NSW budget blunder: Minns deficit $3.6b as GST 'rip-off' bulldozes surpluses
NSW has blamed a forecast $3.6 billion budget deficit firmly on “absurd” GST changes that extinguish hopes of a surplus any time soon.
New spending to ease the housing crisis and boost health and education outcomes will be key features of Treasurer Daniel Mookhey’s second budget on Tuesday.
But he will also use his budget speech to rue recent changes to GST distributions, costing $11.9 billion over four years and plunging the state’s finances into deficits for the foreseeable future.
Sign up to The Nightly's newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.The 2024/25 budget bottom line is expected to dip $3.6 billion into the red, upending hopes from December for a $490 million surplus.
This year’s deficit has also worsened slightly to $9.7 billion, from $9.6 billion.
The alternative to deficits would have meant hurting families or businesses, Mr Mookhey will say.
“Helping families is our most important mission during NSW’s worst cost-of-living crisis in a generation,” his speech reads.
“That is why the Government is carefully absorbing the $11.9 billion cut.
“We refuse to respond to the (Commonwealth) Grants Commission’s absurdity by imposing austerity on NSW. That would lead to misery.”
Large states have helped fund smaller states since the dawn of federation but the government has argued the latest hit to NSW’s slice of the GST is disproportionate and a “rip-off”.
“For every dollar that Victoria will give to the smaller states next year, NSW will give upwards of four,” Mr Mookhey will say.
Eyes will be on the state’s net debt position, last forecast to reach $110 billion or 13 per cent of the state’s economy by June 2026.
Numerous funding announcements have already been unveiled by the government including $650 million to house essential workers and $3.4 billion to upgrade hospitals and health facilities.
About $1.4 billion has been set aside for new schools and upgrades in regional NSW across four years while the new Rental Commissioner will scoop up $8.4 million to crack down on dodgy agents and rental law breaches.
On the revenue side, more landlords and businesses will face land tax while licence fees for jet-skiers and boaters have been hiked.
IMPACT OF GST CARVE-UP CHANGES
24/25: was -$1.9 billion, now -$3.6 billion
25/26: was $0.3 billion, now -$2.5 billion
26/27: was $1.4 billion, now -$2.4 billion
27/28: was $2.2 billion, now -$1.5 billion
Total: $11.9 billion loss over four years.
Source: NSW Treasury
