Fiscal outlook – on track for a return to surplus despite near term pressures
NSW economic growth outcomes since the 2022-23 Budget have been stronger than expected. The resilient economy is supporting State revenues. Revenues (including GST) are forecast to increase by $11.1 billion over the four years to 2025-26.
The State’s fiscal position continues to be impacted by floods and the effects of COVID-19. Since the 2022-23 Budget, the NSW and Australian governments have jointly provided an additional $2.6 billion to support those impacted by flooding, deliver the Resilient Homes Fund, repair flood-damaged local roads and implement recommendations of the 2022 NSW Independent Flood Inquiry.
The NSW Government has also made additional investments in the health system to support the transition to living with COVID-19. These measures, alongside additional expenditure on cost-of-living support and priority reforms, have increased expenditure and placed pressure on the State’s operating position, particularly in 2023-24.
These increased expenses have flowed through to the budget result, with the 2022-23 deficit deteriorating slightly to $11.4 billion, and the deficit in 2023-24 deteriorating by $3.7 billion to $6.5 billion. Nevertheless, the State remains on track to return to a surplus in 2024-25 ($333 million) and 2025-26 ($1.2 billion), ensuring the NSW Government rebuilds its fiscal buffer and moves towards a sustainable operating position.
The State’s infrastructure program is projected to rise to a record $116.6 billion over the four years to 2025-26, an increase of $3.9 billion, driven by investments in new and existing transport infrastructure.
