NSW Treasurer to unveil $7.8bn deficit, long-term $3.6bn improvement in first budget

NSW budget will be about ‘tough decisions’ as the Treasurer prepares to reveal a deficit this year but a modest $3.6bn improvement across the next four.

NSW Treasurer Daniel Mookhey. Picture: Tim Hunter.

The NSW budget will be about “cutting waste” and “tough decisions” – with funding slashed across senior politicians’ pay and “fantasy” infrastructure projects – as the Treasurer prepares to reveal a $7.8bn deficit this year but with modest $3.6bn improvement across the next four.

Treasurer Daniel Mookhey will hand down his first state budget – Labor’s first since 2010 – at midday Tuesday in what is expected to be a low-spend book.

The full scope of the budget won’t be known until then, but it is anticipated Mr Mookhey will unveil a $7.8bn deficit this year – down from $10.1bn in the year previous – with a return to surplus next year.

The Treasurer expects a $800m surplus in 2024/25, with a surplus in the next two years thereafter.

A modest $3.6bn improvement to the state’s bottom line is expected across the four years from 2023-24, which, the Treasurer is expected to announce, is down to savings made across government expenses.

Tuesday’s budget is the first under a state Labor government since 2010. Picture: Julian Andrews

The budget is expected to disclose that about $13bn has been found in savings and redirected through a comprehensive expenditure review, with funding diverted to “the public’s priorities”, such as $2.3bn for disaster recovery and $527m to make 1112 nurses permanent.

Savings – in what the Minns government has called “cutting waste” – have been a tenet of Mr Mookhey’s first budget preparation.

The Minns government will slash pay for politicians and senior bureaucrats, as well as clamp down on the use of consultants.

Freezing MPs’ and senior executive bureaucrats’ pay is expected to save $745m, inclusive of reducing the number of senior executives on the state payroll by 15 per cent.

It also hopes to save about $537m in culling the use of consultants and labour, in an attempt to reduce the public sector’s reliance on costly external contracts.

About $13bn in savings has been found across government expenditure, including in a cheaper Circular Quay redesign. Picture: Sam Ruttyn

Across infrastructure projects committed to by the previous government – some of which Mr Mookhey described as “fantasy projects” – millions have been diverted in favour of amending or scrapping plans.

Mr Mookhey will hope to save about $5bn by scrapping plans for the Dungowan Dam, and raising the walls of the Wyangala and Warragamba dams.

Tunnels through the Blue Mountains and Sydney northern beaches have also been scrapped.

A total new build for Penrith Stadium is scrapped in favour of a more minor redevelopment, while $250m worth of funds initially for Ultimo’s Powerhouse Museum’s redevelopment has been diverted in favour of a cheaper “heritage revitalisation”.

Covid programs and equipment are in the firing line, with the Minns government hoping to repurpose about $100m in funding from the Covid PPE stockpile.

The marketing budget of Destination NSW is set to be slashed by 30 per cent, as are travel card programs for regional seniors and regional tradies.

The full budget will revealed by Mr Mookhey at noon.