New South Wales has become Australia’s first half-trillion dollar economy, with budget surpluses, record infrastructure spending and a strong jobs outlook the focus of Treasurer Gladys Berejiklian’s budget speech delivered on Tuesday.

The Treasurer said NSW was a victim of its own success. With a forecast 14 per cent reduction in next year’s per capita GST share, Ms Berejiklian used the opportunity to criticise the current GST distribution model among the states.

However, the budget is a win for the mid-size business sector, who will benefit from participation in the growth and delivery of the state’s massive infrastructure investment.

As announced in the lead-up to the budget, the abolition of mortgage duty, marketable security duty and duty on non-land business assets from 1 July 2016 is good news for the sector, but the introduction of foreign investor transfer duty and land tax surcharges may impact foreign investment in residential real estate (similarly to Victoria and Queensland).

Headline budget items

  • A surplus of $3.4 billion for 2015-16 and a forecasted surplus of $3.7 billion in 2016-17
  • Low government debt and a triple-A credit rating
  • Above-trend economic growth of 3 per cent in 2016-17
  • Employment growth of 3.9 per cent over the past year, the strongest across the states

Major announcements

The government’s $73.3 billion infrastructure investment over four years will target the following service delivery areas:

  • $41.5 billion for transport projects
  • $4.5 billion for health projects
  • $2.9 billion for education and training projects
  • $4.7 billion for justice projects
  • $6.0 billion for energy projects
  • $3.7 billion for water and wastewater projects
  • $2.4 billion for social housing

Transport project funding

  • $2.9 billion for WestConnex, linking Sydney's west and south-west with the CBD, airport and Port Botany
  • $1.5 billion to continue the Pacific Highway duplication program
  • $1.5 billion for road maintenance, including bridge rebuilding, pavement rehabilitation and traffic facilities maintenance
  • $338 million for Western Sydney Roads to support a second airport at Badgerys Creek
  • $147 million for Western Sydney Growth Roads
  • $283 million to construct NorthConnex
  • $2.7 billion in 2016-17 to deliver Sydney Metro, Australia’s biggest public transport project which includes $1.3 billion for Sydney Metro North West and $1.4 billion for Sydney Metro, Sydney Metro City and Southwest
  • $1.4 billion for additional bus services throughout NSW
  • More than $1 billion over the next four years for extra trains on the existing suburban network
  • $560 million for public transport concessions
  • $234 million for the B-Line Program and Bus Rapid Transit, an initiative aimed at improving bus services

Major investments in health, education and jobs include:


  • $9.2 billion for inpatient hospital services
  • $2.8 billion for outpatient services
  • $2.7 billion for emergency care
  • $1.8 billion for mental health services
  • $1.7 billion for rehabilitation and extended care
  • $1.5 billion for population health and primary and community based services
  • $197 million for drug and alcohol services, as well as prevention and harm minimisation programs
  • $133 million for the redevelopment of Gosford Hospital
  • $167 million for the continued redevelopment of the St George Hospital acute services building
  • $150 million for the Local Health Districts’ Local Initiatives projects


  • $12 billion for government schools to deliver quality teaching services
  • $1.2 billion in support for non-government schools
  • $367 million for National Education Reform Agreement (Gonski)
  • $100 million for additional school staff
  • An additional $400 million over four years for a Schools Infrastructure Strategy
  • Additional funding of $542 million over four years for a combination of new schools, upgrades to existing schools and improved facilities
  • $330 million over the next two years to respond to priority backlog school maintenance needs


  • $190 million for Jobs for NSW, a policy development initiative
  • $100 million over two years for Smart, Skilled and Hired, a targeted youth unemployment program

Other announcements include:

  • $1.3 billion in 2016-17 for the implementation of the National Disability Insurance Scheme in NSW
  • $300 million for specialist domestic violence initiatives over the next four years
  • $370 million over four years to meet increased demand for out-of-home care services
  • $190 million over four years to reform the child protection and out-of-home care systems
  • $146 million over four years to support the integration of Syrian refugees
  • $3.8 billion over four years for the Prison Bed Capacity Program, to provide 7,000 additional beds in NSW prisons
  • $570 million over four years to implement reforms that protect community safety, speed up court processes and reduce reoffending
  • $158 million for renewable energy and energy efficiency programs
  • $111 million for public parklands, zoos and gardens throughout NSW
  • $100 million for the Environmental Trust
  • $129 million over four years for the construction of new and upgraded venues at the Walsh Bay Arts Precinct
  • $194 million in recurrent grants for cultural institutions
  • $175 million for integrated tourism and events programs to promote NSW as a global tourism and event destination

State taxes

Three State taxes – mortgage duty, marketable security duty and duty on business assets (other than land) – will cease to apply from 1 July 2016, saving businesses more than $400 million per year.

The payroll tax rebate for businesses with less than 50 employees will be increased from $5,000 to $6,000 for each additional employee hired.

Foreign investors will be subject to a transfer duty surcharge of 4 per cent for all purchases of residential real estate from 21 June 2016 (in addition to the applicable transfer duty) and a land tax surcharge of 0.75 per cent from 1 January 2017 (with no tax free threshold). These measures are expected to generate revenue of approximately $1 billion over four years.