Tenfold increase in NSW relief spending after horror run of natural disasters

NSW faces unprecedented spending pressures as a result of worsening natural disasters, its budget hit with a tenfold increase to relief and recovery payments since the deadly Black Summer bushfires ravaged the state six years ago.

In partnership with the Commonwealth, the NSW government has spent $9.5 billion on disaster relief and recovery across the state in the period following the devastating summer fires of 2019.

The NSW budget has been hit with a 10-fold increase to relief and recovery payments since the deadly Black Summer bushfires.Credit: Nick Moir

This represents a 10-fold increase compared with the previous six years. Before 2019, expenditure averaged $154 million a year. After Black Summer, that has risen to $1.6 billion annually.

The significant increase will be outlined in NSW Treasurer Daniel Mookhey’s third budget on Tuesday, which despite spending pressures will report a stabilisation of the state’s debt, delivering a gross debt improvement of $9.4 billion.

The $188.2 billion of gross debt projected in the 2023 pre-election budget update is set to be $178.8 billion by June 2026, cutting the government’s interest payments by $400 million in 2025-26.

Mookhey will deliver his budget on the back of two years of the state’s slowest economic growth in three decades, elevated interest rates and cost-of-living pressures.

NSW Treasurer Daniel Mookhey is preparing to hand down his third budget.Credit: Janie Barrett

Mookhey insists he is “optimistic” about the state’s finances and says NSW was able to spend more on improving educational outcomes, as well as investing in hospitals and preventive care to ease the burden on the under-pressure public health system.

Housing will be a key feature of the budget, but the government will also announce establishment of a new Investment Delivery Authority, modelled on the Housing Delivery Authority and designed to accelerate approvals for major projects across all industries, including advanced technologies and energy.

It is expected to help about 30 large projects per year, bringing forward up to $50 billion of investment each year.

Premier Chris Minns said the new authority would be a “game-changer” for NSW.

The budget will also outline an extra $4.2 billion in disaster relief across the forward estimates, with the government anticipating that figure would probably increase in response to previous and potentially new natural disasters.

The Black Summer fires, when 33 people were killed and 3000 homes destroyed during blazes that burnt in late 2019 and early 2020, kick-started what the government describes as “a run of the most devastating natural disasters in the state’s history”.

The horror run of natural disasters included floods in 2020 that hit north-eastern NSW, then in 2022 in the central west and northern NSW, Cyclone Alfred and this year’s floods on the mid-north coast.

The new spending excludes $11.4 billion spent on the state’s emergency services, including Fire and Rescue, the Rural Fire Service and the State Emergency Service between 2019-20 and 2024-25.

While the government says the scale of disasters affecting NSW over the past six years has been unprecedented, the trend is expected to worsen. NSW Treasury has projected that the cost of natural disasters would reach between $24 billion each year by 2070-71 due to climate change.

The Herald will provide live coverage of the NSW budget from 11am at smh.com.au.

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