‍Overview

NSW Treasurer Daniel Mookhey has handed down his third State Budget, describing it as “responsible, sustainable budgeting, delivering investments whilst building long-term resilience.”

Housing was the overwhelming focus, reflecting a government that is keen to boost supply following the Australian Turf Club’s vote against the Rosehill Racecourse sale. The central policy to achieve this is the State Government stepping in to become the guarantor of up to $1 billion worth of new housing projects.

A $1 billion surplus is now forecast in 2027-28, and Treasurer Mookhey has described the Minns Government as “unapologetically pro-growth”.

The forward estimates had previously forecast budget deficits, however, with stabilisation of debt achieved, the Treasurer has claimed a $400 million dividend from the reduced yearly interest payments.

There is a shift in the infrastructure narrative, with no flagship project announcements as with previous State Budgets. Instead, there is a focus on increasing bus services and funding to upgrade the State’s ageing pipes and poles.

With the next NSW State Election not scheduled until 13 March 2027, the Minns Government will deliver one more Budget before voters return to the polls. As always, we can expect to see a range of positive, voter-focused funding announcements in the last Budget before the election, and the 2025-26 State Budget includes $868.5 million in ‘contingencies’, which is likely to refer to spending allocated for election announcements. This compares to only $322.7 million in the 2024-25 State Budget.

Economic Outlook

The 2025-26 NSW State Budget reports a $5.7 billion deficit this financial year. That figure is estimated to fall to $3.4 billion next financial year and $1.1 billion in 2026-27.

In 2027-28, the State is forecast to post its first surplus since the pandemic, at $1.1 billion.

This contributes to a stabilisation in gross debt, which is forecast to rise to $178.8 billion in 2025-26, representing 20.3 per cent of gross state product (GSP). Although gross debt continues to rise over the forward estimates, it peaks at 20.4 per cent of GSP in 2026-27. By 2028-29, it’s forecast to be $199.6 billion or 19.6 per cent of GSP.

The NSW economy is expected to experience modest growth of 1.75 per cent in 2024-25 and in 2025-26. This is a downgrade from 2.5 per cent in 2025-26. It then rises slightly to 2.25 per cent in 2026-27 and 2 per cent in 2027-28.

The Budget papers state that US tariffs will have modest direct impacts on NSW however, it highlights that “the indirect effects of these tariffs are likely to be larger”. NSW Treasury expects the delay to investment and consumer decisions due to global uncertainty will “lead to a small decrease of around 0.5 per cent from the level of GSP over two years”.

The unemployment rate is forecast to remain stable with a slight decrease from 4.25 per cent in 2025-26, to 4 per cent in 2028-29.

Separately, the NSW population is expected to grow at a steady 1.1 per cent over the forward estimates. Wages are forecast to climb by 3.5 per cent in 2025-26 and then by 3 per cent over the forward estimates.

Major Announcements

Housing

• $1 billion for a Pre-Sale Finance Guarantee to help housing developments get finance earlier, fast-tracking more than 5000 homes
• Indefinite extension of the 50 per cent reduction in assessed land value for build-to-rent properties indefinitely – this tax concession was due to expire in 2039
• Changes to be introduced that make it easier for developers to build infrastructure as in-kind payments instead of paying a levy for schools or roads
• A new homelessness package will allocate $20 million to expand crisis and transitional housing, and an additional $10.4 million for support services through the Rev Bill Crews Foundation

Health

• $12 billion overall to upgrade health infrastructure
• An additional $700 million to the new Bankstown Hospital
• $492 million to build a pathology service in Western Sydney
• A $83 million boost to maternity care: including $44.8 million for care after birth and$26.8 million for family care services
• A$37.5 million expansion of the Mobile Dental Van Program
• $23 million to reduce the number of planned surgeries

Tax

• Revenue from stamp duty taxes is tipped to rise by 5.5 per cent a year over the next four years, from $12.30 billion in the current financial year to $15.26 billion by 2027-28

Education and Training

• $9billion for school infrastructure over four years
• Four new schools with 140 new classrooms
• $100million for gifted education programs
• $13billion investment in public schools
• $3.4billion for TAFE and skills funding

Business and the Economy

• Establishment of a new Investment Delivery Authority to fast-track non-residential investments over $1 billion
• Deferral of up to $250 million of royalties on new critical minerals projects
• A $100 million capital fund to begin the search for the location of a second Sydney film studio
• Investment of $79.2 million into ‘Innovation Blueprint’ programs, including $20 million for the Emerging Technology Commercialisation Fund and Physical Sciences Fund

Energy and Manufacturing

• Continued investment of $2.1 billion to fast-track five renewable energy zones, including in Central-West Orana and Illawarra
• $27.3million over four years to fund the Future Jobs and Investment Authority
• Households and small businesses to receive $1500 to install a battery and connect to a virtual power plant

Infrastructure and Transport

• Commitment of $452 million to increase the number of commuter services and accelerate the rollout of new buses, including $150 million for school services and $56 million for 50 new bendy buses
• A$70 million transport investment around the new Sydney Fish Market, including $30 million for the ferry wharf and $40 million for accessibility upgrades at the nearby Wentworth Park light rail stop
• Investment of $50 million in road upgrades across the Western Sydney Airport development region
• Investment of $10 million for maintaining infrastructure at Sydney Olympic Park

Emergency Services

• $42.2 million for a new 24-hour fire station with 52 permanent firefighters
• $35.9 million for Fire and Rescue NSW
• $34.4 million for the NSW Rural Fire Service

Community, Crime and Safety

• A record $1.2 billion investment in child protection reforms, including the first foster care allowance increase in two decades
• $227 million over five years for victim’s support service
• $272.7 million for frontline domestic, family and sexual violence services
• $100.5 million for Corrections NSW to cater for an increased prison and remand population

Reactions

Leader of the Opposition, Mark Speakman MP

“No vision from the Minns Labor Government in its Budget today.”

Shadow Assistant Minister for Innovation, Jacqui Munro MLC

“The announcement of a new Investment Delivery Authority, costing $18 million to set up, is an admission that Minns' Ministers aren't up to the task of leading their portfolios.

“What has gone so wrong with Investment NSW that it can't deliver this work? It is literally the body set up to bring investment into NSW.”

Business NSW CEO, Daniel Hunter

“There are dark clouds on the horizon for business –global uncertainty, subdued business conditions and costs pressures such as spiralling workers’ compensation and general insurance premiums – but this budget keeps the state ticking along and is financially prudent.”

Property Council of NSW Executive Director, Katie Stevenson

“The Pre-Sale Finance Guarantee responds directly to that issue and to the conversations we kickstarted last year. It couldn’t come at a more critical time when we’re facing a steep climb to achieve our National Housing Accord target of 377,000 new homes by 2029. Government has recognised the problem and delivered a world-leading solution to fix it – helping to bring much-needed stock to market faster.”

“This is a Budget that listens. From unlocking finance to fast-tracking approvals, we’re seeing tangible measures that will help bring forward the homes, infrastructure and jobs NSW needs.”

Chief Executive of Domestic Violence NSW, Delia Donovan

“Renewing existing contracts is not progress… It’s business as usual in the face of a growing domestic violence emergency.”

Australian Medical Association NSW President, Dr Kathryn Austin

“There is little meaningful funding in today’s NSW Budget for the state’s ailing public health system and the thousands of patients waiting for their life-saving treatment or surgery.”

Chief Executive of Anglicare Sydney, Simon Miller

“We’re encouraged by the government’s focus on increasing housing supply, and by the recognition of foster carers who provide essential care to vulnerable children.”

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