NSW Intergenerational Report 2016
NSW Treasurer Gladys Berejiklian has released the State Government’s latest intergenerational report, Future State: NSW 2056, outlining Treasury’s projections for the NSW economy in the next 40 years.
The headline finding of this year’s report is – under current settings – an expected budget defecit of $17 billion a year by 2056, with net debt rising to 75 per cent of GSP (up from one per cent today), requiring one fifth of revenue to be directed to interest payments.
This defecit is expected to be caused by the increased infrastructure and service demands of an ageing population.
Other key findings of the intergenerational report are that, by 2056:
- NSW will be Australia’s first trillion dollar economy,
- State gross capital expenditure will be $49.2 billion,
- The State’s population will grow by 50 per cent to 11.2 million people,
- Real income per capita will rise by 73 per cent to $116,000,
- Total workforce participation will fall to 59 per cent as a result of an ageing population,
- Life expectancies for men and women will rise to 89 years old and 91 years old respectively,
- More than 24 per cent of the population will be aged over 65 years old,
- The State’s median age will rise to 41 years old, up from 29 years old in 1976,
- There will be approximately 18,000 NSW residents aged over 100 years old, an increase of 1,100 per cent,
- Net migration will number 41,000 new persons per annum,
- The number of new homes will increase by 1.8 million,
- The service sector will continue to employ the greatest number of residents, and
- Health expenses will continue to take up the greatest proportion of the budget, followed by education and transport.
In reality, it is unlikely a $17 billion deficit would arise. The Fiscal Responsibility Act 2012 requires the NSW Government to implement corrective measures when faced with such a challenge to maintain the State’s triple-A credit rating.
Treasury is expected to use this latest intergenerational report to structure much of the upcoming NSW State Budget 2016-17, due for release on 21 June 2016.