Business warning: Don’t increase wages at expense of vital infrastructure projects

Business leaders have warned Sydney could grind to a halt unless the Minns government stops spending on wages and starts pumping cash back into infrastructure projects.

Sydney could grind to a halt unless the Minns government stops spending on wages and starts pumping cash back into infrastructure projects to get housing and the economy moving, business leaders have warned.

Wages and expenses for government employees have jumped a massive $11 billion over what was budgeted before Labor Premier Chris Minns swept into power in 2023, with train drivers this week pocketing a 12 per cent, perk-laden pay rise.

Doctors, nurses and firefighters are still negotiating their way onto the payroll gravy train that has seen MPs up their salaries by 3.5 per cent and police officers trouser an extra 19 per cent over four years.

Meanwhile spending on critical infrastructure has dropped, with transport spending cut from $76 billion in 2022-23 to just $55 billion this year. Water infrastructure could be cut by 35 per cent or $5.9 billion if water regulator IPART slashes the budget.

Treasurer Daniel Mookhey rejected the criticism and said almost $120 billion had been set aside in the last budget for essential infrastructure that prioritises schools, hospitals and housing.

Doctors and nurses are still negotiating their way onto the payroll gravy train. Picture: NewsWire/Nicholas Eagar

“We are proud that we can pay our essential workers such as police officers, teachers and healthcare workers more because we have cut the state’s interest and insurance bills, and cracked down on the Coalition’s waste – just as we said we would,” he said.

But industry experts argue cuts in transport and water infrastructure spending will stop housing developments from going ahead.

Treasurer Daniel Mookhey, Urban Taskforce chief executive Tom Forrest and Acting opposition leader Damien Tudehope.

Urban Taskforce chief executive Tom Forrest said the focus on wages and drop-off in investment meant infrastructure has become “the bottleneck to new housing”.

“Large pay rises for selfish, militant rail workers send the wrong message to working families struggling to get on the housing ladder,” he said.

Business Western Sydney executive director David Borger said: “We are competing with other states for skills and expertise and we don’t want to lose out.”

Mr Borger said the population in southwestern Sydney will grow from 635,000 to one million in the next 15 years and those people need to be connected to the rest of Sydney.

“It is important to get those projects into the pipeline,” he said.

Acting opposition leader Damien Tudehope said “public servants deserve fair pay” but not at the cost of stalled infrastructure that many of them need to do their jobs”.

“Chris Minns has ordered more than 50 reviews, inquiries and re-announcements across nearly every government department – not to deliver results, but to look busy while doing nothing,” he said.

Mr Tudehope said $1 billion had been axed from the health infrastructure budget, bringing it down to $12.4 billion over the next four years with hospitals in Bankstown, Eurobodalla, Rouse Hill, Ryde, Broken Hill and Fairfield all delayed.

The government has delayed its project at Bankstown Hospital. Picture: Supplied

Mr Mookhey said that Labor had cut costs to fund pay rises and was pumping 15.4 per cent more into infrastructure than the Coalition did in its final term in office.

“Mr Tudehope is scared that we are succeeding, because it undermines his campaign to resume 12 years of privatisation and bring back a wages cap,” he said.

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Originally published as Business warning: Don’t increase wages at expense of vital infrastructure projects