The NSW budget in five charts

Daniel Mookhey’s third budget charts a relatively steady-as-she-goes course, with little in the way of major changes for most NSW residents. The NSW treasurer keeps the state’s finances broadly in check and passes the baton over to the private sector after several years of government-led growth.

There’s a welcome $1.2 billion package aimed at child protection, and a focus on the unglamorous task of patching up the state’s ageing poles and pipes, as the economy faces geopolitical conflict and volatility.

These five charts show some of the key takeaways from the budget.

Geopolitical uncertainty to weigh on economy

The budget says economic growth in NSW will come in better this financial year than expected six months ago.

But forecasts over the next four years show growth will be either in line or worse compared with previous forecasts, clocking in at 1.75 per cent this coming financial year instead of 2.5 per cent.

Mookhey blames this partly on geopolitical uncertainty, with Trump’s tariffs in particular shaving about half a per cent off the NSW economy over the next two years.

However, he says the economy is on track to recover, with further interest rate cuts and income tax cuts expected to boost consumer spending, which, along with business investment, has been relatively weak for some time.

“Notwithstanding the risks from global uncertainty, the outlook remains consistent, with a gradual pick-up in the pace of growth in the NSW economy,” the budget says.

Surpluses back on the horizon

Despite widening the deficit this financial year, Mookhey has managed to put two positive results on the horizon, beginning with a $1.1 billion surplus in 2027-28 and a $1 billion surplus in 2028-29.

Mookhey says this is largely due to the government’s responsible financial decisions, including capping spending growth at about 2.4 per cent over the coming years.

That’s despite spending pressures including workers’ compensation costs and higher-than-expected interest bills over the next four years, which are expected to weigh on the state’s bottom line.

However, the forecast budget positions are also underpinned by revenue that is stronger than previously expected. The state government’s overall revenue will hit a record $124 billion in 2025-26, partly thanks to a bigger GST share for NSW than previously expected and continued growth in property prices.

Debt and interest bill rising

The state government is still grappling with the huge debt racked up during the pandemic years, with the interest bill this coming financial year expected to come in at $7.7 billion.

Net debt over the next four years is expected to continue climbing as the government broadly maintains its level of spending on infrastructure.

As a share of the state’s economy, the government expects net debt to climb from 12.8 per cent in June this year to nearly 14 per cent in June 2027, before tapering back to 13.1 per cent in June 2029.

The taxes topping up the state’s coffers

Health remains the biggest expense in the NSW budget, ahead of education. Transport has come down in 2025-26 as the expenditure on metro construction is ongoing but past its peak. There are increases in expenditure on areas such as environmental protection and public order.

Where the money goes

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.