2024-25 NSW Budget Analysis

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  • The NSW Treasurer’s second Budget responds to the Property Council of Australia’s calls for measures to address the housing supply, affordability and feasibility crisis

  • The package addresses key recommendations from the Property Council’s recent groundbreaking research with Savills showing the viability of projects is a major barrier to construction of new homes

  • It also includes a new financing guarantee pilot to examine how the state can directly support the housing industry to secure finance, increase the viability of housing projects and speed up the construction of new homes in response to our recent Ministerial Roundtable; funding for more planners and improvements to the NSW Planning Portal; and welcome roads funding and changes to streamline infrastructure delivery around the Aerotropolis

  • Of particular note is a significant investment of $6.6 billion in social housing and homelessness services – this is the biggest such investment in the history of NSW and demonstrates a will to address the housing crisis facing the most vulnerable in our society

  • However, a big sting in the tail is the impost of a $4.7 billion cost shift of the Emergency Services Levy (ESL) from insurers to property owners, combined with a $1.68 billion stealth tax hike on land tax and foreign surcharges. Neither measure will help in the delivery of more market housing supply – indeed it will likely hold us back.

Earlier today, Daniel Mookhey handed down his second Budget as NSW Treasurer, laying out the economic and fiscal plans for the state. The Budget also contains measures to reduce government duplication and expand existing revenue sources.

The housing and infrastructure package is made up of several initiatives, many of which have been flagged well ahead of the Budget, including $1 million to investigate a guarantee scheme to enable residential developers to secure funding to accelerate the completion of residential development.

The Budget papers acknowledge the impact of higher interest rates, construction costs, and labour and materials shortages on project feasibility and dwelling approvals, now at their lowest level in a decade – which shows, in part, that the government has heard our sustained advocacy around the complex and challenging economic context in which we embark on a home-building boom.

This responds directly to the Property Council’s groundbreaking ‘Release the Pressure’ advocacy series with Savills which includes recommendations for help to secure finance, increase the viability of projects and speed up the construction of new homes.

But it’s far from good news. The Budget includes the removal of indexation of the NSW land tax threshold – subjecting more Mum and Dad investors to land tax. And it will increase the foreign investor surcharge from 8 to 9 per cent from 2025, and the foreign owner land tax surcharge from 4 to 5 per cent, both measures generating an additional $1.68 billion over the forward estimates.

The changes mean NSW will have the highest level of foreign investor surcharges of any state in the country. Industry is finding it hard enough to secure capital without increasing the cost of foreign investment – it makes NSW a less competitive state from a tax perspective, and it will not create the investment climate we need to deliver more homes than ever before.

And it gets worse. Consultation on reforms to the Emergency Services Levy closed just a fortnight ago, with the Government announcing the legislated appointment of the Independent Pricing and Regulatory Tribunal as the Insurance Monitor to oversee the transition of the levy on insurers onto property owners. Legislation has been passed to enable the collection of data needed to design and implement the reform and allow the Treasurer to access data from insurers and allow councils to perform preliminary classification activities.

But today’s Budget papers make the Government’s intentions clear – with $4.7 billion to be raised from landowners when the levy is transferred from insurance premiums to property. This is a further disappointing step from the Treasurer and one that will only increase housing costs, exacerbating pressure on housing affordability at this critical time.

Taken together, these tax and cost rises are anticipated to raise an astonishing $6.38 billion over four years.

Elsewhere in the Budget, allocations to support more housing include: $450 million for Landcom to develop more than 400 build-to-rent apartments for essential workers over the next three years; $253.7 million to overhaul the planning system and fund more planners and other critical staff; $201.9 million in infrastructure spending (with councils) to support the construction of up to 24,000 new homes in Bathurst, Port Macquarie-Hastings, Shoalhaven, the Tweed Shire and Wagga Wagga; and $200 million for 120 new dwellings for health workers living in rural and regional areas.

Infrastructure is well served with a forecast $119.4 billion program over the four years to 2027-28, including a record $6.6 billion funding for new social housing and homelessness services, $2.1 billion for construction of the second stage of the Parramatta Light Rail to begin before the next election, and more than $1 billion for upgrading and creating roads around the new Western Sydney Airport precinct.

Other measures include funding of $35 million a year for the new Building Commission NSW; $20.4 million to deliver improvements to the NSW Planning Portal; $11.4 million for the new low/mid-rise Housing Pattern Book and design competition; $8.4 million to establish a new NSW Rental Taskforce; expansion of Infrastructure NSW’s responsibilities around the Aerotropolis; and renewed efforts by the NSW Productivity Commissioner to work with the sector to identify solutions to the barriers impacting housing supply and construction.

