Mookhey's latest budget is sensible and sober. It also happens to be his most interesting
Treasurer Daniel Mookhey's third state budget is a sensible, sober and steady-as-she-goes affair. But it also happens to be his most interesting.
With his first two economic statements largely focused on implementing Labor's election promises and dealing with an inflation crisis, Mookhey has used this latest budget to give NSW a glimpse of what a 'new normal' might look like as COVID-era spending subsides and the state's infrastructure rollout enters a new phase.
This is not – to Mookhey's credit – a big-spending budget. He has resisted any temptation to deliver a new cost-of-living relief package, and has curbed the enthusiasm of ministers who have left cabinet's expenditure review committee over recent months empty-handed. It won't win him friends in Labor or deliver eye-catching headlines, but it is the right course to chart for the time being.
Some will view the budget as unimaginative and lacking boldness. There may be some justification to that. But the times warrant a focus on spending restraint and budget repair, particularly around debt.
Gross debt is projected to be $178.8 billion next financial year – $9.4 billion lower than previously forecast. Mookhey points out this will save the state about $400 million in annual interest expenses. Debt as a percentage of the economy will hover at about 20 per cent as growth levels off, which will put NSW in a much better position than most Australian states.
Loading
Average spending in NSW is forecast to grow by 2.4 per cent a year for the next five years, which if achieved (a very big if) would be the definition of a government living within its means. But growth in the public sector wages bill will hit a more concerning 3.7 per cent, reflecting recent pay deals. With employee expenses accounting for about 40 per cent of the state budget, caution will be needed over coming years to ensure the 3.7 per cent growth rate does not increase. Higher pay claims will already cost taxpayers an extra $2 billion over the next four years.
The government claims it is on track to achieve a surplus by the 2027-28 financial year. It's good to see Labor aspire to a surplus, but the forecast should be taken with a grain of salt given global uncertainty.
The big question is whether the discipline Mookhey and Finance Minister Courtney Houssos have shown in this budget on debt and spending lasts. Next year's budget will be handed down less than a year out from the March 2027 poll, and Labor will be keen to flick the switch to showering the electorate with nice surprises. It would be a shame to see the sober fiscal architecture outlined in this year's budget jettisoned for political expediency next year. Asked about this on Tuesday, Mookhey laughed and said: 'Let me deliver this budget before I talk to you about the next one'.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Sydney Morning Herald
20 minutes ago
- Sydney Morning Herald
Trump was boasting of his ceasefire deal. In my Tel Aviv bunker, it was a different story
Among those queuing up for a blue wristband granting a seat on an evacuation flight are Melbourne parents Ilana and Levi Lewis, cradling their two children, aged two and four months. They came to Ashkelon, in southern Israel, to visit family and have spent the past two weeks sleeping in bunk beds in a bomb shelter as Israel and Iran have traded rocket fire. The Lewis' relatives in Australia, watching the news from the Middle East, are desperate for them to return home. 'They've been messaging us, they are very worried,' Ilana says. 'It's been very stressful. We wanted to get out as soon as we can.' For others, it's a more complicated decision. Many of those who have expressed an interest in leaving are Israeli-Australian dual nationals, and some have deeper ties in Israel than Australia. Some Australians arrived at the hotel this morning intending to go, but decided they did not want to leave Israel. As with the evacuation of Australians from Beirut during last year's war between Israel and Hezbollah, the no-show rate has been high. Vivien, a Jewish woman from Sydney's eastern suburbs, is trying to return home after spending two weeks volunteering with the Women's International Zionist Organisation at a farming co-operative near Haifa in the country's north. Aged in her 60s, she says she feels transformed by what she has experienced in Israel, her first visit since her student days. 'In Australia we live in an isolation chamber,' she says, describing the relative sense of safety and security at home. Praising Israeli Prime Minister Benjamin Netanyahu's decision to attack Iran's nuclear facilities and kill top Iranian military leaders, she says: 'The world needs to recognise Israel for what it is doing for them … We need to avoid a nuclear war.' Nearby, two men are doing morning prayers and wrapping leather straps around their arms as part of an ancient Jewish ritual known as tefillin. They had hoped to travel on yesterday's cancelled evacuation flight and are nervously awaiting confirmation that they can get out today. Loading As the buses of hopeful evacuees leave the hotel for the airport and pass along the seashore, the Israeli government issues a statement announcing it has achieved its primary war goals and has agreed to a ceasefire with Iran. Less than an hour after the announcement, warning alerts begin sounding throughout the north of the country, sending Israelis scampering to bomb shelters once again. Accusing Iran of breaching the truce agreement by firing missiles into Israel, Defence Minister Israel Katz quickly announces he has instructed the Israeli military to 'continue the intense activity of attacking Tehran'. For all the talk of a ceasefire, today the conflict has felt very real.
