Tuesday, June 03, 2008

NSW Budget A Mixed Bag

NSW treasurer Michael Costa has delivered what might be his last budget. As with every budget there are winners and losers.

Winners include:
  • NSW infrastructure: the NSW Labor government has been dragged by bad political press into increasing investment in NSW infrastructure. It had allow much of it to run down since taking office 12 years, and myriad Ministers ago.
  • Health: again bad press for health, and extra funding from the Federal Government (to reduce hospital waiting lists) necessitated extra spending.
  • Education: as for Health, with extra funding from the Federal Government for technology initiatives (computer access for every secondary student). Again, years of neglect have necessitated big increases in maintenance/repair/upgrades.
  • Business: phased reductions in payroll tax to 5.75%, although they will still not reach the lower levels of Queensland (4.75%) and Victoria (4.95%)

The big losers will be:
  • government employees, who will likely get pay rises that are less than inflation. This is despite the budget papers saying that it is government policy to "maintain the real value of past significant wage increases over time". Wage rises of 2.5% pa represent a reduction in real wages after inflation of 4.2% to March 2008!
  • NSW voters, who voted for a government that promised NOT to sell electricity assets, but such sale underpins this budget and the next 3 budgets.
  • All government services, (including Health & Education) for which there was little, if any, increase in recurrent expenditure in this budget, or forward estimates.

There is not much use in infrastructure investment or one-off investments in hospital or school/TAFE equipment if there is no ongoing provision for staffing, maintenance and depreciation!