Overview

The 2026–27 NSW Budget has prioritised fiscal responsibility in the run up to next year’s election. Turbulent economic conditions have resulted in significant changes to the forward estimates for economic growth, inflation and tax revenues.  

The budget prioritises cost-of-living relief for households, workers and motorists, but largely misses the opportunity to help alleviate pressures on NSW’s business community. 

This is the last Budget for the 2027 State Election. $1.1 billion has been set aside for announcements which will be made in the lead up to the election.

Measures for business

• Business Advice and Support: A new business advisory service to replace Business Connect, funded at $37 million over four years. 
• No new taxes, although payroll tax contributions are expected to increase by $943 million over the next four years. 
• Ongoing workers’ compensation reform: A two-year workers’ compensation premium freeze will result in 340,000 businesses avoiding a combined $4.1 billion extra in forecast premium increases.   
• Local procurement opportunities for SMEs: $6.4 million for the newly established Local Jobs First Commission which is aimed at giving SMEs better access to $40 billion in government contracts. 
• Growing domestic manufacturing: A further $225 million to create more local jobs in domestic manufacturing, especially for the products and materials needed for the low-carbon industries of the future. 

Fiscal and economic outlook

NSW Treasury has revised down its forecasts for economic growth relative to estimates from the December 2025 MYEFO statement. Higher than expected interest rates weigh on NSW mortgage holders and the conflict in the middle east has increased uncertainty and inflationary pressures.  

The forecast for inflation (Sydney CPI) has been revised upwards for 2026-27, before returning within the RBA target band to 2.5% in 2027-28 as demand eases. 

Real wage growth is expected to go backwards in the short-term due to higher than expected inflation, but real wages growth is expected again from 2027-28 onwards.  

Overall employment is expected to rise consistently across the forecast period. Across this time the unemployment rate is expected to rise moderately to 4.75%, remaining low by historical standards, and rates of underemployment remain below their 10-year average. 

Gross debt is forecast to stabilise at around 20% of Gross State Product (GSP)—more than triple the 6.2% level in June 2019. The 2025–26 budget result is a $3.4 billion deficit, with a $1.1 billion surplus forecast for 2027–28. Treasury expects productivity growth to rebound modestly to 0.8%, though long-term challenges remain.  

Table 1: NSW Economic performance and outlook (a) 

Note:

1. Forecasts are rounded to the nearest quarter point and are annual average per cent change, unless otherwise indicated. 
2. June quarter, per cent 
3. Per cent change through the year to 30 June. Forecasts are rounded to the nearest 0.1 percentage point. 

Source: NSW Treasury, Budget Paper 1, Table 2.1 

Graph 1: NSW budget economic forecast comparison 

Table 2: Key budget aggregates for the general government sector and non-financial public sector capital expenditure

Source: NSW Treasury, Budget Paper 1, Table 1.2 

Highlights for business

Tax & red tape

• No new taxes for businesses, although a $5.4 billion reduction in transfer duty and $3.5 billion in land tax receipts over four years to 2029-30 will be partially offset by a $943 million increase in payroll tax collections. 

Support for business

• Small business advice and support: a $37 million small business advisory program to succeed Business Connect. 
• Growing domestic manufacturing: A further $225 million to create more local jobs in domestic manufacturing and to help NSW businesses build the products and materials needed for the low-carbon industries of the future. 
• $25 million to continue the Office of the 24-Hour Economy, including the Uptown and Purple Flag reform programs to reduce red tape and support precinct development for the night-time economy. 
• Supporting women in business grants: $2 million over four years to extend the Supporting Women in Business grants through to 2030 by providing funding for organisations to deliver tailored support for women to start or expand a small business. 
• NSW Aboriginal Business Taskforce & Aboriginal Business Roundtables: Continuing the NSW Aboriginal Business Taskforce and delivery of Aboriginal Business Roundtables to support the growth of the Aboriginal business sector. 
• Delivery of the NSW Visitor Economy Strategy 2035, subject to further details on new funding commitments as part of delivering the Strategy.

Education, skills & growing the workforce

• New and upgraded schools: $9.2 billion statewide over the next four years to deliver new and upgraded schools, with $4.1 billion for Western Sydney and $2.3 billion across regional NSW. 
• Early childcare: $42.6 million to extend the 3-Year-Old Fee Relief Trial Payment in Long Day Care to the end of 2027 
• Ongoing workforce development: Continued investment in apprentices and trainees, early learning and foundations for future skills, including $233 million to upgrade TAFE campuses.  

