The NSW Treasurer has lashed the federal government over infrastructure cuts which will hurt the state’s bottom line by $1.6bn over the next four years, $200m more than previously expected.
The NSW’s government’s Half-Yearly Review, which will be released on Thursday, will report a further budget deterioration of $1.7bn to its financial year, increasing the 2023-24 deficit to $9.5bn.
This will be followed by “modest surpluses over the forward estimates” until 2026-27.
Federal cuts to joint infrastructure funding, as well as high inflation, high bond yields, a reduction in the national GST take has been linked to the state’s reduced fiscal performance.
NSW Treasurer Daniel Mookhey hit out at the commonwealth’s impact on the state budget, after NSW saw $3.6bn in funding scrapped from 17 road, carpark and rail projects, due to a federal infrastructure review undertaken by Catherine King.
Impacted projects included the $1.7bn M7-M12 interchange near western Sydney airport, which is slated to open in 2026.
The review also found high inflation and consecutive cash rate increases were also causing households to decrease their spending, with NSW’s GST receipt tipped to be $1.9bn less over the next four years.
On Wednesday, Mr Mookhey called on the federal government to return its saved infrastructure dollars to NSW, after reassure Jim Chalmers forecasted a $7.4bn cut to infrastructure funding in the mid-year economic budget update.
“The reality is that there’s going to be many communities in NSW that won’t be getting the infrastructure that was promised to them as a result of the federal government’s decisions to cut funding,” he said.
“NSW is doing more than its fair share to absorb the federal government’s population policy, we expect the federal government to help us build the infrastructure communities expect.”
Speaking to the results from the review, Mr Mookhey said he has been “upfront” over the challenges of returning NSW’s budget to surplus.
“Recent decisions by the Federal government haven’t helped,” he said.
“By continuing to repair the state’s finances we will be in a better position to help families through this once in a generation cost of living crisis.”
Finance Minister Courtney Houssos said the “significant” commonwealth funding cuts created further “economic headwinds”.
“We’ve reined in the previous Liberal-National Government’s waste, adjusted the state’s debt trajectory, and instituted fiscal discipline,” she said.
“This has made NSW more resilient to withstand external pressures.
“We understand the pressures that families and households are facing, and our government has begun to rebuild the essential public services they rely on.”