The NSW Budget for 2023-24, the first delivered by NSW Treasurer Daniel Mookhey, has a strong focus on housing, energy, and health, but light on business.
Significant investments in housing ($2.2 billion Housing Infrastructure Plan), regional health ($3.8 billion) and energy ($1.8 billion for the Transmission Acceleration Facility and the Energy Security Corporation), will assist businesses in getting the workers they need, help regional communities thrive and keep energy costs lower.
Housing is a central pillar to this NSW budget, and we are encouraged by the proactive measures outlined by the government to begin the work of solving the state’s housing crisis.
While welcoming the NSW Government’s commitment to no new taxes or tax increases for business, Business NSW is seeking clarity from the government on a decision to remove the exemption on company restructures and adding a 10% concessional duty.
NSW economic growth: Real gross state product growth is projected at 3.75% for 2022-23 (a downward revision from last Budget’s projection of 4.25%). Economic growth for 2023-24 is forecast to slow to 1.25% (slightly lower than the forecast of 1.5% in the 2023 Pre-election Budget Update), but the forecast for 2024-25 has been substantially revised from 2.25% to 1.25%.
Unemployment: The unemployment rate is forecast to rise to 3.75% in 2023-24 (compared to last Budget’s forecast of 3.5%), after ending 2022-23 at 3.1%. A further increase to 4.75% is expected in 2024-25 (a large upward revision from 3.5% in last year’s Budget and 4% in the 2023 Pre-election Budget Update).
Inflation: Sydney CPI growth is forecast to moderate from 7.1% in 2022-23 to 4.75% in 2023-24 and 3% in 2024-25. (Note: The RBA’s inflation target range is 2%-3%.)
Wage growth: Wage price growth is forecast to accelerate from 3.3% in 2022-23 to 4% in 2023-24 (still below the corresponding Sydney inflation forecast). However, wage growth is forecast to start exceeding Sydney inflation from 2024-25.
Budget result & net debt: A budget deficit of $7.8 billion (1.0% of GSP) is estimated for 2023-24 (larger than the previous estimate of $2.8 billion provided in the last Budget). A small budget surplus of $844 million (0.1% of GSP) is projected for 2024-25. Net debt is estimated to widen from $74.9 billion (9.8% of GSP) in 2022-23 to $92.6 billion (11.7% of GSP) in 2023-24, and further increase to 12.3% of GSP in 2024-25 before stabilising at 12.6% in 2025-26.
Table 1: New South Wales economic performance and outlook
Business NSW is hosting an exclusive webinar on Wednesday 27th of September, featuring Dr Sherman Chan (Business NSW Chief Economist) and Ben Pike (Executive Manager, Media and Marketing). This webinar is your chance to cut through the noise of the NSW Budget coverage and find out what it actually means for your business, with the ability to also ask questions.