The budget projects a deficit of $3.6 billion in 2024-25, and further deficits in the forward estimates down to $1.5 billion in 2027-28. The Treasurer was firm in stating the budget would be in surplus if the State was receiving its fair share of GST from the Commonwealth.
Social housing is the big winner in the budget with a record investment of $6.1 billion. The cost-of-living support is measured, including a new Bulk-Billing support package, and an increase in the energy rebate to $350 – up by $65 from last financial year. Despite these initiatives, the focus of the Treasurer is primarily on housing and budget repair.
It is steady-as-you-go for transport and infrastructure, with Western Sydney the big winner. This includes new allocations for the Parramatta Light Rail Stage 2, Sydney Metro West, and key roads that connect to the Aerotropolis.
Growth in the New South Wales domestic economy has slowed following the post-pandemic recovery as cost-of-living pressures have weighed on consumers, offsetting the strong growth in wages over the last year.
The softening in spending growth and the labour market has helped bring down inflation. However, higher wages in the near term are expected to play a significant role in keeping inflation above its target range until 2025. Momentum is anticipated to shift in 2024-25, and NSW Treasury expects conditions that will allow the RBA to start lowering interest rates in the first half of 2025.
The unemployment rate has gradually increased from a low of 3.0% in June 2023 to 3.8% in May 2024, and is expected to rise to 4.5% over the first half of 2025.
Productivity growth will soon be the key driver of prosperity in New South Wales due to an ageing population and slowing migration rate.
All in all, a cautious to pessimistic outcome that predicts a soft landing for the NSW economy.
New measures focus on easing cost of living pressures include $188.8 million for Bulk-Billing support and increasing energy rebates to a total of $435.4 million for 2024-25.
Other initiatives include continuing the $60 toll cap, stamp duty exemptions for 22,800 first home buyers and delivering the biggest increase to wages for essential workers in over a decade.
This budget focuses on addressing housing affordability. Today the Treasurer announced the government is investing a record $5.1 billion to deliver social housing and a further $1 billion on maintenance to help provide housing for the most vulnerable.
Commitments announced before the budget include $555.5 million to speed up the planning system, $655.1 million for key workers, the delivery of 30,000 new homes on state owned land uncovered during the government audit and over $200 million for parks and green space to incentivise councils to meet their housing targets.
Treasurer Mookhey has set a steady course for the next four years that builds on Labor’s election commitments and continues a path of budget repair until the 2027 NSW State Election.
The government walked a tightrope around the pre-election promise to not raise new taxes, by tinkering with foreign purchaser and land tax duties, as well as freezing indexation of the land tax threshold for non-owner-occupied properties, which will gradually impact investors over the coming years.
For the coming 12 months the Treasurer will continue to communicate to the community and businesses that the Minns Labor Government is a safe pair of hands, delivers on its promises and responds to the headwinds and challenges of the NSW economy.
