NSW Labor set for brutal first budget amid $7b black hole -  SMH  Alexandra Smith  June 12, 2023

KEY POINTS

·                     Treasurer Daniel Mookhey will deliver an economic statement to NSW parliament next Thursday.

·                     He is expected to paint a grim picture,  and will prepare the people of NSW for a $7 billion budget black hole.

·                     The popular active kids vouchers, initiated by the former Liberal government, could be among the programs to be cut to save money.

The NSW government has seized on another unfunded program to lay the groundwork for a brutal budget in September, with Treasurer Daniel Mookhey to detail the $7 billion in unexpected cost pressures facing the state when he delivers an economic statement to parliament next week.

As the government works through its delayed budget, which Labor will not deliver until September, it has sought to highlight schemes which have not been funded beyond this financial year, with the latest a critical program to maintain fire trails on Crown land to manage bushfire risk.

NSW Treasurer Daniel Mookhey is warning of a bleak budget for the state.

As well as rising net debt levels, forecast to climb to $118 billion by mid-2026, Mookhey says NSW Treasury briefings have revealed the government has a $7 billion funding black hole which it will have to plug through major spending cuts.

On the chopping block are the popular $600 million Active Kids and Creative Kids vouchers, which give parents $100 to spend on after-school activities. It will be unfunded after June 30 and the government will this week unveil its plans for the program.

The government has also found there is no funding set aside for 1100 extra nurses, promised by the Coalition, beyond June 30, 2024, which will leave a $380 million hole over the forward estimates.

The annual $11 million Crown Lands Fire Trail program, which manages bushfire risk on 2500 kilometres of trails after the Black Summer fires, is also unfunded beyond this financial year.

The government has highlighted a $1.2 billion backlog in school maintenance and a $700 million funding shortfall for children living in out of home care to bolster its case for major budget repair, although not of the same magnitude as Victoria.

Victoria’s poor fiscal position was revealed last month, with the state’s debt expected to hit $135.4 billion next year. Its budget repair focused on increased taxes, with a new property levy on investors and businesses a key revenue measure.

The NSW government has ruled out imposing a similar levy on property investors to increase revenue and Mookhey has said Labor would stick to its pre-election promise of no new taxes, instead focusing on cuts to spending.

Mookhey will deliver an economic statement to the Legislative Council next week, in which he will paint a bleak picture of the state’s finances ahead of the full budget three months later.

‘There is a $7 billion budget black hole needing urgent attention ... dealing with it is a key priority of the Minns government.’

NSW Treasurer Daniel Mookhey

The government has undertaken a comprehensive expenditure review and Mookhey has warned that Treasury is going through the budget line by line to “identify waste and get control of the budget mess left to us by the former government”.

He said one of the first steps was to freeze the pay of politicians and senior executives in the public service and the government has also committed to reducing expenditure on consultants, labour hire, government advertising, legal expenses and travel.

“There is a $7 billion budget black hole needing urgent attention,” Mookhey said. “The people of NSW expect no less and dealing with it is a key priority of the Minns government.”

 “Without action on a rash of unfunded programs from the former administration, NSW will face having more than 1000 nurses out of a job, at-risk kids without adequate care, gaping holes in our cybersecurity defences and much more. The list of what we’re discovering just keeps growing.”

He said the “September budget will be major step forward”.

“But we’ve wasted no time already and the comprehensive expenditure review is giving us a line-by-line analysis of what needs to be done,” Mookhey said. “I’ll have more to say about the way forward in the June economic statement.”

Treasury briefings have also revealed that Cybersecurity NSW has been costed at $0 from 2025 onwards, while there have also been substantial jumps in the cost of some major infrastructure programs including the Western Harbour Tunnel which has risen in cost by $1.4 billion, while two Metro rail lines are now expected to cost more than $20 billion each.

[bottom.htm]