Why we can't afford a roof over Accor Stadium

As I prepare our state budget - the second in nine months - I remain focused on our plan to rebuild essential services, help families with the cost of living, and rebalance the state's finances.

The budget - due in June - is the next opportunity to take a big step towards building a better NSW.

But just seven months since the last budget, the Commonwealth Grants Commission has hit us with the biggest-ever cut in our share of GST.

NSW Treasurer Daniel Mookhey and other state treasurers believe there are huge problems with the GST system.Credit: Louise Kennerley

This $11.9 billion cut is more of a hit to our state revenue than occurred during COVID-19. NSW has never had such a sudden fall in GST.

It has repercussions for the budget and the state's credit rating.

In 2020 S&P downgraded NSW to AA+. Then the previous government's pre-election spending spree in 2023 piled on more pressure and endangered the state's remaining AAA credit ratings.

Last year we made $13 billion of savings in our first budget. It helped us hold on to our AAA credit ratings. But the Commonwealth Grants Commission's $11.9 billion GST rip-off sends us back to square one. It will almost certainly lead to a downgrade.

I think protecting family budgets takes precedence over the AAA credit rating. And I think having the flexibility to respond to the risk of recession is more important than the AAA in the current economic climate.

In this context, it's worth noting that last year Fitch cut the United States' AAA credit rating to AA+. Moody's downgraded the US' outlook from "stable" to negative.

Like the United States, NSW will have to balance its credit rating with its responsibilities to keep its economy growing, its people in jobs, and to invest for its future.

I know too many families are still doing it tough. I can say to them that we are making progress and we will continue on that path despite this setback.

Fiscal discipline is key.

We can pay our essential workers more because we are paying our creditors less. By slashing the state's gross debt by $14.8 billion we avoided $2 billion in interest payments.

Ending privatisation, rescuing the Sydenham-to-Bankstown Metro and Metro West, and investing in a reliable and clean energy future, will all pay dividends for NSW.

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There is more to do.

In June in NSW the Minns Labor government will respond calmly and methodically to the GST rip-off.

You should expect us to negotiate hard on the funding agreements we have with the Commonwealth. They fund our hospitals and schools. If getting a better result means waiting until after the budget, then we will.

You should also expect us to double down on cutting the state's level of gross debt. This is an insurance policy for the next economic shock, with the added benefit of slashing our interest payments.

Finally, you should expect us to make modest investments in the "must-have" policies that cannot wait: housing, schools and hospitals, community safety, the energy transition and helping with cost-of-living pressures.

These must-haves are our budget priorities. And that means the "nice-to-have" initiatives - such as putting a roof on Accor Stadium - will have to wait.

Every family has had to make household budget decisions when costs rise. Every small business has had to make difficult choices about their spending when revenue falls. A state government is no different.

Daniel Mookhey is the NSW state treasurer.

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