housing since higher density will mean lower rates for each property and/or higher quality living.

4.2 GOVERNANCE: Improving NSW

The NSW government should amend the state constitution with the following 10-point plan:

Protection for free speech, which is the logical prerequisite for free thinking and the bedrock of all other freedoms;
Protection from unreasonable search and seizure, to ensure that the balance of power between people and police leans towards the people;
Voluntary voting for state and local elections, because voting should be a right;
Prohibit government funding for political candidates and political parties, to remove the incumbency bias and inappropriate political dependency on state money;
Term limits for politicians and senior bureaucrats, to remove the possibility that the state will be run by a permanent political class;
Citizen-initiated veto to remove existing legislation, which would be triggered by a petition of at least 10% of enrolled voters in the state and held concurrently with the next state election;
Recall elections to change your local MP, which would be triggered by a petition of at least 10% of enrolled voters in the relevant jurisdiction;
Balanced budget requirement, which strictly limit the size of the fiscal deficit and the period of time the government can be in deficit;
Just compensation both for takings and regulatory takings (when new government restrictions decrease the value of private property), which ensures justice for the victim of government action and improves the incentives of the government; and
Local council ability to nullify state laws and/or choose how those laws are enforced.

A confident and competent government that priorities the well-being of the people should not feel threatened by the prospect of regions breaking away from NSW to form new states. The emerging Riverina State project and the long-standing New England State project should be given a path forward.

The creation of new states within the current NSW borders would be achieved through a binding referendum of people within the new proposed state. Such a referendum must be called if there is a petition from at least 10% of enrolled voters in the proposed new state, a valid new state constitution, and the state includes a minimum of 500,000 people.¹⁵

4.3 GOVERNANCE: Improving the federation

The Australian federation is an excellent idea that has been twisted out of shape. Financial power has been centralised in Canberra, while a large chunk of spending responsibility remains the domain of the state governments. This has created vertical fiscal imbalance, where the state governments live on the pocket money (grants) distributed by federal politicians, which warps the incentives of everybody involved.

Better decision making requires that the state governments should be responsible for raising their own revenue. This requires at least one of the following:

The federal government should remove their effective prohibition on state income taxes, and they should make the ATO available to states as an agency to manage a hypothetical future state income tax as a replacement to federal income tax.
The federal government should propose an amendment to the constitution that reverses the absurd High Court prohibition on state sales taxes, and then take full control over the GST and the “sin taxes” on petrol, tobacco and alcohol.

The NSW government should also demand the ability to veto or locally nullify federal legislation. The political power in the Australian federation should flow up from people to the state to the federal government, rather than the current system of power flowing down from Canberra.¹⁶

If the above reforms are rejected, the NSW government should pursue a policy of de-federation and become an independent country. An independent NSW would have the 30th largest economy in the world (GDP comparable to Austria, Israel, and Ireland), and with wise leadership would develop into a global beacon of freedom, prosperity, and hope.

We commend these modest proposals to the NSW government.

5.1 APPENDIX: Proposed new portfolio structure

Premier’s Department
- NSW Registry of Births, Deaths & Marriage
- Property rights, environment, and heritage
- Arts & culture moved to “Government Arts” NFPC
- Wind down identity agencies
Finance Department
- Budget & financial statements
- Manage assets, financial assets & PNFCs
- Revenue NSW
- NSW Fair Trading, IPART & business regulations
- Wind down industry policy & business subsidies
Justice Department
- Police & law enforcement
- Courts, jails & rehabilitation
- Child protection
- Ambulance, fire & emergency services
- Wind down community funding
Cost of Living Department
- Health voucher (for all; must spend on hospital membership)
- Education voucher (for parents; can spend on anything)
- Transport voucher (for all; can spend on anything)
- Continuing education voucher (for long-term unemployed)
- Parts of the old Customer Services Department
Infrastructure Department
- Maintaining state roads & state property
- Coordinating new infrastructure projects (transport, energy, water)
- New housing projects on state land & oversight of undeveloped private land
- Infrastructure & environment vouchers to councils
- Wind down enterprise, regional & transport funding

5.2 APPENDIX: Unnecessary government agencies

Below are some modest proposals for government agencies that should be abolished. This is meant as simply a starting point and is by no means an exhaustive list. A comprehensive review of all government agencies would doubtless find dozens more that could be quickly and easily removed, and we recommend that the government conducts such a review.

