A $1 billion plan making it easier for developers to get finance and build new homes has been announced in the New South Wales budget.

In an Australian first, the state will guarantee the pre-sale of up to 5,000 apartments, which it claims will allow developers to get finance to build 15,000 new homes over five years.

The scheme is designed to combat the feasibility problems inhibiting development, as the state falls behind its targets for building homes.

Schools and homes were two major focuses in the state budget. (ABC News: Liam Patrick)

Treasurer Daniel Mookhey denied the initiative was merely a “drop in the ocean”.

“This is a canny use of our state’s balancing sheet,” he said.

“Industry can spend less time and resources having to convince their banks that there are buyers of these apartments and more time building them.“

‘A lot needs to go right’

The winners and losers in this year’s NSW budget

From education, disaster responses and housing, the NSW government has unveiled its spending and saving plans for the coming financial year.

The government was not expecting to be back in the black until the 2030s, but treasury is now forecasting $1.1 billion surpluses from 2027-28.

“I am cautious about it,” the treasurer said.

“A lot needs to go right for us.”

No new cost-of-living measures were announced on Tuesday, but $1.2 billion in spending on child protection was unveiled.

The allowance paid to foster carers will increase by 20 per cent, and 44 homes for vulnerable children will be built or upgraded.

“This budget contains the biggest increase in funding for out of care home in New South Wales history,” Mr Mookhey said.

Daniel Mookhey said he was “cautious” about forecasts of the government being back in the black early. (ABC News: Keana Naughton)

The 2024-25 deficit is projected to hit $5.7 billion, which is further in the red than anticipated in the half-yearly review.

The treasurer blamed the downward revision on the ballooning cost of the workers compensation scheme, which the government has so far failed to reform.

The effect of proposed cuts to the scheme, which have been blocked in parliament by the opposition and the crossbench, is not included in budget forecasts.

“This is not a good use of public money,” Mr Mookhey said.

“It is incumbent on the Liberal party to explain why this is a good use of public money.”

Mixed response to scheme

Leo Patterson Ross, the chief executive officer of the Tenants’ Union of New South Wales, said the scale of the guarantee scheme was insufficient.

“We’re talking about a shortfall of hundreds of thousands of properties, and properties that are affordable, genuinely affordable, to the people looking,” he said.

Mr Patterson Ross said it was a shame the government did not repeat its spending in last year’s budget on building social housing.

Katie Stevenson commended the Minns government for the scheme. (ABC News)

However, the Property Council of Australia’s NSW executive director, Katie Stevenson, praised the policy.

“We must try new things. And this is a great example of the Minns government responding directly to the challenges that industry have raised,” she said.

But Ms Stevenson said more work was needed to remove other obstacles to building homes.

“Our research shows up to 40 per cent of the cost of a new development is state and local taxes and charges, which is a significant impost for development. And in some cases, that’s holding back the ability for those projects to get started.”