Would you invest in New South Wales Inc?
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.
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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