NSW: Looking to our economic future – Business Council of Australia speech

EIGHT YEARS OF ECONOMIC ACHIEVEMENT TRANSFORMS NSW
November 22, 2018

NSW Treasurer Dominic Perrottet

NSW Exceptionalism

Last week McKinsey published a report identifying what they called the 50 “superstar” cities around the world.

These cities punch well above their weight.

They hold just 8 percent of global population, but account for:

21 percent of the world’s GDP

37 percent of urban high-income households

And nearly half of firms with more than $1 billion in annual revenue.

These superstar cities are the driving force behind the global economy.

Their people are more productive.

Incomes are higher.

Education levels, better.

They are centres of innovation, hubs for international finance and at the forefront of an unstoppable wave of digital transformation.

The usual suspects are on the list: New York, London, Tokyo & Beijing.

But only one Australian city made the cut.

Sydney.

Sydney is our most exceptional city and NSW our most exceptional state.

And we have unique strengths that no one other state can match.

In Western Australia, prosperity comes almost entirely from digging things out of the ground and selling them.

Queensland is much the same.

And apart from the rust belt manufacturing state of Victoria, the other states have had a solid – but pretty unremarkable – 200 years.

But NSW is different.

We’re the birthplace of our modern nation and the heartbeat of the entire country.

When NSW goes well, Australia goes well.

We’re also the home of Australia’s biggest and best world-beating businesses.

Retailers like Westfield.

Innovators like Resmed and Cochlear.

Financial giants like Macquarie Bank.

Tech pioneers like Atlassian.

If you want your business to be on the global stage, Sydney is the place to be.

As an aside: If NSW is the Head Office of Australia, South Australia is the call centre, Victoria the maintenance department and Queensland the lunch room.

None of these homegrown success stories have relied on drill rigs or boring machines to make their mark.

Their secret ingredient is what sets NSW apart – our people.

Our people are skilled and entrepreneurial.

They have consistently shown the imagination to achieve something extraordinary.

And we have the most multicultural and multilingual workforce in the nation.

NSW is a mecca for Australia’s talent – and the best of New Zealand’s as well.

We’re the only place that can harness that talent and put it on the world stage.

In the new economy, human capital is our most important differentiating asset – and NSW is in pole position.

 

Our potential

Today I’m here to set out what we see as the future opportunities for our state.

But before I do that, I want to briefly take you back to the past.

When I was growing up, there was a little slogan that used to be stamped into NSW number plates.

You probably remember it.

It said “NSW – the Premier state”.

That’s how we thought of ourselves and that’s the NSW I remember.

You could feel the buzz – especially in the years leading up to the 2000 Olympics

Everyone in NSW knew we could create something really special.

And full credit to previous governments on both sides – we did.

At the closing ceremony, Juan Antonio Samaranch said the Sydney games were “the best Olympic Games ever.”

It was one of the defining moments of our city and our state.

That should have been the launchpad for a decade of achievement.

Instead we got the opposite.

It’s as if the previous Government’s vision didn’t extend beyond the year 2000.

They dropped the ball, and NSW slumped into a decade notable only for its mediocrity.

The state’s finances began to decline.

Our economy slowed.

Jobs were hard to come by.

Projects weren’t built.

Key public services were crumbling.

Corruption was rife.

We had lost our confidence and lost our way.

In 2011, our government was elected on a platform to make NSW number one again.

Our 2021 vision was threefold –  restore economic growth, return quality services and rebuild our infrastructure.

By any objective measure, we have made real progress on all three fronts.

The NSW economy has been growing at an above trend rate for three of the last four years.

The lowest unemployment in the country for 41 months straight.

Our budget is firmly in the black with a triple A credit rating secure.

We’re using our financial strength to help with the cost of living and cut taxes for business.

We’ve made it easier to deal with government with Service NSW.

We’ve boosted employment growth in regional NSW.

We’ve laid the foundations of our future state with our three cities vision.

And our asset recycling approach has allowed us to undertake the biggest construction revolution in our state’s history.

Hundreds of new schools and dozens of new hospitals across the state complemented by the transport projects of the future.

We are building for tomorrow and delivering for today.

 

Our vision

The investments we have made so far have been all about transforming NSW from bad to good.

Now it’s time to go from good to great.

I believe those number plates were right.

We weren’t made to be second best.

NSW was born to be the premier state.

Our motivation is the same thing that inspires every good government: a better future for our children.

As a father of five, what’s often on my mind is the jobs my kids will do, and the opportunities they’ll have to get ahead in a rapidly changing world.

Better jobs, better security and better opportunity.

We want NSW to be first in everything.

The first choice for Australian families.

The first choice for new migrants.

For tourists and international students.

For global events and culture.

The first choice for the industries and companies of the future.

For business, investment and jobs.

A beacon of prosperity in our region.

The first and best place to live, work, and raise a family.

