Budget reply 2015


Check against delivery

Thursday 25 June 2015 

Madam Speaker.

This year’s budget undermines the economic foundations of New South Wales - it’s a budget built on sand not stone.

Instead of putting the State’s finances on a more sustainable footing, the Budget makes us increasingly vulnerable to the volatility of Sydney’s property market. Through its obsession with selling off profitable state owned corporations the Government is now more reliant than ever on revenues from property taxes – particularly stamp duty. 

When the Sydney housing boom ends, as it will, and the surge of stamp duty dissipates, what will our state’s budgetary position look like then? The Government is so focused on the quick fix that it no longer sees the need for prudent economic management.

The Government claims that $20 billion will be raised from the privatisation of the state’s electricity transmission and distribution networks.

We will see.

It is not sound management of the state’s finances to spend every last cent of the proceeds on capital works, with no allocation whatsoever for the very substantial operational expenses that will be incurred when these projects come to fruition. Operational expenses – like paying the staff who will work in the new facilities - can’t be imagined away.

One does not have to be an opponent of privatisation to understand prudence dictates that some allowance should be made for the ongoing operational expenses that will need to be met. Indeed this is the most economically rational of points to make.

There is no plan to deal with the $25 billion of cuts that have been inflicted by the Abbott Government on our schools and hospitals. Forty per cent of the New South Wales budget is made up from Commonwealth payments – and as Tony Abbott’s cuts have proved—this imbalance has devastating consequences.

The solution is a new pact with the Commonwealth on tax revenue. A fair share of the tax we pay should be returned to fund the schools, hospitals and infrastructure we use. This must be an ironclad agreement so that no Commonwealth Government can refuse to meet its obligations to health and education.

On 13 May, the day after the Commonwealth Budget reaffirmed $25 billion of cuts to the funding of our state’s hospitals and schools, the Premier welcomed that Budget on the floor of this House.

He said of the Budget: “It will provide a great benefit to New South Wales.”

I say – No it won’t Premier.

A sustainable and predictable share of income tax and GST must be delivered to New South Wales.

The Government likes to talk about making New South Wales number 1 again. But here are some sobering truths.

When the Government was elected, there were 187,000 people unemployed in New South Wales. This has surged to 225,000 people today. One in eight young people looking for work can’t find a job. Across regional areas it is one in six and in many areas it is higher still. In Richmond and the Tweed youth unemployment stands at 17.5 per cent. In the Far West and Orana it is 17 per cent. In Newcastle and Lake Macquarie it is 18.1 per cent.

We should not accept this.

The regions of New South Wales are crucial to our economy. Many of the regions are undergoing difficult transitions in increasingly global and interconnected economies. Regions, like the Illawarra and the Hunter, have been making a fundamental transition for the last quarter of a century. Just last week, the Illawarra was hit hard by speculation that the steel industry would cease.

I make it clear: under a Labor Government, regions like the Illawarra will never face the difficulties of economic transition alone. There will always be a leadership role guaranteed by a State Labor Government. There will always be a helping hand extended by a Labor Government. We have done it before and we will do it again.

We will focus on delivery of crucial infrastructure, expanding business opportunity, and investing in people. Rural and regional areas are important to Labor, they always have been and it is time this Government gave them the attention they deserve.

Madam Speaker.

Unlike the ideologues opposite, I do not believe that the private sector always does things better than the public sector – that private is always good and public is always bad. And unlike the ideologues to our Left, I do not believe that public is always good and private is always bad. For me, what matters is what works.

I meant what I said on the day that I became Leader of the Labor Party in New South Wales. I will champion an enterprising private sector and an essential public sector in this state. The responsibility of government is to ensure that services are delivered. The private and not-for-profit sectors should play a significant role in the delivery of our public services.

Let me be clear.

When it comes to the delivery of our public services the priority must always be delivering those services in the interests of their users. The interests of the users of our public services must come first. The public interest must prevail over special interests. That is why Labor supports the determination of the Australian Energy Regulator to deliver lower prices to this state’s electricity consumers. 

Electricity is a cost to every business. A cut in power prices is a boost for business which makes our entire economy more competitive. Labor wants to save small businesses up to $528 on their yearly power bills. Labor wants to see each and every household save up to $313 on their annual power bills.    

This Government doesn’t.

It will be in court next week taking legal action to keep everyone’s electricity prices high. This Government wants high electricity prices for a quick sale – and it is prepared to hurt every household to do so. Effectively, they are seeking to impose a tax on electricity, a tax on all of the people of New South Wales. Just to fatten the pig for market day. Just to achieve a higher price for our electricity assets.

There is no excuse for this.

The Government should withdraw its legal challenge and let the price cuts stand.

And if we look around we see the same pattern of the Baird Government supporting higher prices at the public’s expense - with no gain in productivity.

Consider our ports.

