Chris Minns’ first budget as Premier, was very much framed with the goal of paying back debt, putting money back into essential public services like health and education and investing heavily in housing and energy.

Treasurer Daniel Mookhey in pre-budget interviews spoke of his desire to make ‘tough decisions’ to get the budget back under control following recent spending on emergencies including black summer bushfires, floods and COVID-19 which ended a long run of budget surpluses.

As with most budgets, there were lots of pre-budget announcements, hinting of harsh cuts on the previous Government’s projects. Treasurer Mookhey has unashamedly redirected spending toward Labor priorities including higher wages for the public service following a decade of Coalition wage cap policy.

The government also sees the increasing impact the housing crisis is having on the community, business and the wider economy and has made spending on housing the centrepiece of this budget. More than $2.2 billion will be spent to ensure that social, affordable, and private housing stock can grow to meet the population and economic demands of NSW.

The government is determined that housing supply does not hamper economic growth and wants NSW to continue to maintain the position it has as Australia’s largest state economy. Premier Minns has made public comments that local councils cannot stand in the way of more housing so NSW can reach the commitment made in the National Housing Accord of 75,000 homes a year for five years.

Debt in NSW is now projected to reach $173.4 billion in June 2026 down from a projected $188 billion when Labor took office.

Rising global interest rates have only added to budgetary pressures with interest payments expected to climb from $2.5 billion in 2020-21 to $7 billion by 2025-26.

The government expects that the budget will return to a surplus of $844 million by 2024-2025 assuming the “no worse off guarantee” payments form the GST floor will remain in place.

Economic Overview

The economic landscape in New South Wales is a mixed bag, showing signs of recovery post-COVID-19 but also revealing stark disparities and challenges.

While economic activity has broadly rebounded, the benefits are not evenly distributed across the population.

Income per person is stagnating, barely keeping pace with inflation, which puts significant pressure on family budgets.

The average household’s spending is on a decline, affecting lower-income families and vulnerable populations the most.

Inflation, although eased to 6.6% in the June quarter, remains high, with the cost of essential goods like food and non-alcoholic beverages rising by 7.8% and household energy costs skyrocketing by 24.3%.

Housing remains a critical issue, with dwelling construction lagging behind federal and state housing targets and rents and home prices escalating at alarming rates. The Reserve Bank of Australia’s decision to raise interest rates 12 times since May 2022 has further exacerbated the cost-of-living crisis.

Public service salary caps have led to low wage growth, contributing to essential service shortages. Despite these challenges, the Government’s comprehensive expenditure review has redirected $13 billion of spend, aiming for a modest surplus by 2024-25 and the largest set of gross debt reduction measures in the State’s history.

The focus is now on increasing housing supply and improving infrastructure, including schools, hospitals, and public transport, without resorting to privatisation.

Key Budget Highlights

Public Sector:

• $3.6 billion for the establishment of an Essential Services Fund to address critical staff vacancies across the public sector including a 4.5% pay increase for more than 400,000 public sector employees.

Health:

• $2.5 billion to recruit and retain healthcare workers. Including $419.1 million for an additional 1,200 nurses and $572.3 million to make 1,112 nurse and midwife positions permanent.
• $13.8 billion for new and upgraded health facilities including:
  • 600 new beds in Western Sydney Hospitals.
  • $120 million for expansion of Blacktown and Mount Druitt Hospital to increase bed capacity.
  • $190 million for upgrades to Royal Prince Alfred Hospital.
  • $350 million to expand Canterbury Hospital and upgrade existing infrastructure.
  • $550 million for expansion of Fairfield Hospital to deliver more beds, increase capacity of the emergency and critical care services, and expand other hospital and community health services.
  • An additional $400 million to build the new $700 million Rouse Hill Hospital with additional services.
  • $1.3 billion to rebuild Bankstown Hospital on a new site to meet growing needs of the community.

• $3.8 billion will be allocated for new and upgraded health facilities in regional areas including:

• $7.5 million for the Milton Ulladulla Hospital and upgrades to the Community Cancer Service Centre.
• $200 million for the Bathurst Hospital redevelopment.
• $538 million for Albury Wodonga Regional Hospital.

• $100 million for increasing women’s access to essential healthcare services including:
  $34.3 million to support 20 women’s healthcare centres.

