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June 23, 2026 — 7:30pm
How lucky can we get? Many of us are suffering under the cost of living crisis, but the state government is just announcing its budget for the new financial year, and it’s happy to come to our rescue. (That there’s a state election coming up in March is entirely coincidental.)
Treasurer Daniel Mookhey says that, for one year only, he will cut the cost of registering your car by $100 and forgo any increase in public transport fares.
And for motorists who pay a lot of tolls and so may claim a rebate on spending above $60 a week, he’ll make it above $50 a week for a year.
What’s that? It doesn’t sound all that exciting? Not compared with a nice big cut in income tax?
Well, no, it doesn’t seem exciting. Pretty mundane, really. But doesn’t that describe most of our cost of living – continually shelling out for the ordinary things in life?
And although it may do little to gladden the heart, it will cost the Minns government more than half a billion dollars. Just for a year.
Even so, Mookhey expects the budget deficit for the coming financial year to be $2.3 billion, compared with $3 billion in the year just ending.
How come? When it comes to expenses, the Minns government runs a tight ship. Whereas expenses increased by an annual average of 9.7 per cent over the four years to June 2023, they rose by only 1.8 per cent in 2024-25.
This is true despite its decision, made early in its term, to end the cap on public sector wages. The previous government’s notion that it could get away with paying skilled workers less than they could earn in the private sector was unsustainable.
Now Mookhey can boast of overcoming shortages of teachers, ambos and nurses.
And it’s worth noting that Mookhey’s way of measuring the budget deficit or surplus is more stringent than the figures that federal treasurers compute.
What Mookhey says is an expected deficit of $2.3 billion, his federal counterpart would call a surplus of $5.5 billion. (Don’t ask.)
Of course, it’s easy for treasurers to forecast a steady improvement in the bottom line over time. Whether Mookhey can achieve a return to ever-improving surplus in his next budget remains to be seen.
His latest prognostications aren’t as rosy as they were this time last year. Why not? Because of the disruption to trade in oil caused by Trump’s ill-considered attack on Iran. We heard much of this from Mookhey in his budget speech.
But there seems to be a deeper problem: the economy may be proving to be more inflation-prone than we took it to be. And this for no reason anyone can put their finger on.
If so, this is bad news for the whole Australian economy, but particularly for Sydneysiders. Why? Because our house prices are so much higher than in other capital cities.
This is a choice we’ve made by taking the city most Aussies want to live in and doing all we can to prevent high-rise housing.
Combine that with the convention of using the manipulation of interest rates as our main way of dampening consumer spending and keeping inflation low.
This choice already pushes people with mortgages to the front of the Reserve Bank’s firing line. Now guess where the people with the biggest mortgages are likely to live.
The Reserve’s three increases in interest rates are already being blamed for our state economy being weaker than expected. If, as some people fear, the Reserve is likely to be increasing rates further, it will be Sydney and NSW where consumer spending is hit hardest.
So we take more of the pain when inflation needs to be brought back into line.
This does not fit comfortably with NSW governments’ eternal complaint that we’re being discriminated against in the almost incomprehensible formula used by the Commonwealth Grants Commission to divide the proceeds from the goods and services tax between the states.
It’s supposed to be divided in a way that allows each of the states and territories to provide the same quality of government services to their constituents. I think most Australians would agree we don’t want rich states and poor states.
To provide this “horizontal equalisation”, those states with the greatest ability to raise revenue with their taxes (including taxes on property) are required to subsidise those with the least ability. The GST pot is divided accordingly.
For decades, Victoria and NSW have been required to subsidise the other states. Of late, however, only NSW has been asked to accept a lesser share of GST revenue.
Get it? We’re in danger of being doubly punished for having such highly priced- and highly taxable – homes. It’s on this day every year that we’re reminded life was never meant to be easy for the NSW treasurer.
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