Mark Speakman
Leader of the NSW Opposition
I begin by acknowledging the Gadigal of the Eora nation and all the traditional owners of all the lands in our various electorates.
Mr Speaker, this is a Budget which fails NSW.
This is a bad Budget, from a bad Government.
This is a Budget where the Government will collect far more revenue than any government in the history of NSW.
Yet this is a Budget that doesn't offer a cent for new cost of living support.
This is a Budget where the Government has lost control of the finances.
This is a Budget that risks our economic security – delivering more deficits, more debt and all but decimating our Triple A credit ratings.
How on earth has this happened?
Here's how. Before the election, the Premier said his union wage deals wouldn't cost the people of NSW a cent – and would be fully offset by productivity savings. Instead, he's broken that absolutely critical promise, costing the Budget already over $9 billion and potentially another $6 billion on top of that.
The Premier's broken promise means that, even though this Government is raking in record revenue, there's no new cost of living support and there are cuts to schools, hospitals, other frontline services and infrastructure.
The Premier's broken promise means:
• More pressure on stretched family budgets.
• More pressure on renters and first-home buyers.
• More pressure on schools – with school budgets cut.
• More pressure on hospitals – with emergency departments overwhelmed; and support for the dying cruelly cut.
Yet the Government hides behind smoke and mirrors – taking no responsibility and blaming everyone but themselves.
This is a Labor Budget through and through.
More taxes.
More deficits.
More debt.
Financial mismanagement and squandered opportunities.
I'll now address:
• Briefly, the budget position which this government inherited, then:
• The government's claims about GST revenue cuts.
• The revenue windfall which the government has received.
• What the Government's broken promise on the funding of union wage deals is costing the taxpayer.
• What the Government's budget mismanagement means for the future state of NSW finances.
• What the budget mismanagement means for cost of living support.
• What the budget mismanagement means for health, education and other frontline services.
• What the budget mismanagement means for housing.
• What the budget mismanagement and lack of vision mean for future infrastructure, and finally
• Some concluding remarks.
THE INHERITED BUDGET POSITION
So let's start with the budget position which this government inherited. The Government likes to talk about the past – so let's set the record straight.
At the end of 2018-19, the Budget showed a $4.2 billion surplus and no net debt.
Notwithstanding the once in a lifetime COVID-19 pandemic and unprecedented natural disasters that followed, the outgoing government left a budget signed off by the independent Treasury Secretary as being back in the black by 2024-25, with ongoing surpluses after that.
Complaints from those opposite about the State's debt reek of hypocrisy – Labor supported every measure delivered in response to the COVID-19 pandemic and natural disasters, and supported infrastructure programs financed through debt.
Despite the challenges, NSW retained two AAA credit ratings.
GST REVENUE
Now let's turn to the Government's claims about GST revenue.
Of course we agree the current GST distribution system is unfair to NSW. For decades NSW has subsidised medicant states and territories. The rip off should stop.
But this is not the cause of the Government's mess. The Government certainly seems to claim it is.
The Premier has said:
"the government has little room to offer any major cost of living relief, due to unprecedented cuts to the revenue the state was expecting to receive from Canberra. "
This claim is farcical when you look at the size of the GST revision and the other revenue more than offsetting it. John Kehoe in The Australian Financial Review rightly identifies a big forecasting error by this Government as the secret reason behind the claim.
The Government blames Canberra for an alleged $11.9 billion GST rip-off.
But the Budget Papers instead confirm "Over the four years to 2027-28, GST revenue has been revised down by $6.2 billion". The State's percentage share of the GST cake fluctuates year by year. It's fallen – but once you allow for the growth in the size of the overall cake, the Budget Papers accept that the downward revision in the erroneous forecast is $6.2 billion, not $11.9 billion.
REVENUE WINDFALL
And the Budget Papers say that this GST revenue revision, and other revenue reductions, will only be partial offsets for increases in land tax revenue, transfer duty revenue, certain Australian government funding and mineral royalties.
The take from State taxation will grow over four years under this Government from $39.7 billion in the 2023 financial year to $53 billion in 2027 – an increase of 33% - or over $3500 per household per year.
Forecast total revenue over the four years to 2027-28 is now expected to be $10.7 billion higher than forecast at the 2023-24 Half-Yearly Review.
As The Australian Financial Review editorialised after the Budget, "the truth is that NSW doesn't have a revenue black hole".
Or, to paraphrase another commentator's observations, into slightly more Parliamentary language, this Government has been hit in the backside by a revenue rainbow.
