NSW’s budget black hole approaches $5 billion

A weaker housing market over the past six months and a Sydney Water tax error are among budget blows which have ballooned NSW’s budget deficit to $5 billion this financial year.

A weaker housing market over the past six months and a Sydney Water tax error are among budget blows which have ballooned NSW’s budget deficit to $5 billion this financial year.

According to Treasurer Daniel Mookhey’s half-year budget update, the government’s forecast $3.6 billion deficit has grown after an extra $1.4bn was spent this year.

Despite getting an extra $90m in extra revenue, the half-year update uncovered a major tax error by Sydney Water which will cost the budget $440m.

Mr Mookhey said Sydney Water had mistakenly “brought forward tax payments that shouldn’t have been brought forward”.

“In essence, they are not going to be paying the government as much tax as they expected to at budget time,” he said.

NSW Premier Chris Minns with Treasure Daniel Mookhey. Picture: NewsWire / Nikki Short

Mr Mookhey said the government was “deeply disappointed … such an error (had) taken place” and his expectation “is that they are reported to the public”.

Meanwhile, the faltering housing market has taken a $400m chunk out of the government’s stamp duty revenue, but sales are expected to bounce back over the next three years to deliver more to the bottom line than forecast.

Stamp duty has been revised down by $391.7m in the 2024-25 financial year, but the state government has projected it to be “up by $428.9m over the four years” up to 2027-28.

“Downgrades in 2024-25 are driven by weaker-than-anticipated residential transaction volumes over recent months,” the report states.

Opposition Leader Mark Speakman said the budget report “appears to be full of smoke and mirrors”.

He lashed the timing of the announcement as an attempt by the state government to minimise its “coverage in (the) media” and it should be “ashamed” of what’s included, and not included in the review.