Without action to address the structural imbalance between revenue and expense growth, the State’s long-term fiscal position will deteriorate. By 2060-61, we project the fiscal gap to reach 2.6 per cent of Gross State Product (GSP). 

This gap means that governments will be increasingly reliant on borrowing to fund the delivery of services and infrastructure, with net debt projected to reach 100 per cent of GSP by 2060-61. The NSW Generations Fund, however, will provide a substantial pool of assets that future generations can use to help manage any build up in debt.

There are a range of policy opportunities open to government to lift economic growth and address the fiscal challenge. Measures include boosting workforce participation and productivity, continued improvements in our health and education systems, modernising the State’s revenue base, and reforms to GST and Commonwealth-State funding arrangements.

Fiscal Gap

A mixed format chart, showing two line data sets representing Revenue (excluding NSW Generations Fund) and Expenditure (including net capex) above an area data set representing Fiscal gap (excluding NSW Generations Fund), across an x axis from 2010-11 to 2060-61 in 10 year increments. Expenditure line is trending up slightly, Revenue line is trending down slightly, while fiscal gap grows sharply in 2020-21, drops into negative around 2025-26 and then grows steadily until 2060-61.

Fiscal pressures are projected to build over the longer term as government spending grows faster than revenues, with the fiscal gap reaching 2.6 per cent of GSP by 2060-61.

Source: NSW Treasury.

Gross and net debt to 2060-61 (including the NSW Generations Fund)

Without corrective measures, gross debt is projected to reach $1.9 trillion in today’s dollars (or 133 per cent of GSP) by 2060-61. Our net debt position would reach 100 per cent of GSP by 2060-61 after taking into account the substantial assets held in the NSW Generations Fund.

Source: NSW Treasury.

Impacts of policy and structural changes on the fiscal gap (mutually exclusive)

There are a range of opportunities available to government to address the fiscal gap. Boosting productivity growth and workforce participation would have the most significant impacts.

Source: NSW Treasury.

By 2061


Illustration of two hands exchanging a dollar coin

Fiscal gap if no action is taken


of GSP (excl. NGF)1

1. NSW Generations Fund


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Net debt of


per person
(in today's dollars)


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NSW Generations Fund to reach

$430 billion

(in today's dollars)

Insights and opportunities


  • The fiscal gap is projected to reach 2.6 per cent of GSP in 2060-61. This is equivalent to around two-thirds of the current health budget or almost all of the current education budget.  
  • As a result of this gap, our net debt position is projected to reach 100 per cent of GSP, or around $125,000 per person in New South Wales (in today's dollars), by 2060-61.
  • There are a range of opportunities available to government to address the fiscal gap. To indicate the potential size of some of these opportunities:
  1. A 0.1 percentage point increase in annual productivity growth to 1.3 per cent could reduce the fiscal gap to around 2.3 per cent of GSP. An increase in productivity growth to 1.4 per cent could decrease the fiscal gap even further, to 1.9 per cent of GSP.
  2. If we were to close the workforce participation rate gap between women and men over the next 20 years, by 2060-61 the total participation rate would be 66.3 per cent (around 5 percentage points higher than baseline projections) and the fiscal gap lower by around 0.7 percentage points at 1.9 per cent of GSP.


Last updated: 07/06/2021