Premier Dominic Perrottet says the allocated funds will be good for local communities, and the benefits will justify the government's past decisions.
"This is why asset recycling works," Mr Perrottet told reporters on Monday.
Labor opposes "asset recycling", both the practice and the term, preferring to call it "privatisation".
"Labor has ruled out privatisation,"Â the party's Treasury spokesman Daniel Mookhey said on Monday.
"But we are worried if Mr Perrottet is re-elected Sydney Water will be on the chopping block, the state's remaining electricity assets will be on the chopping block as well as additional roadways like the Harbour Bridge, the Harbour Tunnel and the future Western Harbour Tunnel," he said.
Mr Perrottet did not reveal any further asset recycling plans on Monday but will not rule it out.
"When you categorically rule out an approach that has unlocked capital, that has invested dividends right across our state, that's the wrong way of looking at things," he said.
WestInvest includes $3 billion for government agencies delivering "transformational projects", $400 million providing up to $35 million in funding for 15 western Sydney councils, and $1.6 billion in grants for local community groups, which councils can also apply for.
It was funded through the $20.4 billion sale of WestConnex, which the NSW government spent about $15.3 billion building, with $1.5 billion contributed by the commonwealth.
"A road that was opposed by Labor, a transaction that was opposed by Labor, and now these investments which naturally are opposed by Labor because they don't have the means to fund them," Mr Perrottet said.
First recipient from the scheme, Canterbury-Bankstown will have $24 million allocated for four projects.
The money will go towards creating an arts and culture precinct including community spaces and a new library at Campsie, the Roberts Park Community Hub facility at the former Greenacre YMCA, and decommissioning Villawood's Wran Leisure Centre for open space, multipurpose courts and playgrounds.
Another $4 million will go towards pedestrian infrastructure and traffic management devices.
"It's the equivalent of the government taking $100 out of the wallets of western Sydney commuters and giving back some loose change," Labor's Roads spokesman John Graham said.
Mr Perrottet says western Sydney is the heart and soul of the state.
It will also be an important battleground in the March election and he promised more "announcements which will make a real difference so that western Sydney is the best place to live, work, and play".
Treasurer Matt Kean says other projects are still being assessed by the WestInvest steering committee and tough new guidelines will "ensure the community can have confidence in the governance that this money is going exactly where it's intended to go".
Mr Mookhey said the pair were doing "their very best Santa Clause impression" in the lead up to the election.
"People will feel quite cynical."
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