NSW Budget 2022 live updates: Health, education explained

Labor leader Chris Minns has accused the NSW Government of carelessly racking up debt with a big-spending budget, in the Opposition’s first comments following the budget’s release.

NSW's strong economic rebound from the Covid pandemic will see the state post a better than expected budget result for this financial year but Treasurer Matt Kean’s pre-election cash splash will cause net debt to explode to almost $115 billion.

While the estimated $16.5 billion deficit for this financial year is better than forecast six months ago, major health and flood recovery spending will lead to next year's deficit being three times as large as predicted in December's half year update - at $11.2 billion.

In a budget centred around “supporting families,” $7.2 billion in cost of living relief will be spent next financial year in new and existing measures.

A $150 subsidy will be provided to every school child next year in a newly announced measure to help families pay for uniforms, textbooks, bags and stationery.

Mr Kean’s budget has unveiled tens of billions of dollars in new spending measures, including $15.9 billion to to transform early education and childcare over the next decade.

Follow along for live updates from our state parliament team of Angira Bharadwaj, James O'Doherty, Clarissa Bye, John Rolfe, Lachlan Leeming and Matthew Benns and to find out what this year's budget will bring for you. 

Updates

3:12 pm June 21, 2022 Highlight

Labor’s first comments on the state budget

Lachlan Leeming

Labor leader Chris Minns has accused the NSW Government of carelessly racking up debt with a big-spending budget, in the Opposition’s first comments following the budget’s release.

“This is a budget that's been handed down when you don't have a long term plan for investment in Australia's largest state, you end up spraying money in every direction at a rate of knots months before the general election,” he said.

Mr Minns wouldn’t confirm what reforms would be scrapped if Labor won the election next year, but signalled their budget reply on Thursday will likely involve belt-tightening measures.

“Look at the end of the day, we have to look at savings measures and we have to look at the budget and we have to look at the impact of debt on the operating side of the budget,” he said, saying rising interest on debt around the world was a concern.

“So this isn't a victimless crime at some point. It has to be paid off.”

Shadow treasurer Daniel Mookhey accused the Premier of a “buy now pay later” budget plan.

“The short summary of his fiscal strategy is this. Mr Perrottet’s budget plan is buy now pay later,” he said.

“New South Wales families deserve a lot better than this. If Mr. Perrottet hadn't spent 12 years denying the problems that exist in our vital public services, he wouldn't have had to rush out so much money in this budget to fix them.”

NSW Labor Leader Chris Minns believes the NSW 2022 state budget is racking up debt. Picture: Dylan Coker

2:14 pm June 21, 2022 Highlight

Budget repair 'adjourned'

John Rolfe

S&P has reaffirmed its rating on NSW, but noted budget repair has been "adjourned" and that gross debt is "climbing".

S&P analyst Martin Foo said it had previously anticipated the state to be in operating surplus by next year.

"We now expect an operating surplus by fiscal 2024," Mr Foo said.

"Budgetary repair will be adjourned in the near term," with billions committed to healthcare, early childhood education and toll road rebates.

"Gross debt is climbing but remains manageable at the 'AA+' level. NSW's wealthy and diversified economy, as well as its track record of excellent financial management, anchor the credit rating on the state, in our view,” Mr Foo said.

1:39 pm June 21, 2022

NSW state budget 2022 wrap-up

Sarah Buckley

Thanks for keeping up to date with The Daily Telegraph's live blog of NSW's 2022 state budget.

Some of the highlights from Treasurer Matt Kean's speech included:
-$15.9 billion to transform early education and childcare over the next decade
-$7.2 billion in cost of living relief will be spent next financial year
-$150 subsidy to every school child next year to help families pay for uniforms, textbooks, bags and stationery
-Thermal coal prices are now expected to be higher over the next four years to 2025-26
-Almost $300 million to rail union to get the moth-balled Mariyung fleet finally on the tracks
-Foreigners driving on our roads using an overseas drivers’ licence will now have to sit a NSW drivers test
-$5bn WestInvest funds will be ploughed into nine schools from Sydney’s west and south west
-Tolls fees to rise by 14 per cent by the 2024-25 financial year
-$44m on Safer Pathways program to support domestic and family violence victims
-$2000 IVF rebates for public sector workers, 12,000 women using private fertility clinics, another 2,060 women using public IVF support

1:19 pm June 21, 2022 Highlight

Public servants' heftier superannuation interest, deficit forecast

John Rolfe

Superannuation interest on public servants’ defined benefits schemes is expected to be more than $1 billion heftier over the next three years.

The deficit in 22-23 is forecast to be $11.3bn, up from $3.6bn forecast in December, “reflecting the large investment in the health system” and flood recovery financial support, according to the budget papers.

The 2023-24 budget deficit is also tipped to be bigger, at $2.8bn, up from $1.3bn.
The state’s rate of economic growth next financial year has been upgraded from December’s forecast of 3.25 per cent to 4.25 per cent.

By contrast, some leading economists have been cutting their growth expectations.
Still, Mr Kean defended the growth projection when challenged by journalists.
He said the numbers were done by NSW Treasury, not the government.

“They are independent when it comes to this modelling and we are backing their assumptions,” Mr Kean said.

The anticipated pace of inflation has exploded, from 2.25 per cent to 5.5 per cent.

1:16 pm June 21, 2022 Highlight

NSW's surging debt

John Rolfe

The Daily Telegraph understands the new aspiration is 12 per cent of GSP, which equates to many tens of billions of dollars more in debt.

