Major Projects - New South Wales Budget Update 2024-2025

The New South Wales Budget for 2024-2025 was released on Tuesday the 18th of June. This is the second budget of the Minns Government.

Against the backdrop of a $3.6 billion deficit, the budget is said to be a budget of “must-haves not nice-to-haves”.  However, infrastructure investment, across all sectors, remains a key focus.   

In this update, we breakdown the budget, focussing on energy, mining, transport and social infrastructure.

ENERGY

The budget re-affirms NSW’s commitment to net zero emissions by 2050, as embodied in the States’ Climate Change (Net Zero Future) Act 2023 (which targets reductions of 50 per cent on 2005 levels by 2030, and 70 per cent by 2035) and reflected in the NSW Electricity Infrastructure Roadmap. Renewable energy in NSW has more than doubled in the past five years, and is forecast to increase with the eventual retirement of coal-fired plants.

Broadly, $4.5 billion of capital investment has been allocated to the Climate Change, Energy, the Environment and Water Infrastructure Portfolios over the four years to 2027-28 ($2.0 billion for 2024-25). This includes investment in:

• Renewable Energy Zones (REZs);
• Electric Vehicle (EV) Infrastructure;
• Regional Water Security; and
• Climate Change Fund Net Zero projects ($2.650 million for 2024-25).

REZs

Transmission Acceleration Facility

$3.1 billion has been allocated to the Transmission Acceleration Facility over the next four years to accelerate transmission projects including the:

• Central-West Orana REZ, to be delivered through EnergyCo which recently received a $490 million investment from the Clean Energy Finance Corporation’s Rewiring the Nation Fund (a Federal Government scheme).
• New England REZ.
• Hunter Transmission Project.

Electric Vehicle Infrastructure

The NSW Government has committed $294 million to developing electric vehicle infrastructure, including charging infrastructure at the kerbside, tourist destinations, and in apartment buildings, and supporting businesses and local governments to shift to EV fleets.

The NSW Government is committing a further $263.5 million to rollout an updated NSW EV Strategy.

Other notable items

New and continuing energy projects

• Port to Project – Road Upgrades and Newcastle Port Logistics Precinct (new): $128.5 million over four years is being invested into infrastructure upgrades of regional roads to the Newcastle Port. This expenditure aims to facilitate safe transport of large renewable energy equipment components, required for REZ projects and other NSW Roadmap and Commonwealth energy projects in Regional NSW.
• Digital Upgrade to the Biodiversity Offset Scheme: $15 million over four years to upgrade and re-design digital infrastructure to meet the demand of the Biodiversity Offset Scheme.

Transmission, production and storage reforms and initiatives

The investment of government agencies into renewable energy projects and reform reflects the Government’s emphasis on the energy transition:

• Essential Energy: $100 million of projected expenditure in 2024-25 as part of its network resilience program. Delivering up to 400 stand-alone power systems by 2028-29 to provide safe and reliable power to customers in regional, remote or natural disaster-prone locations. $607.3 million increase in Essential Energy’s expenditure to deliver connection services.  
• Sydney Water: Implementation of net zero programs to procure renewable energy to meet its electricity needs and achieve net-zero emissions by 2030. Assisting suppliers to meet net-zero emissions across its supply chain by 2040. Pioneering Australia’s first biomethane-to-gas pipeline in partnership with Jemena and the Australian Renewable Energy Agency.
• Hunter Water Corporation: Continuation of its onsite renewable energy generation program, with 6.5 MW of renewable energy capacity to be installed across its treatment plants and pump stations by the end of 2024. Recent renewable power purchase agreement to transition large sites to 100% renewable electricity by 2030.
• WaterNSW: Progressing its Renewable Energy and Storage Program (which identifies opportunities to use WaterNSW’s land and assets to facilitate private sector investment in renewable energy generation and storage projects) through: pumped hydro projects at the Glenbawn and Glennies Creek Dams with Upper Hunter Hydro. a major pumped hydro project in Western Sydney with Zen Energy.

Significant contingent liabilities

• The NSW Government has included a contingent liability to underwrite up to 80% of any operating losses for Eraring Power Station (capped at $225 million per year), until the closure of the plant (scheduled for August 2027).

 MINING

Dividends and Royalties

Over the next four years:

• Mineral royalties have been revised up by $481.6 million, driven by signals from key Asian markets of continued reliance on thermal coal to meet energy demand.
• Total dividend and tax equivalent payments to the Government from the public non-financial and public financial corporation sector are forecast to be $4.7 billion, including a key $139.3 million decrease in Essential Energy’s income tax equivalents. 

TRANSPORT INFRASTRUCTURE

The 2024–25 Budget’s Essential Infrastructure Plan includes $62.9 billion for transport infrastructure over the next four years to 2027–28. Funding for some projects (among others) over the next four years include:

• $13.4 billion for the Sydney Metro West Project;
• $5.5 billion for the Sydney Metro-Western Sydney Airport;
• $4.2 billion for the Western Sydney Harbour Tunnel Upgrade;
• $1.9 billion for the Zero Emissions Buses Program;
• $1.2 billion for Sydney Metro City and Southwest;
• $1.1 billion for Road Safety Investment;
• $661.0 million for upgrade of Elizabeth Drive;
• $605.5 million for widening of Mamre Road;
• $441.5 million for Tangara Fleet Life Extension; and
• $2.1 billion in additional funding has also been allocated for Stage 2 of the Parramatta Light Rail Project to connect Parramatta’s CBD to Sydney Olympica Park.