UNION WAGE DEALS
But this revenue rainbow isn't being used for debt reduction, or more funding for schools or hospitals, or new cost of living relief – instead it's been handed over to Chris Minns' union masters.
Before the election the Premier said his union wage deals wouldn't cost the people of NSW a cent – not a cent. They'd all be funded by productivity offsets.
This was an absolutely critical promise, at the core of budget management, but the Premier has betrayed the people of NSW and broken it.
The Premier has handed the keys to the Treasury over to his union masters.
Not a cent in productivity offsets has been identified. Instead there's already reveals a $9.5 billion for this broken promise.
But that figure and the Budget don't provide for any further wage deal beyond 10.5% over three years.
Yesterday the Minister for Industrial Relations was asked in Question Time:
"Police are demanding wage increases of 25 per cent; nurses and midwives, 15 per cent; rail workers, 36 per cent; and firefighters, 20 per cent. The budget provides for 10½ per cent over three years. Is 10½ per cent the upper limit of what those unions can hope for?"
She replied:
"We have made an offer of 10.5 per cent as a baseline to negotiate".
We know that there's a further $6.4 billion in union demands that sit unfunded and unaccounted for in this Budget – a massive liability our state simply can't afford.
The Government still won't come clean on the true cost of its union wage deals.
Instead of doing what it promised at the election – namely, to fund wage increases from productivity offsets - this government has used its revenue windfall to fund union wage deals and squandered its golden opportunity to maintain and improve cost of living support, to maintain and improve health and education services and infrastructure, and to support home seekers and small business.
FUTURE STATE OF NSW FINANCES
The Government's financial mismanagement means more deficits and more debt as far as the eye can see. The Government will add over $11.5 billion in deficits over the next four years. Net debt is expected to grow from 11.9% of Gross State Product now to 14.2% in June 2028.
Because of the Government's mismanagement, interest expenses are forecast to grow at 9.1% a year for four years.
This will take interest payments to $8.6 billion for 2027-28 – more than double the $4.2 billion paid under the previous government in 2022-23.
The Government's mismanagement means NSW faces the severe risk of losing its prized AAA credit ratings.
COST OF LIVING SUPPORT
What does the government's budget mismanagement mean for cost of living support?
Households right across NSW are struggling with the cost of living crisis.
The cost of electricity is up.
The cost of groceries is up.
Rents and interest repayments are up.
But this Budget confirms what we knew, namely that the Government has no plan to address the cost of living crisis.
Not a cent for new cost of living support – and a shameless attempt to window dress, as some sort of new cost of living measure, a welcome decision not to collect payroll tax from doctors in circumstances when it's never been collected before.
It would be comical, if it weren't so insulting.
But we know who'll foot the bill for the Government's failures.
Families and households across NSW will pay the price – as they have already under this Government:
• Active Kids, slashed.
• Creative Kids, slashed.
• First Lap, slashed.
• Energy relief, slashed.
• Back to School vouchers, axed.
• Regional Travel Card, axed.
All programs we would have kept.
This month the Premier wrote about the impact social media is having on children – something that we all worry is having long-term adverse impacts on your state's children.
The Premier said:
"Research has found that kids who spend more than three hours per day on social media are twice as likely to experience poor mental health, depression and anxiety. "
And he went on to say, correctly:
"We have to ask whether this is a healthy way for kids to grow up and mature into healthy adults. "
If only there were something the NSW Government could do to get kids off the screens and into healthy and active lifestyles.
In 2022, the last full year before Labor took the axe to Active Kids and stopped publishing the data, over 1.3 million Active Kids vouchers were created.
We would and, if the Government were serious about children's mental health, it would, immediately restore Active and Creative Kids and support families in encouraging healthier and active lifestyles.
And then there's the greater tax take from households – as mentioned, over $3500 per household per year by 2027.
Our state deserves better.
HEALTH, EDUCATION AND OTHER FRONTLINE SERVICES
What does the government's budget mismanagement mean for health, education and other frontline services?
Health
For health, Labor's cruel cuts mean that we're going backwards for the second year in a row.
At the time of last year's Budget, Australian Medical Association (NSW) President Dr Michael Bonning, said:
"At a time when the health sector and medical services need an urgent investment of cash, this budget provides almost nothing."
Traditionally governments increase health investment, this Government has effectively slashed it, when health inflation is taken into consideration."
