NSW Budget crushed under ponzi infrastructure

Advertisement

Last year, Infrastructure NSW released a report, State Infrastructure Strategy 2022-2044: Staying Ahead, which called on the state government to reconsider its mega infrastructure projects as ballooning costs put a big question mark over their benefits.

Infrastructure NSW urged the government to reconsider the need for – and timing of – major road and rail development.

These included the Beaches Link, the M6 Stage 2, stage two of the Parramatta Light Rail, the central tunnel of the Great Western Highway between Katoomba and Lithgow, further stages of the Sydney Metro and regional major dam projects.

The report noted that massive infrastructure investment is needed because NSW is projected to experience turbo-charged population growth through mass immigration:

Advertisement
NSW population projection

As shown above, NSW’s population is projected to rocket to 9.9 million people by 2041, up massively from 6.5 million in 2001.

Much like Victoria, NSW’s budget is drowning in infrastructure debt, while its residents pay some of the highest user costs (e.g. road tolls) in the world:

Advertisement
State government debt

Acknowledging the financial pressures, NSW Premier Chris Minns has announced a review of the Sydney Metro rail project, stating it could result in fewer stations on some of the lines.

The review comes after a Treasury briefing to the new Labor government revealed that costs on initial estimates had doubled to $45 billion for two lines.

Advertisement

Minns says Labor will be “more circumspect” than the previous Coalition government when it comes to infrastructure spending, with projects to be weighed up against the state’s credit rating and his government’s budget priorities.

Here’s a novel idea: instead of cancelling expensive mega projects designed to cope with mega immigration, how about cancelling the politically-engineered mega immigration?

Why create the problem in the first place, especially when mega population growth is vehemently opposed by NSW residents?

Advertisement

Sadly, Minns is another rabid supporter of mass immigration, saying in last month’s election speech 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 also said a Labor state government would support federal government plans to attract skilled migrants, while persuading international students to make NSW their first choice.

Advertisement

If NSW’s population continues to grow like a science experiment through mass immigration, then it will need to continue building infrastructure and providing services to its ballooning population.

The state’s budget will continue to drown in debt, crushed under endless mass immigration.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.