19 June 2024

A constrained Budget for 2024-25

As widely anticipated, NSW Treasurer Daniel Mookhey, has handed down a constrained budget for 2024-25.

The budget reflects the state’s ongoing struggle with the need for post pandemic and natural disaster budget repair while seeking to meet the infrastructure and service demands of the state – most notably the deepening housing crisis.

The task has been made even harder with:

• persistently high inflation underpinning high interest rates;
• stagnating housing delivery; 
• a $12 billion loss in GST revenue over four years as the result of redistribution by the Commonwealth Grants Commission.

The NSW budget is forecast to be in deficit for the next four years. This is a deterioration from the mid-year forecast of an $844 million surplus in 2024-25. Net debt is now forecast to climb steadily from about $97 billion in 2023-24 to $140 billion in 2028.

Despite this, there are a number of commitments that align with LGNSW priorities or bring benefit to the broader community. However, it is the adequacy of the funding in certain areas that is in question. The budget largely maintains the commitments made in the 2023-24 budget and enhances some programs.

The government’s budget priorities continue to be:

• Housing
• Health
• Education (schools and TAFE)
• Maintaining the infrastructure pipeline. 

Significant positive announcements include:

• $5.1 billion over four years to build 8,400 social housing dwellings, with 6,200 of these to be new builds (and the remainder rebuilds). At least half of these new homes will be prioritised for victim survivors of family and domestic violence. After decades of neglect, and although the scale of need remains vast, this is a very welcome investment in line with our sector’s multiyear advocacy for far greater investment in public and social housing.
• $37.4 million additional funding over four years to build the capacity of the Office of Local Government. This is consistent with our advocacy and a 2020 conference resolution calling for the OLG to be funded so it can better assist local councils if they encounter serious problems, and respond to complaints in a timely manner.
• $3.3 billion allocated in this budget to repair local and state roads in NSW regions affected by natural disasters, as part of the $5.7 billion overall investment in disaster relief and recovery spanning four years.
• An initial commitment of $2 billion toward enhancing bus services in response to the Bus Industry Taskforce recommendations. 

Areas where more work needs to be done include:

• It is disappointing that there does not appear to be significant new funding to support the necessary infrastructure to enable the foreshadowed uplift in density in our communities.
• Only $43.1 million has been allocated to support water infrastructure, reduce leaks and improve water efficiency and drought resilience across NSW. The funding falls short of the $217.5 million allocated in 2023-24 increase allocated last year to the Safe and Secure Water Program (SSWP).
• There are few measures that will make a meaningful difference to cost shifting onto local government, beyond greater investment in housing for the rural and regional health workforce. However, the review of the ESL – currently under way – presents a significant opportunity for reform towards a fairer, more sustainable funding model. 

See further analysis for the local government sector in our articles at lgnsw.org.au/Public/Public/News/News.aspx.

Source: https://www.budget.nsw.gov.au/sites/default/files/2024-06/BP1-Chpt-2-The-Economy-Budget-2024-25.pdf

Sincerely,

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