 Funding has also been allocated for infrastructure in Western Sydney in response to the region’s rapid growth and the new Western Sydney Airport. This includes:

• $1.3 billion for road upgrades in Western Sydney; and
• $327.1 million for bus services to the Western Sydney Airport.

The Budget has also allocated funds for infrastructure projects in regional and rural NSW. Important projects for rural NSW relating to the improvement of roads and housing being delivered in Restart NSW reservation include:

• $70.0 million for Inland Rail;
• $28.6 million for the Heavy Vehicle Rest Area Program;
• $25.0 million for Avoca Drive Upgrade;
• $8.0 million for the Nowra Bypass;
• $6.6 million commitment to the Yass Water Treatment Plant; and
• $5.0 million for Narooma Bridge Planning.

The Budget also continues to support the oversight of projects funded by the Snowy Hydro Legacy Fund, which is intended to deliver projects throughout regional NSW and support job creation.

SOCIAL INFRASTRUCTURE

The NSW Government has maintained significant investment in social infrastructure in the 2024-25 budget. We have highlighted spending on communities and justice, education and health below.

Communities and Justice

The budget includes a $7.1 billion investment in communities and justice over the next four years. The majority of that investment is allocated to the following new projects:

• $4.0 billion to deliver and replace social housing dwellings;
• $1.3 billion to maintain the social housing portfolio;
• $423.3 million for the Land and Housing Corporation to deliver 850 new social homes under the Social Housing Accelerator Agreement; and
• $73.1 million to maintain and upgrade the Aboriginal Housing Office’s social housing stock.

The budget also allocates funds to ongoing projects, including:

• $304.0 million for the redevelopment of the Penrith Stadium;
• $144.2 million to accelerate the delivery of regional social, affordable and private homes;
• $101.9 million to enhance courthouses, correctional and youth justice facilities;
• $34.4 million to deliver new or refurbish existing fire stations;
• $32.3 million to construct the new Lake Macquarie Sport and Recreational Centre Project;
• $22.3 million to improve the police radio network; and
• $3.0 million to improve the Sydney International Regatta Centre.

Education

The budget also allocates $9.5 billion to education over the next four years. This includes:

• $8.9 billion to deliver 130 new and upgraded schools, including $1.4 billion for regional schools;
• $127.0 million to improve TAFE; and
• $53.4 million to strengthen NSW Education Standards Authority’s (NESAs) defensive and preventative cyber measures.

Health

The government has committed $13.4 billion over the next four years to health infrastructure, including both hospitals and health facilities, as well as health programs.

The vast majority of this investment will be allocated to support ongoing projects, including:

• $705.5 million to rebuild the Bankstown Hospital;
• $687.2 million to redevelop the Royal Prince Alfred Hospital;
• $635.9 million to expand the Rouse Hill Hospital;
• $564.7 million to deliver the New Shellharbour Hospital;
• $503.0 million to redevelop the Fairfield Hospital
• $498.2 million to redevelop the John Hunter Health and Innovation Precinct;
• $470.9 million to redevelop the Ryde Hospital;
• $414.4 million to redevelop the Albury Wodonga Regional Hospital;
• $409.8 million to deliver the purpose-built Westmead Integrated Mental Health Complex;
• $342.8 million to deliver the Liverpool Health and Academic Precinct;
• $334.2 million for the Mental Health Infrastructure Program for the delivery of infrastructure needed to support and achieve key state-wide mental health reforms;
• $327.9 million to redevelop the Canterbury Hospital
• $303.4 million for Stage 1 of the Sydney Children’s Hospital redevelopment;
• $309.9 million for Stage 2 of The Children’s Hospital at Westmead
• $284.3 million to redevelop the Shoalhaven Hospital;
• $276.6 million for Stage 1 and 2 for the Nepean Hospital and Integrated Ambulatory Services;
• $244.2 million to redevelop the Eurobodalla Regional Hospital;
• $224.2 million to upgrade the St George Hospital;
• $222.2 million to redevelop the Grafton Hospital;
• $189.3 million to redevelop the Bathurst Hospital;
• $142.0 million to deliver the Sydney Biomedical Accelerator;
• $134.0 million to redevelop the Cessnock Hospital;
• $119.9 million to expand the Blacktown and Mount Druitt Hospitals;
• $91.2 million to redevelop the Moree Hospital; and
• $90.9 million to redevelop the Temora Hospital.

In terms of new projects, the government will commit:

• $200.1 million over four years to implement the Key Health Worker Accommodation Program to provide housing for healthcare workers in various rural and regional areas;
• $59.6 million for an emergency department relief package to address growing demand for health services, increasing pressure on emergency departments and demand for inpatient hospital beds; and
• $16.1 million to upgrade the Port Macquarie Base Hospital to provide a greater range and enhancement of clinical services.

Whilst this is a budget of “must haves” only, the New South Wales Government’s 2024-2025 budget commits significant investment in major projects across – providing investment opportunities for all project participants.