BLUEPRINT CHARTS TRILLION DOLLAR FUTURE FOR NSW

Putting reform on the agenda to lift productivity and lower taxes (Australian Financial Review, 30 October 2019)
October 30, 2019
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Putting NSW back on the map
December 4, 2019

NSW Treasurer Dominic Perrottet launching the NSW 2040 Economic Blueprint alongside NSW Chief Economist Stephen Walters

There has never been a better time to live in NSW – to work in NSW – and to invest in NSW.

While there’s no denying that we are here in a time of economic uncertainty.

The signs are everywhere. Last week the ABS released the state accounts for 2018-19.

The headline numbers for growth were lower than we would like and that’s the story around the country, and around the globe.

In August the US Treasury Bond yield curve inverted – stoking fears of an American recession.

But then last week it “un-inverted” – and that talk has died down.

The US-China trade dispute has been causing concerns but now there are signs of progress.

Locally, there was an adjustment in the housing market – but that appears to be turning too.

Unemployment is low – but wages growth and inflation are flat.

Retail trade is stubbornly slow.

These are uncertain times – and that saps confidence.

Three interest rate cuts haven’t filled consumers or businesses with optimism.

And that’s a problem in itself – the constant talk of the need for additional stimulus is the last thing we need to hear.

Well I’m here to tell you a very different story one that should fill us with immense confidence.

Because as I stand here today – there has never been a better time to live in NSW – to work in NSW – and to invest in NSW.

We are on the cusp of the greatest economic opportunity since the dollar was floated back in 1983 – one of my fondest memories as a two year old.

And if we play our cards right, we can unleash an era of growth in NSW the likes of which we have never seen.

An unprecedented transformation is underway.

A giant is awakening.

The OECD estimates that by 2030 – around two-thirds of the global middle class will reside in Asia.

This is a major shift in the global order.

And it’s happening right on our doorstep.

NSW is a state of millions in a region of billions.

And as Asia’s middle class booms, so will demand for the world class goods and services NSW does best.

Finance, business and tech services, tourism and education.

Premium produce, medical technology, and resources beyond just coal.

As this transformation takes place, there will be more demand in the pipeline than we could ever hope to satisfy.

So what NSW can achieve over coming decades will be limited only by our imaginations.

And that’s really what I’m here to talk about today.

Imagination.

Paul Keating said it is “the key ingredient for public life”.

You have to imagine a better future – before you can create it.

Well today we are launching The NSW Economic Blueprint.

It’s an exercise in imagination – defining our state’s economic destiny – and a roadmap to get us there.

The Blueprint is the work of our Chief Economist, Stephen Walters – and I want to thank Stephen and his team at NSW Treasury for the work they have done.

This is a comprehensive vision for our state and its people.

It’s not government policy – it’s a directional statement, from the perspective of our Chief Economist.

And the future we build may not be exactly what the Blueprint envisions.

But it is an essential tool – to give us the direction we need to reach our economic potential.

Today I want to tell you what our vision is, why there is a case for optimism and why making it all happen does in fact, start with us.

 

Why NSW is in the sweet spot

More than any other city, state or nation, NSW is in the sweet spot – primed to boom over the next two decades.

Here are three reasons why.

First, location, location, location.

We are perfectly placed – in a unique and important geographic position – as the world transforms around us.

We already have deep ties with our nearest regional neighbours.

Our top four goods export destinations are all in Asia.

China is our top two-way trading partner.

And we have strong ties with emerging markets in India and South East Asia.

The number of NSW tourists, students and immigrants from Asian nations already numbers in the millions every year.

These long-standing relationships, and our proximity to these emerging markets put us at a real advantage over other advanced economies.

Some Australian states share these advantages.

But none have the global status we have in Sydney and NSW – and that is what sets us apart.

Sydney is ranked among the top 10 best connected and influential cities in the world.

For tourists, investors, students, immigrants, and international job-seekers, NSW is the first port of call.

So our proximity to Asia – and our global status – mean we are the natural launchpad into the Asian region.

The second reason is our people.

NSW is the smart state. The entrepreneurial state. The startup state.

Our workforce is already steeped in the skills that will power our future.

Sydney has the most multilingual population in the nation.

We have more STEM graduates than any other state.

If NSW was a country, we would rank fourth in the world for the percentage of workers with a tertiary qualification – almost 50 per cent.

Our global status means we attract the best international talent too.

So we already have the people power and the smart-skilled workforce to capitalise on the opportunities ahead.

The third reason NSW is in the box seat – is that over the last decade, our Government has laid the foundations for growth.

Since 2011, we have unleashed an infrastructure revolution.

If you look out the window, there are cranes in every direction – 319 according to last month’s RBL survey. That’s 106 more than in Melbourne – but hey who’s counting.

So far we have built more than $100 billion in infrastructure in 8 years. Over the next four, we will build $93 billion more.

When you walk up George St across the bridge, you will see the new light rail that very soon will be pulsing through the heart of Sydney.

There are schools, hospitals, motorways, metros, museums and stadiums all under construction.

And out in Western Sydney, a new airport – surrounded by the most advanced and best connected industrial, research and education precinct ever built in Australia.

This is infrastructure with a purpose – to drive the next wave of growth.

And we are building like no other state anywhere in the southern hemisphere – perhaps the world.

The infrastructure boom underway has only been possible because of our asset recycling program. A bold strategy that is now paying dividends for our people.

We took old assets like poles and wires, and transformed them into the new backbone for a better future. Asset recycling has been instrumental in the transformation underway.

And I have no doubt that it will be instrumental in our future success too.

