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The renewable energy rollout is the only thing keeping the NSW economy out of recession, state Treasurer Daniel Mookhey says, warning conflict in the Middle East has led to a significantly lower economic growth forecast for the year ahead.
In a speech to the McKell Institute on Wednesday, Mookhey will break from tradition by revealing a month out from the state budget that the NSW economy is forecast to grow by only 1 per cent in the year ahead, a significant drop from only six months ago when Treasury predicted growth of 2.5 per cent in 2026-27.
The gloomy forecast comes at a precarious time for the first-term Labor government, with less than a year until the next election and as the latest Resolve Political Monitor shows support for both the major parties remains well below that recorded at the 2023 election.
While the latest poll shows Labor’s primary vote increased by three points to 32 per cent, that bump comes after the government recorded its equal-worst result since the election in the previous poll in March. Similarly, the Coalition’s primary vote increased by one point to 26 per cent off its own worst result since the election.
Labor’s Chris Minns remains a commanding lead as preferred premier with 38 per cent of voters, while Opposition Leader Kellie Sloane increased by one point to 18 per cent.
Mookhey will use his speech to McKell to point to the state’s rollout of renewable energy projects, as well as data centre investment, as the key reason the state is not expected to enter a recession.
And in a bid to turn NSW’s weak economy into an election attack line, he will highlight the Coalition’s equivocation on supporting an increasingly contentious rollout of renewable projects.
“The number of renewable energy projects now under construction, combined with all transmission lines and grid connections currently being fixed, extended or upgraded, explains why the NSW economy is set to avoid a recession,” Mookhey will say in the speech, according to an excerpt released before its delivery.
“I notice that the One Nation Party disagrees. I also note that the Federal Liberal Party has recently decided to agree with One Nation and oppose net zero.
“But I have no idea if the NSW Liberal Party agrees with the federal Liberal Party, which agrees with the One Nation Party. The member for Vaucluse (Sloane) could end this uncertainty by declaring whether she is for or against the state’s legislated net zero targets.”
Mookhey’s comments come after Labor spent a fortnight in parliament attacking the Coalition, and Sloane, for failing to rule out a preference deal with One Nation.
In a bid to wedge Sloane, a moderate whose electorate of Vaucluse overlaps with federal teal Allegra Spender, Labor has sought to link Liberal Party criticism of the rollout of renewable energy projects in NSW, in an attempt to placate One Nation voters.
Despite the Coalition championing NSW’s ambitious renewable energy rollout while in government, Sloane last week met with landowners from Walcha in New England to hear their concerns, and said the Coalition was “listening because we believe Labor is bungling the rollout”.
The rollout of renewable energy in NSW has become an increasingly toxic issue in parts of regional NSW. Recently, Australian Energy Infrastructure Commissioner Tony Mahar wrote to Planning Minister Paul Scully to warn the “sheer scale” of the rollout was placing “unprecedented pressure” on regional communities.
However in his speech, Mookhey will declare that campaigning “against NSW’s net zero targets is to campaign for a NSW recession”.
While the treasurer’s office did not outline growth forecasts across the forward estimates in the text of the speech released before Wednesday, the government remains concerned about the impact of the global uncertainty wrought by the conflict in the Middle East, and its impact on interest rates.
Mookhey will use the speech to highlight the outsized impact of the Reserve Bank’s monetary policy on NSW compared to other states, pointing to a “more pronounced” economic slowdown due to the impact of interest rate rises on home owners in the state.
The average mortgage in NSW is $873,000, he will say, 28 per cent more than in Victoria where the average is $677,000.
The Resolve Political Monitor survey of 1100 voters conducted from May 13 to 16 showed while the major parties experienced a slight uptick in their primary vote, the largest bloc of voters still intend to cast their ballot for someone else.
While One Nation’s vote fell by a point to 22 per cent, 42 per cent of voters say they would vote for a minor party or independent, with support for the Greens holding steady at 10 per cent. Independent and other minor party support was also at 10 per cent.
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