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NSW budget deficit blows out to $19.5bn

There’s more evidence of the cost of the Covid pandemic to government finances this morning, with NSW treasurer Matt Kean unveiling his state’s mid-year review at a Sydney breakfast hosted by the Business Council of Australia.

The key number is the more than doubling of the projected budget deficit for this the 2021-22 year to $19.5bn, compared with $8.6bn forecast when the budget was laid down in June.

That was the same budget then treasurer and now premier Dominic Perrottet declared at the start of his budget speech: “NSW is back.” At that time, Delta was clustering in Sydney and within days the state was locked down.

Kean says NSW is “continuing to bounce back from one of the biggest economic shocks the state has faced in generations, with the government’s targeted support measures and strong vaccination rates helping our economy successfully recover”.

Despite that much bigger projected deficit, Kean is still forecasting the budget will return to surplus by 2024-25, “with the impact of the Delta outbreak largely contained to the current financial year”.

Let’s see how the Omicron variant plays out, with health minister Brad Hazzard predicting yesterday the state could be reporting 25,000 new cases a day by the end of next month.

And it remains to be seen whether that return to surplus includes a contribution from the Transport Asset Holdings Entity. This is the financial vehicle at the centre of a standoff between Kean’s Treasury department and the Audit Office. Which side of the ledger will Kean side with is worth keeping an eye on.

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