The Age
21 minutes ago
- The Age
Trump was boasting of his ceasefire deal. In my Tel Aviv bunker, it was a different story
Among those queuing up for a blue wristband granting a seat on an evacuation flight are Melbourne parents Ilana and Levi Lewis, cradling their two children, aged two and four months. They came to Ashkelon, in southern Israel, to visit family and have spent the past two weeks sleeping in bunk beds in a bomb shelter as Israel and Iran have traded rocket fire. The Lewis' relatives in Australia, watching the news from the Middle East, are desperate for them to return home. 'They've been messaging us, they are very worried,' Ilana says. 'It's been very stressful. We wanted to get out as soon as we can.' For others, it's a more complicated decision. Many of those who have expressed an interest in leaving are Israeli-Australian dual nationals, and some have deeper ties in Israel than Australia. Some Australians arrived at the hotel this morning intending to go, but decided they did not want to leave Israel. As with the evacuation of Australians from Beirut during last year's war between Israel and Hezbollah, the no-show rate has been high. Vivien, a Jewish woman from Sydney's eastern suburbs, is trying to return home after spending two weeks volunteering with the Women's International Zionist Organisation at a farming co-operative near Haifa in the country's north. Aged in her 60s, she says she feels transformed by what she has experienced in Israel, her first visit since her student days. 'In Australia we live in an isolation chamber,' she says, describing the relative sense of safety and security at home. Praising Israeli Prime Minister Benjamin Netanyahu's decision to attack Iran's nuclear facilities and kill top Iranian military leaders, she says: 'The world needs to recognise Israel for what it is doing for them … We need to avoid a nuclear war.' Nearby, two men are doing morning prayers and wrapping leather straps around their arms as part of an ancient Jewish ritual known as tefillin. They had hoped to travel on yesterday's cancelled evacuation flight and are nervously awaiting confirmation that they can get out today. Loading As the buses of hopeful evacuees leave the hotel for the airport and pass along the seashore, the Israeli government issues a statement announcing it has achieved its primary war goals and has agreed to a ceasefire with Iran. Less than an hour after the announcement, warning alerts begin sounding throughout the north of the country, sending Israelis scampering to bomb shelters once again. Accusing Iran of breaching the truce agreement by firing missiles into Israel, Defence Minister Israel Katz quickly announces he has instructed the Israeli military to 'continue the intense activity of attacking Tehran'. For all the talk of a ceasefire, today the conflict has felt very real.
West Australian
36 minutes ago
- West Australian
CONRAD LIVERIS: There's no superhero to fix Australia's productivity. It's up to us
Australia's productivity growth is limping along at 0.7 per cent. We're moving slower than traffic on the freeway in peak hour, with about as much co-ordination. It's the kind of dysfunction you'd expect from an episode of Utopia: big ambitions, lots of PowerPoints, and somehow, still no action. Treasurer Jim Chalmers' recent speech at the National Press Club offered some good ideas. But productivity isn't a spreadsheet problem. It's a systems problem. And more than that, it's a people problem. As an economist, I know that we are not short on people. We're just not letting them do the work they're capable of doing. If we want a more productive Australia, we need to stop managing for scarcity and start building for abundance. More people working. More care being delivered. More capability in government. More houses, faster. And definitely more managers who know what they are doing. To assist the Treasurer, I have a few ideas. We have to stop wasting our potential. We keep telling ourselves we have a 'tight labour market'. But that's like saying your petrol is full because it is at 75 per cent. Right now, the under-utilisation rate (people who are unemployed or underemployed) is hovering around 10 per cent. That includes parents stuck without child care, older workers who want to keep working and people with disabilities facing unfair hurdles. This amounts to tens of thousands of people in WA alone who want to work — and could — if the system wasn't working against them. Next, we need to build productivity in the care economy. Aged care, child care, disability support aren't just services, they are infrastructure. They enable everyone else to work. But we treat them like a cost centre instead of the productivity engine they are. Care workers remain woefully underpaid, under-supported, and often working with retro tech and paper rosters. Boosting productivity in care industries by just 10 per cent could save $9 billion a year, according to the Productivity Commission. That's a lot of money that can be invested in improving efficiency and creating jobs. ASIC chair Joe Longo has been a leading voice on deregulation to improve productivity. He wants to go deep and look at the specific pain points, not just wishy-washy frameworks. Longo is right: the problem isn't just too much regulation but too much of the wrong kind. Aged care providers stuck in admin quicksand, small business managers buried in procurement rules, and skilled workers blocked by paperwork. Resolving everyday efficiencies are where productivity gains can be made. Then there's management capability, or the lack thereof. A lot of Australian workplaces are badly managed. Like, 30 open tabs and no idea who owns the project badly managed. Our national management capability scores are below the OECD average. The Productivity Commission calls it a 'capability gap'. I call it the reason your local café is taking 30 minutes to get you the eggs benedict. The truth is that almost nobody in Australia is taught how to manage. Everyone struggles at times, but there's a vacuum of support. The go-to solution is often to outsource to a consultant to fix the immediate issue, rather than build the long-term skills managers need to, you know, manage. Then there's housing. A recent CEDA report showed that dwellings built per construction worker have halved since the 1970s. Even with better tools and technology, we're building less per worker. The problem isn't a lack of effort, but red tape. The CEDA report also found that if the construction industry matched manufacturing, they would produce $54 billion more in revenue without any additional labour. That's equivalent to 150,000 extra construction workers. We can only dream. Many of us know the quagmire of council delays, inconsistent zoning and design-by-committee. Planning has become so slow it makes the NBN roll-out look nimble. Let's reward councils that approve housing faster. Offer incentives for early completion of affordable housing. And stop making developers submit 200-page traffic studies for a five-unit block. Finally, all levels of government must look at themselves. This is a team effort. To see real productivity growth, the Federal Government has to work with State and local governments. Because it's not just what's said in Canberra that matters, it's what gets delivered closer to the ground. Nobody wants government that is bloated, but ours is not the most efficient it can be. This is a handbrake on productivity. Chalmers himself cites a new book by journalists Ezra Klein and Derek Thompson, Abundance, as a key influence. But abundance doesn't start or end in Parliament House. It starts on the ground: in faster council approvals, mobile workforces, child care places that exist, and digital systems that aren't allergic to logic. We're not short on ideas. We're short on execution. That's why Chalmers' reform round table in August matters. But let's make sure it isn't another polite Canberra talkfest where everyone agrees to be ambitious later. Treasurer, what we need is simplicity. Australia needs simplicity around how we work. We've been waiting for productivity to be saved like it's the final act of an Avengers movie. But there's no superhero coming. It's up to us to build, fix, and deliver. Conrad Liveris is an economist and non-profit executive.
