NSW Premier Nathan Rees says he will not be raising taxes to fix the state's economic woes, but has labelled government departments "absolutely ripe for reform".
Mr Rees's new cabinet team will tomorrow be briefed on the grim economic outlook that has put the state's triple-A credit rating at risk.
Eric Roozendaal was today elevated to the role of Treasurer, and together with new Finance Minister Joe Tripodi, will be at the frontline of the Government's response to its financial problems.
"Tax increases have been something that we've ruled out previously and we've always tried to bring downward pressure to bear on the various types of taxes and that's not going to change," Mr Rees told reporters.
However, he said the current 2.5 per cent cap on annual public sector wage increases would remain in place, and that budget cuts were inevitable.
"I don't want to get into where we're going to slash," Mr Rees said.
"But what I am deadly serious about is a robust response to the fiscal situation that we face."
Mr Rees targeted public services as an obvious place for change.
He said up to 20 state and federal organisations were involved when delivering public housing services.
"I think that's an area that is absolutely ripe for reform," he said.
But he tempered his comments by also saying: "There will be no major departmental restructuring for the time being."
After being dumped as treasurer on Friday, Michael Costa revealed the true state of NSW's troubled finances.
Mr Rees has subsequently confirmed a $300 million health expenditure blow-out, and said the state was losing "in the order of $90 million a month in shortfalls in revenues".
Today, he would not outline how the Government would raise additional funds.
"We've got to match the savings that we make with any adjustments to the debt levels and make sure that we can deliver infrastructure projects that we've already committed to," he said.
"We're going to have to demonstrate in the first instance we're not going to spend like drunken sailors."
Mr Rees also said he would consider privatising public transport and other government services in future.
"I'm not ruling anything in or out," he said on the issue.
"I want maximum flexibility."
He did discuss the options for securing the state's electricity needs following former premier Morris Iemma's failed plan to privatise the industry.
"We can borrow to build a new power station, we can raise taxes to fund that, or we can raise debt - and anything in between," Mr Rees said.
Federal Treasurer Wayne Swan has already rejected suggestions the Federal Government would bail NSW out, but he said it had been "particularly hard hit" by consecutive interest rate rises.
Mr Rees will attend his first Council of Australian Governments (COAG) meeting in Perth on October 2 with the hope of securing more funding from the Commonwealth.
"The NSW population has been shortchanged in the recent past," Mr Rees said.
"I would hope that my advocacy skills down there are at least the equal of premiers before me and I'll do my very best to make sure that the people of NSW get their fair share."