• $52.7 million will fund 48 new Sexual Assault Nurse Examiners and forensic staff.
• $18.6 million to fund 29 new and 8 existing breast care nurses.
• $7.3 million to support pharmacists to treat uncomplicated urinary tract infections and prescribe the contraceptive pill.

Education:

• $3.5 billion for 24 new and 51 upgraded schools in Western Sydney
• $1.4 billion for 19 new and 35 upgraded schools in regional areas
• $278.4 million is allocated for permanent literacy and numeracy tutoring programs in schools.
• $1.6 billion for preschool fee relief and an expanded affordable preschool program.
• $849 million invested in early childhood education and care (ECEC) services including new preschools on public school sites, new and upgraded non-government preschools and support for not-for profit ECEC services in high demand areas.

Housing and Planning:

• The government has allocated $2.2 billion for their Housing and Infrastructure Plan. The funding breakdown of this plan includes:
• $1.5 billion to be spent on housing related infrastructure from revised developer contributions.
• $400 million reserved within Restart NSW for the Housing Infrastructure Fund which will enable the delivery of high priority infrastructure projects and unlock housing across the state. $100 million specifically focused on regional areas.
• $300 million for state-owned developer ‘Landcom’ to deliver 1,409 affordable homes and 3,288 market homes by 2039-40, with 30 per cent for affordable housing.
• $70.0 million interest-free debt financing for NSW Land and Housing Corporation (LAHC) to accelerate the delivery of social, affordable and private homes primarily in regional New South Wales.
• An additional $9.1 million has also been allocated to assess housing supply opportunities across government-owned sites, with 30 per cent of surplus government land to be set aside for social, affordable and universal housing.
• Creation of a new government agency, Homes NSW, to improve outcomes for public and social housing tenants and reduce homelessness. This agency brings together the Land and Housing Corporation (LAHC), the Aboriginal Housing Office (AHO) and the Department of Communities Justice (DCJ) housing and homelessness functions to put services under one roof with people at the centre.
• $24 million for the establishment of the NSW Building Commission to regulate against buildings which do not meet housing standards and overall support of higher quality housing.
• The formation of a NSW Rental Commissioner which will be responsible for the implementation of a Portable Rental Bonds Scheme and legislating reasonable grounds for ending a lease, offering greater protection for renters.
• An increase of 1500 social housing dwellings over the next four years through the $610.1 million Commonwealth Social Housing Accelerator Program.
• $224 million for social housing agencies and homelessness services to accelerate the delivery of social, affordable, and private homes in both metropolitan and regional areas, and to provide housing services for First Nations households.
• $60 million for Build-to-Rent trials in the South Coast and Northern Rivers regions.

Energy:

• $263 million to increase electric vehicle uptake in NSW, with a new NSW EV Strategy prioritising charging infrastructure in regional and metropolitan areas.
• $1 billion to establish an Energy Security Corporation, which will invest in storage and firming projects like pumped hydro and address gaps in the market.
• $804 million for Transmission Acceleration Facility, to connect Renewable Energy Zones to the grid sooner.
• Along with the Commonwealth Government, $1.3 billion to provide energy rebates and targeted energy bill relief to up to 1.6 million eligible households and around 300,000 eligible small businesses.
• $480 million to increase NSW’s manufacturing capacity and capability for delivering critical components of the state’s emerging renewable energy sector.

Transport & Infrastructure:

• $7.9 billion over four years to deliver the Sydney Metro to Western Sydney Airport, with six new stations to service the future Western Sydney International Airport.
• $302.7 million reserved for a Western Sydney Rapid Bus network to connect the communities of Penrith, Liverpool, Campbelltown to the future Western Sydney International Airport.
• $300 million to upgrade train station car parks and make stations more accessible through the installation of new lifts, ramps and footbridges.
• $200 million reserved to expedite the planning for the procurement, construction and delivery of Parramatta Light Rail Stage 2 for Western Sydney.
• $71.1 million to return Freshwater Class ferries to the Circular Quay-Manly route.
• $43 million for seven new Australian-made Parramatta River Class ferries.
• $15.8 million for Transport for NSW to invest in the Public Transport Information and Priority System to improve real time bus tracking for passengers.
• $60 million in additional investment for active transport infrastructure.
• Introducing a $60 weekly toll cap for private motorists and a 33% reduction in the truck toll multiplier on specific routes.