New South Wales Treasurer Daniel Mookhey's third budget is characterized by prudence and restraint, marking a shift towards fiscal repair rather than bold reforms or significant new spending. While some perceive it as sensible and measured, others view it as unimaginative, lacking immediate cost-of-living relief, and saving major initiatives for the lead-up to the 2027 state election. The budget signals a departure from COVID-era spending and an entry into a new phase of infrastructure rollout, prioritizing essential services and financial stability.

The state's financial health shows notable improvements, with a projected modest surplus of $1.1 billion by 2027-28, the first since 2018-19. The current financial year's deficit has narrowed to $5.7 billion, a significant improvement from the $10.7 billion in 2023-24. Gross debt is forecast to be $178.8 billion next financial year, which is $9.4 billion lower than previously expected, leading to an estimated annual saving of $400 million in interest expenses. Expense growth has been curtailed to an average of 2.4 percent per year over the next five years, down from 6.2 percent in the five years preceding COVID-19. However, the public sector wages bill is set to grow by 3.7 percent, adding an extra $2 billion in costs over four years. Revenue is set to hit a record $124 billion in 2025-26, buoyed by surging property prices, a larger GST carve-up, and increased federal funding. Despite these gains, the budget is impacted by a 'broken workers’ compensation scheme,' which adds $2.6 billion in liabilities due to the upper house's refusal to pass reforms.

Housing remains a central focus, with the government committed to its ambitious target of delivering 377,000 new homes by 2029, though skepticism remains about achieving this goal. A key initiative is the $1 billion pre-sale finance guarantee scheme, which enables the government to act as guarantor for mid-tier developers. This is designed to fast-track the construction of an estimated 15,000 new homes over five years by helping developers secure loans more quickly, particularly given increased pre-sale requirements from lenders. If these homes do not sell, the government will purchase them at a discounted rate for affordable or social housing. This scheme is acknowledged by the Treasurer as 'no silver bullet,' indicating the need for further initiatives to address the chronic housing supply shortage. Developers also benefit from new tax breaks aimed at combating labor shortages and high construction costs. Outside the budget, ambitious planning reforms are underway to increase housing density across Sydney. However, renters like university student Alyss Cachia express disappointment, feeling the budget's approach is 'top-heavy' and prioritizes investors over immediate cost reduction for struggling residents.

A standout feature of this budget is the historic $1.2 billion investment to overhaul the state's troubled child protection system. This package includes increasing foster care allowances, employing more caseworkers (2126 caseworkers will receive a pay rise, helping fill 200 vacant positions), and crucially, ensuring vulnerable children are no longer housed in motels with minimal supervision. Since April, for the first time in over two decades, no children under state care are sleeping in motels.

In healthcare, a $105.7 million package targets the health of children and their mothers from pregnancy through their fifth birthday, including funding for 53 new midwife positions. Despite this, concerns persist over the allocation of $12.4 billion for new hospitals and upgrades without adequate provision for additional staff. Over 100,000 people are on elective surgery lists, and public hospital specialists are striking over pay. An additional $15.4 million is allocated for community mental health workers, yet acute mental health units face crises and disputes with psychiatrists remain unresolved. Nurses, represented by Ruby Tilley, voiced disappointment over the lack of a pay rise, highlighting their status as the 'lowest-paid nurses in the country' and expressing concerns about affordability to stay in Sydney.

Education funding includes almost $2.6 billion for school upgrades, focusing on Sydney's western fringe growth areas, with new primary schools planned for Emerald Hills and Grantham Farm by 2028. Plans for a new Chatswood primary school have been put on hold despite high school surges in the area. While teacher vacancies have reduced to about 1300, 1800 teachers quit their positions last year. Infrastructure development indicates a shift in focus from major road and rail projects to essential 'pipes and poles' for housing, though upgrading degraded major roads remains a priority, especially in car-dependent Western Sydney. Public transport funding of $522.2 million is directed towards buses, and a $70 million investment for a ferry wharf at Sydney Fish Market drew criticism from commuters like Shane Donaldson, who felt it overshadowed more critical Western Sydney transport needs.

The economic outlook is weaker than previously anticipated, with real gross state product revised down to 1.75 percent for the coming financial year from 2.5 percent, partly attributed to geopolitical uncertainty. A pick-up in consumer spending, driven by income tax cuts and lower interest rates, is expected to lead a gradual recovery, shifting growth from the public to the private sector. However, the budget's lack of longer-term tax reform, such as moving from stamp duty to a broad-based land tax, raises questions about the future health of the economy and the budget, potentially leading to lackluster growth and struggles for real wage increases. Small business owners, such as cafe owner Tara Richardson, found the budget's energy relief schemes to be merely 'Band-Aid solutions,' providing no long-term optimism amidst ongoing cost-of-living pressures and a slow decline in customers.