I see no compelling need for the state to own ports in 2015, but I do see a compelling need to ensure the public interest is protected by properly regulating what a private monopoly can get up to. In a trading economy like ours ports are crucial. The Government privatised the ports in what it claimed was a ‘textbook transaction.’ Selling a monopoly, without regulating in the public interest, is not economic reform. It’s a reckless action whose consequences are now clear—massive increases in charges. At the Port of Newcastle charges are up 60 per cent to $75,000 a vessel. These cost increases damage our state’s competitiveness.

But we shouldn’t be surprised—it’s the government who are the ideologues on this issue.

When the Australian Competition & Consumer Commission concluded that if Macquarie Generation was sold to AGL consumers would ‘…pay more for electricity, receive lower quality service and be offered less choice,’

What did the Government do? They proceeded with the sale.

Selling assets is not reform if it does not raise our productivity and enhance competitiveness.
Governments should enhance the welfare of the community and boost the incomes of households. The Baird Government does the opposite. They impose costs on businesses and families. They hinder our competitiveness and hobble our economic future. The Premier seems to think that the role of Government is solely to get the next deal done – regardless of the impact this has on the people of this state.

From ports to electricity; at each turn the Baird Government is working against the public interest.

This Premier is a deal maker, not an economic reformer.

Madam Speaker.

The time has come for new thinking about the delivery of public services. Last week I travelled to India. Prime Minister Modi has set a hugely ambitious goal of training 500 million Indians by 2022. Education services are a significant export earner for us. India is NSW’s third largest source of international students. India is turning to the world to help them meet their aim of upskilling half a billion people.

I met last week with the Chief Minister of Prime Minister Modi’s home state of Gujarat, Mrs Patel, and several of her ministers.  They expressed their desire to increase collaboration in the area of education and training. The modern Indian project to lift a billion people out of poverty is truly monumental.

There is an opportunity for TAFE NSW to be part of it, providing training to hundreds of thousands, potentially millions of Indians, over coming years. TAFE has put a toe in the water but should now dramatically increase its activities offshore in India and other places. Exporting its training expertise provides TAFE with the ability to earn a return which can then be invested in rebuilding the TAFE system for the people of NSW.

We live in a period of dramatic change. Asia is driving economic growth and its growing middle class expects access to high quality services—this is the Asian Century. New South Wales should be perfectly positioned to take advantage of the Asian Century.

The Productivity Commission has an inquiry underway into promoting the export of services. What did the Baird Government do about the growth prospects of our state’s largest industries? Nothing. It didn’t even bother to lodge a submission. 

Instead, they’ve assaulted our skills and training system. There are 2,600 fewer staff in TAFE today than there were in 2011. There are 80,000 fewer students enrolled in TAFE today than in 2012 because this Government doesn’t believe in TAFE. This Government is making it even harder for people to retrain and get new skills—and it’s not just the young.

With an ageing population, governments have an obligation to give people a chance to find a new career. But it now costs $8,190 a year for an older worker to retrain as an air-conditioning mechanic. This is not acceptable.

We should be equipping people - young and old - with the skills to respond to a dynamic global economy full of promise. People do not need increasing fees and a failing computer system—they need a chance to better themselves. The thousands being impacted by the TAFE crisis are not statistics—they are real people hoping to create a better life for themselves and for their communities.

This Government has forgotten the training system was created to train people.

This Government has forgotten that the education system is about our future.

Madam Speaker.

Any new thinking on the delivery of public services should include public housing.  In 1912, Jim McGowen—Labor’s first Premier—established the Housing Board of New South Wales. Public housing was great Labor reform and thousands of people rely on it for one of life’s essentials –a place to call home. But today the public housing system needs reform.

The Auditor General has told us that public housing is ‘increasingly not fit for purpose’ and that current arrangements are not meeting contemporary demands. NSW currently has 140,000 social housing dwellings. Of these, 111,000 have the NSW Government as landlord, while not-for-profit community housing associations act as landlords for the other 29,000. These associations include organisations such as Compass Housing, Evolve Housing, Bridge Housing and St George Community Housing – which have proven records as providers of affordable housing.

We should build on their success and transfer more of the Government’s stock to the community housing sector. The transfer should include title to the properties to empower the associations with the leverage they need to fund the construction of new and additional affordable housing stock.

As a first step, 20,000 existing public housing dwellings should be transferred from the government to community housing associations. The associations are already there—keen to do more. Let’s give them the chance to succeed. Existing tenants, the users of social housing, will benefit because the associations are closer to them and avoid the characteristics of old style monolithic bureaucracies.

This is an area of public policy where I believe the not-for-profit sector will do better than the state.

Over time all of the state’s public housing should be transferred to not-for-profit community housing associations. They are more responsive and they are best placed to lift the quality and quantity of social housing stock. The provision of social housing is central to government’s responsibility to its community.

It delivers dignity for all. The opportunity to do better exists now.

Madam Speaker.

Governments must plan for the future.

The digital age is upon us. The digital age is a disruptive one—an age where connectivity and commerce will increasingly trump command and control. For decades this has been the case with knowledge. It is now the case for goods and services. We must embrace this change - not resist it.

