State Debt

Hansard ID: HANSARD-1323879322-149525

Hansard session: Fifty-Eighth Parliament, First Session (58-1)

State Debt

Mr MARK COURE (Oatley) (15:09:28):

I move:

That this House:

(1)Notes the Government delivered the largest ever net debt in 2023-24 of $96 billion.

(2)Notes the Government has forecast to deliver the largest ever net debt in 2027-28 of $139 billion.

(3)Condemns the Government for losing control of the budget, with no clear framework on public sector wages.

(4)Recognises that only the Liberals and The Nationals can manage the New South Wales economy.

I acknowledge the packed public gallery! This is a very important issue: the largest ever debt in New South Wales history.

Mr Gareth Ward:

Watch out, this is high risk. Put him on a call now.

Mr MARK COURE:

We do not need audience participation. Which party has delivered the largest ever debt in New South Wales history? It is the Labor Party. I speak on one of the most pressing financial issues facing our State: the spiralling debt and deficit under Labor. Just last year New South Wales recorded its highest ever net debt of $96 billion. The outlook only gets worse. In 2027-2028 the net debt is set to reach—

TEMPORARY SPEAKER (Ms Sonia Hornery):

Order! The Clerk will stop the clock. The member for Liverpool is perilously close to being placed on a call to order. As the member for Oatley said, he does not need audience participation from the members behind him. Members will offer their support silently.

Mr MARK COURE:

By 2027-28 the net debt is set to reach a staggering $139 billion, with no clear plan to rein it in. Gross debt will hit $200 billion. That is more than 20 per cent of the State's economy. This is not just a number in a budget paper; it is a crisis in the making. It means high interest payments, less funding for essential services and a weakening economy for generations to come. We are seeing world-leading deficits in New South Wales and many other Labor-led States across Australia. Australia's big-spending State governments are recording some of the largest deficits in the developing world, putting State debt on track to triple by 2028 relative to pre‑pandemic levels, as many rating agencies have already warned.

There are deficits as far as the eye can see. The numbers paint a clear picture of financial mismanagement by those opposite. There was a $9.7 billion deficit in 2023-24, a $3.6 billion deficit in 2024-25, and continued deficits every single year into the future. Yet this Government is telling us that it is stabilising the debt. What is actually being stabilised is a steep upward trajectory of endless borrowing, higher taxes and more debt. By 2027‑28 interest payments alone will cost $8.6 billion per year, which is more than double what we paid just five years ago. That is $8.6 billion not being spent on schools, hospitals, roads, transport, infrastructure or cost‑of‑living measures, for that matter. This is Labor's financial legacy: debt, deficit and broken promises.

We have the highest taxing State Labor Government in history. Where is all the money going? New South Wales is not short on revenue. The rivers of gold continue to flow into government coffers. But, despite record tax collections, the Labor Government is spending without restraint and governing without a plan. Where is the plan to return to surplus? There isn't one. Where is the plan to manage the rising cost of expenses? There isn't one. Where is the plan to reduce the waste? There isn't one. Instead we see the same pattern that has played out time and again under Labor: a government that racks up massive debt with no real plan to pay it back. Who foots the bill? It is the people of New South Wales. It is the working families, the small businesses and the workers in New South Wales who will face higher taxes and fewer services as a result.

Why does this matter? Some might argue that debt is just part of managing the economy. Yes, debt can be used responsibly to invest in critical infrastructure, to grow the economy and to improve the lives of citizens. But that is not what is happening in New South Wales. Labor is not borrowing to build a better future; it is borrowing to cover its inability to manage a budget. When the Coalition was in government, we delivered record infrastructure without sending debt skyrocketing. We built new schools, hospitals and transport links while keeping the State's finances strong. Some 180 health infrastructure projects were delivered and 130 were underway on our watch. Members on this side delivered 250 new and upgraded schools. We delivered light rail, the metro and many other massive transport projects.

