NSW’s $108b TCorp faces shake-up under plan to slash debt

afr.com:

The NSW government’s $108 billion investment manager is facing a shake-up, as Treasurer Daniel Mookhey orders a consolidation of its funds as part of a strategy to slash the state’s debt bill.

Mr Mookhey will announce on Friday that TCorp will be directed to develop a more efficient management of the state’s funds under management, initially by consolidating six separate government funds managing about $43 billion.

Mr Mookhey will also confirm that the Labor state government will permanently stop borrowing billions of dollars to inject into the $15 billion NSW Generations Fund (NGF) to invest in equities and other financial assets.

Borrowing billions of dollars to invest in volatile financial assets has been deemed too risky in a high inflation and high interest rate environment, while the government’s budget is in deficit and gross debt is projected to hit $187 billion by 2025-26.

Afterincreasing coal royalties by $2.7 billion ahead of his first budget on September 19, Mr Mookhey said suspending contributions to the generations fund would slash the state’s gross debt by more than $7 billion and cut interest payments by $1.1 billion over the next four years.

“NSW is going to stop playing around in financial markets using its credit card,” he said, ahead of an official announcement to the Sydney Financial Forum on Friday.

“The previous government was willing to risk $25.3 billion to improve the state’s net debt position by just $2 billion. I’m not.

“This will be the biggest step we take to reduce the state’s gross debt in this year’s budget. It shows the new government is carefully repairing the state’s budget so we can then fix the state’s essential services.

“Reforming the NGF will allow us to shake up how the state’s