Despite previously forecasting a $289 million surplus earlier this year, the NSW budget is expected to be in deficit in 2013 due to a slowdown in the mining sector.
According to Fairfax Media NSW Treasury originally expected to raise hundreds of millions of dollars in royalties off the back of the federal mining tax.
Due to weakening commodity prices the Government has since revised its estimates, and says the mining tax will not raise any revenue for the state in the next two years.
With returns from the mining sector waning, NSW Government officials claim the state’s combined deficit could exceed $1.2 billion for the first two years of forward estimates.
In last year’s budget the State Government announced a supplementary royalty on mining to compensate for the cost of the carbon tax.
The tax only applied to miners that had to pay the federal mining tax, and in June the policy was expected to raise $479 million over the next two years.
Now that most companies are not expected to pay the federal tax, takings from the NSW Government’s policy have been written down to zero.