To all the crazy economists who say there is no such thing as a free lunch, they obviously need to listen to NSW Treasurer Dominic Perrottet. He is handing out free lunch vouchers to the value of $100 per adult as part of the state’s budget delivered on Tuesday.
Without wishing to be a complete damp squib, the economists are still right.
The cost of this gesture is being added to the government debt tab, which is increasing at an extraordinary rate.
From just over $19bn of net government debt in 2019-20, at the end of the forward estimates in 2023-24, net debt is expected to be above $104bn.
That’s surely a record: an increase of about 450 per cent.
It makes the Queensland government look half-responsible.
There’s a common view that this is difficult time to be a treasurer, what with COVID-19 impacting the economy and restricting the growth of revenue.
The truth is quite the reverse: these state treasurers are like kids in candy stores, spending away to their hearts’ content.
Little attention is being paid to the quality of spending or implicit trade-offs that still exist about spending or not spending as well as spending on A rather than B.
Perrottet complains about losing $25bn in revenue over five years. This is actually very little, given annual revenue is more than $80bn and growing.
The Treasurer is unable to manage a recurrent budget surplus in any of the four years, with the deficit for this year estimated to be $16bn.
The only conclusion is that he isn’t really trying, particularly as it is expected that the negative effects of the pandemic will be over relatively soon and that the NSW economy will bounce back from mid next year.
Notwithstanding the NSW government’s demonstrated inability to manage large-scale infrastructure projects — think light rail project, in particular — the budget has lashings of billion-dollar bills for more. And for some smaller projects as well.
The only intriguing part of the budget is the option to allow some home purchasers to choose between paying a lump-sum stamp duty or an annual property tax.
All up, the budget looks like a dog’s breakfast of excess spending and irresponsible growth in debt.
In budgetary terms, NSW is now officially no better than the other states — and that’s not a compliment.
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