Budget error: O'Farrell defiant

THE NSW Premier and Treasurer have rejected calls to apologise to the departing Treasury boss.

THE NSW Premier and Treasurer have rejected calls to apologise to the departing Treasury boss whom they falsely accused of misreporting the state's financial position.

On his first day in office last month, Premier Barry O'Farrell ordered Michael Schur - the longstanding and widely respected NSW Treasury chief - to go on leave pending the outcome of an independent audit of the state's budget.

At the time, Mr O'Farrell and NSW Treasurer Mike Baird claimed there was a $4.5 billion "black hole" in the state's finances and that the ALP government had "cooked the books".

They recruited former Treasury head Michael Lambert to audit the department's accounts.

 That audit subsequently found Treasury's budget assumptions for the four years to 2013-14 were based on information available at the time, and determined there was no impropriety on the part of Mr Schur.

Despite being asked by Mr Baird to reapply for the position of Treasury secretary earlier this week, Mr Schur declined the offer, announcing his decision yesterday to leave "by mutual agreement", as first revealed in The Australian.

Yesterday, NSW's longest-serving treasurer, Michael Egan, said Mr O'Farrell and Mr Baird owed Mr Schur a "full apology" for suggesting he had engaged in professional misconduct.

"I have never seen a public servant so maliciously defamed as Michael Schur was," Mr Egan, who served as the Labor government's treasurer from 1995 to 2005, told The Australian.

But Mr Baird rejected the calls for an apology to Mr Schur, saying the decision to stand him down pending the outcome of an independent audit was "not that unusual".

He said that while Mr Schur had not been found responsible for any wrongdoing, the audit did confirm that the former Labor government had acted dishonestly.

"What's clear is that Labor did cook the books . . . but Treasury did not," Mr Baird said.

"All fault rests with state Labor and not with Treasury."

Opposition Treasury spokesman Michael Daley denied that Labor had left the incoming government with a budget black hole.

"Barry O'Farrell is already making excuses for not delivering on his own election promises and, worse than that, he's softening people up for savage budget cuts," Mr Daley said.

In a statement, Mr Schur said he was pleased that the audit confirmed that he and Treasury had "acted at all times with professionalism and integrity, and that all our forecasts have been based on the best information available".