The NSW Government has today released its Half-Yearly Review following the September Budget.
The review is reporting a $1.7 billion budget deterioration this financial year, followed by modest surpluses over the forward estimates.
High inflation, high bond yields, a reduction in the national GST pool and the Federal Government’s infrastructure cuts are responsible for the pressure on the budget result.
The Federal Government’s Mid-Year Economic and Fiscal Outlook delivered yesterday identified $9.8 billion in savings and reprioritisations. $7.4 billion of those savings over the forward estimates are through cuts to state infrastructure funding.
The federal infrastructure cuts will create an estimated budget deterioration to NSW of $1.6 billion over five years.
The NSW Government remains clear that it expects every cent taken out of NSW to be returned to NSW. Those conversations continue.
Interest costs have also risen by $500 million in 2023-24, arising from higher bond yields charged against the record levels of debt the government inherited.
The state’s insurance liabilities have also grown and have worsened the budget result by $900 million over the four years to 2026-27. It follows additional claims against the iCare administered Treasury Managed Fund as well as lower than expected investment returns.
High inflation and rising interest rates are impacting household consumption, with the State’s GST receipts forecast at $1.9 billion lower over the four years to 2026-27.
In the months since the September budget, global ratings agencies Moody’s and Fitch both affirmed NSW’s triple-A credit ratings, while S&P maintained its double-A plus rating – all endorsing the Minns Government’s responsible budget approach.
Read the full Half-Yearly Reviewlaunch
Treasurer Daniel Mookhey said:
“I’ve been upfront about how challenging it is to return the state’s budget to surplus. Recent decisions by the Federal Government haven’t helped.
“The review is another reminder about why it’s so important for the government to carefully manage its finances, just like every NSW family is having to do.
“By continuing to repair the state’s finances we will be in a better position to help families through this once in a generation cost of living crisis.”
Minister for Finance, Courtney Houssos said:
“In this year’s Budget, the Minns Labor Government began the long process of winding back 12 years of waste and mismanagement under the Liberals and Nationals.
“It’s clear NSW still faces external challenges with economic headwinds and the withdrawal of significant Commonwealth government funding.
“We’ve reined in the previous Liberal-National Government’s waste, adjusted the state’s debt trajectory, and instituted fiscal discipline. This has made NSW more resilient to withstand external pressures.
“We understand the pressures that families and households are facing, and our Government has begun to rebuild the essential public services they rely on.”