It’s great to be here today among friends to open the IPA conference.
I believe there has never been a better time to be in the infrastructure game in NSW.
And with your help, this government has made this state the infrastructure capital of the southern hemisphere.
Sydney now accounts for over half of cranes in Australian skies – a number that again increased last quarter.
And our recent budget invested another $73 billion to keep this revolution rolling on.
Boral CEO Mike Kane said last week he expects the infrastructure boom to last for ten years – and be even better for business than the housing construction surge so far.
But our motivation is not about building and construction.
Whilst it is exciting to see an enormous amount of activity, we are not embarking on this ambitious programme simply because we love pouring concrete and raising steel.
As a Treasurer and as a government, we never lose sight of the fact that we are on a mission to make our state the best place to live, work, raise a family and run a business.
We are passionate about building infrastructure because it contributes to improving the quality of people’s lives.
A new metro means a quicker trip home to join the family for dinner.
New classrooms help our children reach their full potential.
New social housing gives struggling families the security of a home.
And new motorways clear traffic from local roads and help small business get product faster to market.
While we are all from different background, this is the real business we are in together – building a better NSW for our citizens and the communities they live in.
As Treasurer I always like to remind myself that behind each spreadsheet entry and funding allocation we are writing the future story of our state.
Each time we sign a contract, cut a ribbon or lay track or we are adding new chapters to this story.
The cranes in the sky, the tunnelling machines underground and the jackhammers on our streets are the tools we are using to write its pages.
I consider the people in this room today to be among its most important authors and characters – so I want to acknowledge and thank you for the contribution you and your organisations are making to building the future NSW.
But this story is not yet complete.
And there are challenges that lie ahead.
So today I want to outline for you what the next chapter might look like – and why I believe our infrastructure agenda is vital to our prosperity.
Just outside this venue, the CBD light rail project is in full swing.
It’s just one of many parts of our city and state under construction, as we build the metros, museums, and motorways of tomorrow.
Our government understands the inconvenience this causes our citizens as they try and go about their everyday lives.
But when the construction dust settles, NSW in 2025 and beyond will be a very different place.
Fast forward to the future and imagine for a moment you live in Newcastle.
Light rail runs every seven and a half minutes during peak hour, taking you along a revitalised urban business precinct.
From there, you can drive south along the newly upgraded Pacific Highway.
Approaching Sydney you dip into a sleek modern 9km tunnel – this is NorthConnex – connecting our north to the CBD and the west.
Above you, Pennant Hills Rd has 5,000 less trucks a day.
It is quieter. It is safer. The air is better and local public transport options are more reliable.
Driving non-stop at 80km/h, you get onto the M2 and then link up with our second major city – Parramatta.
After visiting the new high rise school campus, you can catch the light rail to get to the world class Westmead health precinct, the new Western Sydney Stadium, the new Powerhouse Museum or Riverside Theatre.
From here, you can take the M4 and M7 to the new Western Sydney airport at Badgerys Creek – one of two world class airports for our state.
To get to Sydney airport, you can drive from Parramatta along the widened M4 and then underground, bypassing a liberated Parramatta Rd, cruising on the Western edge of the city using the M4-M5 link.
This is Westconnex – an essential addition to our city’s circulatory system, removing congestion and increasing the flow of freight, supporting the economic heartbeat of Sydney.
From Penrith to the western edge of the CBD you will be able to travel without stopping at a single traffic light, cutting up to 40 minutes from the average peak hour journey today.
From the airport, you can drive north to the new world class Northern Beaches Hospital, using new motorways to get there quickly and reliably, bypassing the CBD.
From the north-west, if you need to go to the CBD or out West towards Bankstown – you can skip the road and now go by rail.
Your trip on the new Sydney Metro takes you through major centres like Castle Hill, Macquarie Park, Chatswood, under Sydney Harbour into the CBD and then South-West through Sydenham and out to Bankstown.
You won’t even have to look at a timetable – trains will come every four minutes during peak hour.
On weekends, you can spend time on our revitalised urban harbour foreshore – a true jewel in the Pacific.
You’ll stroll through Barangaroo, experience a rejuvenated Circular Quay with family and friends, take in a concert at the new International Convention Centre or go shopping in a restored Rocks precinct.