Our vision is for NSW to be Australia’s gateway to the world – and the world’s gateway to the rest of Australia.

To make this vision a reality, we need to own the future.

And there are four wells of prosperity that will be the key to our state’s future success.

 

The rise of Asia’s middle class

The first is the rapid transformation that’s underway in Asia.

For years, Asia’s emerging economies have been driven by manufacturing and exports.

Now a mighty middle class is roaring to life – especially in China and India.

According to the Brookings Institution – by 2030, two thirds of the world’s middle class will be living to our immediate north.

This is an unprecedented reshaping of the global economic order.

The World Economic Forum calls it “one of the biggest seismic shifts in history”.

Demand for high quality services in health, education, tourism and finance is set to explode.

So will demand for premium quality food and beverages.

And NSW is uniquely placed to capitalise.

Already we are the first choice for migrants, tourists and students.

And we are perfectly positioned to be the prime source of premium goods and services to meet the booming Asian demand.

While we focus primarily – and rightly so – on the Chinese market, I also believe we should not underestimate the opportunities with India.

A report released by DFAT earlier this year found India offers more growth opportunities over the next 20 years than any other market.

That country is urbanising the world’s largest rural population, upskilling a workforce of 400 million people and industrialising rapidly – the opportunities are real and significant.

NSW is uniquely positioned to capitalise, because we are a state of millions in a region of billions.

The rise of the Asian Middle class represents a once in a generation opportunity for a golden century for our state.

 

Cultivating industry

To make the most of the Asian boom we will need to embrace the second major opportunity – nurturing the next generation of home-grown world-beaters.

We are already well underway in growing our tourism and education exports for the Asian market.

Four others sectors stand out from the pack where demand will grow.

Agriculture

Advanced manufacturing

Financial services.

And Innovation & technology.

In agriculture, our goal is to be the food bowl of Asia.

We already have a strong food export industry with healthy roots and a world class reputation.

In the coming years we need to think big.

As the Japanese became the gold standard for manufacturing quality in the 80s, so too can Australia for food technology in the next century.

There will be scope to massively increase our exports of grains, artisan foods, wine and dairy products.

Riverina citrus.

Chardonnay from Orange.

And Wapengo oysters.

One of Australia’s most highly acclaimed beef producers is just an hour and ten minutes south west of where we are right now, in Camden Valley.

It also happens to be just half an hour away from the new Western Sydney Airport, which will open up a whole new avenue for exporters.

Then there’s advanced manufacturing.

Traditional manufacturing here just hasn’t been able to compete with lower cost production overseas.

Rust belt states have been crushed by international competition as tariff walls came down.

But technology is turning the tide, and in NSW our advanced manufacturing sector has thrived.

Harnessing the power of robotics, AI, and big data – our manufacturers are at the cutting edge of the fourth industrial revolution.

NSW is already home to the largest advanced manufacturing industry in Australia, and rapid growth in recent years has made it our 4th largest export industry.

Locally produced medical and pharmaceutical products – as well as transport equipment and machinery – are reaching global markets.

We’re exporting medical isotopes to Asia and the US from Lucas Heights.

And advanced steel armour for US and Israeli armoured vehicles from Unanderra, south of Sydney.

So we already have a huge head start – but we need to go further.

That’s why we are laying the foundations for NSW manufacturers to flourish once again, starting with Western Sydney – the state’s traditional manufacturing heartland.

And our new Aerotropolis will provide the launchpad to capitalise on the opportunities that lie ahead.

Expanding our finance sector will also play a critical role in our future success.

While Sydney is already ranked a top-10 global financial centre, we must consolidate our position as a financial hub.

And we must set out boldly for the next frontier in finance: fintech.

Almost two thirds of Australia’s fintech companies are headquartered here.

We’re ranked the eighth strongest fintech hub in the world by Deloitte.

And at our Sydney Startup Hub in Wynyard you’ll find Stone & Chalk – the largest fintech hub in Asia.

Just a few weeks ago I had the opportunity to launch Mastercard’s new innovation hub in North Sydney – the only one of its kind in the southern hemisphere.

And last month our new International Convention Centre hosted the world’s largest fintech conference – SIBOS.

So the signs are already pointing to success.

But there is more to do.

NSW must remain the dominant fintech force in all of Australasia – and our Government is creating a culture of innovation to make that happen.

That culture extends beyond fintech and into the broader ICT industry.

Deloitte has estimated that by 2020, the ICT sector will contribute $139 billion to the Australian economy each year – a 75 per cent increase from 2014.

Here in NSW, around 260,000 people were employed in ICT in 2017 – and that number is predicted to grow to 300,000 over the next four years.

The rapid rise of technology is accelerating productivity in just about every industry – and our goal is to harness those benefits for the workforce here in Australia.

That’s why we are creating Australia’s own tech precinct, right here in Sydney – to create an environment for home-grown tech to flourish.

