One of the reasons for the outbreaks is what the budget calls “the major investment in the health system to improve capacity and resilience, continued support for COVID-19 and flood response.” But new government spending decisions, including direct payments to households, are another big factor. This includes toll relief ($520 million over the next two years) and back-to-school grants rolling out a few months before the March 2023 election ($193 million).
3. Revenues vs. Expenses
A challenge for any government is to keep the growth of revenue and expenditure roughly in line. COVID-19 made that impossible for governments around the world – the pandemic caused costs to rise and revenues to fall.
NSW was no different – the public finances show that a large gap between spending and revenues has emerged in recent years and the government predicts that it will gradually narrow. But that won’t be easy. Much will have to go right if the government is to achieve its next surplus as projected in 2024-25.
4. Where does the money come from?
The state budget is still repairing the damage done by COVID-19. But the government has recently received some welcome revenue windfalls to bolster the treasury.
As this chart shows, the GST is a major contributor to state finances, and is projected to bring in $11.5 billion more over the next four years than previously expected. Mining royalties will also be much higher due to a boom in global commodity prices.
But this year’s budget comes with a caveat: In the long run, as the population ages, revenues are expected to grow more slowly than in the past. The best way to deal with this challenge, the budget says, is through reforms that increase the productive capacity of the economy.
5. Doubling the Debt
The government debt position has deteriorated sharply since the outbreak of the pandemic. An important measure is net debt, which takes into account the liabilities and assets of the state.
Over the past two years, that measure has risen from $22.7 billion (3.6 percent of gross government product) to $53.5 billion (8 percent of gross government product) and is expected to reach $115 billion (or $115 billion) in June. 14 percent of the GSP). 2026.
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