Historic child protection overhaul, $1 billion housing guarantee scheme in budget

The NSW Labor government will make the largest investment in child protection in the state’s history, spending $1.2 billion to overhaul the troubled system, which will include increasing the foster care allowance, employing more caseworkers and ensuring children needing out-of-home care are not housed in motels with minimal supervision.

The budget will also focus on supporting the private sector to deliver much-needed housing, with the government to act as the guarantor for up to $1 billion of new developments to speed up the delivery of 15,000 new homes over five years.

NSW Treasurer Daniel Mookhey has delivered his third budget.Credit: Janie Barrett

NSW Treasurer Daniel Mookhey delivered his third budget on Tuesday, outlining a pathway to returning to a modest $1.1 billion surplus by 2027-28, which would be the first time the state returns to the black since 2018-19.

The state’s deficit will also fall from $10.7 billion in 2023-24 to $5.7 billion in 2024-25, representing a $5 billion improvement, while gross debt will decrease by $9.4 billion from the projected levels in the 2023 pre-election budget update. This will cut $400 million from the government’s interest payments.

Expense growth is projected to average 2.4 per cent a year, down from 6.2 per cent in the five pre-COVID years.

Mookhey’s budget speech said Labor improved its fiscal position “without privatisation or an unfair wages cap”.

“The challenge is no longer high inflation, but low growth,” Mookhey’s budget speech says. “In this budget, we show that cost of living and higher interest rates are easing and opportunities for economic growth are emerging.”

However, he warned that the improvements in the budget should be viewed “with caution” because of the volatile geopolitical landscape that is rapidly unfolding.

The government’s landmark $1.2 billion child protection package will result in 2126 caseworkers receiving a pay rise, helping to fill the 200 vacant positions, while also ensuring vulnerable children are not housed in motels.

“In March 2023, more than 100 children cared for by the state of NSW were sleeping in motels,” Mookhey told parliament.

He said this was unaccredited emergency accommodation, with no proper support and “barely adequate supervision”.

“Since April this year, for the first time in over 20 years, no children are staying in motels.”

“This is a canny use of the state’s balance sheet which has been carefully calibrated to bring online 15,000 homes.”

NSW Treasurer Daniel Mookhey

Under the National Housing Accord, NSW needs to deliver 75,000 new homes annually for the next five years.

Mookhey said the pre-sale finance guarantee would accelerate low- to mid-rise housing, particularly around the government’s transport-oriented development sites.

The government will guarantee a set number of homes to help mid-tier developers secure the finance needed to start building, with projects and developers assessed on their “credibility, capability and capacity”.

If the homes do not sell, the government will purchase them at a discounted rate and offer them as affordable or social housing.

Mookhey said NSW Treasury modelling shows that the state’s property market would need to slump by 15 per cent before the state would lose money on its finance guarantee scheme.

“This is a canny use of the state’s balance sheet which has been carefully calibrated to bring online 15,000 homes,” Mookhey said.

The government says the number of pre-sales required to secure funding from a registered financial lender has increased, in some cases, from 50 per cent of the dwellings to 80 per cent over the past few years.

Despite the improvement in the state’s finances, Mookhey said the “broken workers’ compensation scheme” was adding pressure to the budget, warning the upper house’s refusal to pass his bill – which would overhaul the system – had significant impacts.

Instead, the upper house has referred the reforms to an inquiry.

“Because reform is blocked, the budget is hit by $2.6 billion in additional workers’ compensation liabilities. Most of these expenses fall in the current budget year and next budget year,” Mookhey’s budget speech says. “Those blocking reforms need to explain why this is a good use of money.”

The treasurer also defended the government’s approach to easing the cost of living, insisting NSW was working in partnership to deliver relief, while the state was delivering real wage growth to ease pressure on NSW households.

Mookhey said housing costs remained the biggest factor in living costs, which was why the government was committed to delivering thousands more homes for NSW as quickly as possible.

NSW Liberal Leader Mark Speakman criticised the lack of cost-of-living measures and said the housing measures would not go far enough.

Speakman said the pre-sale finance guarantee would only deliver 15,000 new homes, and opposition treasury spokesman Damien Tudehope said “tech billionaires and Hollywood studios” were winners, while “families and communities” were losers in the budget.

Tudehope was referring to the $100 million fund which will be used to search for a home for Sydney’s second film studio, and the new Investment Delivery Authority which will fast-track private investment projects, such as AI data centres.

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