Penny-pinching NSW budget lacks vision and offers few solutions to state's most pressing problems

The Guardian

4 days ago

The Minns Labor government's third budget is one of consolidation, careful management, penny-pinching and modest spending. This budget will please the ratings agencies, and those who value New South Wales's AAA rating.
But it is not for those who hoped to see a bold vision for NSW or big steps forward to deal with some of the state's and the nation's most pressing problems: a cost-of-living crunch, housing crisis, climate emergency and other environmental challenges.
No new major infrastructure projects were announced and fresh measures to help stimulate private investment in housing and increase the number of tradies in the state are modest.
To be fair, the government announced a major package in last year's budget to address social housing: $5.1bn over four years. The program will build 8,400 social housing dwellings (6,200 new and 2,200 replacement).
Now the treasurer, Daniel Mookhey, says he's turning his mind to stimulating private-sector investment in housing.
The development industry has long complained about the levies NSW imposes on new housing, which it says makes construction in NSW the most expensive in the nation.
In this budget, the government has agreed to forgo the $12,000 per lot levy if developers provide in-kind infrastructure, such as lots for schools and roads. This is potentially risky, given some developers' record in actually delivering on what they promised. Just ask the residents of Wilton, on Sydney's south-west fringe, who moved in without a proper sewerage system.
The pre-sale guarantee announced in this budget means the government will use its balance sheet to effectively guarantee to buy 5,000 dwellings off plan to help mid-tier developers gain finance for projects. The guarantee is basically without cost unless property prices drop precipitously. It is capped at $1bn, which makes it modest.
Mookhey says it will unlock 15,000 new homes and help developers wanting to build six to nine-storey developments in transport-oriented development zones within 400 metres of stations.
Yet the population of Sydney will keep growing. Without a coherent infrastructure plan to keep pace, the sort of problems that beset the Carr Labor government in its latter years – congested roads, trains that broke down and overcrowded public transport – will return to haunt the Minns government or whoever is in power.
The trend in infrastructure investment is down. It reached a peak of more than $30bn in 2023-24 and 2025-26 but will fall to $28bn in 2028-29.
Mookhey has recognised that Sydney's water infrastructure is ageing and has promised more investment. Watch this space, after Ipart reports in October on Sydney Water's price rises.
When it comes to the enormous challenge of energy transition and meeting the state's emissions reduction target of 50% from 2005 levels by 2030, the state is falling woefully behind.
The budget contains no new programs to stimulate solar or batteries – though there is some additional spending on transmission lines for the renewable energy zones. Mookhey also points to investment in the Newcastle port facility, which he says will be used to handle massive wind turbines.
In the meantime, the budget reveals the enormous costs of recent floods, which have increased disaster relief by 1,000% in the six years since the 2019-20 bushfires.
On cost of living there is nothing either.
Toll relief will run out for Sydney motorists by 1 January. Mookhey is in the midst of a difficult negotiation with the private toll operator Transurban, which owns 80% of Sydney's motorways and unsurprisingly does not want to take a haircut on its lucrative toll revenues.
The likely outcome will be higher tolls on the Harbour Bridge and Sydney's eastern suburbs, with some cuts in the city's west. But it's not going to be easy, with the built-in indexing in current agreements.
Mookhey argues that by boosting public-sector wages he is helping repair households' purchasing power and that that is his contribution toward relief, with the federal government responsible for the lion's share of cost-of-living support.
But while the budget shows inflation in NSW moderating, households in Sydney are still grappling with living in the most expensive city in the country.
And on the environment the budget is particularly disappointing: no additional funding to achieve the great koala national park.
Luckily it's not an election year. Mookhey was coy when asked whether he was keeping his powder dry.
Instead he hopes modest spending on innovation, plans for a new film studio and a fast track for business wanting to invest in NSW – the Investment Delivery Authority – will keep business sweet.
The citizens of NSW will just have to wait.