Under the Liberals, we had a strong plan, a responsible budget, a clear framework for wages and disciplined spending. Under Labor, what do we have? We have debt, deficit and economic chaos. This Government has lost control of the budget. It is plunging our State into record levels of debt, with no credible pathway out. The people of New South Wales deserve responsible economic management. They deserve a government that invests wisely, spends responsibly and plans for the future, not one that racks up billions of dollars with no strategy to repay it. Members on this side of the Chamber have the experience and the track record to restore fiscal responsibility in New South Wales. Only we can manage the budget, ensure responsible investment and secure our economic future. It is time to hold the Labor Government to account. It is time to stop the waste, stop the reckless spending and start delivering real financial stability for New South Wales.

Mr DAVID MEHAN (The Entrance) (15:16:45):

Let us be very clear about one fact that will override all that is said here today: The Minns Government inherited a budget in complete disrepair. The only explanation I have for the motion moved by the member for Oatley is that on 26 March, the day after the 2023 election, the member was born anew. He woke up. He had been narrowly re-elected—I congratulate the member on the work he does for his electorate—but his party had lost government. He breathed a sigh of relief and then went to the office to clean it out. In his cleaning out, he got his copies of the budget books going all the way back to 2011 and threw them in the bin. He was born anew.

The member for Oatley should know—as I am sure all members know—that no incoming government inherits a zero position. They all inherit a position from the former government. They inherit a budget position and budget settings from a former government with different priorities and different means of addressing its ideological position in the State. That is what happened in 2023. Members opposite left New South Wales saddled with the largest debt in the State's history.

Let us recall that in 2011 the incoming Liberal-Nationals Government inherited a gross State debt of $22 billion. In 2023, after 12 long years of Liberal-Nationals management of the budget and management of the State, the incoming Labor Government inherited the largest debt in the State's history: $130 billion in gross State debt. Let that sink in: A gross State debt of $130 billion is what Labor inherited in 2023, along with a budget deficit, according to the pre-election budget update, of $12 billion, and budget settings that would see gross State debt reach $188 billion-plus by 2026. The reality is that the incoming Labor Government inherited a budget position which reflects serial and compounding debt going back to 2019.

Let's recall budgets past: The 2022-23 budget had a printed deficit of $10.5 billion. That increased to a $12 billion deficit by the time of the pre-election budget update. In a very short period of time the deficit in the printed document had blown out from $10.5 billion to $12 billion. In 2021-22, a $15 billion deficit. In 2020-21, a $7 billion deficit. In 2019-20, before the uptick in pandemic spending, a $7 billion deficit. We have to go back to 2018 for the last surplus budget in this State, $1.4 billion surplus on that date. Where was the member for Oatley during all those years? Where was he in 2019, 2020, 2021, 2022 and 2023? Where was his concern about debt and deficit then? It was nowhere. He was on the front bench, and he had big ambitions for himself and his party.

What has the Government done with that position? In Labor's first budget, we trimmed the deficit we inherited. We inherited a deficit of $12 billion and we trimmed it to $10 billion. In our second budget, we cut that deficit to $5 billion. We more than halved the deficit in two budgets. That is what budget repair looks like. We are determined to continue the process of budget repair so we can deliver the public services the people of New South Wales want, rely on and deserve. Over the forward estimates, we are holding expenses growth to below 2 per cent. That is real restraint. Revenue is projected to grow 3 per cent plus. If expenses are growing less than 2 per cent and revenue is growing more than 3 per cent, that is a sustainable budget position. That is the pathway back to surplus: getting the debt down over time.

Members will recall that between 2018 and 2022 expenses growth under the Liberal-Nationals Coalition, the masters of budgets, was 9.5 per cent. If we take out pandemic spending—and that is fair—the target for spending under Coalition budgets was 5.6 per cent. That is how it was trending under the former Liberal-Nationals Government. It stoked inflation at every budget. Labor's settings have taken pressure off inflation in this State. Remember, the Reserve Bank's comfortable inflation band is 2 per cent-3 per cent. If the State Government is getting its spending increase below 2 per cent, that is not putting pressure on inflation. That is having a positive outcome for our community. Our budget settings are on track to reduce gross State debt over the forward estimates by $9 billion so that by 2026, by our settings, gross State debt will be under $180 billion. Under the Coalition, it was on track to be $188 billion-plus.

