Mookhey created a $860 million pool in the budget. We don’t know how he will spend it

NSW Treasurer Daniel Mookhey has more than doubled a pool of money that gives him the power to spend more than $860 million on election commitments and essential services.

Mookhey has increased the so-called “special appropriation for the treasurer” from $322 million in last year’s budget to $868 million, which can be spent on “state contingencies, expenditure related to the government’s election commitments and essential services”.

NSW Treasurer Daniel Mookhey delivers his budget speech in NSW parliament on Tuesday.Credit: AAP

A spokesperson for Mookhey said the money may be needed for a potential takeover of Northern Beaches Hospital or a public sector wage claim, adding the treasurer could not budget for unforeseen circumstances. He did not explain why the increase was so large.

The opposition seized on the special appropriation measure included in the government’s budget bill, introduced to parliament on Tuesday, insisting it amounted to a “slush fund”.

Opposition Leader Mark Speakman said the treasurer had a massive pot of money to spend.

“The government talks a big game on transparency, and yet they have set aside for themselves a large pot of money to spend on whatever they want with practically no oversight,” Speakman said.

“The public deserve to know what the government has planned for this almost $1 billion slush fund.”

In last year’s budget, Mookhey put aside $322 million for the fund. This year’s budget papers show $34 million of that was spent across several departments, including communities and justice, education, health and customer service, but no specifics were provided.

Similarly, the total amount Mookhey spends from this year’s allocation will not be known until it is outlined in next year’s budget, when the spending will be broken down by departments.

In a statement, a spokesperson for Mookhey described the inclusion as a “standard request” to parliament to authorise funding for contingencies.

“Treasurers Kean, Perrottet and Berejiklian all included similar appropriations in their budgets,” the spokesperson said.

“The appropriation allows the government legal authority to respond to events that may arise after the budget is finalised without having to present further appropriation bills.

“Far from being secret, it is there for all to see in this year’s budget bills. It is also included in the forecast operating result.”

The opposition also accused NSW Labor of axing a similar fund in place when the Coalition was in government, only to replace it with one that gives Mookhey comparable sweeping powers.

In a costings request to the Parliamentary Budget Office before the March 2023 election, Labor said it would abolish what was then known as the Advance to the Treasurer to “promote stronger budgeting” and “clean up imprudent ad-hoc spending”.

As promised, the fund did not appear in Mookhey’s first budget, nor did any mention of state contingencies, other than cash specifically for natural disasters and integrity agencies.

When in office, the Coalition set aside hundreds of millions in its budgets in the so-called Advance to the Treasurer, which later became known as state contingency funds. In 2020-21 the budget included a $1.47 billion contingency – however this was during the pandemic and the cash was specifically set aside for spending related to COVID measures and wages.

Asked whether the special appropriation for the treasurer amounted to a “slush fund”, Mookhey’s spokesman responded: “No”.

Mookhey delivered his third budget on Tuesday, outlining the state government’s path to returning a modest surplus of $1.1 billion by 2027-28.

The deficit will fall from $10.7 billion in 2023-24 to $5.7 billion in 2024-25, and gross debt will decrease by $9.4 billion from the projected levels in the 2023 pre-election budget update – cutting $400 million from the government’s interest payments.

The budget focused on fiscal responsibility with no big-ticket handouts. A $1.2 billion child protection package was the major announcement of the day, with 2126 caseworkers receiving a pay rise, helping to fill the 200 vacant positions while ensuring vulnerable children were no longer housed in motels when it was unsafe to live at home.

Mookhey also unveiled Australia’s first pre-sale finance guarantee. Under the scheme, the government would guarantee a number of homes to help “credible and capable” developers deliver low- and medium-density housing projects.

If the homes go unsold, the government will purchase them back at a discounted rate for either build-to-rent, affordable or social housing.

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