Budget innovations

The report also points to reforming state budget processes to extend definitions of ‘investment’ - currently being used to deliver privatised infrastructure - to also include public services.

Current budget processes view public services in terms of cost only, rather than future benefits.

Conversely, spending on infrastructure is considered an investment, not a cost, because it delivers future income from user payments and asset sales.

Budget innovations can unlock fiscal space by accounting for public services as investments that deliver returns back to the government, such as via savings to the real budget costs of social disadvantage.

“To really fix the NSW budget, the government needs to completely overhaul the way it imagines spending on public services,” Dr Bryant said.

“Major infrastructure projects like WestConnex avoid fiscal constraints because they are defined as investment in a private asset, rather than a budget cost.

“Currently, governments see public services such as health and education as a cost, when they should be treated as an investment in the future. With innovative budgeting, the government could invest in nurses and teachers at interest rates currently reserved for toll roads.”

“Behind the scenes, politicians of all parties will tell you that they’re worried about the future of the public finances in NSW. But there’s not been much talk of that in the current state election. How are we going to continue to fund great public services, like schools and hospitals in the future?” Professor Marc Stears, Director of the Sydney Policy Lab said.

“The Sydney Policy Lab is proud to have commissioned this bold and imaginative report that presents innovative new ways of supporting our public services long into the future. We hope whichever party ends up in government will take its findings seriously.”