York Park Group’s Analysis

The 2024-25 Budget is the second delivered since Labor returned to power in NSW under Premier Chris Minns. Treasurer Daniel Mookhey described it as a “must haves and not nice-to-haves” Budget, and said: “I don’t think we should be slamming the door on home ownership to the next generation”.

The Budget follows a national trend of taxing asset-rich property owners and using the revenue to increase spending on government services, housing and public sector employees. Interestingly, the Budget avoided following the Federal, Queensland, Victorian and Western Australian governments in providing further cost of living support. Instead, Mr Mookhey focused on a big social housing spend and public sector wage rises.

Key Take-Outs

The housing commitment of $5.1 billion will go towards building a targeted 30,000 new homes in total under various schemes. Included in this is 8,400 new and refurbished social homes, of which 6,200 will be new and the rest are old social housing stock being knocked down and rebuilt.

The Treasurer said half of these homes will be kept for women and children fleeing domestic violence. Approximately 5,000 of the 34,000 women on the social housing waiting list are assessed as in urgent need, meaning they are often escaping or at high risk of domestic violence.

Continuing with the housing focus is $555.5 million to speed up the planning system with investment to assess more development applications, provide more enabling infrastructure and land acquisitions, along with $35 million for the NSW Building Commission.

Health infrastructure was also a big focus of the Budget, with $13.4 billion over the four years to 2027-28 allocated. The major project is a $265 million for the upgrade of Macquarie Hospital, and there’s another $200 million to deliver key health worker accommodation in rural and regional areas.

Further health spending includes $189 million invested into bulk billing which the Government said will incentivise GPs to bulk-bill patients. GP clinics will also be exempt from paying back taxes they may owe on contractor wages.

Economic Outlook and State Finances

There was a $3.6 billion deficit in 2024-25 – a $6 billion improvement compared to the $9.6 billion deficit in the 2023-24 Budget. The deficit is forecast to continue shrinking over the coming years, eventually falling to $1.5 billion in 2027-28. Gross debt was $166 billion in 2024-25, representing 19.3 per cent of gross state product; it is forecast to climb to $199 billion in 2027-28, at 20.3 per cent of GSP.

The economy is forecast to grow by 2.5 per cent in 2023-24 and will then continue with subdued growth of between 2 per cent and 2.25 per cent until 2027-28. The unemployment rate is expected to be 4.5 per cent this year and will stay at the same level in 2025-26 before decreasing over the coming years to 4 per cent in 2027-28. This combined with the recent high inflation has contributed to strong wage growth forecasts of 4 per cent in 2023-24 and 3.75 percent in 2024-25.

The Reactions

Leader of the Opposition, Mark Speakman MP: “This is a Budget that risks our economic security – delivering more deficits, more debt and all but decimating our Triple A credit ratings.”

Master Builders Association of NSW Executive Director, Brian Seidler: “A record investment for social and affordable housing for our most vulnerable will improve the critical undersupply of housing in this area of the market.”

For further detail on the economic outlook, key takeouts and reactions to the 2024-25 NSW State Budget, please see the full York Park Group analysis paper.