NSW Budget 2023-24: Cost of living relief and rebuilding essential services

19 September 2023

NSW Budget 2023-24: Cost of living relief and rebuilding essential services

Delivering the first budget of the Minns Labor Government this afternoon, Treasurer Daniel Mookhey declared that the 2023-24 Budget “delivers the people of NSW the fresh start they voted for”. The Budget focuses on investment in essential services including schools and hospitals, housing, energy, infrastructure, and rebates, as well as increasing public sector wages.

In his Budget speech, Mr Mookhey stated that this Budget “signals the beginning of a new age of public investment that benefits the many, bringing an end to the era of privatisation that handed profits to the few”, and also that NSW’s cost of living crisis is worse because of “a decade of privatisation”. The Budget includes several key measures aimed at alleviating cost of living pressures. Mr Mookhey has also taken the decision to cut or considerably reduce a number of legacy programs from the previous Government.

Mr Mookhey revealed that the budget deficit will reach $7.8 billion this financial year, with a surplus of $844 million forecast in 2024-25, increasing to a surplus of $1.6 billion in 2025-26. The Treasurer acknowledged that inflation remains NSW’s primary economic challenge, with Treasury forecasting that inflation will peak at 4.75 per cent this year before it is expected to return to the target range in 2025. Highlighting the interest rate rises over the past 16 months, Mr Mookhey noted that households have been hit hard and are spending less. He did state however that the NSW economy is still expected to expand by 1.25 per cent this financial year and climb to 2.25 per cent by 2026-27. Mr Mookhey also indicated that real wages are set to rise from next year.

Recognising mounting rental stress and the housing shortages across NSW, the Treasurer announced a $2.2 billion dollar Housing and Infrastructure Plan, including $300 million for the State’s property development agency, Landcom, to accelerate the construction of 4,697 new homes, including 1,409 homes classified as ‘affordable’ housing. The Treasurer also announced that $400 million will be redirected to establish the Housing Infrastructure Fund, which will support the construction of footpaths, lights, and parks. An additional $224 million will also be provided to the State’s social housing agencies and homelessness services.

Mr Mookhey acknowledged that these measures alone will not fix the challenges that the NSW housing market is facing. However, he also said that combined with the previously-announced reduction in stamp duty for first home buyers and the reforms to planning protocols and rentals laws, “the Government is establishing the foundations of a new housing compact in NSW”.

The Budget also focuses on rebuilding essential services, with the establishment of a $3.6 billion Essential Services Fund a centrepiece announcement. The Fund includes the abolishment of the public sector wages cap, a two-year wage freeze on senior public servants and Members of Parliament, and a 4.5 per cent wage increase for NSW’s 400,000 public sector workforce.

On health, Mr Mookhey shared a focus on recruiting more essential workers to the health system. To achieve this, the Budget allocates funding to hire 500 new paramedics for rural and regional NSW; reforms to salary packaging benefits for the lowest paid health workers; and funding for 12,000 scholarships for healthcare students. The Budget also includes $13.8 billion for health infrastructure, including $120 million to expand Blacktown and Mount Druitt Hospitals, $700 million to build the Rouse Hill Hospital, and $1.3 billion to rebuild Bankstown hospital on a new site.

On cost of living relief measures, the Treasurer outlined an additional $100 million for energy bill relief. The package will increase the Family and Seniors Energy Rebates to $250; the Low Income Household and Medical Energy Rebate to $350; and the Life Support Rebate to $1,639 for each equipment type from 1 July 2024.

Highlighting that Sydney is the most tolled city in the world, Mr Mookhey provided further detail on the Government’s plan to reform the tolling system, with the introduction of a two year $60 per week cap from January 2024 onwards. A key election commitment, the initiative is set to impact approximately 700,000 motorists. Alluding the Government’s ongoing Toll Review, the Treasurer pledged a more ‘streamlined’ toll-pricing system for major state roads and guaranteed that key roads, including the Sydney Harbour Bridge and the Sydney Harbour Tunnel, will remain in public ownership.

As part of the Government’s broader energy reforms, the Treasurer announced the establishment of the NSW Energy Security Corporation with a $1 billion endowment. Tied to the Government’s commitment to phase out coal-fired power stations, $804 million will be invested into the Transmission Acceleration Facility in order to inject more renewable energy sources into the state’s grid and fast-track a cleaner energy mix. $263 million will be used to build more electric vehicle infrastructure, particularly in regional NSW.

On education, the Budget allocated $9.8 billion over four years to reform NSW’s public education system. Included in this package is $3.5 billion over four years to upgrade primary and high schools in Western Sydney, and $1.4 billion over four years to upgrade and construct schools in regional areas. Mr Mookhey also highlighted that the recent agreement to increase NSW teacher’s wages is another measure the Government is investing to support the state’s education system.

Stating that this Budget will “build real projects – not waste billions on fantasy projects, vanity projects, or projects that are just plain bad”, Mr Mookhey noted that, as foreshadowed, a number of infrastructure projects that were previously established under the former Coalition Government will be revised, rescoped or cancelled. The Treasurer did clarify that the Sydney Metro City and Southwest will receive an additional $1 billion in funding and the Parramatta Light Rail Stage 2 will be expedited by reserving $200 million. Meanwhile, $2.4 billion will be sets aside for Western Sydney’s roads including $770 million to establish an Urban Roads Fund to target congestion in metro areas.

On disaster relief, the Treasurer acknowledged that “few people have done it tougher than those who have lost their homes or seen their community devastated by floods and fires” and subsequently announced $4 billion for natural disaster support and recovery programs to “pay the bills” from the flooding events in 2021/22.

For further information on key NSW portfolio measures, please refer to GRACosway’s detailed briefings:

Further Reading

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