The NSW Treasurer Andrew Constance announced the NSW budget midyear review forecast a $555 million turnaround in this financial year, while scaling back expected surpluses in future years.

This year’s originally forecast $283 million deficit has been revised to a $272 million surplus.

He also forecast a $402 million forecast in 2015-16 and $1 billion surpluses the following two years.

But these surpluses across the forward estimates are almost $2 billion less than forecast back in June, when the surplus was expected to be above $2 billion in 2016-17 alone.

Mr Constance said: “While the Australian economy is facing its challenges, NSW is riding a wave of prosperity built on the tough choices we made on coming to government.

“We now control the budget. It doesn’t control us.”

He said that higher than forecast property transfer duties were the significant driver of the turnaround, partially offset by softening payroll tax and mining royalties.

“Housing approvals remain close to their highest levels in over a decade, we have the strongest retail sales growth among the states, and our unemployment rate remains the second lowest in the nation.”

Boosted by asset sales, NSW’s net debt is now forecast to fall to $9.3 billion by June next year, instead of $12.4 billion forecast in last June’s budget.

Mr Constance announced that $2 billion from its asset proceeds fund, Restart NSW, would be reserved to support the delivery of the state infrastructure strategy.

“This will serve as a down payment as we turbocharge infrastructure with the proceeds from a long- term lease of the electricity network businesses.”

Mr Constance acknowledged that NSW had benefited from federal government grants for roads for the second Sydney airport, WestConnex and NorthConnex but said that federal cutbacks in health and education were not sustainable. “The federation is broken,” he said calling for reform of federal and state responsibilities.