The State Infrastructure Strategy, published last year by Infrastructure NSW, urged the state government to reconsider its large infrastructure projects amid skyrocketing costs.
In particular, the government was advised to re-evaluate the need for and timing of major road and rail projects.
These included the M6 Stage 2, Stage 2 of the Parramatta Light Rail, Stage 2 of the Beaches Link, Stage 2 of the Sydney Metro, Stage 2 of the Great Western Highway between Katoomba and Lithgow, and Regional Major Dam Projects.
Infrastructure NSW also stated that due to the projected strong growth in the state’s population, NSW will require enormous infrastructure investment:
As shown above, the population of NSW is projected to soar to 9.9 million by 2041, up by around 50% from 6.5 million in 2001, all via mass net overseas migration.
Similar to Victoria, NSW’s budget is being pulled underwater by infrastructure debt at the same time as its residents pay some of the highest user prices (such as road tolls):
Last week, newly elected NSW Premier, Chris Minns, said Labor will be “more circumspect” on infrastructure spending than the previous Liberal government, with projects to be assessed against the state’s credit rating and his government’s budget goals.
This announcement came after an incoming government brief from the State Treasury revealed that the expected cost of the Sydney Metro rail project had doubled from its initial estimate to $45 billion for two lines.
Today, The AFR reports that NSW Treasurer Daniel Mookhey has delayed the state’s budget until September as he attempts to stabilise a budget stretched thin by the Liberals’ $115 billion infrastructure pipeline.
“We are inheriting significant economic challenges and its difficult to avoid pressures on the budget, including unfunded government programs”, Mookhey said, claiming he had inherited the largest debt in the state’s history.
Heavy borrowings by the former government, used to fund the state’s infrastructure pipeline, have put NSW’s net debt on track to hit $80 billion with an interest bill of more than $2 billion a year.
In reality, the former NSW government only embarked on such a heavy infrastructure build because the state was being overrun with population growth owing to the federal government’s mass immigration policy.
This extreme population growth means infrastructure has to be continually expanded to accommodate the larger population, otherwise congestion costs will rise, wrecking productivity and living standards.
However, because Sydney is already built-out, providing new infrastructure becomes increasingly expensive due to the need to build tunnels or engage in land buy-backs of some of the world’s most expensive real estate.
Despite the massive costs of growth, which are mostly borne by the state government, you would have thought that the new Minns Labor Government would have pushed back against the federal government’s record immigration program.
To the contrary. In last month’s election winning speech, Minns declared that NSW businesses needed to have “access to world-class skilled labour. And that’s where I think we can really step up”.
“They need to know that the NSW government of the day is open for business and that we want people to come to Australia”.
Minns said a Labor state government would support federal government plans to attract skilled migrants, while persuading international students to make NSW their first choice.
Thus, if Minns gets his way, then NSW’s population will swell and it will need to build hugely expensive infrastructure and provide services to its ballooning population.
In turn, the state’s budget will continue to drown in debt, crushed under the endless migrant deluge.
There is another way of course. Instead of building mega infrastructure projects to cope with mega immigration, why not instead cancel the politically-engineered mega immigration?
Why create the problem in the first place, especially given mega population growth is fiercely opposed by NSW residents?
As long as the federal government continues to flood Sydney (and Melbourne) with people, state budgets will continue to drown in debt, crushed under mass immigration.
That’s the reality of the situation.
