NSW Treasurer warns of a tough budget due to $11.9b GST hole

In March, the government was floating the idea of building a big new roof at home Bush after Taylor Swift risked being washed out. Now the Treasurer says the state can’t afford any such extravagance as he prepares for the government’s difficult second budget. Or, as I think of it, our highly anticipated next album. But voters may not like what they’re about to hear. Treasury’s done the sums on the latest GST carve up. NSW is facing an $11.9 billion shortfall over four years. With that money, the state could have hired 19,000 teachers or 16,000 police officers over the same period. The commission’s decision will see NSW lose more revenue than we did during COVID-19. It’s not unusual for a state or a territory at different times in the history of the Commonwealth Grants Commission to have a different view about the allocation. The funding shortfall will almost certainly mean the state loses its remaining AAA credit ratings, potentially pushing up the cost of government borrowing. Another notch downgrade from NSW could be worth something like $100 million per year. For the state’s interest bill, I just make the point that Queensland has a lower credit rating than NSW and they are borrowing cheaper than we are. All these warnings are designed to soften voters up for what could be a tough budget. Exactly where the cuts will come from remains a mystery. The opposition is accusing the government of using the GST shortfall to try to disguise its own economic missteps. Stop playing the blame game and accept responsibility for the budget in NSW and the way it operates. Will have to wait nearly two months for the detail. The budget will be handed down in mid June.