He continued:
"It is the people of NSW who will suffer. This means less access to emergency departments, less urgent surgery and non-urgent surgery …"
Labor's cuts are hitting palliative care, frontline services, and emergency departments, including in regional NSW.
The most recent Bureau of Health Information data show a hospital system under immense strain because of existing Labor's cuts.
People are waiting longer to be seen and their health is at risk.
Labor's cuts have seen:
• March quarter elective surgeries performed down 6.6% from the same quarter last year and down 13.9% on the December 2023 quarter.
• The proportion of patients spending less than four hours in emergency departments (EDs) the lowest since recording in 2010.
• A 16.9% increase in the number of people leaving emergency departments without treatment.
AMA (NSW) President Dr Kathryn Austin described this as a "catastrophe waiting to happen". She said:
"The NSW health system is straining under the weight of increased demand and complexity at a time when budgets are being slashed...
"The Minns government announced a surgical taskforce to reduce elective surgery wait times, but the funding had already been put in place by the Perrottet government. Now the Perrottet government's funding program has ended elective surgery numbers have fallen dramatically.
These figures reflect a system which is experiencing continued downward decline under the Minns Government."
She called on the Government to "immediately reinstate critical health funding and stop putting politics and photo opportunities before the health of our state."
So what's the Government done in response? Cut health spending - yet again.
AMA (NSW) Vice President Dr Fred Betros says that the 2024-25 health budget:
"Falls below actual health CPI meaning that after health inflation this is an effective loss."
He says:
"As a surgeon in Western Sydney there is little comfort in this budget for my patients and for thousands of the sickest patients across NSW."
and
"This is bad news for anyone on the elective surgery waiting list …."
Education
This is a Budget of smoke and mirrors – no more so when it comes to education.
The Government has embarked on a so called 'infrastructure blitz', a blitz that saw less funding than had been allocated by the former Liberals and Nationals Government.
In fact it provides less funding than the Budget handed down last year.
The Treasurer's claim that $1.08 billion is a "record" pipeline for maintenance and minor capital works is simply wrong.
The Liberals and Nationals in our last Budget allocated $1.3 billion to support the same types of projects.
So what we have here is a cut of $220 million to our schools.
Cuts that mean schools have less money to spend on facilities for our kids.
This is on top of Labor's decision to rip $150 million out of public school budgets mid-way through the year, forcing school principals to cut staff and programs to find savings.
The Budget Papers show a cut this year of $196 million (or 7.5%, even before inflation) in non-staff operating expenses for school education. As with health, total expenses are cut in real terms.
The Government has lost control of the Budget – and our children are paying the price.
Other frontline services
The Government is also making real cuts across the board to spending on other frontline services.
For example the Budget Papers show cut this year in non-staff operating expenses of $181 million for Police and $101 million for Fire and Rescue.
HOUSING
What does the government's budget mismanagement mean for housing?
We welcome the Government's announcement of new social homes – including priority homes for victim-survivors of domestic violence, a welcome addition to the Core and Cluster investment by the Liberals and Nationals.
But given the Government's revenue bonanza, it's the least they can do.
Let's put an end to Labor's deception about Opposition policy, which Labor peddles to hide its own failures. We support ramping up housing supply in metropolitan and regional NSW, we support greater density and we recognise that transport hubs will commonly be the best place for it. But, with State Government targets for each local government area, and with appropriately strict time limits and sanctions, you should first let communities have a say in how and where in their local areas they want that density delivered.
This is a government of grand announcements and little follow through.
Last year with great fanfare the Premier announced housing targets of 75,000 per year for five years – yet within months he'd thrown in the towel. We need an explicit estimates and targets from the Premier about numbers of annual completions going forward.
Ramping up supply down the track is welcome, but in a crisis you'd expect immediate action. House prices and rents are determined not just by supply, but also by demand. Easing demand is something that can be done far more quickly. But the Premier refuses to stand up for NSW, take on Anthony Albanese and demand further cuts to immigration to ease demand. If the Queensland Labor Premier can do it, so should Chris Minns.
But this sort of failure seems to be part of the Premier's DNA. It's not just immigration. He also won't pick up the phone to Anthony Albanese on the GST revenue or federal infrastructure funding cuts. If the Premier won't even pick up the phone to the Prime Minister, how we expected him to fight for NSW households?
We reiterate our offer to work with the Premier on a bipartisan approach to Canberra on immigration.
Returning now to supply, despite the rhetoric, and the targets – the Premier leads a Government whose arrogant one-size fits all approach is failing.
