NSW’s AAA credit rating is on the line. The federal government, other states and rating agencies believe NSW made an error forecasting GST revenues.
A big forecasting error by the NSW government is the secret reason behind Treasurer Daniel Mookhey’s claim that the state has lost $12 billion in revenue from the goods and services tax and that its AAA credit rating is at risk.
NSW will receive more revenue from the housing boom via land tax and property stamp duties, as well as higher coal royalties as the war in Ukraine drives up energy prices, according to the grants commission. Moody’s Investors Service and Fitch Ratings have NSW clinging to an AAA rating, but they will review this after the budget on Tuesday.
The Minns Labor government has removed the Coalition’s 2.5 per cent public sector wage cap for 400,000 public servants, as high inflation fuels union demands for bigger pay increases. Adding in “no-worse-off payments” from the federal government to the states for the Western Australia GST deal, the total distribution is forecast to be $93.7 billion.Weaker discretionary spending by consumers forced the government, in its federal budget in May, to forecast the GST pool to decrease by $988 million in 2024-25 and $3.5 billion over the five years from 2023-24 to 2027-28.
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