Higher taxes from a thriving property market and wage rises will deliver a boost to NSW government finances as Labor promises to funnel spending into essential services.
The Minns government handed down its first budget on Tuesday, predicting the state's bottom line would return to a modest surplus of $844 million in 2024/25 after a deficit of $7.8 billion this financial year.
Revenue is set to increase by 5.8 per cent in 2023/24 to $112.4 billion, thanks to a booming property market that is delivering a stamp duty and land tax bonanza, while employment and wages growth means more payroll tax.
Over the four years to 2026/27, revenue is projected to grow at an average rate of 3.4 per cent.
Increased coal royalty rates will start from July 2024, while higher casino duty rates and scrapping stamp duty exemptions on electric vehicles will also improve the state's finances.
Previous projections showed gross debt would hit $187 billion by 2025/26, but Treasurer Daniel Mookhey said the government had reduced debt growth by $14.8 billion without privatising public services.
Instead, savings would be made by freezing pay rates for politicians and senior executives, as well as cutting the number of people in high-paying public service roles and slashing consultants.
Some $2.3 billion that would have gone towards interest payments could also be redirected to essential services.
But shadow treasurer Damien Tudehope said the government was not being transparent about how it would achieve budget savings.
"(There is) no commitment requiring the government to identify outcomes they want to see and which they can say to the people of NSW: this is how we are going to improve your life," he said.
Opposition Leader Mark Speakman described the budget as a "mirage" ahead of his reply speech in parliament on Thursday.
Credit ratings agency Moody's said while the state was projected to have a surplus in 2025, the budget also introduced increases in recurrent spending.
These would be driven by 16,000 casual teaching and admin staff being made permanent, removing public sector wage caps, increases to health spending and ongoing cost-of-living support.
The state's net debt was expected to hit nearly $114 billion by 2026/27, while gross debt was forecast to reach almost $187 billion the same year.
Interest expenses will continue to put pressure on the budget as the cost of borrowing money skyrockets.
In 2023/24, interest costs are expected to be $5.5 billion, representing 4.6 per cent of the state's total expenses.
The treasurer warned the impact of increased interest rates was still making its way through the economy as household spending slowed.
"I don't want people's living standards to go backwards and pleasingly this budget shows perhaps from 2025 onwards there will be an increase to real wages," Mr Mookhey said.
"We've got to get inflation under control and the sooner we do that, the sooner we get back to judging the economy on its long-term fundamentals."
