'Budget with heart' continues NSW splurge

But the Labor opposition says the government has not done enough on debt, housing affordability, the cost of living or local manufacturing.

Tuesday's 2021/22 budget confirmed a deficit of $7.9 billion for the current year, jumping to $8.6 billion for the following 12 months.

Treasurer Dominic Perrottet - who four months ago pointed to a $13.3 billion deficit - said NSW's successful suppression of COVID-19 and government stimulus had prompted increases to GST, stamp duty and payroll tax receipts.

He said the government would continue to splash cash on projects and tax relief, aiming the state at a surplus of $466 million in 2024/25 thanks to an economy unshackled by COVID-related restrictions.

"This budget gets NSW dressed for success," the treasurer on Tuesday told reporters of the plan, which outlines expenditure of $102.5 billion.

"This is a budget with a heart."

Despite the treasurer's confidence, the budget acknowledges risks to the government's outlook which could "postpone, if not derail, the recovery".

These include the emergence of new COVID-19 variants which are more difficult to suppress, perpetuating restrictions.

Forecasting the resumption of international travel in mid-2022, the budget cautions that a one-year delay could hamper economic growth by 0.9 per cent and send unemployment one percentage point higher.

It also notes risks remain about the availability of COVID-19 vaccines to NSW residents and the speed of the federal government's beleaguered jab rollout.

The budget finds Australia's continued geopolitical tension with China could likewise hurt NSW's bottom line, should the countries' trade stoush escalate.

Regulations limiting the supply of credit for rapidly-appreciating NSW real estate could also stunt the state's recovery, the budget warns.

The financial outlook forecasts an increase to NSW's gross state product (GSP) of 3.25 per cent in 2021/22, having grown 0.75 per cent in 2020/21 and contracted 0.7 per cent in the pandemic-affected 2019/20.

Mr Perrottet said net debt for 2020/21 sits at 6.3 per cent of GSP - some $40.6 billion - and will rise to 13.7 per cent of GSP, or $103.9 billion, by mid-2025.

The largest budget measure is a 2.5 per cent annual pay rise for NSW public sector workers over the next four years, costing $2.7 billion.

Measures revealed on Tuesday include the provision of five days' leave for NSW public sector workers who suffer a miscarriage or stillbirth, as well as additional leave for parents whose babies are born prematurely.

Every child aged between three and six will also be allotted $100 for swimming lessons, while NSW Ambulance will receive a $214 million boost.

The budget papers reconfirm a $490 million program to drive uptake of electric vehicles, including stamp duty exemptions and rebates.

Community and mobile preschools will become permanently free, there's extended pandemic assistance, and $50 million in vouchers will be made available for Friday lunches in the pandemic-affected Sydney CBD.

An extra $2 billion has been promised by the NSW government to build or upgrade an additional 44 schools across the state.

The government's health budget totals $30.2 billion. Some $4 billion has been spent on COVID-19 pandemic measures since March 2020.

And while the government points to $6 billion in cost of living measures, opposition leader Chris Minns on Tuesday said it wasn't enough.

Labor said the budget's theme was "tolls, fees, fines and taxes".

"The government makes gestures in terms of the cost of living, but it's nothing in comparison to the quantum they're taking out of the pockets of the people of NSW. It pales in comparison," Mr Minns told reporters.

The state's unions also hit out at the government's reinstatement of the 2.5 per cent pay rise cap for public workers, reiterating it should be scrapped.

Unions NSW secretary Mark Morey said industrial action remained an option.

Australian Associated Press