Public Service Commission ($40 million last year)¹⁷ – Afuera!

This government agency employs over 100 people across nine groups (led by a commissioner earning half a million dollars) to support other government agencies, mostly by delivering moral lectures and being a living meme about “diversity, equity, inclusion” identity politics.
They list their achievements as having over 500 bureaucrats attend an International Women’s Day event, getting over 1500 bureaucrats to join a Pride club, inviting a disabled person to their board meeting, issuing a series of behaviour guidelines, creating a working group to reconsider ethics, launching a reconciliation plan, and created an inclusion library. Despite this inspirational performance, even according to their own performance metrics they are failing.

Destination NSW ($350 million last year)¹⁸ – Afuera!

This sort of corporate welfare is both inefficient and ineffective, and it is not an appropriate use of scarce taxpayers’ money.

Identity politics agencies – Afuera!

Women NSW, NSW Women’s Week, NSW Women’s Advisory Council, Women’s Grants, NSW Gender Equality Dashboard & NSW Women Awards = while men and women are different, they should be treated equally by the government, and assistance provided on the basis of need.
Aboriginal Affairs NSW, Aboriginal Housing Office & Aboriginal Languages Trust = all races should be treated equally by the government, and assistance provided on the basis of need.
Pride in NSW & NSW LGBTIQ+ Health Strategy = all sexualities should be treated equally by the government, and assistance provided on the basis of need.
Multicultural NSW ($80m last year)¹⁹ = this transparent vote-buying scam is not just discriminatory and wasteful, but it actively encourages migrants not to assimilate and risks creating more social tension.
Youth NSW & Youth Week = unpopular and unnecessary attempts at pandering.

NSW Childcare & Economic Opportunity Fund ($100m this year) – Afuera!

The federal government already offers a massive (and highly inefficient) childcare subsidy, and the state government should not get involved.

Government art & culture ($420 million last year)²⁰

While it’s a pleasant luxury for those lucky enough to attend, art & culture subsidies are not a core government responsibility and ordinary taxpayers should not be required to subsidise cultural events they may not want.
Government art and cultural agencies own billions worth of assets, so they are not poor. They raised over $200 million of their own funds last year (see table below), and this would doubtlessly increase if they became independent non-profits.
These agencies would not be abolished (no afuera), but they should be managed by a single public non-financial corporation called “Government Art & Culture” and required to fund their own activities. Spending on cultural infrastructure should be considered within the context of the overall infrastructure budget.
Create NSW (including Screen NSW & Sound NSW) should be abolished – Afuera!

Office of Sport & Institute of Sport ($470 million last year)²¹ – Afuera!

Australians love our sport, but that does not justify forcing taxpayers to fund elite athletes to get $20m worth of subsidised training at the NSW Institute of Sport.
General subsidies from the Office of Sport are not an appropriate use of scarce taxpayer money, especially for people who have the “wrong” unsubsidised hobbies. Spending on sports infrastructure should be considered within the context of the overall infrastructure budget.

Redundant environmental agencies ($320m last year) – Afuera!

Environmental Protection Authority ($170m) = genuine pollution issues transferred to the Premier’s Department, environmental accidents & emergencies transferred to the Justice Department, and the rest of the EPA should be abolished.
Environmental Trust ($50m) = unnecessary to have yet another agency dedicated to research, education, and forming green groups, and the NSW government should not be using taxpayer money to decrease the availability of water and land.
Energy Corporation of NSW ($100m) = the “Unreliable Energy Zones” boondoggles would almost certainly fail an honest benefit-cost analysis and should be shut down.

Business regulation & complaints agencies

There has been a steady expansion in the number of agencies dedicated to regulating, monitoring, and investigating different business sectors. These should all be done through a single agency such as NSW Fair Trading, operating within the Finance Department.
This regulatory agency should focus on addressing fraud, false advertising and complaints, and resist the temptation to incessantly meddle proactively investigate the private sector. Criminal behaviour should be reported to the police.
All other business regulators should be abolished, including:
- Independent Review Office (injury insurance) – Afuera!
- Independent Liquor & Gaming Authority ($5m) – Afuera!
- Independent Casino Commission ($20m) – Afuera!
- Health Care Complaints Commission ($25m) – Afuera!
- Health Professionals Council Authority – Afuera!
- Greyhound Welfare & Integrity Commission – Afuera!
- Ombudsman’s Office ($40m) – Afuera!
- NSW Education Standards Authority ($170m) – Afuera!
- State Insurance Regulatory Authority – Afuera!
- Building Commission NSW – Afuera!
The Independent Pricing and Regulatory Tribunal (IPART) would remain separate because their role in regulating natural monopolies is qualitatively different to standard business regulations.

