Overview
The 2025-26 Half-Yearly Review demonstrates continued improvement in the budget position while delivering significant commitments over the last few months, including:
- the public ownership of the Northern Beaches Hospital
- a permanent Toll Cap at $60 per week from 1 July 2026
- extension of the Preschool Reform Agreement to the end of 2027
- additional investment to respond and recover from natural disasters.
The 2025-26 Half-Yearly Review operating position is expected to improve by $0.6 billion over the forward estimates since the 2025-26 Budget. The government remains on track to return to a budget surplus in 2027-28, now projected at $1.3 billion.
The Government maintains its fiscal strategy outlined in the 2025-26 Budget and is stabilising the State’s gross debt at around 20 per cent of gross state product (GSP). This helps keep interest expenses manageable and supports the State’s operating position while the Government rebuilds essential services.
Average annual expense growth was 2.8 per cent over the two years to 2024-25, the lowest rate of growth of any Australian government and below inflation for the period. Expense growth is projected to average 2.6 per cent over the budget and forward estimates, which remains well below the 6.5 per cent average annual expense growth between 2011-12 and 2022-23.
Total general government revenue is projected to be $4.6 billion higher over the four years to 2028-29, which will support essential services such as the cost-of-living relief through a permanent toll cap.
The State’s infrastructure program is projected to be $28.2 billion in 2025-26, one of the largest years on record in New South Wales.
Economic growth in 2025-26 is expected to be slightly weaker than forecast at the Budget. The unemployment rate is now expected to peak in the June quarter 2026 at 4½ per cent, which is still a historically low level.