You could then fit in a visit to the new Sydney Modern Art Gallery, right on the edge of the Botanical Gardens.
Or stop in for a drink at the new rooftop bar on the NSW State Library and gaze upon world icons such as the Opera House and Harbour Bridge, lit up at night for the Vivid festival, attracting visitors from around the globe.
You’ll then be able to catch the light rail up through George Street and out to the Eastern Suburbs, stopping off at the Randwick Health Precinct or watch a sporting match at a world class stadium in Sydney’s East.
From there, you can head south from Port Botany to major centres like Wollongong and beyond, using upgraded motorways, better connecting Sydney to the south coast.
This is a but a glimpse of NSW beyond 2025 – a modern, global and connected state.
A state with a metropolis of three separate but equally important cities.
An eastern city, Sydney.
A central city, Parramatta.
And a western city, around the western sydney airport.
All connected to each other – and to our regional economic centres.
Each area with world-class transport, schools and hospitals – the foundations people need to thrive.
This is the future we are constructing today.
This vision of NSW beyond 2025 is something we have all long aspired to.
But for many years, it remained words trapped on a piece of paper.
While services and infrastructure were under increasing pressure as our population grew – state budgets were too tight and stretched to cope.
Previous administrations had no way of solving this problem without raising taxes or increasing debt – and many did not act at all.
The last state government – with all the best intentions in the world – released transport plan after transport plan.
But they could never deploy the financial firepower that was needed, so their projects remained stuck on the drawing board.
Something had to change – a new approach was needed.
In 2011, we decided not to simply tax and spend, borrow more money or kick the can down the road for future generations.
Instead, we realised governments have to use our resources and capital more intelligently – to make the most of what we already have.
Asset recycling is the answer to the dilemma that plagues every government.
This means divesting old assets and then reinvesting that money in newer assets that work for the people of NSW.
This approach has secured $20 billion to help rebuild NSW through the electricity network transactions – so instead of owning a pole outside your house, you can have a new school or hospital around the corner.
Its allowed us to divest old and expensive social housing stock – and build three times as many houses across the state, providing hope to the 60,000 people currently on the waiting list.
And it’s allowed us to build costly but vital infrastructure while simultaneously maintaining our commitment to fiscal responsibility –
protecting our AAA credit rating and putting us on track to be the first state to have a net worth of a quarter of a trillion dollars.
Asset recycling is also why the IPA classified our last state budget an ‘‘infrastructure budget’ – because it puts hard dollars behind actual transport, health and education projects – in stark contrast to other states.
Infrastructure is not only the backbone of our future state.
It is also the backbone of our current fiscal strength.
There would be few jurisdictions around the world that could point to a healthy budget surplus, negative net debt, growing net worth and a record infrastructure spend.
Recent economic data has also been positive.
Business investment, public infrastructure and dwelling construction have all been exhibiting strength, lifting construction activity and driving employment and productivity growth.
Unemployment is at 5% – the lowest of any state, and an extra 92,000 full time jobs have been added over the past year.
Housing approvals are at record levels, totalling 70,000 for the past financial year, while capital expenditure in NSW is the highest in the nation for the first time in over a decade.
NSW also has the strongest business conditions and confidence of the mainland states and consumers here are once again among the most confident in the nation.
The lesson for governments is that investing in infrastructure is a strategic economic imperative to boost growth.
Central banks have been trying monetary stimulus for some time – but the NSW experience proves economies can be kickstarted with large scale infrastructure investment.
In fact, we estimate our infrastructure agenda alone will add around ½ percentage point to the state’s GSP over the next two years.
But despite all these benefits, NSW continues to be penalised for our success.
I note a recent survey by the IPA shows the majority of Queenslanders want their government to use asset recycling to fund infrastructure, as opposed to raising taxes or increasing debt.
But while here in NSW we have reformed, our neighbours up north have refused to do so – putting political ideology before the progress of their people.
While we are busy building up our infrastructure, they are busy building up their back office bureaucrats.
And thanks to the current GST distribution system, their failure to reform is being rewarded.
Over the next four years, the taxpayers of NSW are underwriting the poor decisions of the lazy QLD government by handing over more than $6 billion.
