NSW state election 2023: State’s deficit blows out by $1.28bn

With just over a fortnight until NSW voters head to the polls, it’s been revealed the state’s deficit is forecast to grow by nearly $1.3bn over the next two years.

NSW’s budget deficit over the next two years has increased by nearly $1.3bn in the four weeks since the NSW Treasurer Matt Kean released his half-yearly budget review.

A pre-election budget update released by the NSW Treasury on Wednesday forecast a $12.03bn deficit in 2022-23, reflecting a $668m increase since figures shared on February 7. In 2023-24, the deficit is forecast to grow by $615m to $7.1bn.

While forward estimates report the budget is still on track to reach a “relatively small surplus” by the 2025-26 financial year, the outlook has decreased. As it stands, the 2024-25 financial year will return $328m, with that number growing to $824m in 2025-26.

The deficit has grown by a combined $1.28bn from 2022-23 to 2023-24 financial years. Picture: NSW Treasury.

NSW Treasurer Matt Kean said the budget blowout was due to the “deteriorating price of coal”.

“Just only a few weeks ago, coal prices were significantly higher,” he said.

“Once the forward estimates have been factored in, there’s been a drop in the price of coal, which has seen revenues deteriorate.”

NSW Treasurer Matt Kean attributed the deficit increase on ‘deteriorating’ coal prices. Picture: NCA NewsWire/ David Swift

The pre-election budget update stated that expectations for thermal coal prices had decreased by “approximately 50 per cent since late January”, which caused mineral royalties to be significantly revised downwards.

The report said global prices fell “significantly” due to a warmer-than-expected European winter, with the outlook for coal prices “subject to greater uncertainty than usual”.

The opposition used the deficit increase to attack the government’s financial management.

Shadow treasurer Daniel Mookhey said a reinstated Coalition government would need to resort to privatisation to pay for their $50bn in unfunded infrastructure projects.

“There is no doubt that with the cost of debt skyrocketing, the only way Mr Perrottet can pay for unfunded infrastructure is to privatise assets like Sydney Water,” Mr Mookhey said.