We have done this without privatisation and without a cap on the wages of the State's public servants. That is what responsible economic management looks like: the calm and methodical approach of Treasurer Daniel Mookhey to reduce waste, investing in the must-haves, and reviewing the budget, line by line, through our comprehensive expenditure review led by finance Minister Houssos. All of our work is underpinned by Labor values, to get debt under control, and not just for the sake of it. It is not done simply to say, "That's a good set of books." It is to invest in the public services the people of New South Wales want, rely on and deserve. Our investment is paying off. We have more teachers and more policemen. We have more face-to-face teaching in our schools. We have committed to safe staffing levels in our hospitals.

The Opposition's attempt to condemn the Government is nothing more than an attempt to rewrite history. The people of New South Wales deserve a government that invests in them, strengthens our public services and restores fiscal responsibility. That is exactly what the Minns Labor Government is doing. This motion should be rejected. I foreshadow that we be moving an amendment. I ask the House to support that amendment and to reject this motion.

Mr MATT CROSS (Davidson) (15:23:51):

I am proud to support the motion of the member for Oatley. I know that the member for Oatley has definitely read the budget papers, and he knows the importance of the budget for New South Wales households. I will make some introductory remarks about how important the economy is to New South Wales and its people. Firstly, a strong economy is central to everything, and we in the Liberal Party know and understand that. Secondly, only with a strong economy can you make sure you are investing in the infrastructure and services that our State needs and deserves. Finally, when it comes to the economy, only the Liberal Party knows the work, discipline and focus that is required to make sure that the budget is full of growth. That we are not burdening households and, in particular, small businesses.

When it comes to net debt in New South Wales—and the member for Oatley has articulated it very well—the Australian Labor Party has overseen the largest debt in the history of New South Wales over two budgets. I will say that again: The Labor Party in New South Wales has overseen, in two budgets, the largest debt ever in the State's history. When Labor came to government, as members opposite have rightfully pointed out, there was net debt from COVID. But Labor has taken that level of net debt and increased it—and it continues to increase. I prepared this graph in my office. It shows the Liberal Party paying down Labor's debt from 1995 to 2011. We actually had $10 billion of negative debt. We had a pandemic, but we are now seeing the Australian Labor Party increase those debt levels to be the largest ever in history.

I am happy to read the budget papers, but the midyear economic statement said: "Gross debt is projected to be $199.9 billion by June of 2028, in line with the 2024-25 Budget projections." The Australian Labor Party will be overseeing the largest net debt in history. I have some interesting quotes that I will share with the House. The first reads, "It would be grossly reckless, if you were the government of today, to rack up the largest debt the State has ever seen in its entire history." Who said that? Chris Minns. The next quote reads, "The idea that some future generation will have to pay off this debt, it just doesn't occur to them." Who said that? Chris Minns. Another quote reads, "New South Wales will pay more each year in interest on the State's massive debt than it spends on New South Wales police and TAFE combined, Premier Chris Minns has revealed".

The interest payments on debt is $7 billion, which is more than those two agencies combined. That is completely outrageous. That means the interest expenses we are borrowing will increase by $453 billion by 2027- 28. One might say that debt does not matter, but it absolutely does matter. More debt means higher interest rates, which means higher cost of living for the families and businesses of New South Wales. Government has a responsibility to the taxpayer and to future generations to do everything it can to lower debt.

Mr GREG WARREN (Campbelltown) (15:27:56):

I am delighted to make a contribution to debate on the motion of the member for Oatley. I thank him for bringing it to the House so we can yet again display the incompetence of those opposite. They were the architects of the debt, deficit and destruction left to Labor when it came to government in March 2023. The previous Government left a deficit in excess of $180 billion. They left the legacy of those three Ds—debt, deficit and destruction—but they will also be remembered for selling, slashing and sacking. That is what they did to the public service. They sold off everything. I have said before, they would sell their own dog. The reality is, they sold off revenue-raising assets that we no longer have. But it got worse. They then went on a spending spree like a drunken sailor. The economy of a sub-Saharan country was in better shape than the New South Wales economy left to Labor. It was absolutely appalling.