Stretching from Central to Eveleigh, this mega-precinct will rival the best in the world.

It will the home of 10,000 new jobs.

And it will generate the big ideas that will shape the coming decades.

Apart from these big four industries, other opportunities also beckon.

For example, we’re applying the same strategic thinking to health and education – developing world-class research and innovation precincts in places like Randwick, Liverpool and Westmead.

Regardless of the industry, the secret sauce in NSW is the same – our people.

 

Creating the regulatory environment for success

Government must also play a role in getting NSW to great – especially when it comes to the regulatory framework.

That is the third opportunity we must pursue – not just for startups but for all businesses in NSW.

Our Easy to Do Business program is an example of how much scope there is for regulatory improvement.

It has slashed the time and complexity of starting up a café, restaurant or small bar – and now we’re rolling it out to the housing construction sector as well.

We’ve also cut payroll taxes and reduced insurance duties.

But there are bigger opportunities on offer.

That’s why I appointed our first ever NSW Productivity Commissioner this year.

He’s already produced a plan to simplify payroll tax administration that will save business $10 million in compliance cost a year.

While the work of reform can be slow – I believe that over time we will win the battle and make NSW the best place in the nation to start and run a business.

 

Skilling our workforce to meet demand and deal with change

The final opportunity is to build the workforce to support our future economy.

Our most successful industries rely on highly skilled workers – and if we want our children to enjoy the fruits of economic success, they need the right skills.

One of the biggest challenges for forward thinking businesses today is finding the right people to get the job done.

At present, we rely too heavily on drafting talent from overseas.

That may be a necessary solution for the short term.

But it is not acceptable in the long run.

We need to build a skills base here that not only sustains local industries, but boosts their momentum.

This means investing not just in hard infrastructure, but in our people as well.

This year our Government announced 100,000 free apprenticeships to secure a strong pipeline of skilled workers across the State.

We have invested nearly $560 million in TAFE facilities across NSW.

And in the last two years, enrolments in government funded vocational education and training have increased by 29 per cent.

Just a few weeks ago we announced a new 25,000 student University of Sydney campus in Westmead.

And at the Western Sydney Aerotropolis, four of NSW’s leading universities are joining forces to create a university focused on science, technology, engineering and mathematics.

For our major growth industries, we are taking concrete steps.

ICT skills and digital literacy are now part of our school curriculum.

We have launched an advanced manufacturing industry development strategy, with skills development at its core.

And we are building state of the art agriculture and agribusiness educational facilities like the new Agricultural High School in Sydney’s north west – which will allow students to work closely with the Western Sydney University’s local agricultural campus.

These educational resources will be vital for our children.

But they will also be critical as more and more jobs are touched by automation and AI – and the need for retraining and re-skilling becomes an ordinary part of career progression.

 

Economic Strategy 2050

Today I have laid out four opportunities we can embrace to take NSW to the next level.

The rise of Asia’s middle class

Nurturing the next generation of Australian world-beaters

Creating a regulatory environment for success

And developing a skilled workforce to make it happen.

None of them would be within reach without the platform our government has laid – strong finances, record infrastructure and a resurgent economy.

But there are long term challenges we must address as well.

The ageing of our population.

Better connecting our three cities and the rest of NSW.

Managing the disruption of AI and the sharing economy.

The efficiency of our tax system and Federation.

Drought and water security for our regions.

Exploiting our opportunities and managing these challenges requires a concrete plan of action.

So today I can announce that I have asked the NSW Chief Economist, Stephen Walters, to work with industry stakeholders to develop a detailed economic vision for NSW 2050.

Much of groundwork has already been started, and I have asked the Chief Economist to deliver the strategy next year.

 

IN CONCLUSION

Our Government has great ambitions for NSW.

And when you look around our state today, here’s what you see.

More people are working.

More businesses are investing.

And day by day, hour by hour, more schools and hospitals, roads and rail lines are taking shape.

On every important measure, NSW is a better place today than it was 8 years ago.

The cranes that litter our skyline make two things very clear.

We are building a better NSW.

But we’re not finished yet.

Like the people of our state our government will never shirk the challenge.

They say past performance is the best indicator of future success.

And our track record tells you everything you need to know.

Our future is bright and our prospects have never been better.

We will push beyond this phase of renewal.

To a NSW exporting world class goods and services – to Asia’s aspiring billions.

A NSW that is the food bowl of our region.

The premier finance hub.

A pioneer of cutting edge manufacturing and ICT.

I believe we will succeed just as we have before.

Because that is who we are – an exceptional state of exceptional people.

The premier state.

And that’s the way it should be.

Thank you

Leave a Reply

Your email address will not be published. Required fields are marked *

Want the latest news sent to you?

Get the latest political news and insights from Dominic Perrottet delivered straight to your inbox.
Name
Email address
Secure and Spam free...