Small relief rises from a tight ship, but there might yet be rough seas ahead

How lucky can we get? Many of us are suffering under the cost of living crisis, but the state government is just announcing its budget for the new financial year, and it’s happy to come to our rescue. (That there’s a state election coming up in March is entirely coincidental.)

Treasurer Daniel Mookhey says that, for one year only, he will cut the cost of registering your car by $100 and forgo any increase in public transport fares.

And for motorists who pay a lot of tolls and so may claim a rebate on spending above $60 a week, he’ll make it above $50 a week for a year.

What’s that? It doesn’t sound all that exciting? Not compared with a nice big cut in income tax?

Well, no, it doesn’t seem exciting. Pretty mundane, really. But doesn’t that describe most of our cost of living – continually shelling out for the ordinary things in life?

And although it may do little to gladden the heart, it will cost the Minns government more than half a billion dollars. Just for a year.

Even so, Mookhey expects the budget deficit for the coming financial year to be $2.3 billion, compared with $3 billion in the year just ending.

How come? When it comes to expenses, the Minns government runs a tight ship. Whereas expenses increased by an annual average of 9.7 per cent over the four years to June 2023, they rose by only 1.8 per cent in 2024-25.

This is true despite its decision, made early in its term, to end the cap on public sector wages. The previous government’s notion that it could get away with paying skilled workers less than they could earn in the private sector was unsustainable.

Now Mookhey can boast of overcoming shortages of teachers, ambos and nurses.

And it’s worth noting that Mookhey’s way of measuring the budget deficit or surplus is more stringent than the figures that federal treasurers compute.

What Mookhey says is an expected deficit of $2.3 billion, his federal counterpart would call a surplus of $5.5 billion. (Don’t ask.)

Of course, it’s easy for treasurers to forecast a steady improvement in the bottom line over time. Whether Mookhey can achieve a return to ever-improving surplus in his next budget remains to be seen.

But there seems to be a deeper problem: the economy may be proving to be more inflation-prone than we took it to be. And this for no reason anyone can put their finger on.

If so, this is bad news for the whole Australian economy, but particularly for Sydneysiders. Why? Because our house prices are so much higher than in other capital cities.

This is a choice we’ve made by taking the city most Aussies want to live in and doin