Mookhey,who will steer the nation’s largest state economy and oversee the $117 billion budget,says his mission is to deliver public services “to the standard people expect”,and infrastructure that supports growth in the glare of a housing crisis.
NSW Treasurer Daniel Mookhey in his office at Martin Place.Dominic Lorrimer
“We’re building infrastructure,so people have a place to live,a school to send their kids to,a hospital in their neighbourhood,and they are the guiding values that we’re following,” he said.
The newly-minted treasurer concedes initial briefings on the state’s finances had revealed it would be tougher than anticipated for Labor to deliver its goal of maintaining gross debt at $187 billion by 2025-26.
“I expect to be spending a lot of my energy on repairs,dealing with many of the problems we’ve inherited from the previous government ... almost like the clean-up operation that needs to be run[to] restore a bit of discipline to the public finances,” he said.
Mookhey has become treasurer at a for the NSW economy – business confidence is low,and many households are grappling with severe cost of living pressures and rising interest rates.
A budget update in March forecast a significant slowdown in the NSW economy over the next 18 months,and warned the state faced “headwinds and uncertainty” including a challenging global economic outlook.
The former Coalition government promised a return to surplus in two years,but Mookhey says that was a “heroic assumption” that could only have been achieved by slashing essential services.
“The previous government had projected a $322 million dollar surplus by 2024-25. The cost of 1200 nurses that are unfunded from that year is $385 million,” he said.
“Such a return to surplus was clearly predicated on there being cuts to essential services ... it’s for the previous government to explain the wisdom of that.”
Mookhey says the Coalition government led by Dominic Perrottet and Matt Kean made unrealistic promises.Dominic Lorrimer
This week the government announced cuts to red tape for public school teachers and,proof that Labor was committed to its election mandate to improve public sector conditions,Mookhey said.
“We made it clear that we want to pay our essential workers more and what they deserve ... we’re having good conversations with our workforce. We’re showing them the respect they deserve.”
However,the treasurer will be forced to confront an increasingly impatient Health Services Union,after bossaccused the government of dragging its feet on a new pay deal delivering its election on public sector wages.
The NSW budget is deep in the red following the upheavals of COVID-19. The latest forecasts show a deficit of $12 billion this financial year and a shortfall of more than $7 billion next financial year.
‘[I’m] the first treasurer in a while not interested in becoming premier.’
NSW Treasurer Daniel Mookhey
Since those predictions were made,Mookhey has revealed an extra $7 billion in “difficult to avoid” over the next three years,making budget repair even more demanding.
The treasurer said he was concerned about the effects of a so-called “mortgage cliff”,which looms as a large number of home borrowers move from very low fixed rates to much higher repayments – factoring into a decision to defer his first budget from the regular time in June to September.
The delay will allow a “more timely read on the effects of hundreds of thousands of mortgages transitioning from fixed rates to variable rates … that actually means the budget is likely to be a lot more credible,” he said.
Mookhey also inherits a deteriorating state debt position. Between now and mid-2026 the state’s net debt is forecast to rise from around 10 per cent to 14 per cent of the state’s annual economic output – far higher than at any time in the past three decades – while the burden of servicing the debt has increased dramatically thanks to the recent spike in global interest rates.
“In just a few years we’ll be paying billions of dollars more on our interest bill than we would be to fund the entire NSW Police Force,” Mookhey said.
Describing himself as “the first treasurer in a while who isn’t interested in becoming premier”,Mookhey’s priorities also contrast with his immediate predecessors.
While a hallmark of the 12-year-old Coalition government were the mega transport projects it delivered through multibillion-dollar asset recycling,Labor’s central pitch to voters was opposing privatisation and rehabilitating essential services in NSW.
“I’m envious of the fact that the Queensland government,which has kept many of their electricity assets,get big dividends from their electricity companies,which they can then use to hire more nurses and more teachers,” Mookhey said.
“We got a mandate to confront the shortage of teachers,to make sure that emergency departments have enough health staff,so they can provide services to the standard people expect,” he said.
Since being elected to parliament in 2015,Mookhey has developed a reputation for being a policy wonk. He will be the first NSW treasurer to sit in the upper house in over a decade.
When asked what sort of treasurer they thought Mookhey would be,a senior member of the former Coalition government simply said:“a technocrat.”
“If by that they’re saying that I’m across the detail managing the responses and understanding the intricacies of the budgets,then I’m guilty as charged,” Mookhey replied.
“I imagine they’ll call me worse as time goes by ... but yeah,guilty as charged.”
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