The New South Wales government will lose a massive $8 billion in property taxes over the coming years. Treasurer Daniel Mookhey delivered this harsh warning on Wednesday. He blamed the huge revenue drop on the ongoing war in the Middle East involving the United States, Israel, and Iran. The international conflict has severely damaged the Australian economy and crushed consumer confidence across the state.
Mookhey shared these grim details while speaking at the McKell Institute in Sydney. He took the unusual step of releasing state economic forecasts a full month before he officially delivered the June budget. The Treasurer revealed that the state Treasury will severely downgrade its economic growth predictions. In December, officials expected the New South Wales economy to grow by 2.5 percent during the 2026-2027 financial year. Now, they expect a sluggish growth rate of just 1.0 percent.
The government will take a heavy hit to its primary revenue streams. Treasury officials predict that stamp duty collections will plummet by $5 billion over the forward estimates. At the same time, land tax revenues will fall by another $3 billion. Mookhey noted that other revenue sources, like payroll taxes, will recover some of this lost ground because rising interest rates do not affect them as directly. However, the overall financial picture remains incredibly difficult for the state.
The Treasurer painted a stark picture of how much life has changed for regular people in just 152 days. Back in December, a typical working family felt optimistic. They saw their wages increase, experienced a pause in interest rate hikes, and watched grocery prices finally stabilize right before Christmas. Today, that same family faces a brutal financial reality.
Global events quickly erased that holiday optimism. Mookhey pointed out that fuel prices have skyrocketed by 50 percent since late last year. Meanwhile, the Reserve Bank of Australia raised interest rates again, adding roughly $415 to the average monthly mortgage payment. Furthermore, grocery bills remain incredibly high. The Treasurer stated that nobody expected to live through the worst global oil shock since the 1970s, including his own financial experts at the Treasury.
This oil shock now dictates every major decision inside the upcoming state budget. Mookhey explained that expensive oil directly feeds higher inflation across the entire economy. That persistent inflation forces the central bank to keep interest rates high. Because everything costs more, businesses and their customers feel much less confident about the future today than they did just five months ago. Mookhey warned that even if the war in the Middle East ended tomorrow, petrol prices would not magically drop right away. He noted that global oil markets take a long time to normalize.
The high interest rates damage New South Wales much more than the rest of the country. Mookhey explained the simple reason behind this painful trend. Higher interest rates lower consumer spending everywhere, but residents in New South Wales carry much heavier debt. A typical working family buying a house in New South Wales today takes out an $873,000 mortgage. For comparison, a family in Victoria borrows only $677,000. Because New South Wales residents borrow 28 percent more money for their homes, they suffer much more when interest rates climb.
Despite these massive challenges, Mookhey promised that the upcoming budget will remain pragmatic and sensible. The state government plans to focus heavily on cost-of-living relief for struggling families. Officials also want to build a high-wage economy, reverse privatization deals made by the previous government, and continue making record investments in public hospitals.
The poor economy also sets the stage for a bitter political fight. Voters will head to the polls early next year, and the Labor government faces a growing threat from right-wing populist groups. Pauline Hanson’s One Nation party recently gained momentum by winning the federal seat of Farrer and performing very well during the South Australian state election.
Mookhey directly attacked his political rivals over their economic and environmental policies. He noted that the federal Liberal Party recently aligned with One Nation to oppose net-zero emissions targets. Late last year, former state Opposition Leader Mark Speakman supported net-zero goals, causing a major split with his conservative allies. Now, Mookhey wants the new state Liberal leader, Kellie Sloane, to state her position on the matter clearly. He challenged her to tell voters whether she supports or opposes the state’s legal net-zero targets.
Mookhey delivered a final, harsh warning to his political opponents. He stated that campaigning against net-zero targets is the same as campaigning for a state recession. The Treasurer explained that the state only avoids a complete economic collapse right now because companies are pouring money into green energy. The large number of renewable energy projects under construction, along with major power grid upgrades, currently prop up the state economy and create thousands of jobs. Mookhey firmly believes that reaching net zero remains the smartest economic strategy for the state.