5.3 APPENDIX: Long & incomplete list of agencies

Departments listed in the Budget papers:

Department of Communities and Justice
Department of Customer Service
Department of Education
Department of Enterprise, Investment and Trade
Department of Planning and Environment ²²
Department of Regional NSW
Ministry of Health
Premier’s Department
The Cabinet Office
The Treasury
Transport for NSW

Public Non-Financial Corporations (Government businesses) listed in the Budget

Essential Energy SOC²³
Forestry Corporation of NSW SOC
Hunter Water Corporation SOC
Landcom SOC
NSW Land and Housing Corporation
Newcastle Port Corporation ²⁴ SOC
NSW Trains
Place Management NSW
State Sporting Venues Authority
State Transit Authority of NSW
Sydney Ferries
Sydney Opera House Trust Executive Agency
Sydney Trains
Sydney Water Corporation SOC
Teacher Housing Authority of NSW
Transport Asset Holding Entity of NSW SOC
Venues NSW Executive Agency
Waste Assets Management Corporation
Water NSW SOC
Zoological Parks Board of NSW

Public Financial Corporations (Government banking) listed in the Budget ²⁵

First Australia Mortgage Acceptance Corporation
Insurance and Care NSW
Lifetime Care and Support Authority of NSW
NSW Treasury Corporation

Executive agencies:

Art Gallery of NSW Trust (Enterprise)
Australian Museum (Enterprise)
Crown Solicitor’s Office (Justice)
Destination NSW (Enterprise)
Fire and Rescue NSW (Justice)
Health Professionals Councils Authority Office (Health)²⁶
Infrastructure NSW (Treasury)
Institute of Sport (Justice)²⁷
Library Council of NSW (Enterprise)²⁸
Local Land Services (Regional)
Mental Health Commission (Health)
Multicultural NSW (Justice)
Museums of History NSW (Enterprise)
& State Records Authority (Enterprise)
Natural Resources Commission (Premier)
NSW Reconstruction Authority (Infrastructure)
Office of NSW Rural Fire Service (Justice)
Office of NSW State Emergency Service (Justice)
Parliamentary Counsel’s Office (Cabinet)
SAS “State Super” Trustee Corporation (Treasury)²⁹
Service NSW (Customer Service)
Office of Sport (Justice)
Sydney Opera House Trust (Enterprise) PFNC
Trustees of Museum of Applied Arts & Sciences (Enterprise)
Venues NSW (Justice) PFNC

Separate agencies:

Ageing & Disability Commissioner ³⁰
Children’s Guardian
Director of Public Prosecutions
Environment Protection Authority
Greyhound Welfare & Integrity Commission
Health Care Complaints Commission
Independent Liquor & Gaming Authority
Independent Planning Commission
Independent Pricing & Regulatory Tribunal
Independent Review Officer
Information & Privacy Commission
Inspector of the Law Enforcement Conduct Commission
Law Enforcement Conduct Commission
Legal Aid Commission
NSW Crime Commission
NSW Electoral Commission
NSW Education Standards Authority
NSW Independent Casino Commission
Ombudsman’s Office
Public Service Commission
TAFE Commission

Universities created by the NSW government:

Charles Sturt University
Macquarie University
Southern Cross University
University of New England
University of Newcastle
University of NSW
University of Sydney
University of Technology Sydney
University of Wollongong
Western Sydney University

Other agencies listed in the Budget:

