Treasurer Daniel Mookhey will deliver his second budget on Tuesday and confirm that,despite optimism that NSW would return to the black,the state’s deficit will be $3.6 billion in 2024–25.
NSW Treasurer Daniel Mookhey,left,and Premier Chris Minns with the budget papers on Monday.James Brickwood
The sea of red will continue,with a $2.5 billion deficit expected in 2025–26,$2.4 billion in 2026–27 and $1.5 billion in 2027–28.
Only six months ago,the newly elected Labor government predicted a slim $475 million surplus for the next financial year. Instead,NSW will notch up six years in deficit,with a further three years in the red forecast to follow.
The forecast budget deficit for this financial year has ballooned over the past 18 months. Early last year,the then-Perrottet Coalition government predicted a shortfall of $6.5 billion.
That was raised to $7.85 billion in September and then to $9.55 billion in December. Tuesday’s budget will show the 2023–24 budget deficit has now reached $9.7 billion,nearly 50 per cent higher than forecast in February 2023.
This follows a pattern of substantial increases in forecast budget deficits since the COVID-19 pandemic.
The 2021 budget delivered by Perrottet predicted a deficit of just $1.75 billion for 2022–23,but the actual shortfall that year turned out to be $10.1 billion.
Mookhey will use his budget speech to heap a fresh wave of criticism on the Commonwealth Grants Commission,whose decision to reduce the state’s GST share will leave NSW
NSW’s share has fallen to 87 cents for every dollar paid in GST.
“If NSW was still getting back 92 cents from every dollar in GST paid in the state,the budget would be returning to surplus next year,” Mookhey’s budget speech will say. “In fact,NSW could have expected cumulative surpluses over the forward estimates worth $1.9 billion.”
Mookhey’s budget speech will say that the Commonwealth Grants Commission “has cost NSW more in lost revenue than COVID-19 did”.
He cites Perrottet in 2018 – the last time NSW was stripped of GST funding – who said at the time:“Yet again,we are seeing the hardworking taxpayers of NSW being ripped off by a perverse and unfair distribution model.”
Mookhey’s speech says that was “true then,true now”.
“There is plenty that divides the parties in this place. But this can unite us all,” Mookhey will say.
The treasurer has made it clear that his budget will be no-frills after insisting ministers be disciplined with their spending requests. NSW’s net debt is projected to hit $119 billion in 2025–26.
Mookhey has said there will be no major rounds of cuts,with most of the toughest decisions made last year following a comprehensive expenditure review that found $6 billion in savings.
Housing will be at the centre of the budget as the government embarks on the most comprehensive planning reforms in a generation to boost supply amid the worsening housing crisis.
is a pilot financing program where the state government will look to buy houses off-the-plan to give lenders,developers and builders the confidence to fund and start construction. It will also consider acting as a guarantor for some development loans.
The government will also spend $450 million on 400 build-to-rent homes for essential workers.
Mookhey says the state had to forgo a budget surplus in order to minimise cost-cutting.
“Helping families is our most important mission during NSW’s worst cost-of-living crisis in a generation[and] that is why the government is carefully absorbing the $11.9 billion cut,” he will tell parliament.
“We refuse to respond to the Grant Commission’s absurdity by imposing austerity on NSW. That would lead to misery.”
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