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Would you invest in New South Wales Inc?

Mike Baird

by Mike Baird

09 Jun 01:09pm

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Filed under: Economy, Kristina Keneally, Nsw, Nsw Budget, Politics

29 comments

In any decision to invest, wise investors look at three things – the quality of the management of the company you are investing in, their track record, and the underlying numbers.

NSW - all bang and no buck. Picture: Adam Ward

I also believe it’s the right way to judge a government on its economic performance.  What are the values, culture and philosophy of the team?  What is their record of implementation? And how reliable are the assumptions that underpin the forecasts?

The importance of these questions is that a Budget is only as strong as the team that will implement it.  I’m sure investment analysts would be very suspicious of any company that have had four CEOs in five years and over 200 changes in its senior management team in the same period.  Yet this is the management turnover of the NSW Government.

I suspect those analysts would also be suspicious of investing in companies that consistently failed in its partnerships with other organisations.  The lesson of the Cross City Tunnel and the Metro is that the current NSW Government is not a reliable partner.

And then we have to look at the performance of an organisation against its own projections.  In 2009, Treasurer Roozendaal committed the NSW Government to keeping the growth in expense costs to 7.6%, yet in this past year the growth was 9.6%.

This repeats a trend seen over the past few years and this overrun alone will cost taxpayers close to $1 billion.  This performance makes the expense forecasts over the coming four years even more fanciful where it is projected to be 3.4%.  If they fail to meet their expense targets any forecast surpluses are nothing more than a mirage.

My view is that economic management is more than having a positive number at the end of the balance sheet.  Given the dramatic turnaround in the property market and significant stimulus funds from the Federal Government, it was easy to keep the Budget in surplus. 

What’s missing from this Budget is exactly what’s missing from this Government – and it’s the word leadership.

Where is the plan to make NSW number one again?  Where is the substantive work to encourage businesses to invest in NSW, to expand private sector investment in infrastructure, to improve performance across every area of government?

The fact is we don’t see such a plan from this Government.  This is despite the fact that in 2000, 35% of all private sector spending in Australia occurred in NSW.  By last year it had fallen to 24%.  These figures hold true even if one excludes the resources boom states of Western Australia and Queensland. 

Excluding these two states, New South Wales’ share of private investment spending among remaining states fell from almost 50% to 42% over the same period.

Where is the leadership to move forward much needed road and transport projects in Sydney and move beyond the glossy brochures produced, changed and reproduced every 18 months?

And where is the leadership to help our regional centres, with their lower cost structures, become vibrant economic alternatives to simply investing in Sydney’s CBD?

After almost 16 years, the unstable team that governs NSW has run out of puff and given up.  They even lack the passion and motivation for the seat of Penrith that they have held for 34 out of the past 37 years.  They have given up getting things done, they are simply counting down the clock.

By every measure used by wise investors this government has failed – the management team is unstable and self serving, its record in delivery continues to deteriorate and the balance sheet is nowhere near as strong as it should be.  NSW needs a new management team - it’s as simple as that.

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29 comments

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    • Julia says:

      01:22pm | 09/06/10

      Absolutely not.

      I doubt very much that NSW is really back in the black. I think they have ways of making the budget look better than it is.

      Reply

    • Adam Diver says:

      01:41pm | 09/06/10

      Copy/Paste federal labor.

      But you are right governments need to be more business like as in results based outcomes. I dont care if you spend 200 billion dollars on improving aboriginal health, I want to know how many years you have added to thier life. They use large numbers showing the work they are doing in various areas but after the money is spent there is very little to show for it.

      Reply

    • John A Neve says:

      01:51pm | 09/06/10

      Mike,
      I agree with most of your comments, so I’ll reverse the question, would you invest in Federal Coalition Inc?
      While not as large a company as the government, they have had four CEO’s in three years.
      Their costly failures such as “wars” in Iraq and Afghanistan, totall bill unknown.
      The dithering on “climate change”, is it, isn’t or is it?
      Added to their twelve years of infrastructure inertia, would indicate a lack of forsight.
      On top of all of this, we have their budget vote buying and asset sales to balance the books.

      Mike, I ask you again, would you invest in Federal Coalition Inc?

      Reply

    • Ryan says:

      03:16pm | 09/06/10

      John A Neve: Yep I sure would, they have a history of turning around the country and getting rid of Labors debt.

    • Phil says:

      03:20pm | 09/06/10

      John

      Would you invest in Federal Labor.

      Company gone from making profits of 20 billin a year and 60 billion in bank to say 100 billion in debt with little to show cept for a few overpriced school buildings. Projecting a loss of 40 billion this year alone.

      40 odd billion for quicker porn downloads without a business plan.

      Try to bring havoc to your one of your largest customers (Mining Tax)

      Think you meant Kevin dithering on Climate Change, was it not the greatest moral challenge of our time now it can be put off till others do something. The libs wanted it to wait till after copenhagen, as they could see the world was not going to agree to anything other than a scappy piece of paper so Kevy would not look like a total dropkick.

      Anyone can spend others money. Labor are the world champions at it.