It’s not unexpected that the Government has delivered a Budget that puts the housing crisis plaguing our state front and centre with a number of significant initiatives to try to help deliver more housing where it’s most urgently needed. However – measures that will increase taxes and costs and discourage investment will work against us and increase the challenge before us.

More details and analysis of 2024-25 NSW Budget are available at the links below.

The projections over the forecast period within the 2024-25 Budget show the state’s economic growth is expected to remain subdued as high inflation and interest rates constrain household expenditure as well as business investment.

The NSW economy is expected to grow by 1.25 per cent in FY2024-25, while unemployment is forecast to increase to 4.5 per cent in the same financial year. Economic growth is projected to increase gradually over the forward estimates, reaching 2.5 per cent in FY2027-28 as inflationary pressures are expected to ease (see Figure 1). According to the Budget, population growth across the state will halve over the forward estimates. Reducing from the 2022-23 highs of 2.2 per cent, over the forecast period population growth declines in FY 2023-24 to 2.1 per cent, FY 2024-25 and 2025-26 1.2 per cent and in 2026-27 as well as 2027-28 1.1 per cent growth.

Figure 1: Economic performance and outlook

Source: 2024-25 NSW Budget

The NSW Budget focuses on key areas of housing, health and cost of living pressures, while continuing to target the debt trajectory outlined in the Half Yearly Review. The 2024-25 Budget projects a deficit of $3.6 billion in 2024-25, revised down from the 2023-24 Half Yearly Review. Deficits remain across the forward estimates, with modest improvements projected in FY 2025-26 as $2.5 billion deficit, a deficit in FY 2026-27 of $2.4 billion and a deficit of $1.5 billion in FY 2027-28.  

Softening in both spending growth and the labour market has assisted in inflation reduction. Over the year to the March 2024 quarter, Sydney CPI inflation rose by 3.8 per cent which is half of the increase seen in the December 2023 quarter.  

The state’s gross debt is also projected to increase over the forecast period reaching $199.8 billion by June 2028, dedicated to changes to the GST relativities, weaker payroll tax and higher depreciation and interest costs. Net debt is now projected to peak at 20.3 per cent of GSP by June 2028.

Figure 2: NSW Fiscal Outlook

Source: 2024-25 NSW Budget

The NSW Government’s commitment under the National Housing Accord to deliver 377,000 new well-located homes across the state by 2029 underpins the 2024-25 Budget.

The NSW Budget outlines $544.7 million for its updated Planning Program, which covers a range of budget measures, including:

  • $253.7 million to overhaul the planning system by increasing the funding for planners and other critical staff to assess housing, job creation and infrastructure proposals. $20.4 million of this funding is to improve the NSW Planning Portal.
  • $200 million for the Faster Assessments Council Incentives and Grants Program, aimed at incentivising councils to meet and beat their housing targets.
  • $85 million from the Housing Infrastructure Fund in Restart NSW, to fast-track infrastructure in growing regional communities including West Dapto.
  • $1 million to investigate a guarantee scheme which would enable residential developers to secure funding to accelerate the completion of residential housing.
  • $85 million from the Housing Infrastructure Fund in Restart NSW, to fast-track infrastructure in growing regional communities.

Aerotropolis coordination

Going forward, the Bradfield Development Authority will take on responsibilities for the delivery of the Bradfield City Centre (in place of the Western Parkland City Authority). Infrastructure NSW will take on a stronger coordination function with access to “step-in powers” across the various government agencies tasked with delivering growth-enabling infrastructure in the Western Sydney Aerotropolis.

Building Homes for NSW Program

The 2024-25 Budget provides significant investment for the NSW Government’s “Building Homes for NSW” program which will help unlock up to 30,000 new homes and deliver a $6.6 billion investment in social housing and homelessness services.

The Budget includes:

  • $5.1 billion over four years for new social housing. This will fund the land purchase and construction of 8,400 new social homes (which includes 2,200 replacement), with a focus on housing for women leaving domestic violence.
  • $810.0 million for critical maintenance and minor works that bring homes back online and prevent disrepair.
  • $202.6 million over four years to the Aboriginal Housing Office (AHO) to support critical capital maintenance of First Nations social housing.
  • $527.6 million for emergency housing and homelessness support services, supporting vulnerable people in crisis transition into stable housing.

