A report released by global ratings agency Standard and Poor’s (S&P) this week noted Australian wages caps, like the one in NSW, have “struck a pragmatic middle ground” as the “fiscal scars and debt overhang from COVID-19 linger”.
The report, titled Subnational Debt 2023: Australian States Navigate Crosscurrents of COVID, Coal And Capex, outlines the challenges facing Australian states including pressures on infrastructure delivery and rising interest rates.
It also notes Australian states, including NSW, are “highly rated” by ratings agencies.
NSW Treasurer Matt Kean said the “middle ground” noted by S&P was a result of the NSW commitment to deliver a fair deal for both public servants and taxpayers.
“Despite current economic challenges following unprecedented floods, fires and the pandemic, NSW remains in a strong economic position that allows some of the most generous public sector pay increases in the country,” Mr Kean said.
“This is what a Liberal and Nationals Government dedicated to providing support, services and a strong economy can actually deliver, as opposed to NSW Labor promises that will never be delivered. NSW Labor left a $30 billion infrastructure backlog last time they left office with their poor economic and financial management.”
The report comes after the Reserve Bank Governor Philip Lowe warned that further increases in interest rates would be required in the months ahead.
The February Statement of Monetary Policy said the Reserve Bank board would pay close attention to labour costs and the price-setting behaviour of firms, “given the importance of avoiding a prices-wages spiral”.
Mr Kean said the Minns and Mookhey policy of removing the public sector wage cap could have grave economic consequences for the people of New South Wales.
“The risks of Labor’s half-baked approach to economy and fiscal policy is clear,” Mr Kean said.
“It’s a price every household in NSW would pay if these two former Labor Party officials were elected. It would mean higher interest rates for longer as the Reserve Bank’s monetary policy fights against NSW Labor’s fiscal profligacy.
“Wages make up more than 40 per cent of the state’s budget. We are already seeing Labor cancel Metro projects from opposition to cover their $8 billion public sector wages black hole
“Only the Liberal and Nationals Government has a long-term economic plan to keep NSW moving forward.”