      Budget vote buying. John Howard always said they would use what money they needed and give back by reducing taxes and giving benefits what they didnt.

      I can guarantee you more people got benefits of lower taxes, extra super contrabutions, benefits for child care etc than will get a benefit of the Super Tax if and when it comes in.

      For every argument that the libs didnt invest, there is one that they paid off debt, and reformed the country. For every argument that labor spend like drunken sailors, you will find one where they are compassionate to someone. None of them are perfect, its my opinion and that is all it is that the libs run the counrty like a business and labor like a charity.

    • John A Neve says:

      03:24pm | 09/06/10

      Ryan,
      That is why I would employ you as a financial adviser.
      You see Labor never had a debt, we have had a national debt, which is a very different thing.

    • Ryan says:

      03:29pm | 09/06/10

      @John A Neve: actually John, come to think of it, I already do.. see a wise man once told me “When Labor is in power, put your super in cash and put your investments in gold, when the Liberals are in power, invest in the country !”. So far that policy has kept me from loosing a lot of money this time around. I will be reinvesting in the country when the Liberals come back in, as per the recommendation, so technically I am investing in the Federal Coalition Inc.

    • David C says:

      03:50pm | 09/06/10

      Im with Ryan

    • Wayne Fehlhaber says:

      05:54pm | 09/06/10

      John Neve :  Posing such a hypothetical was not good idea old chum .
      People are really angry at the destruction wreaked on this nation in such a short time , by a seemingly demented , drunken lunatic . The gloves are off John , and the voters are not afraid of skinned knuckles.
      You mention the costly war in Afghanistan , costly in ways more than money , but please note , we are still there and Rudd has been the boss for 2.5 years , so he has had more than ample time to bring the troops home.  Don’t bother with the the tripe about honouring Howards committment , it won’t wash , Rudd is the P.M. and he can easily order them home.
      You mention 12 years of infrastructure inertia , at least 6 years of that was spent paying back the previous Labor govt’s debt ,  and we don’t want to hear about it being the national debt - not Labor debt.
      The assset sales on Howard’s watch did not go to balancing books ,
      the proceeds helped pay off the Keating debt.
      Yes John , you will find that a lot of people will be happy to invest in Federal Coalition Inc.

    • John A Neve says:

      06:04am | 10/06/10

      Wayne,
      Whether you and your friends are upset by my post concerns me not.
      What I have pointed out is both factual and fair, please feel free to point out any untruth in my post.

      The fact is Wayne you and those like you only see what they want to see.
      I am getting to the stage when I believe it would almost be fun if the coalition is re-elected. Then we will all know what hard times really are.

    • Wayne Fehlhaber says:

      08:52am | 10/06/10

      John Neve :  Heh heh heh , actually it looks and sounds like you are being overwhelmed by the wave of rejection and distrust whipped up by Rudd’s lies , broken promises , backflips , bungles , botched programs
      and bloody ridiculous buckets of money style of vote buying.
      Your continuous support for a failed Labor govt. seems to place the focus on to your real allegiances.

    • John A Neve says:

      09:25am | 10/06/10

      Wayne,
      I note you failed to indicate any flaw in my post!! So you must agree what I said was correct, which of course it was.

      Chuckling all the time is no match for contructive debate, so tell us Wayne where was I wrong?

    • Ryan says:

      10:14am | 10/06/10

      @John A Neve: “I am getting to the stage when I believe it would almost be fun if the coalition is re-elected. Then we will all know what hard times really are. ” I look forward to it also, I can’t wait to get back to those “hard times” we had under Howard!

    • John A Neve says:

      01:15pm | 10/06/10

      Ryan,
      Try telling that to aged pensioners, explain the lack of infrastructure, the sale of the people’s assets. The $billions spent in Iraq and Afghanistan, that could have been spent onhealth or education.

      Twelve years Ryan of vote buying and stagnation and you want more of the same!!

    • Wayne Fehlhaber says:

      02:47pm | 10/06/10

      John Neve :  John i answered your first comment on this thread .
      See Wayne Fehlhaber says , 5.54 pm 09/06/10.
      Very constructive debate too old chum.

    • Ryan says:

      05:09pm | 10/06/10

      @John A Neve : Lack of infrastructure = State LABOR governments, Aged pensioners, they are worse off now than they ever were, electricity prices doubled in the last 3 years, most expensive groceries in the world since Rudd came in to power.. although I am still watching for that “grocery watch” BS to come true, general cost of living under this soft fool Rudd who has done absolutely NOTHING to curb gouging of those most at risk, our pensioners. Whatever money Rudd has given has easily been swallowed up by these rampant increases, and whatever money Howard had planned to give the pensioners in the future is now going to uninvited illegal immigrants being put up in $200 a night accommodation whilst our single mothers of the country are sleeping in their cars with their kids.
      I will take Howards economic prosperity over this bunch of incompetent fools ANY DAY OF THE WEEK and I have already told you that I am willing to put MY MONEY where my mouth is.

      So the only big question there John, are you wiling to invest your money into this economy under Rudd or have you already ?