The NSW Government has also been conducting an audit of government land to identify surplus sites that are suitable for social, affordable or market housing. This audit has identified an initial 44 sites not being used by government that are suitable for housing and will make these sites available for housing with Homes NSW and Landcom to have the first choice of sites for the delivery of social, affordable, essential worker and market housing. Other sites will be developed into housing in partnership with the private sector. The locations of these sites will be made public over the coming months.

Housing for Essential Workers

The budget includes $650.1 million to build essential worker housing which includes:

  • $450 million for a Key Worker Build-to-Rent Program to be delivered by Landcom across Sydney.
  • $200.1 million for key health worker accommodation across rural and regional areas of the state.

Under the Key Worker Build to Rent Program over 400 homes will be built for essential workers in metropolitan Sydney, while approximately 500 health workers will benefit in regional areas of the State.

The 2024-25 Budget includes $119.4 billion infrastructure investment over four years through the Essential Infrastructure Plan.

Significant projects continuing or commencing delivery as part of the 2024-25 Budget include:


$62.9 billion for transport and infrastructure, including:

  • $13.4 billion over four years for Sydney Metro West.
  • $5.5 billion over four years for Sydney Metro-Western Sydney Airport.
  • $4.2 billion over four years for Western Sydney Harbour Tunnel Upgrade.
  • $1.9 billion over four years for Zero Emissions Buses Program.
  • $1.2 billion over four years for Sydney Metro City and Southwest.
  • $1.1 billion over four years for Road Safety Investment.
  • $661.0 million over four years for upgrade of Elizabeth Drive.
  • $605.5 million over four years for widening of Mamre Road.
  • $441.5 million over four years for Tangara Fleet Life Extension.
  • $327.1 million over four years for delivery of New Bus Services for Western Sydney.


$13.4 billion for health infrastructure to plan and deliver new and upgraded hospital builds (estimated total costs shown below), including:

  • $1.3 billion for new Bankstown Hospital.
  • $1.0 billion for Nepean Hospital and Integrated Ambulatory Services Stage 1 and Stage 2.
  • $940.0 million for Royal Prince Alfred Hospital Redevelopment.
  • $835.0 million for John Hunter Health and Innovation Precinct.
  • $780.0 million for Liverpool Health and Academic Precinct.
  • $781.9 million for New Shellharbour Hospital and Integrated Services.
  • $700.0 million for Rouse Hill Hospital.
  • $669.8 million for State-wide Mental Health Infrastructure Program.
  • $265.0 million for the upgrade of Port Macquarie Hospital.
  • $200.1 million for a Key Health Worker Accommodation Program.

Education and skills

  • $9.5 billion for education and skills infrastructure, including $8.9 billion over four years to support the planning and delivery of new and upgraded schools.

The 2024-25 NSW Budget sets out a series of tax integrity and revenue measures designed to support the Budget repair task and address tax compliance, including across land tax duties and thresholds. Taxation revenue is forecast to be $48.3 billion, $1.1 billion higher than released in the Half Year Review, largely driven by increased transfer duty and land tax. The increases to surcharging of both property taxes and transfer duties is forecast to deliver an extra $7.8 billion over the next four years, resulting in the property sector more than offsetting the $6.2 billion in lost GST revenue. 

The NSW Budget provides an additional $35 million in funding for Building Commission NSW to support its ongoing efforts to reform the building and construction industry and improve consumer outcomes. The funding will enable the Commission to have enhanced digital capabilities as it continues lifting building standards statewide.

The Government is investing $3.1 billion into the energy transition, to deliver infrastructure needed to provide lower cost and more reliable energy for all NSW consumers. This Budget also includes $128.5 million for regional road upgrades and infrastructure at the Port of Newcastle to enable the timely transport of large Renewable Energy Zone projects.

An extension to the operating life of Eraring Power Station has been announced, with the government allocating up to $450 million to pay Origin if the plant runs at a loss.

The energy social program will be expanded, which includes an increase of $100 million in FY 2024-25, aimed at supporting up to 1 million NSW households with the cost of living, and brings the total program for 2024-25 to $435.4 million. From 1 July 2024, the Family Energy Rebate and the Seniors Energy Rebate will increase to $250, and the Low-Income Household Rebate and the Medical Energy Rebate will increase to $350. The Life Support Rebate will be up to $1,639 for each equipment type. This support is in addition to the Federal Government’s $300 energy bill relief payment. Also announced was the Social Housing Energy Performance Initiative to help reduce energy bills for tenants and keep their homes cooler in summer and warmer in winter.

The NSW Government also announced the establishment of a $5 million grants program for councils, non-government organisations and community groups to prepare volunteers for natural disasters.