NSW Budget: Savings task force formed as treasurer stares down recession
John Howard enlisted Max “the Axe” Moore-Wilton to slash public sector spending in the mid-1990s, now Treasurer Dominic Perrottet has appointed another “axeman” to cut through state government waste.
NSW
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The state government has formed a secret task force to review the spending of every department as it moves to plug a multi-billion dollar deficit in the upcoming State Budget.
Government-funded programs and initiatives that do not drive jobs, productivity or economic growth will face the chop and precious dollars redirected to those that do.
But, in his first interview about the State Budget — due to be handed down in November — Treasurer Dominic Perrottet said the message of 2020 would be of “smarter” government spending than one of cuts and contraction.
While the John Howard enlisted Max “the Axe” Moore-Wilton to find savings in the public sector in the mid-1990s, The Sunday Telegraph can reveal Mr Perrottet has brought on leading economist, Professor Percy Allan, to contribute to his own review.
And one of the first programs to face the chop will be one of his own, the NSW Generations Fund “My Community Project”.
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The scheme, which allowed the community to vote on local projects that make their area more “liveable, cultural, accessible, safe, revitalised and healthy”, had invested more than $25 million in 248 projects through grants of $20,000 to $200,000.
Mr Perrottet said Mr Allan, who served as NSW Treasury Secretary and chairman of the NSW Treasury Corporation, would be scrutinising spending, discretionary grants and procurement as part of a steering committee of Treasury official, which will also include the Secretaries of the Department of Premier and Cabinet.
The review will scrutinise government spending over the medium-term to advise if programs are operating efficiently and effectively.
The move follows confirmation last week that Australia had officially entered a recession for the first time since 1990-91, with GDP collapsing by 7 per cent in the June quarter, and by around 6.3 per cent over the past year.
In NSW, state final demand fell 8.6 per cent in the last quarter with a 13.3 per cent plunge in household spending.
“This is going to be a tough period and there are going to have to be tough decisions,” he said.
“Every single dollar is now precious. My Community Project was one of mine, but I’m axing it. This is about smart government and making sure every single dollar of our over $80 billion budget is focused on jobs, productivity and economic growth. Everything will now have to be viewed through that lens.
“But this is not about cutting — it’s about reallocating. There will be more spending in this budget than any other budget, but it will be spending in the areas that matter.”
Prior to the pandemic, Mr Perrottet was again looking at delivering a surplus, although smaller due to the drought and bushfire relief spending.
“I’ve handed down big surpluses and there was an expectation the budget this year would have a modest surplus off the back of investment in droughts and bushfires,” he said.
“I am now going to hand down potentially the biggest budget deficit we have ever had.”
The November Budget will be one of three “linked” financial statements to be handed down in the next six months with a half-year report to be released in February followed by another State Budget in June next year.