The New South Wales, treasurer Daniel Mookhey, says Labor’s first budget for the state in more than a decade will lay the groundwork for future reform, make cuts “in areas that don’t affect people” and provide support for a “once in a generation” cost-of-living crisis.
“We are looking for every available opportunity we can to provide practical assistance to people,” he said.
“At the same time, I think what people want is deeper reform to prevent these cost-of-living pressures from simply repeating and repeating.
“It’s about making sure that we are fixing the fundamentals about what’s wrong with our essential services and it’s about responsibly repairing the state’s finances.”
Speaking with Guardian Australia before Tuesday’s budget, Mookhey said he was focused on combatting inflation and global challenges, as well as a worsening housing crisis.
“The finances are under a lot of pressure,” he said, noting the weight of interest repayments on the state coffers.
“I would much prefer to be able to spend money on the state’s essential services and essential workers, rather than have to write big cheques to the state’s bondholders.”
In 2021-22, NSW revealed a historic deficit of nearly $17bn. A $7bn shortfall has been forecast this financial year. Successive interest rate hikes and sharp inflation over the past year have also taken their toll.
The “deeply flawed” housing market will be a key focus in the budget after Committee for Sydney research found Sydney’s chronic housing crisis was costing the economy more than $10bn a year.
“Had we built more homes over the last decade, we’d have had more homes for people to buy and rent this decade and we’ve got to turn that around,” Mookhey said.
“What people will see is this government taking action to get housing construction going again.”
The government has already announced its intention to see more homes built closer to Sydney’s CBD and along transport routes, and pledged $224m to build more social housing properties as the need continues to increase.
In the leadup to the budget, the government has also announced a cap on tolls; $1.8bn for power lines, batteries and other renewable energy infrastructure; $3.5bn for school builds and upgrades in Sydney’s west and south-west; and $1.4bn for regional schools.
The government also introduced an increase to coal royalties for the first time in almost 15 years, which is forecast to deliver an extra $2.7bn to the government over the next four years.
The government has already scrapped the wages cap – a key plank of its election platform – and announced a $3.6bn fund to support long-term pay growth for workers including nurses, paramedics and teachers.
It has frozen salaries for senior executives and parliamentarians for two years.
Mookhey also wanted to capitalise on the PWC-induced shift away from consultants to rebuild the public sector in earnest.
“One of the reasons why the state has been saddled with the financial consequences of the poorly designed Transport Asset Holding Entity was because the people who designed it were not accountable for the result,” he said.
“We are cracking down on consultants spending in this budget and equally, we want to cut down on labour hire too.”
While backing the government’s $16m spend to bring the UFC to Sydney earlier this month, Mookhey said there would be a “much more strategic approach” to sponsoring major events moving forward.
“We made a very quick decision not to try to chase the Commonwealth Games because it’s not an event that yields a return for the people of NSW,” he said.
“We are making sure that events like Mardi Gras and others are put on a much more firm basis. We are making some tough decisions about which events we go for and which ones we don’t.”
There were some areas that the treasurer said would not be dealt with on Tuesday.
“We can’t promise radical transformation overnight but what we are promising is calm, methodical foundation construction for a long-term plan.”
Among reforms not attempted was a comprehensive response to Dr Ken Henry’s review of the Biodiversity Conservation Act, which warned that the government had to prioritise the environment above competing land uses by giving the department more resources and the act more power.
Henry said if the environment was not made the top priority, the government risked “at least 50% of GDP”.
Mookhey said he was “well across” Henry’s warning but that there were a “couple of pieces of work that need to happen before we can start to adopt that approach”.
He said part of it was working alongside the commonwealth on harmonising environmental laws and how to properly measure carbon abatement.
