``He's a man of extraordinary decency, integrity and honour, and his actions today in resigning the premiership of NSW demonstrate he's also a man of enormous courage,'' Mr Rees told reporters.

He also said sacked Treasurer Michael Costa would not be returning to the new-look Cabinet.

Mr Rees said NSW faced clear service delivery challenges in transport and health.

``You know those challenges as well as I do,'' he said.

``Today, we start work on fixing those issues. Those issues that go directly to people's lives, that impact on their lives, in their homes, their streets and their communities and their schools.''

Mr Rees said he would work to restore public confidence in the administration of NSW.

``On occasions, the administration has let you down,'' he told the people of NSW.

``You are right to feel frustrated, you are right to feel annoyed, you are right to feel disappointed.

``On occasions, you are right to feel angry.

``On that basis that I say this to you: we need real change, and that real change starts today.''

Mr Rees was adamant there was no place in his Cabinet for Mr Costa, who earlier today delivered a scathing assessment of NSW's financial position and said he had a strategy to salvage its AAA rating.

``There is a Caucus meeting over the weekend. There is a process to be followed there, I am not going to speculate or comment on the make-up of the Cabinet,'' he said.

``... other than to say Michael Costa will not be returning to the Cabinet.''

Mr Rees refused to be drawn on Mr Costa's time as Treasurer.

But he said Mr Costa had been a ``disruptive'' force within Cabinet.