A recovering economy and GST help fuel NSW budget spending initiatives

Inflated by GST revenues and mining royalties, the NSW government is able to spend while keeping its fiscal credentials intact.

Housing is a big part of the NSW budget (Image: AAP)

Like the Commonwealth budget, the NSW 2022-23 budget reveals a big boost in government revenue. And like the Commonwealth budget, part of that is going to election-year spending intended to address cost-of-living issues. But unlike the Commonwealth budget, it also addresses fundamental fiscal challenges and starts some much-needed reform.

NSW Treasurer Matt Kean’s budget benefits from a mammoth $25.7 billion upgrade in forecast revenue over the forward estimates — for which changing GST allocation provides $11 billion and mining royalties $4 billion.

Surging revenue has also brought the 2021-22 budget result in well ahead of expectations, but the northern NSW floods alone pushed spending in the budget year up by more than $3.5 billion, combining with increased cost-of-living measures to blow out next year’s deficit to $11 billion.