We've seen housing approvals go backwards by 11%.
We've seen supply held back by a new $12,000 housing tax on every new home.
We've seen a lack of funding to support essential infrastructure required to drive development.
We're still waiting for the outcome of the land audit.
We're still waiting for this Government to deliver on their rental reform.
And this Budget will only make matters worse.
The Budget reveals yet more taxes on homes and properties right across NSW.
The decision to freeze indexation of land tax thresholds is a tax grab by stealth.
The last thing you do in a housing and cost of living crisis is to push up taxes on property owners - which will be passed on as even higher costs for renters and struggling small businesses.
It's a desperate tax grab because this Government has lost control of the Budget and handed the keys over to their union masters.
The Property Council's Katie Stevenson says:
"Subjecting even more Mum and Dad investors to land tax will not reduce rents or provide urgently needed new housing – in fact it will do the opposite, it will act as a brake on housing affordability."
The Real Estate Institute's Tim McKibbin says removing indexation would have "severe ramifications" for commercial tenancies in particular:
"Given the high cost of holding a residential property, adding to the tax burden will only place additional pressure on investment returns, leaving landlords two undesirable options. "
And the result?
"They can either pass the extra cost onto tenants or sell their investment property, taking more homes out of an undersupplied rental market."
Make no mistake – the land tax grab will drive more people out of housing - and is a direct result of this Government's budget mismanagement.
You can increase social housing, but overwhelmingly the main driver of housing supply is private investment, which has to be financially viable.
The Government's announcement of targets and rezonings is the easy part.
You can announce all the targets and up-zonings in the world, but they won't produce more housing unless it's financially feasible to build, but the Government continues to increase fees and charges that is crippling the financial feasibility of new housing projects.
You can also throw all the money in the world at creating infrastructure tsars and worthwhile speeding up of approvals – but if it's too expensive to buy and build, it won't matter.
The Property Council says the Government's recently released new housing targets for Sydney, the Illawarra, Hunter and Central Coast "will remain a pipedream without fixes to the delivery pipeline".
Its research tells us that recently introduced residential taxes and charges would make the construction of up to 50,000 new homes financially unfeasible for homes built west of Homebush over the next five years.
Instead of squandering the revenue bonanza like the Government, we would have used it to help home buyers and renters in NSW.
• We would have removed the burden of stamp duty on young people, by reintroducing the First Home Buyer Choice program - again arrogantly abolished by this Government.
• We would have provided stamp duty exemptions for older people looking to downsize, to free up larger homes for families.
• We would have established a program of at least $2 billion, funded through the windfall stamp duty that this Government squandered, to support local councils meet and beat their housing targets. This Government was too arrogant to engage constructively, dismissing the idea - yet months later announce a similar program with a paltry $200 million - a drop in the ocean that's an insult to local councils and a reflection of no money in the kitty because it's been diverted to union wage claims.
• We'd keep indexing the land tax thresholds.
• And we'd be easing taxes and charges that are making developments unviable.
Our offer remains - for the Government to work constructively with us to solve the housing crisis - rather than their failing approach which is making matters worse.
LACK OF VISION AND INFRASTRUCTURE
Because of its utter financial incompetence, this government is borrowing more, but building less.
The Government has announced no new major projects. The infrastructure revolution will soon be over.
Once the infrastructure pipeline left by the Liberals and Nationals dries up, infrastructure investment falls off a cliff.
By 2027-28, total infrastructure investment will be almost 12% less than this year, plus the effect of inflation.
In transport the fall will be 34%, health 36%, education 41%, plus the effect of inflation.
The Government has no vision for infrastructure and will be failing commuters, patients and students – and failing to build the infrastructure we need to support the extra housing that the Government claims it wants.
CONCLUSION
Mr Speaker – this Budget lets the people of NSW down.
It's a bad Budget – and the Government is to blame.
A Budget out of control – but a Government unwilling to take responsibility for its decisions.
A lot of blame – but no vision.
Targets – but no plans.
Record revenue – but not a cent in new cost of living support.
Higher taxes – but cuts to schools, hospitals and infrastructure.
None of the government's attempts at smoke and mirrors,
None of its cherry picking of individual projects,
None of its ribbon cutting on Coalition projects can disguise the government's cuts to investment in health, education and infrastructure.
The people of NSW deserve better.
We'll hold this bad government to account.
And instead of a government focused on Labor mates in Canberra or on union masters in Sussex Street, we'll offer a responsible alternative government focused squarely on delivering for the people of NSW.
