NSW burden drags nation deeper into strife

 

The council’s chief executive, Katie Lahey, said NSW was too big a part of the economy to let it drift. “I think right now NSW needs more fundamental support than just a bucket of money. These are different times now. I think different solutions are needed and perhaps something a bit more radical, a bit out of left field, needs to be brought to bear in NSW.”

An official report card on the economy on Wednesday is expect to confirm Australia is in recession. But a Herald analysis has found NSW has been slipping as a share of the national economy ever since it hosted the Olympic games in September 2000.

NSW now contributes less than 32 per cent of the country’s economic production, down from nearly 34.5 per cent just after the Games. An exodus of people interstate has also led NSW’s population share to shrink by 1 percentage point to 32.5 per cent.

Even more remarkable has been the slump in NSW’s share of new business investment and new home building activity. Of every dollar businesses spend investing in new equipment and buildings, NSW accounts for just 23 cents, down from 35 cents in late 2000.

And despite being home to one-third of Australia’s population, only 15 per cent of all new home-building takes place in NSW. The state approved just 1558 new homes in March, behind Victoria (4023) and Queensland (2052).

NSW’s jobless rate remains consistently one of the highest in the country and the traditional wage premium NSW workers enjoyed over other states has all but evaporated. In late 2005 NSW employees earned $3500 more a year than the national average. Now it is just $500.

Ms Lahey said NSW’s sub-standard performance was a common topic of conversation among the top 100 companies. “They talk about the fact that under normal circumstances NSW is the power house of the economy; it is about a third of the economy and it is the face of Australia internationally and there is a lot of concern about the capacity of the Government here to be able to deliver and support a growth platform.”

Many in the business community see the NSW Government’s failure to secure funding for major Sydney transport projects in the recent federal budget as a turning point for NSW-federal relations.

Of $8.5 billion in transport spending announced in the federal budget on May 12, Sydney received just $91 million for a study on the West Metro, compared to $3.2 billion for a Melbourne rail project.

The chief executive of the NSW Business Chamber, Patricia Forsythe, said: “A decade ago NSW was No.1 for infrastructure. Victoria has now claimed that mantle.”

But two members of the Rudd Government’s Infrastructure Australia advisory board have suggested to the Herald that NSW needs to lift its game in developing its infrastructure proposals.

A board member and a professor of sustainability at Curtin University, Peter Newman, said NSW needed a more co-ordinated approach to planning. “I would say the key thing is that people start talking to each other from across the silos. That process … requires leadership.”

Fellow board member and the chairman of Industry Funds Management, Gary Weaven, questioned whether Sydney would always be Australia’s premier city, pointing out that other eastern seaboard cities, foremost of them Melbourne, could also fit the bill. “NSW is the biggest state and it is the most populous state and it has the biggest city. Maybe that won’t be forever.”

NSW’s persistent under-performance is a headache for the Rudd Government, keen to distance itself in voters’ minds from its crisis-prone state counterpart before next year’s federal election.

However, several federal cabinet members are understood to be highly concerned about NSW’s performance.

The Prime Minister, Kevin Rudd, has floated the idea of creating a new body, much like the Sydney Organising Committee for the Olympic Games, to help plan Sydney’s infrastructure and the Treasurer, Wayne Swan, last month described Sydney as his “second home”.

The appointment of the NSW Labor powerbroker Mark Arbib to manage reports from individual states on their progress spending billions of dollars of stimulus money on schools and public housing has been interpreted by some as a way for the Government to keep a closer eye on NSW.

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