NSW Premier Gladys Berejiklian address to the Business Council of Australia
Introduction
It is great to be with you this morning.
I thank the BCA for your leadership and advocacy on behalf of Australian business.
And I thank all the companies here for your partnership in a historic period of transformation and delivery for the people of NSW.
The Transformation of NSW
At a time of economic uncertainty globally and within Australia, NSW is stronger than it has ever been – and moving forward with pace, confidence and purpose.
The reality is in NSW we have not only built the strongest economy in Australia, but one of the strongest in the world.
Our economic growth rate of 3.5% is faster than any other state and territory – and faster than 30 of the 35 nations in the OECD.
Our budget is the strongest on record, with a record surplus, no net debt, a Triple A credit rating and net worth of a quarter of a trillion dollars, growing by over 40% in just four years.
Boosted by the proceeds of asset recycling and strong surpluses, NSW TCorp now manages $90bn of financial assets for the Government, making it a top 10 Australian fund manager. Among pension and sovereign wealth funds, TCorp would rank in the top 50 worldwide.
Business investment in NSW is the highest in the nation – growing at 10% year on year whilst unfortunately it falls by 20% a year across the rest of Australia.
And our unemployment rate of 4.6% is the lowest in the nation – the direct result of a jobs boom that has created 410,000 new jobs over the past six years and 220,000 of those in the past two years alone.
Our success underpins the nation’s.
But for me, best in class in Australia is not enough. In taking NSW and our citizens to the next level, we are setting world’s best practice in many ways.
Last to First
It is all a stark contrast with the situation just a few years ago.
The first decade of the 21st century in NSW was a time of stagnation, underinvestment and missed opportunities.
But since 2011, Government, business and the community have worked together to turn NSW around.
We have gone from last to first in the nation.
We have rebuilt our economy.
Reshaped the state budget.
And put in place a clear plan for the future of NSW – a plan to set this state and its people up for decades to come.
What’s the Point?
And why are we doing this? We want NSW to be the best place in the world to live and to work.
We want companies from across Australia and around the world to choose Sydney and NSW as the place to set up their national, Asia-Pacific and global headquarters.
The more NSW goes from strength to strength, the more jobs there will be, and the more choices and opportunities for our children and grandchildren in improving their quality of life.
This is what provides an ongoing sense of inspiration and motivation for me. Knowing that each day I have the opportunity to improve the prosperity of this state and improve the standard of living of every single one of our citizens.
More jobs, better jobs, higher-paying jobs and a better spread of them across all corners of the State are the keys to improving people’s sense of economic security.
Investing in vital infrastructure and services – transport, health, education and community assets – to make people’s lives better and their communities more liveable, no matter what their postcode.
And for the disadvantaged and vulnerable in our community, providing direct assistance so that everyone feels the benefit of this State’s success, no matter what their circumstances.
Drivers of Change
So how has our Government achieved what we have to date?
In NSW, we have restored fiscal discipline and efficient, accountable government.
Cut back office costs by $10.3 billion over since 2011.
And moved government resources from the bureaucracy to front line workers and services.
Our asset recycling transactions have raised $30 billion to rebuild NSW with worldclass infrastructure which will power our economy for decades to come.
Over the next four years, we will invest $73 billion in the transport, hospitals, schools, sporting, cultural and local infrastructure of the future.
You can literally see this wave of infrastructure taking shape.
In the skies above Sydney, there are 350 cranes at work (Sydney is second to Dubai on the global crane index) and below ground 50 road headers and tunnel boring machines are building the road and rail tunnels of the future.
Next year, tunnel boring machines will be digging a second harbour rail crossing as part of the rail metro project.
Light rail is revitalising the CBDs of Sydney, Parramatta and Newcastle.
Unprecedented road construction is connecting suburban and regional communities.
Regional NSW is thriving as we target one third of infrastructure spending in our rural and regional communities. That equates to around $22 billion over the next four years.
A record $7.7 billion commitment to hospitals is creating a 21st century healthcare system that will secure our standards of living.
And a record $4.3 billion commitment to schools is ensuring the next generation of children in NSW receive the best environment and opportunities in which to learn.
The scale of infrastructure investment is unprecedented in this State. But we aren’t simply doing it because we have a strong budget and the money to spend.
This is about future-proofing the State and improving the lives and prospects of our citizens.
To me, we are in a race against time.
