Over the ensuing quartet of years, the Australian economy’s powerhouse is set to experience a financial boost of $4bn under the NSW Labor government, courtesy of $13bn in identified expenditure savings, as divulged in the NSW budget announcement on Tuesday.
In what marks the fifth year of budget deficits for the state, the NSW Treasurer Daniel Mookhey declared the beginning of a “new epoch of public investment”. This pivot is underscored by the government’s commitment to augment public sector wages, inflate the supply of housing, and largely rely on means-tested cost-of-living agreements.
Despite NSW reporting a $7.8bn slump, Mookhey expressed the state’s potential to curb its debt and register a prudent $844m surplus in the upcoming financial year, with projections to proliferate to $1.508bn by 2026-27.
When Mookhey illuminated the NSW lower house with his budget address, he acknowledged the persistent “economic hurdles” such as high inflation and hiking interest rates. However, he optimistically conjectured that increasing wages would revive “a decade’s worth of lost purchasing power”.
Mookhey, alongside Finance Minister Courtney Houssos, pointed out approximate savings of $13bn in expenditure, strategically repurposed to fund other priorities, notably in the realm of public sector wage augmentations.
He elaborated that these expenditure reductions encompassed $700m saved from the wage freeze on politicians and high-ranking government officials, a $530m cut from the external consultants’ reliance, and a $100m slash from the funds previously earmarked for pandemic PPE.
Mookhey expressed his view to the lower house: “Reversing the damage wrought by privatisation on household budgets, fortifying essential services, rewarding essential workers, reconstructing calamity-impacted cities and regions: these determinations mark the genesis of sculpting an improved NSW.” He continued, “The investments permitted by this budget illustrate we’ve opted for better choices.”
In the next four years, the gross debt of the state is projected to be cut by $14.8bn, saving around $400m annually in interest payments. This includes the fallout from reforms within the Transport Asset Holding Entity of NSW (TAHE), and the NSW Generations Fund (NGF).
Moreover, swelling the housing supply of the state emerges as a top priority. A commitment of $300m in funding for Landcom has been announced, which is expected to promote the construction of approximately 4697 new homes on public land.
The establishment of a $400 million Housing Infrastructure Fund is also noteworthy, aimed at aiding the construction of infrastructural elements such as sewage systems, footpaths and schools. Interestingly, it has been funded by fiscal residuals discovered during a review of over 700 Restart NSW ventures, some of which had less than $100 allocated.
Another prominent policy measure highlighted was the promise of pay raises in the public sector, a significant pledge Labour had taken to the election.
A financial envelope of $1.9bn has been assigned to the restructuring and elevation of teachers’ salaries over the coming four years, with an additional $1.9bn allocated to cater to other unions and employee collectives.
Furthermore, a $3.6bn Essential Services Fund has been established, set to finance future wage negotiations for the following four financial years stretching until 2026-27.
Stressing the indispensability of competitive pay rates for retaining and attracting nurses and teachers statewide, Mookhey also slammed the erstwhile government for wage stagnation, which exacerbated the impact of “bills, tolls, rent, and mortgage hikes”.
He succinctly summed up his perspective, “Providing people with adequate income to support their family is not only morally right but also economically correct. It is crucial if we aspire to upgrade essential services to the world-class standard that NSW demands”.