The sad thing about all of this is that our local businesses and local families continue to pay the price. We have a very astute Treasurer and a very diligent and honest Premier, who is dealing with the New South Wales economy whilst also trying to deliver services that people need and deserve. Whether it is nurses, police or teachers, all of our Ministers and, indeed, the broader Government are focused on that, whilst we continue to navigate our way through debt recovery and getting the economy back on track. We know that if we do not get the budget right now, there will be long-term ramifications.

I have spoken to many stakeholders in my electorate, and they understand the simple fact of the legacy that we were left by members opposite. They have no credibility in this space at all. They are a bit like a scratch lottery ticket when it comes to the New South Wales economy. You pick up the ticket and think, "This is great." Then you scratch the surface and are terribly disappointed. But you do not have to scratch too far to find that disappointment, because the people of New South Wales—workers, families and everyone—are living it every day. Sadly, they are the ones suffering.

It might be an appropriate thing for the member for Oatley to bring this motion forward. He is a member who I know works very hard in his electorate. But the reality is that his motion is totally inconsistent with fact and, at best, leaves most of those facts out of the motion. The 2024-25 budget included $8.9 billion of targeted assistance, including toll relief, energy bill rebates, bulk-billing incentives and stamp duty concessions for people buying their first home. That assistance can make a real difference for families. I move:

That the motion be amended by omitting all words after "House", instead inserting:

(1)Notes that under the Minns Labor Government gross debt is projected to be $9 billion lower by June 2026 than was projected in the 2023 pre-election budget update;

(2)Notes the former Liberal-Nationals Government left New South Wales with the largest ever debt and budgeted with two biggest ever blowouts in the State's history;

(3)Recognises that the Minns Labor Government's investment in public sector wages is already delivering returns for the community by reducing teacher vacancies, boosting police recruitment and more; and

(4)Notes that the Minns Labor Government's responsible approach to financial management has delivered these public sector wage increases while also bringing down the State's deficit from $10.6 billion to $4.9 billion.

I urge the House to support the amendment and put credible facts back into this debate.

Mr JAMES WALLACE (Hornsby) (15:32:24):

The Minns minority Labor government is failing the people of New South Wales because it is failing to manage the economy. Our State gross debt is projected to reach nearly $200 billion by 2027-28. The interest repayments alone on that debt will be $8.5 billion per year in 2027‑28. That is nothing off the principal; it is $8.5 billion just to pay the interest on the debt. That is more than we spend each year on police, Fire and Rescue and other emergency services. Just to pay the interest on the debt, the Government will need to either make massive cuts, like cutting the entire police, fire and emergency services budgets, or raise taxes on families. Every family in New South Wales will need to pay an additional $2,500 per year just so the Minns minority Government can pay the interest on its debt. Every family will be $2,500 worse off.

That money will need to be raised through higher stamp duty, land taxes, higher payroll taxes and an ever‑increasing reliance on poker machine revenue. Those are taxes that flow through to families. They will be feeling the impact of increased prices at the shops, increased prices for services and an increased cost of rent and housing. The people of New South Wales are already frustrated by rising prices, and it is going to make things worse. Most concerningly, Government overspending is focused on short-term costs, not long-term infrastructure. There is no spending we can see that will grow the State economy through productivity improvements. To put it in business terms, this debt is akin to credit card debt to make this month's payroll work.

There is a lot to be said about the position that the Minns Government found itself in, but it is deteriorating that position significantly. The Minns minority government is mismanaging the economy through more taxes, more deficits and more debt. Before the election, Chris Minns said that his union wage deals would not cost the people of New South Wales a cent. They would all be funded through productivity offsets. That was the critical promise that he made to the people of New South Wales. It was the core of his message about how he would manage the budget and his economic credibility.