NSW Treasury did not respond to a question asking what 12 per cent versus 7 per cent equals in dollars of debt.

Treasurer Matt Kean said the government was “absolutely not” giving up on bringing debt under control.

“Our net debt to GSP ratio is half that of Victoria and we are building double the amount of infrastructure in NSW,” Mr Kean said.

Net debt to GSP of 12 per cent in 2031 would still be a reduction on 2026 levels of nearly 14 per cent, or nearly $115 billion.

With borrowing becoming much more expensive as rates rise, the state’s debt interest cost is forecast to leap by $500m next financial year and by about $1 billion in each of 2023-24 and 24-25 compared to what was anticipated in December’s half-year review.

Treasurer Matt Kean said the state government is committed to reducing debt. Picture: Gaye Gerard

1:14 pm June 21, 2022 Highlight

State debt predicted to double

John Rolfe

The state’s debt level at the end of the decade is now predicted to be close to double what the Perrottet government estimated only a few months ago.

Despite rosy forecasts of substantially improved economic growth, the state will sink deeper into the red next financial year – as well as the one after that.

Skinny surpluses are then anticipated. But over the longer term, NSW’s net debt is going to be much larger than we had been led to believe.

NSW's debt level is expected to double. Picture: Supplied

A chart in last June’s budget estimated the ratio of net debt to gross state product (GSP) would fall to 8 per cent by 2031.

A comparable chart in December’s half-year fiscal review was even more optimistic, suggesting net debt would fall to 7 percent of GSP over that time period.

But with the debt picture deteriorating as interest expenses blowout, the government has omitted that chart from its new budget.

1:09 pm June 21, 2022 Highlight

Greater supervision for criminals on parole

Matthew Benns

Criminals on parole in the community will be subject to stricter supervision as part of a $20 million increase in spending on Community Corrections officers over the next four years.

“This year’s budget will allow additional offenders to be subject to active intervention,” Corrections Minister Geoff Lee said.

The annual budget of $2.2 billion for managing criminals in prison and the community was increased to $2.5 billion.

A further $6 million has also been set aside to refurbish cells to increase the safety of inmates and staff. The refurbishment will focus on cells housing prisoners at high risk of self harm.

Thirty six local courts that did not have the ability to provide the necessary care for mentally ill people who commit petty offences will be boosted as part of a $13.5 million expansion to extend the statewide community and court liaison service.

1:07 pm June 21, 2022 Highlight

Electricity price hike warning

Clarissa Bye

Budget papers warn that electricity prices for consumers will rise.

It says higher coal prices combined with “unplanned generator outages” have doubled wholesale electricity prices in a year – and “This will eventually feed into consumer prices”.

“NSW’s electricity market is heavily dependent on coal and gas generation,” the papers state.

“Higher global prices for these commodities and unplanned generator outages have contributed to a more than doubling of the state’s wholesale electricity prices over the last year.

“This will eventually feed into consumer prices.”

Coal prices began rising very sharply in 2021 and peaked at more than four times their long-run average by May this year. Thermal coal prices are now expected to be higher over the four years to 2025-26.

Electricity prices continue to rise with the ongoing energy crisis. Picture: Jeremy Piper

1:04 pm June 21, 2022 Highlight

Covid's hefty economic cost

Angira Bharadwaj

Two years on from the pandemic, Covid-19 is still eating a hefty chunk out of NSW’s overall health budget, with $899m dedicated to the ongoing costs connected to the virus.

The whopping bill breaks downs to $287m for the overall hospital response, including testing at all hospitals and health facilities and $253m for personal protective equipment.

Another $180m will be added to the state’s tab for the operation of Covid clinics while $161m will be used for the public health response including continued surveillance and testing.

Taxpayers will also fork out $19m for the management of long Covid – a debilitating condition where severe symptoms of the virus persist for months after the initial infection.

Treasurer Matt Kean said the state was still “experiencing the health aftershocks of the pandemic” which include “Covid-19 presentations to our hospitals, the first real flu season in three years and a backlog of elective surgery”.

A health worker (C) takes a sample from a woman to be tested for the Covid-19 coronavirus at a swab collection site in Beijing on June 20, 2022. Picture: Noel Celis

1:03 pm June 21, 2022 Highlight

Covid cost $1.7b in Metro delays

Lachlan Leeming

A Transport for NSW spokeswoman said $1.7b of the additional funding was due to problems and delays caused by Covid-19.

“Market conditions outside of Sydney Metro’s control heavily impacted the project…in 2020 and 2021 the construction industry was significantly impacted by Covid,” she said.

“The revised cost of the project includes $1.7b of costs that can be attributed to Covid – which caused significant disruption to critical workforce, construction production, supply chain and program.”

Transport for NSW said $1.7b of Metro costs can be attributed to Covid. Picture: Nikki Short

The project was also hit with an extra $50m worth of delays due to an ongoing dispute and industrial action by the Electrical Trades Union, according to the government.

The development, one of four major metro lines currently under construction, will save up to three minutes travelling between Sydenham and Central, up to 12 minutes to Pitt Street and up to 20 minutes to Macquarie University.

The budget also includes $1.3 billion for the coming year – $12.4 billion over four years – to deliver Sydney Metro West, which will link the Sydney CBD to Parramatta with a 20-minute driverless train trip.