New South Wales budget outlines pathway to surplus

The New South Wales (NSW) State Government led by Labor Premier Chris Minns handed down the state’s budget on Tuesday 24 June 2025. 

In delivering his third budget, NSW Treasurer Daniel Mookhey reported a $5.7b deficit in 2024-25, with a projected $3.4b deficit for 2025-26 and a pathway to a reserved $1.1b surplus by 2027-28.  

The state’s net debt is $109b, and is projected to increase to $130b by June 2029. Overall gross state product – a measure of NSW’s economic growth – has been revised down to 1.75 per cent in 2025-26, projected to increase only to 2.25 per cent in 2026-27. The unemployment rate is expected to remain steady at 4.25 per cent this financial year and the next. 

Despite global uncertainty, the NSW economy is in a strong position for growth. As cost-of-living pressures ease and real wages grow, consumer spending is expected to rise which should create new opportunities for businesses. Additionally, fiscal consolidation will free up resources for private infrastructure investment, including housing, paving the way for a brighter future and future surplus budgets.

Revenue measures

Extending the build-to-rent land tax concession

In an effort to address ongoing pressures faced by households in NSW, the government announced that owners of eligible new build-to-rent (BTR) developments will be able to apply for a 50 per cent reduction in assessed land value for land tax. This concession, previously set to end 31 December 2039, will now apply indefinitely from the 2026 land tax year subject to eligibility requirements. 

The current requirement that a proportion of labour force hours for construction be performed by specified classes of workers will also be removed, and BTR developers will also be able to apply for exemptions from foreign purchaser duty and land tax surcharges (or a refund of surcharges paid). 

Developments that are already receiving, or have applied for, the BTR land tax concession for the 2025 land tax year or prior years are ineligible to receive the extended concession. 

Other revenue measures

• The government has stated its commitment to reforming the emergency services funding system which is largely funded by the Emergency Services Levy (ESL). In the last year, the Government took several steps to advance the reform, including The Pricing and Regulatory Tribunal progressing its work for monitoring the removal of the ESL from insurance premiums. 
• The NSW Government has also announced the introduction of a critical minerals royalty deferral scheme to support new mining projects, attract additional investment to regional areas and support the development of an industry segment crucial to the energy transition.
• Electric vehicle drivers will start paying a road user charge from July 1 2027, which is forecast to bring in $73m for the NSW government in the first year.