James O’Doherty: Daniel Mookhey’s second budget won’t be much fun to watch

The belief that sequels are rarely as popular as the original applies just as much to government budgets as blockbuster films — and next week NSW Treasurer Daniel Mookhey will prove it, writes James O’Doherty.

The commonly-held belief that sequels are rarely as popular as the original apply just as much to government budgets as blockbuster films.

While a government’s first budget is delivered with the fanfare of delivering on election promises, by year two treasurers find the rubber hits the road.

Thanks to NSW’s four-year election cycle, a state government’s second budget is also the perfect time to drop the bad news in the hope that voters will forget about it by the time the next poll comes around.

While Treasurer Daniel Mookhey has promised his second budget will be spared from widespread cuts, there will be little in this sequel to get audiences excited.

As Premier Chris Minns revealed last week, fears over inflation meant there will be no major cost-of-living relief.

And there will most likely be no flashy cash splash on massive infrastructure projects — because NSW is too strapped for cash.

Instead, Mookhey is set to hand down a budget forecasting massive deficits as far as the eye can see. “There will be a deficit in 2024-25,” Mookhey said.

NSW Treasurer Daniel Mookhey has promised to outline just how the federal government has dudded NSW of GST. Picture: Justin Lloyd

The red ink will continue in the years ahead, although the Treasurer expects them to “be falling over the period of time”.

To be fair to the Treasurer, he has a good excuse for NSW plunging into deficit when a surplus had been expected.

Firstly, we will get almost $2 billion less in GST revenue from the Commonwealth government next financial year compared to what we were expecting.

Over four years, we will be almost $12bn worse off, Mookhey argues.

Just to ram the point home, Mookhey is promising to release “more details” of how Canberra has dudded NSW when he hands down the budget on Tuesday.

“People will see that if we had simply applied last year’s GST share to this year’s GST that the imposition of the NSW budget would have been dramatically different,” he says.

Next year’s deficit will also have an extra billion dollars added on top, after NSW Treasury accidentally double-counted the money made from selling property above the Sydney Metro about five years ago. Whoops.

Premier Chris Minns has ruled out handouts. Picture: Gaye Gerard

All of this means that NSW will not be back in the black any time soon.

In order to keep the wheels turning, Mookhey will run bigger deficits over the next few years rather than try to claw back revenue from service cuts or tax hikes.

He argues that doing the heavy lifting in paying down debt last year means the budget will be able to “absorb the hit so families and businesses don’t have to”.

“I think it would be wrong in this present economic circumstances for the government to be pledging cuts or tax rises,” he says.

Running bigger deficits means that Mookhey can afford billions of dollars in funding for new schools, like facilities for Box Hill. The government is also spending hundreds of millions on public transport (like finally fixing ageing bus technology). And, there’s planning funding for new roads around the Aerotropolis.

But when it comes to cost of living relief measures that were a staple of the Coalition’s budgets before the election, voters are set to miss out. Gone are the days of the universal vouchers for kids’ sport and music, or the widely popular Dine and Discover Covid stimulus measures.

Government ministers are describing Tuesday’s economic blueprint as a “back to basics” budget, which promises little in the way of a sugar hit.

Prime Minister Anthony Albanese has not made balancing the books easy for NSW. Picture: Roy VanDerVegt

Mookhey insists the budget will point us in the direction of a surplus, but the bottom line in future years is riding on the outcome of funding agreements with the Feds.

Unfortunately for Minns, the boring budget comes right as voters appear to be turning on the government.

Labor copped a beating in a Redbridge poll released on Monday, down almost four percentage points compared to its vote at the last election.

While the Minns government is still ahead, it is leading by the very narrowest of margins: 50.5 to 49.5, on a two-party basis.

The poll gave hope to the Coalition, which got a 4 per cent bump in its primary vote. The way Liberal sources see it, the 2027 election is very much up for grabs (if people ever work out who Mark Speakman is).

Pollster Tony Barry noted that it is a difficult time to be an incumbent government, with the cost of living crisis fuelling the “politics of grievance”.

The Albanese government has not helped their NSW comrades either.

A Newspoll this week recorded the Coalition at a three-year high, while federal Labor’s popularity slumped.

Some of that unpopularity is bound to be bleeding over into the state sphere.

While Minns’ bruising in this week’s Redbridge poll can partly be blamed on the Anthony Albanese, the fact that Tuesday’s budget will do little to make the state government any more popular is Canberra’s fault too.

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