Frontline services will be hit: unions Unions are warning that frontline services across the state are at risk after NSW Treasurer Mike Baird announced further cuts to the public service, despite already axing thousands of jobs and shrinking departmental budgets. Delivering his third budget on Tuesday, Mr Baird detailed a two-year extension of a 1 per cent "efficiency dividend" to help fund the state's $1.7 billion contribution to the Gonski education reforms. It follows the decision to cut 5000 public servants in the 2011 budget and last year's announcement of a labour expense cap to slash the equivalent of 10,000 jobs. NSW budget winners and losers Small businesses, the seat of Newcastle and home builders are the biggest winners in the NSW state budget while the public sector will find it tough, says senior reporter Matt Wade. Asked how he could guarantee that service delivery would not be compromised, Mr Baird said this would be monitored by departmental heads. "We need to set financial settings that set up a sustainable financial position for the state," he said. Our objective in doing that is to maintain frontline services ... I still think we are in a position where we can be more efficient. But the general secretary of Unions NSW, Mark Lennon, said it was "crude, short-term cost cutting" that would hit frontline services, particularly in health and justice. "Crude, short-term cost cutting": Mark Lennon, general secretary of Unions NSW. Anne Gardiner, the general secretary of the Public Service Association, warned of the cumulative effects of the new cuts on top of the 15,000 job losses already announced. "You can't build a better NSW by putting people out of work and cutting services to the community," she said. The centrepiece of the budget was the announcement that the port of Newcastle would be sold for an anticipated $700 million by way of a 99-year lease. Half of the expected proceeds from the privatisation - $340 million - will be spent on revitalising the central business district of Newcastle, including replacing the heavy rail line through the city with light rail. The sale should be completed before next year's budget. Mr Baird announced a smaller than expected deficit for 2013-14. In December, the midyear review forecast a deficit of $423 million, which has been revised to $374 million. The budget is still expected to return to surplus in 2014-15 but instead of a previously forecast surplus of $1.3 billion, it is now estimated at $829 million. A new accounting standard relating to how the government must calculate interest on superannuation assets means the budget result for 2013-14 will be recorded as a deficit of $1.89 billion. Under the change, the forecast deficit is $563 million in 2014-15 before returning to a surplus of $157 million in 2015-16. But Mr Baird stressed this did not change the state's underlying fiscal position. The government announced funding for its signature transport programs - the north-west rail link and the 33-kilometre WestConnex motorway linking the M4 and M5 via Sydney Airport and Port Botany. The final cost of the rail link, expected to open in late 2019, will be $8.3 billion. Funding of $1.8 billion for WestConnex - expected to cost up to $13 billion - will be released over the next four years. The first home buyers grant for purchasers of new homes will remain at $15,000 for an extra two years instead of dropping to $10,000 next year. The payroll tax threshold will rise from $689,000 to $750,000 from July 1, with indexation removed, in an attempt to get small business to hire workers. About 1300 businesses that previously paid the tax would now be exempt. The jobs action plan payroll tax rebate will rise from $4000 to $5000 for each new job created and extend until June 2015.