NSW will continue to run up public debt as the Labor government spends heavily on housing and bureaucracy, but state Treasurer Daniel Mookhey is forecasting a return to surplus after a decade of red ink.
In handing down his budget on Tuesday, Mookhey said the $5.7 billion deficit in the current financial year will be followed by $3.4 billion next year, $1.1 billion in 2026/27 before hopefully returning to surplus the year after.
‘Investment in our essential services is up, debt is down, and NSW is back on the path toward surplus,’ Mr Mookhey told reporters in the budget lock-up.
‘This budget has been put together carefully, deliberately, at a time of great global uncertainty, and sends a big message that NSW is stable and NSW is open for business.’
Finance Minister Courtney Houssos said the budget is about reform and accelerating growth.
‘Our focus over three budgets has been on controlling what we can in the context of the budget.
‘That has resulted in very low expenses growth … at the same time as we are delivering these important reforms,’ she said.
The state will make an unprecedented intervention in the housing market as it struggles to meet a goal of 377,000 new houses by 2029 to accommodate burgeoning levels of immigration.
A $1billion fund will provide pre-sale guarantees to developers to begin construction.
The funds will go towards low-to-mid-rise developments, some of the most challenging projects to deliver under current market conditions and the kind of homes the state needs to tackle housing affordability constraints, Mr Mookhey said.
The government will guarantee 5000 homes in the hope of supporting the construction of 15,000 more.
It is a step to broaden its response to the housing crisis, moving into the mainstream market after previous budgets focused on supporting priced-out frontline essential workers and building more social housing.
‘We are very careful about what projects we are going to guarantee,’ Mr Mookhey told reporters.
But it is not the ‘plan B’ promised following the failure of a plan to build 25,000 homes on the grounds of Rosehill racecourse; a proposal rejected by club members.
A record $1.2 billion child protection package will be spent on support and protection for young people in the state’s care.
Allowances for foster carers will increase for the first time in decades.
Almost $50 million will go to building or upgrading residential care homes for children with complex needs, and $191.5 million will support caseworker recruitment and retention.
Mr Mookhey said the package was funded ‘from the savings created by no longer having to pay labour hire firms to care for kids in motels’.
Mr Mookhey acknowledged ‘a lot needs to go right’ in order to return to surplus but the state’s finances were improving.
Net debt is $120billion while gross debt, hitting $178.8 billion by next June, remains proportionally lower than other states outside resource-rich Western but still saddles the state with billions of dollars in interest bills alone.
Spending on government employees will increase by 3.7 per cent over the next four years to surpass $2billion annually.
Other drags on the budget include workers compensation, which the government has been unable to reform before premiums increase on July 1, and natural disasters.
Disaster relief spending has leapt tenfold since the 2019/20 Black Summer Bushfires, when compared to the six years prior, now costing $1.6 billion annually.
WINNERS:
* Indigenous ns – The Minns Labor Government will allocate $246.8 million over the next 4 years through an additional $202.4 million in the 2025-26 Budget to Close the Gap to improve the lives of Aboriginal people in NSW
* Workers – real wages forecast to grow 0.6 per cent a year after declining 0.1 per cent a year since 2020
* Foster carers – an immediate 20 per cent boost in allowances
* Property developers – n-first pre-sale guarantee supporting $1 billion of projects plus $83.4m to speed up planning approvals
* Apprentices – $40.2 million for up to 90,000 fee-free apprenticeships
* School students – $10 billion more for public education over next decade, $9 billion for school infrastructure over four years
* Justice – $856 million to better support victims, prosecute child abuse claims faster and boost domestic violence services
LOSERS:
* Sydney drivers – no extension of $60 weekly toll ‘cap’ while revenue from government-owned toll roads nearly doubles over four years once the Western Harbour Tunnel opens.
* Feral animals – $9.3 million for pig and deer culling program that has killed 230,000 animals over two years
* Service NSW – the shopfront for government services faces a $70.8 million budget cut including to capital works
* Dodgy officials – corruption and police watchdogs’ budgets boosted by nearly 20 per cent