State’s dire warning of ‘tough choices’ as landmark budget handed down

One state has been warned to brace for potential pain from “tough choices” in their first budget. Here’s what we already know.

Australia’s largest state economy is bracing for pain after being warned “tough choices” need to be made ahead of the NSW state budget on Tuesday.

When Treasurer Daniel Mookhey hands down his first budget next week he is expected to lay bare the dire state of the state’s finances.

Facing a mountain of increasing state debt, soaring living costs and ailing essential services, he will cut existing voucher programs for families and spend more on retaining key worker positions.

While all will be revealed on Tuesday, September 19, here’s what we know so far.

NSW Treasurer Daniel Mookhey will hand down his first budget on Tuesday. Picture: NCA NewsWire/ Nikki Short

WINNERS

Public sector workers

Promising to boost the pay of public sector workers was a policy commitment that played a key role in Labor’s election success.

The pay rises have been estimated to cost about $618m during the 2023-24 financial year and will be paid for through budget savings and productivity gains.

Premier Chris Minns has promised at least a 4 per cent wage increase to workers, along with a 0.5 per cent boost to superannuation.

While the deals haven’t been without controversy – including highly publicised fights with the Health Services Union and the NSW Teachers Federation and criticisms of a spending frenzy by the opposition – deals have been struck with public service workers, teachers, nurses and midwives, and health service employees.

Labor’s uplift to public sector wages has come at a budget cost of $618m. Picture: NCA NewsWire/ David Swift

Energy security fund

Amid fears of risks to energy security, and a push to extend the life of Australia’s largest coal-fired power plant Eraring, the government has injected $1bn into Restart NSW.

The cash will be used by the Energy Security Corporation for projects like investing in community batteries and virtual power plants that will allow communities to pool electricity generated from rooftop solar.

The Transmission Acceleration Facility will also receive $800m to speed up construction in the Central-West Orana Renewable Energy Zone.

Women’s health

A futher $34.3m has been committed to women’s health centres in Sydney, the Hunter, the Central Coast, Illawarra, Lismore and South Coast.

School funding

Another $3.5bn over four years will be used to build or upgrade more than 60 new schools in Sydney’s western suburbs. The funding will go towards building new schools in 18 suburbs and upgrading facilities in nine areas.

A whopping $3.5bn has been committed to build and upgrade more than 60 schools across the state. Picture: NCA NewsWire/ Damian Shaw

Hospital funding

$3bn has been promised to upgrade and build new hospitals in western Sydney, with the ultimate goal of creating 600 new hospital beds.

The funding includes $400m to build Rouse Hill Hospital, $550m for the first major redevelopment of Fairfield Hospital and $1.3bn to build the Bankstown-Lidcombe Hospital on a new site.

The government has also committed $572m over four years to permanently hire 1112 nurses and midwives who were initially hired during Covid but only funded until June 2024.

Students studying health

The government has allocated $121.9m for university students studying health to receive a $4000 scholarship for each year of study.

Applications will open on January 1, 2024, and 12,000 students across medicine, nursing, paramedicine and midwifery are expected to benefit. Current students can also apply for a one-off $8000 payment upon graduation.

Childcare

Families with three-year-olds in long daycare preschool programs will be able to access $500 in fee relief for each child.

The $64m program is committed for the next two years and accompanies a further $22m to support early childhood workers and $20m in capital funds to support new not-for-profit services in high-growth and regional communities.

The government has also committed $20m to the Flexible Initiatives Trial, which will look at programs to extend operational hours and expand access to early childhood education.

Families will be granted $500 fee relief for three-year-olds attending long daycare preschools. Picture: NCA NewsWire / Nicholas Eagar

LOSERS

State’s debt outlook

NSW’s debt levels are set to grow to $187.5bn by the end of the 2025-26 financial year, with the state’s interest payments increasing from $2.5bn in 2020-21 to $7bn in 2025-26.

Regional seniors travel card, regional apprentice and university student travel card

Although no announcement has been made in relation to whether these to programs will be cut, they have both been suspended.

Both programs were implemented under multi-year trials and gave eligible seniors $250 a year to spend on taxis, public transport and taxis and $250 a year to help fund transport and training needs for apprentices and students.

Vouchers for kids

Active Kids and Creative Kids vouchers will be means tested from term 1, 2024, with families able to access two $50 vouchers at the start of term 1 and term 3.

Previously, the vouchers were eligible for all parents, guardians and carers, with households receiving two $100 vouchers every year per child. The First Lap swim program voucher has also been halved to $50 and is in place until June 30, 2023.

The Powerhouse Museum

The famous museum in Ultimo, Sydney that dates back to 1988 will undergo a sizeable $250m heritage revitalisation under Labor.

The figure promised has been reduced from the $481m originally allocated by the Coalition. Instead, the government will use the remaining $231m to fund other projects, like new hospitals and schools.

The NSW government has committed $250m for the Powerhouse Museum in Ultimo to undergo a significant heritage revitalisation project.

Programs not funded past June 30, 2023

Since flagging $7bn of unfunded initiatives left by the former government, it’s likely these will be targets for funding reductions or cuts.

Most recently, Labor flagged the former government cut $188m from the Department of Enterprise, Investment and Trade’s budget, with more than a dozen programs from Investment NSW, Destination NSW, and Create NSW scrapped. At the time, Arts Minister John Graham said these programs would likely be subjected to “tough choices”.

Infrastructure

This has been the key pain point flouted by the Coalition.

While some were snubbed pre-election – like the $2.5bn Blackheath to Little Hartley Great Western Highway upgrade and the $10bn Northern Beaches tunnel – Labor has flagged large-scale builds may be reprioritised and nipped.

Although all eyes are on whether the Sydney City Centre to Westmead Metro West link will be saved, Mr Minns has said the project’s future will be pushed back until the release of the Sydney Metro Review in October.