Not only have we had to play catch-up after more than a decade of inaction from the previous Government, but we need to be ready for the increase in Sydney’s population over the next 40 years and all the opportunities and challenges this will bring.
We need to be ahead of the game to ensure proper planning which provides the type of lifestyle and local character our citizens crave, rather than being subject to an ad hoc policy approach of crisis management which for too long had dictated how planning and infrastructure took place in NSW.
Delivering for the People of NSW
NSW today is a better place to work and live than it was a decade ago – more dynamic, more prosperous and fairer.
Households in NSW have the highest and fastest-growing after tax income in Australia.
The highest and fastest-growing household wealth in Australia.
And the lowest level of financial distress in Australia.
We have the lowest water bills in the country. And the smallest proportion of income going to energy and fuel bills.
Of the 220,000 jobs created in NSW since 2015, 75% are full-time – compared with less than 40% in the rest of Australia.
More people are working, contributing and building a better life for their family.
And our economic strength means we can help the most vulnerable and tackle the challenges our communities face – whether it is the cost of living or job security.
Delivering for Australia
Not only has the transformation of NSW delivered for the people of NSW – it has powered the national economy.
From just under one third of the national population, NSW today is driving more than half of all domestic economic activity in Australia.
Our infrastructure spend over four years is the equivalent of the Federal Government’s spend over a decade.
And as well as being Australia’s growth, investment and jobs capital, we are also quite clearly Australia’s innovation capital.
NSW accounts for more than 40% of all R&D spending in Australia.
And NSW is also the entrepreneurial capital of Australia, with more than 40% of all business start-ups in the nation, and more than twice the number of the next-best state.
Owning the Future
Earlier this month, the BCA and other major business and community organisations penned a letter to me with an important message.
The letter stated that budget reform and infrastructure investment had changed the course of history for NSW – and urged us to finish the job.
Let me assure you today – we have no intention of taking our foot off the pedal. We will not be easing off on the pace of change.
On the contrary – we want to accelerate our pace and progress in the years to come.
As Premier of NSW, the Government I lead will never take the easy option.
We accept that change on a historic scale requires gutsy decision-making and at times, short-term disruption.
But our responsibility is to the entire community – and to future generations.
We believe that Governments exist to improve the quality of life of their citizens.
To give their citizens the choices and opportunities they need to get ahead and realise their aspirations.
To foster the economic growth and jobs that are the drivers of those choices and opportunities.
And to secure better choices and opportunities for successive generations.
We are determined to ensure that NSW is ready to meet the challenges of the future.
And we will always work and fight for a better, fairer NSW.
Principles for Progress
This morning, I want to talk about the principles that will guide my government into the future.
The responsibility of leading the only Liberal-National government in mainland Australia weighs heavily on me, but more than ever, we need to adhere to our core values.
- Collaboration, not confrontation with business and the community sector.
- Ensure certainty in the operating environment.
- Reduce the tax burden to encourage aspiration.
- Better not bigger government. “Less is more”.
- Reform of Federal-State financial relations.
These are principles that I believe are fundamental for good government in Australia.
Most pointedly, these principles will ensure NSW continues to go from strength to strength.
They are principles that we must abide by to ensure economic growth, jobs and opportunity for our citizens – so we can own the future rather than being at the mercy of it.
The need for strong values in government are more important than ever in this era of disruption.
Around the world, economic and technological change is putting new pressures on governments and communities alike.
The digital era means far more people are making their voice heard.
Rightly, they are demanding that governments and institutions do more and do better to respond to their concerns.
The test for government is how we well we respond.
Now to each of the principles I have outlined.
Collaboration not Confrontation
In such a fast-changing environment, the temptation is for governments to look for short term fixes rather than long term approaches. Nowhere is this more obvious than a disconnect that can exist between business and government.
Frustratingly, we observe that governments under pressure look for someone to blame – and business is an all too easy target for punitive taxes or regulation.
Don’t get me wrong, both government and business often fall short of community expectations. And, like government, business is, as it should be, subject to a social license as well as the regular operating environment.
But much of this pattern of the blame game between Government and business is unnecessary.
We should of course call each other out when it is justified, but for governments to use business as a scapegoat because they are in a political pickle, or they haven’t managed to find innovative solutions to budget challenges, is inexcusable.
In these volatile times, we should be pursing collaboration – not confrontation.
