World-class services and infrastructure

2021-22 NSW Intergenerational Report

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NSW Government delivers and commissions services and infrastructure to make New South Wales a great place to live, work and invest. 

Over the next 40 years, we project government recurrent spending on services per person to increase by 80 per cent in today’s dollars – from around $10,000 in 2018-19 to a projected $18,000 in 2060-61. Health contributes 40 per cent of this growth. 

Infrastructure spend is expected to return to lower levels following a record spend of over $100 billion on infrastructure in the last decade. Infrastructure investments are expected to be 1.8 per cent of Gross State Product by 2060-61. This compares to 2.6 per cent of Gross State Product in 2018-19.

It is anticipated that external events - such as natural disasters or global crises - will continue to present challenges in the future. As these pressures grow, it will be increasingly important to prioritise government spending towards the most effective and efficient ways of delivering services.

Gross capital expenditure in real terms, 2005 to 2061

Gross capital expenditure is the general government acquisition of nonfinancial assets, including assets acquired under finance leases. This is projected to average 3.4 per cent annually over the next 40 years.

Source: NSW Treasury.

Recurrent expenses as a share of nominal GSP

A waterfall chart showing the following recurrent expenses along the x axis; 2018-19 12.5, Higher health expenses +1.9, Higher public order and safety expenses +0.4, Higher social security and welfare expenses +0.2, Higher transport expenses +0.1, Lower education expenses -0.1, Other -0.4, 2060-61 14.5.

Government recurrent spending funds the non-capital expenses required to deliver, maintain and improve services. Assuming no changes to government policies, recurrent expenses are expected to grow from 12.5 per cent of Gross State Product in 2018-19 to 14.5 per of Gross State Product in 2060-61.

Source: NSW Treasury.

In the next 40 years

 

Illustration of a column graph trending up along the x axis

Average annual recurrent expenses are projected to grow at

4.7 PER CENT

this is faster than projected nominal economic growth

 

 

Illustration of a person standing next to two arrows pointing up

Recurrent expenses per person are projected to increase by

80 PER CENT

between 2018-19 and 2060-61, in today's dollars

 

 

Illustration of safety helmet and glasses

Gross capital expenditure growth as a share of GSP will be

1.8 PER CENT

in 2060-61 compared to 2.6 per cent in 2018-19

 

Insights and opportunities

 

  • With growing expense pressures, there is an opportunity for government to rethink and redesign service delivery and infrastructure needs.
  • This will require us to invest in a way that makes the most of technological advances, take a more joined-up approach to services that supports individuals across different systems, and plan and design for resilience to environmental and other risks. 
  • These interventions can help better utilise existing physical infrastructure. A reduction of reliance on physical infrastructure by 10 per cent across health, education, transport, and justice can reduce further capital spend to 2060-61 by nearly $4 billion in today’s dollars. 
  • Addressing rising health expenses through prevention and early intervention of chronic illness can reduce pressures on expenses and improve health outcomes.
  • If people live more of their older years in good health, the projected long-term growth in annual health spending will be lower by 0.13 percentage points

 

Last updated: 07/06/2021