20 September 2023

Budget reflects challenging economic climate 

I don’t think there is anyone in NSW who doesn’t recognise the challenging economic climate in which we find ourselves – a climate well and truly reflected in yesterday’s State Budget handed down by Treasurer Daniel Mookhey.

The NSW Government has sought to strike a balance between investing in essential state infrastructure and services and addressing cost of living pressures, while seeking to ensure sustainable fiscal management and a return to surplus in future years.

Unfortunately, the Budget offers little by way of improvements for the financial sustainability of local government, although there are some bright spots in the areas of housing, health, transport and education.

Positive announcements for local government include:

• $400 million for a new Housing Infrastructure Fund, repurposing residual funds from Restart NSW, to deliver community infrastructure such as lights, sewerage, footpaths, schools, and parks.
• $217.5 million in additional funding for the Safe and Secure Water Program, to support regional towns dealing with town water supply, quality, and safety risks.
• $390 million to implement the new Regional Emergency Road Repair Fund to assist rural and regional councils in repairing roads damaged by recent weather events and natural disasters.
• $150m for a new Community Restoration Flood Fund, which will include funding for Disaster Adaptation Plans (including for the Northern Rivers and Central West); repair, replacement and betterment of critical community assets; and housing programs to be developed in consultation with councils.

Each of these announcements follow on from LGNSW’s Pre-Budget submission and advocacy priorities and are certainly welcome news.

The budget also provides $4.5 million in additional funding for the Office of Local Government, which we anticipate will, in part, provide for the forthcoming review of the financial model of local government.

Disappointingly, there was no restoration of the $77 million subsidy for the Emergency Services Levy in 2023-24, entrenching this multimillion dollar hit to council budgets and reducing funds available for critical local infrastructure and services. LGNSW will continue to campaign for an equitable resolution to emergency services funding arrangements.

The Budget does take some positive steps towards greater supply of market housing, particularly through funding for enabling infrastructure. These Budget measures include the $400 million Housing Infrastructure Fund (as set out above) and the $1.5 billion generated through Housing and Productivity Contributions for essential state infrastructure such as schools, hospitals, major roads, public transport infrastructure and regional open space. (Importantly, and as confirmed to you earlier this year, these state infrastructure contributions have no impact on how councils collect their own local infrastructure contributions).

However, the Budget also missed an opportunity for substantial investment in public and social housing after years of underspending by successive state governments. LGNSW pre-budget priorities included a call for sustained investment of $2.6 billion annually for 10 years, to build 5,000 additional units of public and social housing each year. While existing programs will continue, this Budget does not go far enough in tackling the public housing shortages impacting the most vulnerable members of our communities despite providing some funding to Landcom to deliver an estimated 4,679 additional dwellings, of which 1,409 will be affordable housing, over the coming 15 years up to 2039-40.

The problematic Waste and Environment Levy is expected to collect a total of $894 million in 2023-24. For several years now LGNSW has called for the reinvestment of this levy into waste and circular economy infrastructure and programs, so it’s disappointing to see the vast majority of this tax still diverted to NSW Government coffers and shoring up the Budget’s bottom line.

On the upside, more than $1 billion set aside for more nurses, midwives and paramedics is a good first step in implementing the recommendations from the Parliamentary Inquiry into rural and regional health. Full implementation of these recommendations is a key advocacy priority for LGNSW, and we will continue to work to ensure each and every one is delivered.

Our Advocacy team has dug deep into the Budget papers to bring you more details on how the 2023-24 Budget impacts NSW councils, so please don’t miss their analysis in the articles posted to our website.

And finally – while it is not strictly part of our Budget analysis - it would be remiss of me not to call out the “Red Fleet” private member’s Bill introduced into the NSW Parliament by Adam Marshall this week.

This very welcome Bill would make clear once and for all that ownership of RFS assets are vested in the NSW Government, and that depreciation costs for these assets should not be recorded on council books.

It’s the result of a great deal of hard work by everyone involved, so special thanks go out to the many, many councils that have supported our ongoing campaign to resolve this matter. I am hopeful the Bill will receive support across Parliament, and I will continue to keep you informed.

Sincerely,

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