• The budget at a glance
• Ross Gittins analysis: budget won’t win any friends
• Sean Nicholls comment: a classic “tough” budget
• Double or nothing for first home buyers
• Treasurer tightens screws to maintian AAA rating
• Treasurer gambles on Pacifric Highway funding
• Josephine Tovey tweets @jo_tovey

Port Kembla will be privatised, speeding fines will be increased and the equivalent of 10,000 public sector jobs will be cut by the NSW government to help bring the state budget back to surplus from a forecast deficit of more than $800 million next financial year.

The Treasurer, Mike Baird, has also today announced major changes to stamp duty and other property concessions designed to boost the purchase of newly constructed homes in NSW alongside measures to fast-track the approval of major housing developments.

However, as part of the package the $7000 First Home Owners Grant for existing properties will be cut from October 1.

As well, more than $3 billion has been earmarked towards construction of the North West Rail Link and $30 million will be set aside for planning a new Sydney motorway to be recommended by Infrastructure NSW as part of its 20-year strategy due for release in September.

In a further revenue-raising measure, the government has flagged the sale of the rights to the future revenue stream from NSW lotteries.

Delivering his second budget today, Mr Baird said it was set against the backdrop of a highly volatile global economy, but that it “builds for the future of NSW”.

“We have taken many difficult decisions,” he said. “Some will not be popular, but they are the right decisions for challenging economic times”.

The budget papers show NSW will record a deficit of $337 million this financial year, rising to an $824 millon deficit in 2012-13. This is largely due to a collapse in expected GST payments from the Commonwealth of more than $5 billion since last September’s budget.

The budget is forecast to return to a $289 million surplus in 2013-14, raising to $562 million in 2014-15 and $1.17 billion in 2015-16.

The government has already announced the planned long-term lease of Port Botany but today announced that Port Kembla will be included in the transaction. This was “to fund priority infrastructure projects”.

While Port Botany is expected to raise more than $2 billion, it is understood proceeds of around $500 million are anticipated from Port Kembla.

The budget contains significant changes to boost the purchase of newly-built homes in NSW.

The existing First Home Owners Grant will increase from $7000 to $15,000 from October before dropping back to $10,000 from January 1, 2014, for buyers of newly-constructed homes worth up to $650,000.

The stamp duty exemption for purchasers of newly-built homes who are not first home buyers – previously worth around $22,000 for an average Sydney home – will be axed and replaced with a $5000 New Home Grant for properties up to $650,000, phased out from $550,000.

Up to $500 million will be used to “target critical infrastructure” and accelerate 76,000 new housing lots and the budget includes a $50 million incentive for councils to clear their backlog of development applications.

Mr Baird said the government’s Building the State package would also “fast-track large-scale housing proposals which demonstrate private sector readiness and local government endorsement”.

As previously announced, speeding fines will rise by 12.5 per cent. This is forecast to raise an extra $180 million over four years.

A labour expense cap will be imposed on all government departments to cut the equivalent of 10,000 public sector jobs.

This is on top of the 5000 public service redundancies announced in last year’s budget.

However, directors general of government departments will be given the flexibility to find the cuts by reducing contractor levels or other labour-related savings.

The measure is anticipated to save $2.2 billion over four years.

Mr Baird told Parliament the budget featured “the right decisions for difficult times”.