'Hard decisions': Scully defends government over scrapping Hunter funding

Mr Scully faced a grilling on stage at a Property Council lunch in Newcastle on Tuesday over what the almost year-old government was doing for housing supply and broader economic development in the region.

Property Council Hunter chair Julie Rich told the audience that the Hunter had taken "body blows" over the past year, including the decision to scrap the grouting fund and the activation precinct, delays to the Honeysuckle HQ redevelopment site sale and a "lack of strong government leadership" over the Hunter Park sport, entertainment and residential precinct at Broadmeadow.

Asked if he had "any good news" for the Hunter, Mr Scully said Labor had a "different set of priorities" to the former Coalition government when it took office in March last year.

"In terms of the Hunter's focus, it's certainly not lost," he said.

"You've got several ministers around the cabinet table, directly at the cabinet table where decisions are being made.

"But we also have to deal with the reality: we inherited the largest debt of an incoming government in NSW history."

Mr Scully said the government had been forced to "take those hard decisions and reset those priorities".

"We want to deal with the debt and get the budget back in order."

At the same time Mr Scully was defending the decision to scrap a grouting program which has cost the state just over $2 million in nine years, Premier Chris Minns was at a business lunch in western Sydney extolling the virtues of the "massive injection of public money" in the $25 billion Metro West rail project.

Mr Scully said Broadmeadow had been left off a list of eight precincts earmarked for accelerated rezonings and community infrastructure investment under the new Transport Oriented Development Program because the government had prioritised population growth around Sydney's "big" transport investments.

He said Broadmeadow was "a bit further off than where we are".

Ms Rich said the Hunter Park development had been "spoken about for a very long time and it's time for action".

The Newcastle Mines Grouting Fund was established in 2015 from the Hunter Infrastructure and Investment Fund and paid out a total of about $2 million on four projects, including the Newcastle Art Gallery expansion.

In an interview on Tuesday with the Newcastle Herald, Mr Scully said the government would not revisit its decision to scrap the fund, which helped mitigate the risk associated with developments on inner-city sites affected by underground mining.

"I don't believe it will shut down large-scale development," he said.

"I appreciate some may be looking at where their development is.

"When you're repairing the mess we inherited, you have to make some difficult decisions.

"It's not under review at this stage, and, to be honest with you, I haven't had any requests to review it."

The government delayed the sale of Honeysuckle HQ, a state-owned three-hectare site on the Newcastle waterfront, when it announced in October that it would require a 30 per cent social and affordable housing target on the redevelopment.

The Herald understands an 18-month tender process had yielded a shortlist of three proponents before the government intervention.

Mr Scully said the government would have "more to say" this year on how the revised tender process was progressing.

"What we'll deliver at the end is a better outcome," he said.

"It's important where there's government land it's used for the public benefit as well as other outcomes."

Former Property Council Hunter chair Neil Petherbridge said in October that mandating social housing would "kill off" the Honeysuckle project, but Mr Scully said the premium site's location should not preclude housing for people on low incomes.

"We're addressing all parts of the housing market and making sure there's social and affordable housing.

"People have different views about the location. My view is that social and affordable housing should be on any location available as well.

"There's no point forcing people who are less well off further and further out into the urban fringes, because that puts them further away from the transport they need and other opportunities they might have.

"It won't kill it. We'll go out and ask for new expressions [of interest] and options and see what comes forward.

"We'll need to have people have a look at whether or not they can integrate what they're doing into that."

Mr Scully said work was progressing on a Broadmeadow master plan to go on public exhibition this year.

"I get exactly how important that is. In the same vein, I get how frustrated people might have become with the previous government seemingly dragging its heels on that," he said.

Newcastle Airport chief executive Peter Cock said on Tuesday that the Labor government had also discontinued a regional scheme which was poised to fund a new cargo terminal at Williamtown.

The Herald reported on Tuesday that a Hunter Joint Organisation report had found government funding was critical to developing a freight industry at the airport.

"The importance of the project has previously been recognised by the NSW government and we were well progressed in the Regional Investment Attraction Fund," Dr Cock said.

"With the change of government in March 2023, this scheme was discontinued, although the importance of the project remains."