This is an unfair system that needs to change.
[So what’s next?]
In terms of infrastructure, the good news is our plans are just beginning.
Being a good government is about managing dual horizons – what is front of us and what is yet to come.
Our last budget signalled a number of important infrastructure priorities we are now turning our minds to.
Over the next four years we are undertaking over $41 billion of major capital works in the transport sector alone.
Development and planning funding has been allocated for the proposed Western Harbour Tunnel, Beaches Link and F6 extension.
Both these projects will need detailed business cases before any investment decisions are made.
Work continues on the Sydney Metro City and SouthWest – a project that will make room for an extra 100,000 train customers an hour.
And in Western Sydney, significant capital is being invested to support the second airport at Badgery’s Creek, generating tens of thousands of jobs.
But our building agenda is much broader than transport.
Over the next four years, record amounts are being invested to build and upgrade over 90 new schools, creating an additional 1,500 classrooms to accommodate growing demand.
We’ve also kicked off the biggest program of hospital building this state has ever seen, with new and upgraded hospitals in areas including Concord, Campbelltown, Nepean, Tweed and the Prince of Wales at Randwick.
Cultural institutions are not being neglected either, with ambitious plans for new museums and sporting facilities, both in regional and metropolitan NSW.
On the asset recycling front, we will continue to proceed with our plans to sell a 51% stake in Sydney Motorway Corporation, to help fund construction of the next phase of WestConnex, the M4-M5 link.
This will mean it is built sooner and the people of NSW will continue to benefit from the growth in the value of the Government’s ongoing shareholding.
We are also in discussions with the federal government to look at the future of Snowy Hydro.
At a time when energy prices and energy security are top of mind for this government it is important we consider the future of this asset very carefully.
It now presents another opportunity to unlock value and fast track important projects needed to secure our future.
While on the topic of energy, I do want to make a couple of observations.
Firstly, I am a firm believer renewable energy sources are the energy of the future.
The energy network of tomorrow will be distributed and decentralised, relying on clean and green technology, very different to the model we have today.
Current projections say that future could be as close as the 2030s – but clearly we are not there yet.
This is evident in the recent blackouts that have occurred – and the action taken by the Federal Government to try and guarantee energy supply, taking on projects like Snowy and Liddell.
The current energy policy settings are having exactly the effect that was intended – to dis-incentivise traditional sources of power generation by making them economically unviable.
But this heavy handed approach is having real impacts on families, communities and industry.
In a first world country, our citizens have the right to affordable, reliable and secure energy.
While the 2030s are not far away, we have to be realistic in the meantime – we cannot simply stand by and accept 20 years of rolling blackouts and crippling energy bills.
It therefore makes sense to continue investing in traditional sources of generation, while at the same time managing the transition to a renewable future.
Right now, our main priority should be on ensuring the reliability of our energy supply.
I also have to indicate my strong agreement with Professor Gary Banks, who said last year when he addressed the IPA:
“The inconvenient truth is that the increasingly high prices for increasingly unreliable electricity are a direct consequence of the increasingly high utilization of renewable energy required by government regulation.”
Whether it’s pink batts, school halls, the NBN or the energy market – ill thought out government interference in private markets for purely ideological purposes almost never ends well – especially for the end consumer.
They say the road to hell is paved with good intentions – I believe it’s also paved with government interventions.
Let me conclude by saying our infrastructure agenda has been instrumental in securing our current and future prosperity.
It is the cornerstone of our solid budgetary position.
It is helping us build the city and state we all want to live in.
And it has catapulted NSW from the last to first.
We believe it is our role as a government to provide high quality services and world class infrastructure for our citizens to thrive.
But we cannot do it alone.
That’s why conferences like today are so important.
Today you’ll be engaging in discussions on themes important to our future such as productivity growth, technology and energy policy.
The quality of the conversations you have here today absolutely have an impact on the quality of the outcomes we achieve for our future citizens.
And so I commend the work of the IPA in bringing together the private and public sector to engage constructively at this conference.
My message to you today is while much has been achieved, there is a lot more to be optimistic about.
I look forward to working with you all in writing the next exciting chapter for the state of NSW.