Energy

• Investing in Renewable Energy Zones (REZs): Accelerating the delivery of Renewable Energy Zones (REZs) through targeted investments in transmission infrastructure, land acquisition, logistics and transport networks. Key initiatives include: 
  • $224.8 million over four years in the South West Renewable Energy Network Infrastructure Project connecting four renewable energy projects and unlocking $17 billion in private investment. 
  • $348.9 million over four years for land acquisitions and biodiversity offsets required to deliver the Central-West Orana REZ. 
  • $93 million over four years in investment in the Newcastle Port Logistics Precinct to facilitate the import, storage and movement of renewable energy components to REZs across the state. 
  • $14 million over two years to address critical infrastructure to support delivery of renewable energy zones. 
• $291.4 million in 2026–27 for the Regional Corridor Upgrades Program, aiming to make roads safer and more efficient, improve connectivity, freight and productivity, and support the transportation of oversize components to Renewable Energy Zones, including:  
  • $120 million for Euxton to Tocumwal, supporting the South West REZ 
  • $8.1 million for Muswellbrook to Armidale (Phase 1), supporting the New England REZ.  
  • $145.3 million for Newcastle to Dubbo (Phase 2), supporting the Central West Orana REZ.  
  • $18 million for Muswellbrook to Armidale (Phase 2), supporting the New England REZ. 
• Transmission Infrastructure and Planning: $18.7 million to implement the Transmission Planning Review and an additional $39 million over four years through the Transmission Acceleration Facility to support future network upgrades. This brings total investment in the Facility to $4.7 billion, helping deliver the transmission infrastructure needed to support Renewable Energy Zones, energy security and growing electricity demand. 
• Energy Security Intelligence System: $3.5 million Investment over four years to develop an energy security system to track development of new infrastructure projects.

Transport & Infrastructure

• Electrifying Sydney’s bus fleet: $6.5 billion over ten years to electrify 1,800 Sydney buses and to deliver 17 new or upgraded bus depots across Sydney. This will include support for local manufacturing to meet demand. 
• Heavy rail maintenance: $2.1 billion will be invested into heavy rail maintenance for signalling systems, maintenance and station upgrades and a new incident response capability. 
• Improving connectivity across Sydney: continued funding of $60.2 billion over four years in transport infrastructure projects which will improve connectivity, unlock opportunities for new housing and support access to jobs and services including: 
  • $12.9 billion for Sydney Metro West 
  • $2.3 billion for Western Harbour Tunnel Upgrades 
  • $2.2 billion for Sydney Metro Western Sydney Airport 
  • $2.4 billion for Parramatta light Rail Stage 2 
  • $6.5 billion in Western Sydney Roads. 
• Upgrading Sydney to Canberra rail corridor: The NSW government is investing $100 million in partnership with the ACT and Australian governments to upgrade the Sydney to Canberra rail corridor. 
• Better fuel price transparency: $2.6 million to upgrade FuelCheck and enforce accurate fuel price reporting. 

Housing

• No major new spending commitments, but an uptick in new housing approvals and commencements from the lows of mid-2024 shows that planning reforms and other measures to boost housing supply may be beginning to have a positive impact.  
• Building Commission: $32.3 million for the Building Commission to fund an improved building approvals system for the NSW Planning Portal, a Modern Methods of Construction Regulatory Framework to decrease the cost of construction and pilots of enhanced dispute resolution and trialling AI to streamline licensing.  

Regions  

Infrastructure: 

• Regional roads: $910 million to restore local and state roads and other essential public assets damaged by natural disasters. 
• Highway upgrades: $50 million additional funding for the Barton Highway upgrade. 
• Hunter flood mitigation: $73 million to deliver critical repairs for damaged flood management assets across the Hunter.

Industry development and support:  

• Business support: $7.4 million investment into aquaculture business in the Far South coast to boost local jobs and drive economic opportunities and encourage sustainability. 
• Drought resilience: packages of support for regions to continue the Drought Resilience Planning Program to strengthen drought resistance in drought-prone areas. 
• Strengthening biosecurity and primary industries: Coaching, capability building and business planning support to farms. 

Services: 

• Regional services: $153.9 million in additional funding to deliver services in regional communities via the Regional Development Trust Fund. 
• Health innovation and service delivery: $9.9 million investment into robotic surgery research and capability at Orange Health Service, and $67.4 million for three new helicopter bases to provide better emergency care in regional NSW. 
• Childcare for Western NSW: $4.9 million will be invested to deliver 176 additional childcare places in Western NSW, addressing the regional skills shortages and closing the worker shortage gap.

Regional visitor economy and placemaking: 

• Great Koala National Park: $140 million for the establishment of the Great Koala National Park. 
• National Park visitor facilities: $130 million to keep national park visitor facilities open and safe for visitors. 
• Gosford Waterfront: The Gosford Waterfront amenity will be improved further shaping city development with a $41 million investment into upgrading walk and bike pathways around the waterfront. 
• Visitor economy: $14 million to upgrade Broadmeadow precinct and Newcastle Entertainment Centre. 

OTHER

Office of the Anti-Slavery Commissioner for New South Wales: Increased budget for the Office of the Anti-Slavery Commissioner for New South Wales from $1.5 million in 2022-23 to $2.8 million in 2026-27 to support its work building capacity to prevent modern slavery. 

What’s Next – More Support for Business?

On Thursday the NSW Opposition Leader, Kellie Sloane, is set to deliver her Budget Reply. 

We look forward to all parties engaging with the business community throughout 2026 ahead of the state election in March 2027. 

Business NSW remains committed to advocating on your behalf in the lead up to this state election. 

For more information from Business NSW, please contact:

Ben Pike – Head of Marketing and Media |  Ben.Pike@businessnsw.com