Source : the age
The Minns government’s fourth budget, delivered on Tuesday, is a restrained one, considering NSW voters head to the polls in nine months.
The main sweetener – a $560 million transport affordability package that will reduce the weekly road toll cap and freeze public transport fares – is temporary and fairly modest as pre-election handouts go.
Treasurer Daniel Mookhey has preached fiscal discipline since Labor took office in 2023 so the ongoing pressure on the state’s finances left him little scope for largesse.
The restraint suggests Labor is confident it can hold office at the election next March without a big spending budget.
Even so, the budget papers show NSW will have an eighth consecutive budget deficit next financial year before a return to surplus in 2027-28.
It is not surprising it took a long time for the state’s finances to recover after the COVID pandemic. Mookhey warns “lots of things need to go right” if the budget is to be returned to balance as forecast. But NSW has been in the red for long enough; whoever is treasurer following the next state election must keep the books balanced in line with that budget forecast.
A highlight on Tuesday was the boost in funding to address domestic and family violence, one of the biggest social challenges facing NSW. An additional $184.1 million will be spent over the next four years to increase funding by 50 per cent for six frontline specialist domestic and family violence programs.
This funding aims to expand access to safety planning, counselling, case management and tailored support and grow the frontline workforce dealing with domestic and family violence. The government must now monitor this initiative closely and be prepared to allocate more resources should it prove effective.
Perhaps the most concerning aspect of the budget is the anemic growth it predicts for the state.
Only six months ago the NSW economy was forecast to expand by 2.5 per cent next financial year and 2.25 per cent the year after. But the hit to consumer spending caused by this year’s spike in fuel prices, coupled with the interest rate increases since February have changed the economy’s trajectory; growth is now expected to be just 1 per cent in both 2026-27 and 2027-28.
The sluggish outlook comes with the NSW jobless rate already at a five-year high of 4.5 per cent and with about 211,000 people unemployed across the state – the highest since the COVID crisis. Recent figures show unemployment is already above 6 per cent in parts of western Sydney.
The growth forecasts underscore how sensitive the state economy has become to interest rates.
As the Herald reported on Saturday, NSW Treasury estimated the average new home loan in NSW is about 32 per cent higher than in Victoria.
The state’s finances, which were pushed into deep deficit by the pressures of COVID, are on track to return to surplus. All sides of politics must ensure that their enthusiasm to win the election doesn’t result in a spending spree that would risk this recovery.
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