But the Premier betrayed the people of New South Wales and he broke that promise. The Premier effectively handed the keys to the Treasury over to the unions. Not a cent in productivity offsets has been identified by the Minns Labor Government. The size of the debt is an issue of intergenerational injustice. It is a debt that will have to be repaid by young people and young families. This is the most critical thing: No government can claim any moral standing when its enduring legacy is a structural debt that forces our kids to choose between taxes they cannot afford and a healthcare system that they deserve. That will be the legacy of the Minns minority Labor government.

Ms KAREN McKEOWN (Penrith) (15:35:43):

I support the amendment of the member for Campbelltown. If the original motion proves anything, it is that the Opposition has an impressive talent for selective memory. Were Opposition members asleep for those 12 long years? Talk about a coalition of Rip Van Winkles. They talk about debt as if they did not hand us the biggest debt in New South Wales history, leaving their mess behind for us to fix. Remind us which government lost the triple-A credit rating from Standard and Poor's, which has called out and acknowledged the fiscal mess we inherited? Opposition members want to condemn us for poor fiscal management as if they were not the ones who delivered two record budget blowouts and their legacy of a $7 billion black hole of unfunded programs. The facts are an inconvenient truth for them, so let us remind them, yet again. They set gross debt to hit a record $188.2 billion by 2026. They left us a $10.6 billion deficit. They froze public sector wages, causing a workforce crisis and deterioration of our essential services. And now, they want to condemn us for fixing their mess.

The amendment put forward by my colleague the member for Campbelltown sets the record straight. It acknowledges that the Minns Government has done the hard work of budget repair, keeping spending tight and focusing on the things that matter most to the people of New South Wales. We have lowered projected gross debt by $9 billion, and that is helping us to save on interest repayments so we can put that money back into the essential services our communities rely on. We have also given public sector workers their biggest pay rise in over a decade, removing the Opposition's wages cap for good.

Under our industrial bargaining framework, we have signed multi‑year agreements with more than 250,000 of the 400,000 public sector workers in the State, giving them the certainty they deserve. Because of that, we now have more teachers in schools, more police on the beat and more paramedics saving lives. We are building more health infrastructure and upgrading our hospitals. Just this month, thousands of students across New South Wales started term one in brand-new or upgraded facilities at 18 schools across our State. That is what delivering for New South Wales looks like, and we are doing all of that while bringing the deficit under control—down from the $10.6 billion we inherited to $4.9 billion.

This Government is making responsible fiscal choices. Those opposite made reckless ones. I will spotlight just one example. Previous analysis by the New South Wales Auditor-General from the last five years of the previous Liberal-Nationals Government shows it spent more than $1 billion on external consultants, which was done with inadequate procurement and management policies in place. Let us put that in perspective: That is a rate of one consultant engagement every working hour for five years straight. It is unbelievable.

Do not even get me started on buying ferries that do not operate at night, fit under bridges or go backwards. How about buying trains that do not fit the tracks or that are too wide to go through tunnels? What a monumental waste of taxpayer funds given that those projects required billions of dollars to fix. The Opposition selectively forgot about those issues. When Labor builds for the people of New South Wales, at least things are fit for purpose, and the people of this State can see the difference. The Coalition saw that difference at the March 2023 election, despite spending $27 billion in the nine months before it. The amendment to the motion will ensure that the House sees that. I support the amendment.

Mr MARK COURE (Oatley) (15:39:54):

In reply: I thank members on both sides of the House for their contributions to debate. Labor's financial legacy is debt, deficit and broken promises. The new member for Hornsby said that the State's interest payments alone will total $8.6 billion per year, which is more than double the interest payments of five years ago. That is $8.6 billion not spent on schools, hospitals, roads, transport, infrastructure and easing the cost of living. I commend the motion to the House.

TEMPORARY SPEAKER (Mr Alex Greenwich):

The member for Oatley has moved a motion, to which the member for Campbelltown has moved an amendment. The question is that the amendment be agreed to.

The House divided.

Ayes48

Noes36

Majority12

Amendment agreed to.

TEMPORARY SPEAKER (Mr Alex Greenwich):

The question is that the motion as amended be agreed to.

The House divided.

Ayes51

Noes34

Majority17

Motion as amended agreed to.