Rather than attacking one another, we should be forming new partnerships to secure growth, opportunity and fairness.
Whether in Government, business or the not-for-profit sector, only by working together will we deliver progress for our states and our nation.
While other governments in the Federation go down the path of confrontation, we believe that NSW offers a different and better approach.
In NSW, Governments and business are working together to deliver the historic infrastructure pipeline that is reshaping our state.
Businesses from Australia and around the globe are coming together to provide knowledge, expertise and finance.
Collaboration is creating jobs, developing skills and delivering world-class services for the community.
And as each of these projects progresses, it sets up a virtuous circle.
More businesses invest, more services are delivered and more and better jobs are created.
In NSW, collaboration is driving economic growth – and it is also increasingly driving social progress.
Through the Government’s Social and Affordable Housing Fund, managed by the NSW Treasury Corporation, we have gone to market for thousands of affordable homes.
We are challenging the private and non-profit sector to step up in an area where traditional government policy has often failed.
And through Social Impact Investment partnerships with investors and community organisations, we are tackling some of our most difficult social issues.
Our Government has issued six Social Benefit Bonds to fund projects that are helping thousands of people across the state.
One venture is re-uniting children in out of home care with their families.
Another is helping parolees re-integrate with the community and prevent reoffending.
And another will provide supported housing to help vulnerable young people receive access to accommodation, education, training and employment.
In NSW, we have moved beyond the tired dogma which says either government or business knows best.
Our focus is on doing what is right for the community – on ensuring quality services regardless of who delivers them.
In some cases it makes more sense for the private sector to run and deliver a service – as with Sydney ferries, the electricity poles and wires and with the WestConnex transactions now underway.
In other cases, it is Government which has adopted a customer service focus to improve our offering – as with the Opal transport smart-card, or the Service NSW offices that are now a one-stop-shop for 850 government services and transactions.
We will always choose partnership and collaboration over counter-productive confrontation. But of course we expect to call each other out when we fail to meet our obligations to the community.
Certainty in the Operating Environment
The next principle of good government is the need to provide certainty in the operating environment.
The lesson of NSW over the past decades is that certainty creates economic growth and jobs – and uncertainty kills them.
The Sydney North West Rail Link is a classic example.
It was proposed in the 1990s, delayed endlessly, cancelled, then re-announced only to be cancelled again.
When our Government came to office, we committed to the North West Rail line which forms the first stage of our Sydney Rail Metro network.
And now in 2019, the first services on the North West Metro will begin.
The result is not only a world-class piece of transport infrastructure that will change the way we move around Sydney – but an example that we understand the certainty that businesses need to invest and grow.
Infrastructure is not the only area where uncertainty can stifle growth.
At the federal level, over the past decade or so, we have had extreme swings in tax policy, industrial relations and carbon policy.
And at both federal and state level, new taxes targeted specifically at business have distorted the market and prevented greater jobs growth.
In NSW we know that investment cannot thrive if governments set the goalposts only to move them, frequently without notice.
Reducing the Tax Burden to Encourage Aspiration
Sustained commitment to lower the burden of tax across the board is another important principle.
Reducing the tax burden encourages aspiration. Not just reducing the burden, but making it less complicated.
It eases the cost of living for individuals – giving them more freedom, choice and opportunity.
And it enables businesses to grow. It creates jobs.
We cut $1.6 billion of taxes in this year’s state budget, following $1.8 billion of cuts last year. That’s $3.4 billion dollars of cuts in two budgets while still running Budget surpluses.
We have abolished five taxes and charges – homebuyers tax, stamp duty on business mortgages, stamp duty on unlisted marketable securities, transfer duty on non-real business assets, and duty on lenders mortgage insurance.
And we have slashed stamp duty for first home buyers to help young people get their feet on the home ownership ladder.
These changes are making a difference. But we are determined to make our tax system even simpler, fairer, more efficient and more sustainable.
I can say with confidence today that our government will always reduce the overall tax burden on citizens and businesses in NSW.
The risk for Australia is that I fear there are too many Governments who are prepared to take the easy road of higher taxes on soft targets.
Look at South Australia – where they were prepared to introduce a bank tax, to make up for increasing public sector costs and a sluggish economy.
I fear we will be dragged backwards by the rise of heavy-handed, high taxing Labor state governments – governments that NSW as a fiscally responsible state will then have to subsidise.