Of course, we’re not just laying bricks and mortar foundations – we’re laying the policy foundations too.

Our government has embarked on a suite of reforms to unlock the potential of the NSW economy.

We have streamlined government services, cut $5 billion in taxes – including almost $1 billion in payroll taxes so businesses can grow.

We’ve slashed red tape, especially for small business. We’ve established a $10 billion sovereign wealth fund to deliver for future generations.

Our Productivity Commissioner will soon launch a White Paper to kick-start productivity growth.

And David Thodey is leading a review of Federal Financial relations, to find ways for states to secure more financial autonomy.

Our reforms are designed to get NSW in shape to make the most of the opportunities ahead.

To some extent, the success of our reform agenda will depend on the cooperation of other states and the Commonwealth.

Reform is hard at the best of times, but the complexities of federation can make it even harder.

So I welcome my federal counterpart Josh Frydenberg’s comments committing to our common cause of reform.

The bottom line is, with our proximity to Asia – our strong ties with key trading partners – our world-class people – our infrastructure boom – and our reform agenda –

We are the perfect match for the Asian century.

We are best placed to deliver what the rising Asian middle class will need and that means NSW is poised for success like nowhere else.

 

A vision for NSW

If these features put NSW in poll position, the question is – what is the future we are hoping to realise?

Well I can tell you this – it’s not for NSW just to plod along, as a backwater down under.

Over the weekend, the Sydney Morning Herald lamented Sydney’s lost decade – that period after the Olympics when our nation’s premier city just stopped trying.

That decade of apathy ended when our government came to office.

Our vision is for a NSW that confidently stands on its own two feet, as a truly global state.

We know NSW can punch well above its weight. We know the potential of our people, and we plan to unleash it.

there has never been a better time to live in NSW – to work in NSW – and to invest in NSW.

It answers the question – what will NSW be famous for in 2040?

It offers eight criteria for industries where NSW should focus its energies, including:

  • Those with a heavy R&D focus
  • With a high proportion of highly skilled workers
  • With high forecast growth
  • And with a distinct export orientation

Applying these criteria, it identifies a handful of key industries that are likely to play a prominent part in our economic future.

First – are the sectors where we already lead the pack, such as mining, education, tourism, and of course – financial services.

Then there are industries that serve our domestic needs – cyber security, medical technology and waste management.

And finally, emerging industries where NSW has a presence, but where the potential for growth is huge.

These include advanced manufacturing, fintech, agricultural technology and food production; aerospace and defence; and hydrogen production.

What is striking about these industries is that the overwhelming majority are export oriented.

That’s because we see NSW’s future as very much on the world stage. This isn’t new.

NSW has launched world-beaters like Resmed, Macquarie, Westfield, TNT and Atlassian.

Their success is just the tip of the iceberg. Over the coming decades, our goal is to enable countless more to follow in their footsteps.

To find the smart solutions to tomorrow’s problems, and export them to mass markets around the world.

I also think we should focus more on Sydney’s status as a global city. When Sydney goes well, NSW goes well and so does the whole country.

Former Victorian Premier Jeff Kennett wrote last week about Sydney’s natural advantages over other states.

But for too long we have coasted by on the beauty of our harbour. Right now we face a choice of whether Sydney is a suburban city or a global city.

If we are to succeed, over the coming decades, Sydney must mature into a truly global metropolis – with the nation’s best business, sports, arts and culture – a London of the South Pacific.

 

What Govt can do to maximise the opportunity

To make that happen, government has an important role to play.

We must ensure the people of our state have secure energy and water supplies. We must keep building the infrastructure communities rely on.

As the world of work changes, we must think outside the box on education and lifelong learning –  so our future workforce – our children – have the skills and agility to excel in the high-value jobs of the future.

And we must press on with the work of reform to boost productivity and remove the barriers to increased prosperity for our people.

All of those tasks present enormous challenges – and as the Blueprint points out, they will require novel solutions.

But there are other ways government can help nurture emerging industries.

We believe the most important of them all is “matchmaking”.

At the last election our Government launched a plan for a series of innovation precincts around the state. Precincts for Science and Tech, Health, Education, Nuclear Medicine.

Startup hubs in Sydney and the West. Special activation precincts in regional areas like Parkes and Williamtown.

The term “innovation precinct” isn’t particularly exciting but we believe these precincts represent nothing less than the future prosperity of our entire state and its people.

Their purpose is simple – but unprecedented in Australia – to bring together the researchers and entrepreneurs, the workers and logistics – all in the same place, all at the same time.

These are the conditions for great ideas to quickly become great products that our people can export to the world.

 

Conclusion: we are building so you can take us forward

Today I have barely skimmed the surface in terms of what the NSW 2040 Blueprint envisions for our state.

Over the coming months our government will engage closely with its recommendations.

It was produced in consultation with a wide range of stakeholders – and I look forward receiving feedback from sectors like yours.

For now, let me conclude where I began: the current economic climate.

The Blueprint is designed to point the way forward – out of economic uncertainty and into a more prosperous future. But let me be clear.

Government policy alone cannot create prosperity.

Businesses need regulatory certainty – and above all, fewer unnecessary rules and red tape – and that is what we are determined to deliver in NSW because ultimately our way out of economic uncertainty can only be led by the private sector, focused on creating prosperity for all.

This is something that, as a Liberal, I believe is fundamental to our future success.

Every great idea, every triumph, every innovation, every success has come from you – the entrepreneurs – the innovators – the startups – the working men and women of our state.

So my message to you today is a call to action.

Get confident, and let’s launch NSW into the Asian century.

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