    • John A Neve says:

      07:26pm | 10/06/10

      Ryan,
      You really are clutching at straws with the “illegal immigrants” their numbers are just a drop in the bucket and if you don’t know that!!!  Your knowledge of the immigrant situations is even less than you so called “debt” knowledge, although I doubt that is possible?

      The coalitions efforts regarding national infrastructure were also lamentable as a smart person like you would know.

      As to rising costs, that is why I said in my last post I’d almost like to see the coalition re-elected. Because they will not be able to contain costs as with your knowledge of finances you would know. Rising utility costs have little if any thing to do with federal parliament

    • NCG says:

      02:00pm | 09/06/10

      Sounds to me like the Enron bookkeepers have been re-employed for the NSW Labor State Government. Rodney Adler doesn’t happen to hold a position on this board by chance? Would make a lot more sense. Invest in NSW Inc? Only if I was looking for a capital write off, though its parent company Fed Labor does pay a nice $900 dividend regardless of the amount of holdings, perhaps I’ll get my broker to pick up a few shares on speculative value…..

      Reply

    • Luke says:

      02:11pm | 09/06/10

      I would…
      Its stock would be cheap!! Wait a few years itll go up really fast!

      Reply

    • Bob H says:

      03:54pm | 09/06/10

      “What are the values, culture and philosophy of the team? ”
      One example of the large amounts of MBA w@nk in this article.  We really have given the world over to the bean counters haven’t we, no mention of anything other than accounting metrics, as that is the only important measure in life isn’t it?.  NSW is being destroyed by similar thinking and self interested politicians - New South Wales is it’s people and environment more than its spreadsheet, and despite the bean counters and politicians inability to do anything creative and productive, NSWers will persevere and work hard to keep the state going no thanks to the myriad of besuited t0$$ers.  Apologies for venting.

      Reply

    • sam says:

      04:34pm | 09/06/10

      Bob, teams and governments do have values and cultures - and we’ve seen it in NSW - a government with a culture that is self serving and self centered, that is more focused on spin rather than the public.

      Baird is making the point that the Budget is more than a balance sheet and you have to look at who the people are putting it forward. 

      He made his case with his 4 CEOs and 200 changes - State labor is a rabble - and Id rather an MBA type anyday than the shoddy bunch we have in Government now/

      Bob youre right that government is more than a spreadsheet - its exactly the same point Baird is making.

    • Grumbles says:

      04:47pm | 09/06/10

      “When you are spending my money, you must have something tangible to show for it”. If you don’t believe that then it isn’t your money they’re spending.

    • Labor Ruined NSW says:

      05:16pm | 09/06/10

      I note that only a very small portion of funds ( $600 000) has been spent on property acquisitions for the North West rail link. I think the budget forecast millions to be spent.

      Oh well, another drop kick budget from a drop kick government.

      P.S. could someone check if that hard hat is glued to the premiers head.

      Reply

    • Stef says:

      07:03pm | 09/06/10

      Wayne

      Ask yourself. Do you think you would have a job still if the Liberals had been in power? Cut, cut, cut. Thanks God Labor had a social conscience. Who cares about the miners anyway. When the GFC struck they retrenched thousands. Check the facts.

      Reply

    • Jacob M says:

      07:36am | 10/06/10

      If N.S.W is doing so well , why are we paying more for Greenslips and electricity? They are doing well, if they really are!! Because they keep overcharging us for their stuff ups.What would their stocks be worth to the people of N.S.W? Probably zero!! You should all get in your cars and come to The Hunter Valley, the area is fertile , horse studs and vineyards and farming flourishes!! Sounds good? Well glance around at the huge scars made in the earth by mining. Newcastle itself is riddled with underground tunnels from mining. I definatly agree with this mining tax. Much is made of Western Australia , where the mines are in barren country, but come to our Valley and talk to the people there.

      Reply

    • Andrew says:

      08:38am | 10/06/10

      Regardless of which political party is in Government the plain fact is that the tax payers of NSW are not feeling that our taxes are being put to good use.  We have our public servants wanting bigger salaries and more benefits when they simply are not performing.  I am not sure that the next party in Government will in the short term fix all of the accumulated issues but stopping the current flow of misuse needs to be stopped.

      Reply

    • shabangabang says:

      09:02am | 10/06/10

      I would invest in NSW Co. Given the lack of competency at the top of the management tree, it comes as a surprise to many that NSW was the fastest growing State economy last year, and will be again this year. This shows resilience, and an underlying strength that cannot be eroded. All I would ask for is that the state become more decentralised, with areas outside of the Newcastle, Sydney Wollongong metro area being targeted to cater for future growth.

      Reply

    • Darren says:

      09:51am | 10/06/10

      would I invest in the NSW Coalition? We have a bunch of Christian fundamentalists - many of whom take the bible as the literal word of god - ie the world is less than 7,000 years old - I am waiting to see them next year move against abortions, close the heroin injecting room and stop ethics classes -

      Reply

    • LB says:

      07:54am | 11/06/10

      What an amazing analysis. Mike, you are of course right. Given the facts, I would never invest in NSW Inc. which is why notwithstanding living in Sydney the bulk of our property investments are now in Victoria.

      Reply
 
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