Over the next four years, the bottom line of Australia’s largest economy will be $4bn better off under the NSW Labor government, with the Treasurer identifying $13bn in spending savings, the Tuesday’s NSW budget has revealed.
Despite handing down the state’s fifth consecutive budget deficit, NSW Treasurer Daniel Mookhey said he was ushering in a “new age of public investment”, emphasising the government’s promise to boost public sector wages, increase housing supply, and implement largely means-tested cost-of-living arrangements.
While NSW recorded a deficit of $7.8bn, the Treasurer said the state could reduce its debt and post a cautious $844m surplus next financial year, which would grow to $1.508bn in 2026-27.
Presenting his budget speech to the NSW lower house, the Treasurer said that while the state’s “economic challenges” of elevated inflation, and increasing interest rates remain ongoing, growing wages would increase a “decade’s worth of lost buying power”.
Mr Mookhey and Finance Minister Courtney Houssos also identified about $13bn in expenditure savings, which he said had been redirected to funding other priorities like public sector pay rises.
Mr Mookhey said these cuts included $700m in savings from freezing the wages of politicians and senior government executives, reducing the government’s reliance on external consultants by $530m and slashing $100m previously set aside for PPE during the Covid pandemic.
“Undoing the damage privatisation did to family budgets, fixing our essential services, paying our essential workers decently, rebuilding disaster-stricken cities and regions: these decisions begin the work building a better NSW,” he told the lower house.
“The investments we make in this budget are possible because the government has made better choices.”
The state’s gross debt has been slashed by $14.8bn over the next four years, with the state saving about $400m annually in interest repayments as a result. This included changes to its restructuring of the Transport Asset Holding Entity of NSW (TAHE), and the NSW Generations Fund (NGF).
Increasing the state’s housing supply will also be a priority, with the government announcing a $300m funding commitment to Landcom, which will help build about 4697 new homes on public land.
A $400 million Housing Infrastructure Fund to help construct infrastructure like sewers, footpaths, paths and schools was established out of “loose change” found in a review of more than 700 Restart NSW projects, with some having less than $100 still allocated to them.
The John Hunter Neonatal Intensive Care Unit, which had funding allocated in 2016, had $40.35 still being held for the completed project.
“Many of those dollars have been idling in the government’s bank accounts for years,” he said.
“They were forgotten until our comprehensive expenditure review found them.”
Public sector pay rises was another key policy measure, and one of the biggest promises Labor took to the election.
Over the next four years, $1.9bn has been allocated to restructure and boost the salaries of teachers, with $1.9bn also committed to other unions and employee groups.
A $3.6bn Essential Services Fund was also established to fund future pay negotiations for the next four financial years until 2026-27.
Mr Mookhey said competitive pay rates were essential for the state to keep, and recruit nurses and teachers across the state. He also blasted the former government of stagnating wages, which increased the severity of “energy bills, tolls, rent and mortgage increases”.
“Paying people enough to provide for their family is right morally; it is correct economically; and it is vital if we want to rebuild essential services to the world-class standard NSW demands,” he said.