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September 2017 · Australia

AUSTRALIA - NEW SOUTH WALES: A $73 billion infrastructure program drives growth

Dominic Perrottet, Treasurer of New South Wales, discusses the nation-leading growth his state is experiencing and how foreign investors can get involved in their unprecedented infrastructure program.

Regarding Australia's record-breaking 27-year growth period, what sort of contributions is NSW making to Australia’s broader growth story?

DP: A substantial contribution is the short answer and especially in recent years. Pre-2011, from an economic standpoint, NSW was one of the worst performing states and we are now the engine room of Australia’s growth. We’ve seen substantial improvements in the services sector, which is driving this growth. In the 2015/16 period, NSW saw growth at 3.5%, the first time that NSW led the way, among the Australian States, in economic growth. Going forward the state economy is expected to grow by 2.75% in 2016/17.

An important part of that has been our infrastructure pipeline, with more than A$72 billion to be invested over the next four years. This adds half a percentage point a year to our economic growth for each of the next two years. The unemployment rate is now the lowest in the nation and there have been nearly 390,000 jobs created since 2011. Additionally, the tourism sector is increasing at a double-digit rate. Construction is also significant here in NSW with 70, 000 home approvals last year alone.

This government is always looking to help streamline processes and how it can really ‘get out of the way’ and let the private sector grow. Accordingly, outlook for NSW is very positive.

PR: Is there concern over lop-sided development in NSW? Is there a push to look beyond the metropolitan Sydney area?

DP:Regional centres certainly need to be made attractive for people to live. Regional jobs growth has increased dramatically – for one month the regional jobs created in the state of NSW were more than those created in all regional areas nation-wide combined.

Of course, the services and infrastructure in those areas need to be there for them to be attractive. We’ve set up the fund ‘Restart NSW’ where a significant portion of the proceeds from our asset recycling are invested into regional areas.

In total, A$30 billion has been deposited into the fund since 2011 and 30% of these funds are required to be invested over time in regional NSW. We’re investing significantly in NSW including the greater Sydney area and regional areas.

PR: With Western Australia losing its AAA credit rating, there are important questions being raised nationally on fiscal responsibility. Does NSW need to be worried about its AAA credit rating?

DP: In NSW, we’ve enshrined maintaining our triple-A credit rating into law and we are the only state to do that. This is also supported by robust fiscal targets to eliminate the State’s unfunded superannuation liability by 2030, and control annual expense growth below long term average revenue growth.

As another example of our fiscal discipline, we are also improving the way we manage our expenditure. We are shifting to outcomes based budgeting so agencies deliver value for money and we focus on quality rather than quantity of funding alone.

PR: The public sector is often criticised as slow moving. How is NSW looking to innovate in the public sector?

DP:Innovation in the public sector can be incredibly difficult to achieve. From our government’s perspective, we need to ensure that we are fast followers in that space. We are partnering with the private sector to find solutions for the government. Our core responsibility is to provide outstanding customer service – and if you can do it well in the private sector, there is no reason we cannot do it in the public sector.

We have pioneered some very innovative services. We will be one of the first jurisdictions in the world to have a digital driver’s license. We are moving to digitise the majority of our services. We are very committed to giving the best service for money to ensure the taxpayer sees the best possible value.

This doesn’t necessarily mean further privatisation. However, as a government we question if it is indeed the government or the private sector that is better positioned for the provision of certain services.

PR: In 2016, the US was the largest foreign direct investor in Australia. What opportunities are there for the US to invest in NSW?

DP:The most significant area for investment in NSW is certainly in infrastructure development. Looking to some of the previous investment opportunities, such as Sydney Metro and WestConnex, we can see there is a lot more to offer. We are very open as a state to foreign investment because we know that it is crucial in getting our projects out the door and across the line at the best possible value for the taxpayer. There has never been a better time in the history of the state to invest. We have a services industry that continues to grow and opportunities in NSW are immense. In fact, during a recent visit from Vice-President Pence, he emphasised the United States’ strong interest in the asset recycling approach here in NSW that they want to bring to their own nation. I look forward to travelling to the US next year to discuss that in more detail.