Simply taxing business is lazy. It is much more difficult to grow the economy and reduce the overall tax burden.
That is a risk this country cannot afford if we are going to extend Australia’s long run of economic growth and prosperity.
Smaller Government is better government.
Less is indeed more.
In NSW we have cut the number of middle managers in the public service, kept public sector wages under control, and adopted new technologies to find back office savings.
We believe in creating jobs by enabling businesses to succeed, not by employing more bureaucrats.
We believe in developing partnerships with business – and for that matter community and NGOs – to dramatically improve the way that government services are delivered.
Above all, we believe in ensuring that taxes and regulations do not stifle the competition, productivity and innovation we need to create the industries and jobs of the future.
For instance, in Transport, we have reduced the back office by thousands of middle managers – but have 27,000 more weekly train, bus and ferry services.
Service NSW now offers 850 transactions – with a small back office but better customer service – and was recently recognised by the AFR as the 24th most innovative company in Australia.
We centralised government procurement to cut the cost of our $35 billion annual procurement spend and improve government services for our customers.
And we created Property NSW which centralises property services for all government agencies into one place.
Taking NSW to the next level – Improvement in Federal-State financial relations
As it stands, our antiquated federal system is thwarting NSW’s ability to modernise and grow at the pace I would like.
Our system of GST distribution acts as a disincentive to good government.
Over the next four years, NSW will effectively subsidise the weaker states by $19 billion.
That is a perverse reward for strong economic management, reform and investment in services and infrastructure.
As I have said, it is a disconnect that will only get worse if there is no penalty for bloated, ineffective state governments that are failing to deliver for their citizens.
I’ll leave you to determine which ones these are.
This dysfunctional system extends beyond the GST to the staggering number of national agreements and partnerships between the states and the Commonwealth. In NSW’s case there are around 45 of them.
Agreements negotiated with 6 States, 2 Territories and the Commonwealth Government.
That’s hundreds of bureaucrats working on too many separate agreements.
This is not sustainable.
The agreements are too prescriptive, too complex and in the end there is little ability to enforce the terms of the deals that we have agreed.
I would like to see these 45 agreements consolidated to ten by the end of next year.
If we want to put our national interest first we should have more bespoke arrangements to allow each state to progress to its full potential.
And make sure good, reforming state governments feel incentivised to work harder and faster.
I don’t want opportunities for the 8 million citizens of NSW to be held back by the economic inefficiency of a Queensland, or the parochial interests of the 400,000 citizens of the ACT – a jurisdiction not much bigger than the Blacktown Local Government Area.
We recognise that as the largest State, we will always have a responsibility to support other States and Territories – but at the right level and in the right way.
A better approach would be a system of earned autonomy. For the States that take the lead on reform – asset recycling, deregulation, service innovation – the Federal Government could step back, and allow greater flexibility in how we deliver our responsibilities through greater discretion on use of funds.
We should be rewarded, not punished by our state-federal structures.
We need a more flexible approach to deal with an increasingly diverse nation.
Once we have consolidated our National Partnerships to ten, I will look to establish bilateral arrangements with the Commonwealth – and if it can work, then other states can choose to embrace it.
I am pleased to say the idea has support from a number of my state and territory colleagues.
It makes sure that good, reforming state governments feel incentivised to work harder and faster.
This would deliver the right balance between autonomy and accountability that today is missing from our Commonwealth-State arrangements.
NSW will continue to push for these important reforms.
It would create a stronger, fairer Commonwealth system better suited to the demands of the 21st century global economy.
Conclusion
Let me finish where I began.
NSW today is stronger than ever before – but we have much more to do in the months and years ahead.
Thank you again to the BCA for asking me to “finish the job”. My commitment to you is that here in NSW, we are just getting started.
We are accelerating infrastructure delivery – major and local projects alike.
Roads, rail lines, schools, hospitals, sporting and cultural institutions.
We will continue to exceed our targets for new jobs – and then set new ones.
We will continue to innovate and collaborate.
Working together with all of you, the principles of progress I have outlined today are intrinsic to our plan to drive economic growth, jobs and opportunity to make NSW a leading jurisdiction in a global context, not just across the nation.
And of course, at the end of the day what this will deliver for our citizens is a continually improving standard of living, and the confidence that future generations will inherit stronger, fairer communities that can be bolder in their aspirations than the generations before them.
Thank you