The Baird government will go to the polls in March with the budget in surplus after Sydney's booming property market delivered the state's coffers a $1.8 billion windfall.
The NSW government's half-yearly budget review, released on Thursday, said stamp duty revenue is now expected to increase by 12 per cent this financial year following growth of 40 per cent in 2013-14 and 21 per cent in 2012-13.
The stamp duty bonanza helped transform this financial year's budget from red to black. A $555 million turnaround, driven mainly by the hot property market, means a deficit of $283 million predicted at budget-time will instead be a $272 million surplus.
Budget surpluses totalling $2.8 billion are now forecast over the next four years, although the surpluses predicted in 2016-17 and 2017-18 have been pared back on the expectation that the beneficial effects of the the property boom will fade.
The state's debt position has also improved with net debt now forecast to be $9.3 billion by mid-2015 compared with the $12.4 billion predicted in the June budget.
Treasurer Andrew Constance said the NSW Budget was powerfully positioned and that the state's economy was the "envy" of the nation.
"While the Australian economy is facing its challenges, NSW is riding a wave of prosperity," he said.
Earlier this week the Federal Government's half-yearly budget update forecast many years of deficit, including a $40.4 billion shortfall this financial year.
The improved budget position is welcome news for the Baird government with economic management sure to be a centrepiece of the Coalition's bid for re-election in March.
The state government now expects to receive $744 million more stamp duty in 2014-15 than forecast in May and a total of $1.8 billion more than forecast over the next four years. Commercial and industrial property transfers have been stronger than expected at the budget. However, the tax windfall flowing from the property market was offset to some extent by softer than expected payroll tax and weaker mining royalties.
The budget update said the state's economic growth rate would be 2.75 per cent this financial year, a little lower than forecast in June, before accelerating to 3 per cent in 2015-16. Solid growth in household consumption and accelerating dwelling investment growth were underpinning growth in NSW, it said. Low interest rates and a falling exchange rate will be favourable for the state economy. Even so, the jobless rate in NSW is expected to be a little higher than the 5.5 per cent forecast in June.
"Slightly softer employment growth, combined with stronger forecast population growth, as labour is drawn into NSW given its relative economic strength, is now expected to result in the unemployment rate remaining at around recent levels through 2014-15," the budget review said.
Mr Constance announced that $2 billion from the state's dedicated infrastructure fund - "Restart NSW" - has been allocated to the State Infrastructure Strategy, a 20-year infrastructure plan mostly funded by the proposed privatisation of the state's poles and wires.
"This will serve as a down-payment as we turbocharge infrastructure with the proceeds from a long-term lease of the electricity network businesses," Mr Constance said.
 
