The last decade was about metros and motorways. The next 10 years will be different

NSW Treasurer Daniel Mookhey says the next decade will be defined by “pipes and poles” as the focus on the state’s infrastructure shifts from mega-projects such as metros and motorways to replacing ageing assets and supporting much-needed new housing.

The treasurer said the government would spend $120 billion on infrastructure over the next four years, including delivering under-construction metro lines, but providing water and power services for new housing would be the priority for the foreseeable future.

NSW Treasurer Daniel Mookhey will deliver his third budget on Tuesday.Credit: Sam Mooy

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

However, despite the tough conditions, Mookhey is “optimistic” about the state’s finances and said 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.

“This budget is about the future of our essential services and the future of economic growth in NSW and people will see we’ve made real, steady progress in fixing the state’s finances, which means we are in a position where we can make more investments in our essential services,” Mookhey said in a pre-budget interview.

“It means that there are more kids getting access to tutoring programs, it means that there are more kids getting access to remedial reading catch-up programs, it means they’re getting more access to maths instructions, and that’s making a big difference in terms of the quality of outcomes.”

Beyond bricks and mortar

Mookhey said the government had also made investments in hospitals such as Bankstown, a statewide pathology lab at Westmead and regional centres including Eurobodalla on the south coast.

“People are seeing us do the bricks-and-mortar aspects of health, but they’re also seeing us invest in new service delivery models, like the preventative stuff,” Mookhey said.

Housing, however, remained a key priority for the government and Mookhey conceded the government’s target to build 75,000 homes annually for five years was “ambitious” and more akin to a “stretch target” that NSW would likely miss.

Nonetheless, he said NSW had to pull every lever so future generations are not to be locked out of the housing market or leave the state for cheaper housing options elsewhere in Australia.

‘The future of infrastructure in the next 10 years is going to look quite different to what it has been in the last 10 years.’

Daniel Mookhey, NSW treasurer

Australian Bureau of Statistics data released this week showed NSW was losing more residents to other states than it took in. Nearly 31,000 people left NSW in the final three months of last year, while Queensland and Western Australia were the only states to record an increase in population from interstate migration – net increases of 7600 and 2943 respectively.

“When it comes to the housing market, it is so crucial for our ability to keep people in NSW and attract people to NSW. Ultimately, we need to build more homes, and we want to build homes and neighbourhoods people want to live in,” Mookhey said.

Mookhey said the government was “borrowing billions” to build the next stages of Sydney’s metro network, which was crucial to the city and also for housing delivery in well-located areas.

“I’m mindful that we have to derive maximum value from the investments we’re making [and] we need to make sure we squeeze every inch of housing we can out of those big investments,” he said.

“When we’re borrowing so much money from our kids and our grandkids to build those projects, I think it’s only fair and reasonable that our kids and grandkids can live near them and that’s the argument we’re making to the people in NSW as to what the future of infrastructure looks like.”

Digging deep

However, Mookhey said mega-projects such as metro lines would not be the focus in years to come.

“The future of infrastructure in the next 10 years is going to look quite different to what it has been in the last 10 years,” Mookhey said.

“If the last 10 was about the big metro projects and the big freeways, motorways and tollways, the next 10 is going to be about making sure we’re building the power and the water, especially.”

Mookhey said government assets built in the 1980s are “coming to the end of their natural life”.

“The rule of thumb, that I say internally, is that in general, if it was something that [former Labor premier] Neville Wran built in the late ’70s and early ’80s, in the next 10 years, we’re going to look how we replace it and renew because these are assets now that are quite old,” Mookhey said.

“We are going to have to put more in the poles and the pipes and that is something that is not sexy, and it doesn’t involve the big openings, but it’s so crucial to people’s quality of life.”

Housing and taxes

Mookhey said while his first two budgets focused on build-to-rent and funding for public housing, this budget would pivot towards ensuring the private market could deliver new homes.

The government has already revealed it would provide tax breaks to developers in Tuesday’s budget, which will allow private land to be dedicated for public purposes or deliver infrastructure projects, rather than paying through a housing and productivity contribution.

However, there will be no other significant tax reform in the budget, including around gambling, after the government ruled out ending tax concessions at casino-style clubs, which cost NSW residents $964 million in forgone tax income in 2023-24, according to last year’s budget papers.

Clubs do not have to pay any tax on gambling profits under $1 million, and only 28.4 per cent tax on gambling profits under $20 million, compared to the 50 per cent tax on pubs’ gambling profits.

Mookhey defended the decision to not end the tax concessions for clubs, insisting that reform would come through cashless gaming.

“When it comes to different forms of taxation, lots of people have different views as to the taxes that we should increase and the taxes we should decrease; it’s always an area of public debate,” he said.

“We listen to it all, but when it comes to specifically the issues around clubs and pokies and pubs, the government’s response is there, predominantly, through the cashless gaming process.”

A government-sponsored trial of cashless gambling in NSW failed to produce meaningful data due to the low participation rate.

Follow our live coverage of the NSW budget from 11am on Tuesday at smh.com.au.

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