Today, Treasurer Daniel Mookhey handed down his third NSW State Budget, prioritising the delivery of essential services, achieving a cash surplus, and addressing ongoing housing and economic productivity issues. Despite some setbacks – including recent industrial relations disputes and the high costs associated with the NSW workers compensation scheme – the NSW Government is investing in its core priorities: housing, education, infrastructure, health, and industry.

Over the four years to 2028–29, projected revenue is forecast to exceed the mid-year economic update by $11.3 billion. The 2025–26 Budget attributes this upward revision to increases in GST revenue and new revenue measures. Total revenue is forecast to grow at an average annual rate of 3.8 per cent to 2028–29. However, growth projections remain below the long-term trend of 5.5 per cent, a decline attributed to NSW’s declining share of the national GST distribution.

In his address to Parliament, the Treasurer delivered a hopeful outlook for the state’s economy. NSW’s Gross State Product (GSP) is expected to grow by 1.75 per cent in both the 2025–26 and the 2026–27 financial years. Following the $15.3 billion deficit recorded in the 2021–22 Budget, the Treasurer announced that the state’s deficit has narrowed to $3.4 billion. Treasury projects a surplus of $1.1 billion for 2027–28, NSW’s first since the COVID–19 pandemic.

In the December 2024 mid-year economic update, the Treasurer had projected a deficit of $2.2 billion for 2025–26, with net debt reaching $137.2 billion in 2027–28. However, net debt is now forecast to be $130.7 billion in 2027–28, $6.5 billion lower than initially expected. As a proportion of GSP, net debt is projected to be 19.5 per cent in 2025–26 and remain stable over the forward estimates to 2028–29.

The highlight of the 2025–26 Budget is the Government’s focus on housing. Building on the Transport Oriented Development program and the Housing Delivery Authority, the Budget aims to deliver both immediate relief and long-term solutions to NSW’s housing supply challenges. A key measure is the permanent extension of incentives for Build-to-Rent developments, with eligible properties to receive a 50 per cent land tax discount to support essential workers. Through the Pre-Sale Finance Guarantee, the Government will act as guarantor of up to $1 billion in new housing projects, aiming to speed up housing development, and support the construction of 15,000 homes by 2029–30. The Budget also includes investments in public, affordable, and crisis housing, with $30.4 million allocated to emergency support focused on assisting women and children escaping domestic violence.

In education, $9 billion has been allocated over four years to build four new schools and upgrade existing facilities across NSW, aiming to support Sydney’s population growth corridors. The Budget also includes $3.4 billion for TAFE and skills training, including provisions to provide 23,000 fee-free construction apprenticeships to address skills shortages in critical sectors.

Although there is no new funding for Metro lines in Sydney’s outer suburbs, the Government is prioritising early infrastructure to support the future Western Sydney Aerotropolis. Ahead of the Western Sydney International Airport’s opening in 2026, this includes $644 million for water infrastructure to support industrial and housing developments in the region and a joint $156 million partnership with the Federal Government to upgrade roads in growth areas including Blacktown, Rooty Hill, Marsden Park, Schofields, and Rouse Hill.

To support the state’s growing population, the Budget includes significant health infrastructure investment. This includes $700 million for the construction of the new Bankstown Hospital, bringing the total investment to $2 billion. An additional $492 million has been set aside for a new Statewide Pathology at the Westmead Health campus, $40.1 million has been committed for a complex care centre at Westmead Children’s Hospital, and $90 million to deliver comprehensive maternity and birthing services at the new Rouse Hill Hospital.

To drive investment and productivity, the Government is establishing a new Investment Delivery Authority (IDA) to speed up the approval process for projects valued over $1 billion. More than 45 projects totalling around $100 billion — including renewable energy, data centres, and logistics precincts — are currently seeking approval. The IDA is expected to be operational in 2025–26 and will support around 30 major projects each year, unlocking up to $50 billion in investment annually.