Aboriginal Housing Office
Alpha Distribution Ministerial Holding Office – Ausgrid
Audit Office of NSW
Conservation Trust NSW
Building Insurers’ Guarantee Corporation ³¹
Centennial Park and Moor Park Trust
Electricity Assets Ministerial Holding Corporation – Dust Disease liabilities
Electricity Retained Interest Corporation – Ausgrid
Electricity Retained Interest Corporation – Endeavour Energy
Electricity Transmission Ministerial Holding Corporation – TransGrid
Environmental Trust
Epsilon Distribution Ministerial Holding Corporation – Endeavour Energy
Greater Cities Commission
Greater Sydney Parklands Trust
Historic Houses Trust NSW ³²
Home Purchase Assistance Fund
Hunter and Central Coast Development Corporation
Independent Commission Against Corruption
Judicial Commission NSW
Lands Administration Ministerial Corporation
Liability Management Ministerial Corporation
Long Service Corporation
Luna Park Reserve Trust
NSW Government Telecommunications Authority
NSW Rural Assistance Authority
Northern Rivers Reconstruction Corporation
NSW Food Authority
NSW Police Force
NSW Self Insurance Corporation
NSW Trustee and Guardian
Office of Transport Safety Investigations
Planning Ministerial Corporation
Port Botany Lessor Ministerial Holding Corporation
Port Kembla Lessor Ministerial Holding Corporation
Port of Newcastle Lessor Ministerial Holding Corporation
Ports Assets Ministerial Holding Corporation
Property NSW
Regional Growth NSW Development Corporation
Rental Bond Board
Resilience NSW ³³
Road Retained Interest Pty Ltd
Royal Botanic Gardens and Domain Trust
State Insurance Regulatory Authority
Sydney Metro
Sydney Olympic Park Authority
The Legislature
Water Administration Ministerial Corporation
Western Parkland City Authority
Western Sydney Parklands Trust
Workers’ Compensation (Dust Diseases) Authority

Other agencies within the Department of Customer Service:

Architects Registration Board
Behavioural Insights Unit
NSW Registry of Births, Deaths & Marriages
Board of Surveying and Spatial Information
Budget Data Visualisation
Building Commission NSW
Customer Experience Unit
Cyber Security NSW
NSW Digital Channels
Digital NSW
Geographical Names Board
ID Support NSW
Independent Pricing and Regulatory Tribunal ³⁴
Independent Review Office
Information and Privacy Commission NSW
Long Service Corporation
NSW Fair Trading
NSW Telco Authority
Office of the Registrar General
Personal Injury Commission
Professional Standards Authority
Revenue NSW
SafeWork NSW
Service NSW
NSW Small Business Commission
Spatial Services
State Insurance Regulatory Authority
Subsidence Advisory NSW
Surveyor General of NSW
TestSafe

Other agencies within the Department of Environment:

NSW Climate and Energy Action
Environment & Heritage
Water
NSW National Parks & Wildlife Service
NSW Environment Protection Authority
Energy Corporation
NSW Biodiversity Conservation Trust
Air Quality
Adapt NSW

Other agencies within the Department of Health:

NSW Ambulance
Health Infrastructure
HealthShare NSW
NSW Health Pathology
eHealth NSW
Health Protection NSW
Local Health Districts (x15)
Justice Health and Forensic Mental Health
Sydney Children’s Hospital Network
Agency for Clinical Innovation
Bureau of Health Information
Cancer Institute NSW
Clinical Excellence Commission
Health Education & Training Institute

Other agencies within Regional NSW:

Department of Primary Industries
Local Land Service
Mining, Exploration & Geoscience
NSW Resources Regulator
Office of the Cross Border Commissioner
Public Works
Regional Development Group
Regional Growth NSW Development Corporation
Regional Precincts Group
Soil Conservation Service

Other agencies within Enterprise Department:

Art Gallery of NSW
Australian Museum
Create NSW
1. Screen NSW
2. Sound NSW
Destination NSW
Greyhound Welfare & Integrity Commission
Independent Liquor & Gaming Authority
Investment NSW
Liquor & Gaming NSW
Museum of Applied Arts & Sciences
Museums of History NSW
NSW Independent Casino Commission
Office of Racing
Office of Responsible Gambling
Office of the Chief Scientist & Engineer
Office of the 24-Hour Economy Commissioner
State Library of NSW
State Records Authority of NSW
Sydney Opera House

Other agencies not listed above:

Careers NSW (Education)
Training Services NSW (Education)
Corrective Services NSW (Justice)
Youth Justice NSW (Justice)
Department of Attorney General and Justice (Justice)
NSW State Parole Authority (Justice)
Women NSW (Premier)
Aboriginal Affairs NSW (Premier)
Aboriginal Languages Trust (Premier)
Government House (Premier)
…

More agencies are scattered in other departments, but the size of the NSW bureaucracy is so large that my computer would run out of storage space if I attempted to list them all here.

