Surplus dip as NSW fights for more cash from Canberra
Treasurer Dominic Perrottet will take the fight up to the Commonwealth to secure more money for NSW as the state delivers a budget that doles out record funding for health, education and cost of living while staring down economic headwinds and shrinking surpluses.
Today's state budget is almost exclusively funding promises made by Premier Gladys Berejiklian in March's fierce election campaign, and enshrines now more than $2 billion in cost of living help handed back to families in the past two years, ranging from school sports vouchers to the Opal card cap.
But as the state faces record revenue pressures, the major new announcement today is a plan to appoint former Telstra boss David Thodey to lead a review into how Commonwealth funding is distributed across the county.
This goes beyond Mr Perrottet's already highly publicised battle for more GST for NSW, and will see NSW lead a review of scores of Commonwealth funding arrangements in a bid to strike a better deal for the states.
Detail on how this will be tackled and what this could mean is not yet established, but the intent is clear - to better negotiate deals.
"We need to refresh the national conversation on how we can leverage our federation to deliver sustainable funding arrangements for our state," Mr Perrottet said.
"There have been a number of reviews into federal financial relations, but they have mostly been conducted by the Commonwealth. Our review will provide a much-needed state perspective".
However, when pressed Mr Perrottet admitted yesterday he had not yet discussed the plan with other states, but said he had flagged it with Federal Treasurer Josh Frydenberg.
Today's budget posts a smaller surplus of $802 million for 2018-19, with surpluses to average $1.7 billion over four years to 2022-23.
While the state has boasted four consecutive years of negative net debt, today's budget reveals the figure will rise to $12.35b in 2019-20 and then even further to $38.6b in 2022-23.
The soft housing market has wiped $10.6 billion in stamp duty from the budget since 2017, including another $232 million confirmed today.
April's Federal Budget also slashed $2.3 billion in GST revenue from the states.
The past four budgets combined have seen the NSW Coalition cut almost $5 billion in taxes.
Savings in today's budget come in the form of already announced belt tightening in the public service, although the wages cap is left untouched.
Between 2000 and 3000 backroom jobs will be cut, with Mr Perrottet rationalising today that was "just one per cent" of the public service. He said they were "efficiencies" that could be found while the government boosted frontline services.
Mr Perrottet said that while other states went down the path of cutting wages for public servants, NSW wanted to resist this in order to keep economic stimulus conditions moving.
He has instead focused on a bigger frontline and what he termed a "leaner, more agile back office".
The plans, already announced, slash spending on consultants and contractors, abolish bonuses for high paid executives and limit long service leave benefits so they match community standards, Mr Perrottet said.
As the government comes to terms with a backlash in a string of rural seats in the March election, today's budget also offers a fresh focus on drought, taking the total package for struggling communities to $1.8 billion, including transport subsidies, water supplies and investment.
Mr Perrottet said agricultural exports had been slashed by one fifth, hurting the state's economy.
Health and education is also trumpeted today with a delivery on front line services, including a boost of 4600 teachers, 5000 nurses and midwives, 3300 more health professionals and 1500 more police.
On infrastructure, Mr Perrottet's speech name checks a long list of projects already announced, but allows the government to crow about its major building program.
This includes 190 school projects right across the state.
Mr Perrottet said NSW was still leading the pack and "powering the nation", but foreshadowed the economic headwinds the state faced.
"Today we face a new set of challenges. The global economic outlook is weaker than it was 12 months ago," he said.
"Our farmers are battling what some are calling the worst drought in living memory. Our housing market has undergone the biggest downturn in four decades. And with wage growth still slow, homeowners are cautious with their spending."