A major debt retirement fund created by the former Liberal-National government will be reviewed after Treasurer Daniel Mookhey determined it may no longer serve the best interests of NSW.
Mr Mookhey will announce in an economic statement to parliament tomorrow that the current method of reporting the NGF Debt Retirement Fund’s (DRF) impact on the Budget result will be revised to improve transparency.
The Treasurer will also reveal that he is seeking advice on the fund’s further operations ahead of the September Budget.
Mr Mookhey will describe the former government’s plan to raise more than $25.3 billion of debt by 2027 to deposit into the DRF, taking the fund’s balance to $50.8 billion, as not being a fit-for-purpose approach.
The 2023 Pre-Election Budget Update showed a $328 million surplus for 2024-25, which would have been a $911m deficit without the DRF’s returns.
The Government will in future include a Budget result that excludes the DRF’s net investment returns.
Excluding these returns, which can only be used to retire debt, will show more clearly the State’s available resources to fund services and infrastructure.
As part of his June economic statement, the Treasurer will refer the DRF to the Legislative Council’s State Development Committee to review.
The committee’s report will inform the September Budget.
Treasurer Daniel Mookhey said:
“The NGF was created when NSW was in surplus and interest rates were low. But now, at end June 2023, the State is forecast to be $12 billion dollars in deficit, with debt expected to reach $187.5b by 2026 and interest payments skyrocketing.
“The former government’s strategy of growing the DRF will be revisited.
“We will address the fact the previous government had been planning to wield the State’s credit card to play around in financial markets.
“Revenue from State Owned Corporations, and royalties that the former Government had budgeted to contribute to the DRF, could be redirected instead to help fund our essential services.
“The DRF will be referred to the State Development Committee so that we can fully assess how to manage our exposure to risk and reduce our interest payments.
“We will also ensure the Budget provides a more transparent picture of the State’s finances.”