5.4 APPENDIX: References

¹ The other widely used budget metric is the underlying cash balance, which is forecast at -$9b for 2024/25.

² The federal government normally reports the underlying cash balance as their official budget position, though they switched to fiscal balance briefly about 20 years ago, before mysteriously switching back in a year that coincidentally had a cash surplus but fiscal deficit.

³ The other debt statistic sometimes cited is “gross debt”, which is higher than net financial liabilities. This metric is useful in the right context, but it is not an accurate measure of the state government’s financial position because it ignores both payables and financial assets.

⁴ There would presumably be an inter-hospital fee paid from your “home hospital” to any other hospital that you visit in an emergency or because you were referred there from your home hospital.

⁵ A watered-down version of this was attempted by the previous Liberal government when they created the “Transport Asset Holding Entity” as a PNFC that managed rail infrastructure. That move was criticised for being an attempt to shift transport capital spending off-budget, but such chicanery would no longer be possible if the government switched to reporting the “fiscal balance” in their budget, which includes capital spending.

⁶ Note that PNFCs may fund infrastructure projects themselves, without approval of the state government, though the state government retains ownership and therefore control of PNFC governance and strategy.

⁷ This means that the assets currently held by the Transport Assets Holding Entity (TAHE) should be transferred to Sydney Trains and Trains NSW, which are government businesses.

⁸ To the solitary junior Treasury official given the task of briefly skimming these submissions, I am not implying that you are necessarily a bad person. You did not create the bureaucracy, but simply followed the incentives that were put in place by somebody else. I only ask that you resist the temptation to lobby for more money and power for the bureaucracy.

⁹ It will be important for buyers to have a clear understanding of the after-tax price of different properties so that they can make informed decisions when comparing the price of new and old houses.

¹⁰ HouseMate

¹¹ If the federal government remains intransigent, the NSW government should explore whether it is possible to create a work-around by either providing loans that mirror super balances and/or setting up a super fund that operates as a temporary trustee on behalf of the de facto homeowner.

¹² The other payroll thresholds around the country are $2m for ACT, $1.5m for NT & SA, $1.3m for QLD, $1.25m for TAS, $1.0m for WA, and $0.7m for VIC.

¹³ While the Australian constitution is currently interpreted as prohibiting state-based sales and consumption taxes, the state government can still benefit financially from a licencing regime and the possibility of charging a higher payroll tax for licenced vaping businesses and/or stamp duty on vaping licence purchases.

¹⁴ The state police would retain the right to enforce state laws in local councils.

¹⁵ Roughly the size of Tasmania, which is currently Australia’s smallest state.

¹⁶ The astute reader may have noticed that this submission has proposed shifting political authority from the federal to state governments, the option for local councils to nullify state laws, and transforming local councils into body corporates. The logical consequence of these three changes would be to effectively convert the government into a voluntary opt-in organisation – a political position known as “anarcho-capitalism”. Afuera!

¹⁷ 2023 Annual Report

¹⁸ NSW Budget, Agency Financial Statement, Jobs & Tourism (8)

¹⁹ NSW Budget, Agency Financial Statement, Communities & Justice (3)

²⁰ Sydney Opera House 2023 Annual Report & NSW Budget, Agency Financial Statement, Jobs & Tourism (8)

²¹ Institute of Sport 2023 Annual Report & NSW Budget, Agency Financial Statement, Communities & Justice (3)

²² These are sometimes listed as two separate portfolios: “Planning” and “Environment”.

²³ NSW Treasury lists eight State-Owned Corporations (SOCs).

²⁴ Newcastle, Sydney & Port Kembla port corporations amalgamated into Port Authority of NSW.

²⁵ Only iCare and TCorp are listed on the NSW Treasury website.

²⁶ Not included in the NSW Budget list of agencies considered material (Section A4).

²⁷ Not included.

²⁸ Called “State Library of NSW” in the NSW Budget list.

²⁹ Not included.

³⁰ Not included in the NSW Budget list of agencies considered material (Section A4).

³¹ The agencies struck through and grey no longer exist (abolished or transferred).

³² Functions transferred to the newly created “Museums of History NSW” executive agency.

³³ Functions transferred to the newly created “NSW Reconstruction Authority” executive agency.

³⁴ The agencies shown in grey are also included in one of the previous lists of agencies.