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A fight is coming:NSW Premier Chris Minns and Prime Minister Anthony Albanese.Credit:Alex Ellinghausen

The state premiers were already in position before King announced the list of 50 projects across the country for which federal funding would be axed as part of an infrastructure review. Queensland and Western Australia,the next states to go to the polls,were spoiling for a fight.

NSW was a little less worked up. But that was before King dropped the bombshell. One-third of the projects on the chopping block were in NSW. Most notably,the M7-M12 interchange,which is already under construction,was on her list. It blindsided NSW because it isn’t a pipedream (unlike faster rail,which was also axed but has been reborn more times than anyone can remember).

The interchange,which will be a crucial link to Sydney’s second airport,will have to be delivered,regardless,given the contractual obligations to Transurban. And unless King has a change of heart,NSW will be lumped with the bill. Not only for the M7-M12 link,but any of the other 16 projects that the Commonwealth is abandoning but which NSW deems indispensable. In all,that withdrawn funding will cost the state about $1.4 billion,according to early NSW Treasury estimates.

King complicated the issue by acknowledging that the interchange was an important project. At the same time,she claimed it was riddled with unexpected cost pressures. The usually mild-mannered NSW Treasurer,Daniel Mookhey,came out swinging. He was disappointed with a “capital D”.

“We’ve been in conversations with the federal government as part of their 90-day infrastructure review for more than 200 days,” he thundered. “It’s not clear whether the Commonwealth has been listening.” If it had been,it ignored NSW.

NSW has every right to be seriously concerned about the direction the Commonwealth is heading in terms of state/federal funding arrangements. The National Housing Accord,agreed to in August,means NSW will need to build 75,000 homes each year for five years – twice as many as it is forecast to deliver – to reach its share of the federal government’s ambitious new targets.

It’s a huge task by anyone’s measure,and while NSW has not publicly said so,behind closed doors the Minns government knows it will struggle to meet the targets. It should hardly surprise its Labor colleagues in Canberra,then,that NSW is furious at them for pulling infrastructure funding. The rapid expansion of housing requires the rapid expansion of infrastructure.

Health is the another battleground. NSW has long complained,including under the former Coalition government,that a chronic lack of GPs is forcing people into the state’s emergency departments. In a submission to NSW Labor’s upcoming special commission of inquiry into healthcare funding,health bureaucrats have warned that the state’s hospitals and EDs are being used as a last resort for older people and those living with a disability. Aged care and the NDIS are funded by the federal government,yet NSW has to pick up the slack when services are not there.

And an extension of the housing and infrastructure conundrum for NSW is immigration. The states have no control over the intake and yet they bear the brunt of the Commonwealth’s decisions. Australia’s intake is surging past the federal government’s forecast and could reach almost 500,000 a year. Those numbers could balloon even more as international students continue to return,adding yet more pressure to the housing crisis.

It is little wonder that the premiers are demanding they have a say on immigration levels. Premier Chris Minns is suggesting giving migrants an incentive to go to the regions to ease pressure on the cities. He also wants to import more skilled workers in chronically under-staffed services such as health and childcare.

Minns and Mookhey are lumbered with a huge task. They have to find the fiscal fixes to pinch points,even where the state has little control. Instead of heaping blame on the former Coalition government for the succession of problems facing NSW,the Minns government will increasingly point the finger at its Labor colleagues in Canberra.

This week,Minns warned that NSW taxpayers contributed “enormous amounts of money” to the federal budget,and they wanted adequate funding in return. “It is not the NSW government whingeing,” he said. “It is voters and the state taxpayers in NSW that deserve to have access to world-class education and functioning hospitals and infrastructure that’s been promised.”

Prime Minister Anthony Albanese famously says he “loves to fight Tories”. No doubt Chris Minns does too. Now they’ll be fighting each other.

Alexandra Smith is theHerald’s state political editor.

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