It is a budget that allows the government to give a pay rise to public sector workers,claws back some infrastructure spending excesses,and extends modest cost of living assistance without adding to the inflation problem.
But it does not radically cut expenditure beyond scrapping some Coalition’s pet projects and funds. Despite the tough talk before the budget of savage cuts and hard decisions,there is very little pain for voters. On balance,it is responsible but lacks bravery.
For example,Treasurer Daniel Mookhey and Finance Minister Courtney Houssos both warned the state was in the middle of a. Yet while there are welcome measures focused on housing,including tasking Landcom with constructing thousands of new homes by the end of the decade,there is an absence of policy measures that reflect the scale of the crisis.
The treasurer defended the government’s budget housing pitch,saying the job of fixing the crisis is bigger than just the NSW government to solve. True,but there will be much debate over the coming weeks about whether state Labor is doing enough.
Mookhey’s overall budget balancing act has been made much easier by a projected $17.6 billion boost to state coffers over the four years to 2026-27,thanks mainly to healthier than expected revenue from transfer duty,land tax and payroll tax. The booming NSW property market alone will deliver $9.5 billion in additional stamp duty payments,and $4.9 billion in land tax payments.
But the books aren’t all rosy. TheHerald shares Mookhey’s concern about the state’s debt position. While NSW’s share of debt as a proportion of gross state product is far below Victoria’s,it will need to be a focus of the new government over the coming years. Of particular concern is the rising cost of borrowing and the soaring cost of repayments. Mookhey talked up the $10.5 billion improvement to the state’s net debt,however a large chunk of this – nearly $4.5 billion – is due to reorganisation of the troubled Transport Asset Holding Entity.
The budget forecasts a slowing in economic growth and a rise in unemployment,but not enough to tip NSW into recession. Three options loom:either the government’s forecasts hold;interest rates fall from 4.25 per cent to 3.25 per cent by the end of 2025 with benefits flowing to the budget;or the economy deteriorates sharper than expected due to a delayed impact of interest rate hikes. The latter scenario,which would also involve inflation remaining elevated,would tip the state into recession in 2023-24. Mookhey hedged his bets about which option was the most likely,but repeatedly warned NSW needed to be prepared to respond to any shocks.
The budget includes modest revenue measures,including a crackdown on land tax concessions for some people who part-own property. They are good steps but tinkering around the edges. Labor’s no new taxes pre-election pledge might have been smart politics but surely will corral potential reform over its first term in office,the only realistic time when real change is a distinct possibility for new governments.
That said,NSW needs to see more agenda-setting reform from Labor over the coming 12 months. Mookhey is a smart and savvy pair of hands and there are still plenty of signs outside the budget that he and Premier Chris Minns are keen to prosecute policy reform.
Unlike previous treasurers,including Matt Kean,Dominic Perrottet,Gladys Berejiklian and Mike Baird,Mookhey is of the upper house and has little ambition to be premier. He has a rare chance to help shape the state through bold policy. We hope he will not waste it through unnecessary political caution from a government still finding its feet.
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