In New South Wales—as elsewhere—people are finding new ways to share goods and services. People can now easily buy, sell or share– everything from books to bedsits. This is not a new concept—just a digital version of a good friend or garage sale.

But smart technology has undeniably changed the nature and extent of this relationship. The sharing economy is creating jobs, driving innovation, increasing productivity and reducing waste. It continues to change our state, but the state has not kept pace with this change.

Embracing the sharing economy is part of my vision for our state’s future.

There is huge economic potential here. It is time for Government to engage with this collaborative economy, by creating a framework for its use – and we should start with ride sharing. A year ago the Treasurer, the then Minister for Transport, said that the Government was ‘considering how these new services could be addressed’. A year ago, the Government announced that it would take action but it’s done nothing.

The time for talk is over.

Ride-sharing has already been regulated in more than 24 jurisdictions around the world - it’s time for this state to join that list.

I will introduce a private member’s bill this year to regulate ride sharing in New South Wales.

People are voting with their feet—hundreds of thousands used Uber last year. And the public should be free to choose the services they want without fear of retribution from Government. Once again, Labor’s starting point is clear: the public interest comes first.

The Parliament should regulate to protect consumers and drivers by putting in place some basic standards. We should have a race to the top, not the bottom, when it comes to customer standards and driver pay. We need to find ways to encourage and facilitate the sharing economy. This makes economic and environmental sense—by enlisting a whole suite of assets that otherwise lay idle.

On this issue, and so many others, the Government is behind the times.

Madam Speaker.

One of the most significant challenges we face is the mismatch between the location of people and jobs. It is an issue for regions like the Illawarra and the Central Coast which have tens of thousands of people commuting to Sydney every day. Forcing people to travel long distances for work, then home again, is a drain on productivity and comes at a cost to public health, communities and the environment.

Government needs to focus on creating jobs where people live.

The issue is acute in Western Sydney. Creating several hundred thousand new jobs in Western Sydney over the next 25 years is perhaps the single most important thing we can do to help our states’ productivity and sustainability. There is a labour market gap in Western Sydney of around 200,000 jobs. As the region’s total population grows to nearly three million in 2031, this gap will increase.

The Centre for Western Sydney estimates there are 70 local jobs per 100 Western Sydney workers. Fewer local jobs mean longer commute times: more cars, more congestion, and a lower quality of life. The fact is that Western Sydney’s job gap is not just about the number of jobs: it is about the access workers in Western Sydney have to those jobs. Childcare, adequate public transport and a raft of other social support services are needed to spread the state’s surplus equitably.

Western Sydney has been closing the gap on Greater Sydney, but disparity at the top remains: 32% of Greater Sydney households earn above $2000 a week; only 27% of Western Sydney households meet that figure. More than double the number of households in Greater Sydney earn above $5000 a week than do households in Western Sydney.

Even those figures hide pockets of more serious disadvantage in accessing Greater Sydney’s prosperity. The labour force participation rate in Greater Sydney in 2011 was 61.7%. In Bankstown it was 52.9%, Auburn 53.4%, and in Fairfield just 50.8%.

The health of Western Sydney also shows the effects of poor access to essential preventative services. Campbelltown’s rate of high body mass related hospitalisations exceeds the state average by 41%. The Hawkesbury has a 29% higher rate of alcohol related hospitalisations than the state average. Blacktown has a 40% higher incidence of smoking related hospitalisations.

Linking the state’s fastest growing population to the opportunities on its doorstep will require more than new roads.

Madame Speaker.

In this century connectivity and communication are the keys to economic success.

That’s why Labor believes the Western Sydney Airport will be the single most important jobs generator in the west. Labor has championed Western Sydney Airport and will continue to do so.

But building an airport is about more than laying a runway. The new airport should not be a spill over for Mascot—it should be Australia’s finest—a place that connects Western Sydney to the world. Labor’s vision for the new airport combines commercial and industrial land with the new service industries of this century.

Universities and TAFE should be provided with space near the airport to underpin employment in training, research and development. The people of Western Sydney should have access to jobs on their doorstep, in everything from retail to biotech research.

And the Western Sydney Airport must have a rail connection. The Federal Government must ensure that the airport is served by rail. The Government of New South Wales must fight for this.

Western Sydney Airport—like Adelaide, Darwin and Cairns—should not be artificially hindered by the restrictions imposed by bilateral air services agreements or Australia’s four designated Gateway Airports.

It should enjoy exemptions from these restrictions to stimulate its growth. Giving it the freedom to grow will make it more attractive to international airlines and support it quickly becoming a thriving airport and major job generator. Turning airlines away because of the fine print in restrictive air services agreements is an unacceptable threat to Western Sydney’s economic future.  

Our state is Australia’s most attractive and important tourism destination. International visitors spend $7 billion in our state each year. Giving Western Sydney’s airport the right to grow will benefit all of NSW. 

The future of Bankstown Airport also needs to be considered.

In future decades, as the new airport grows and becomes the flourishing aviation centre that Western Sydney deserves, airspace requirements mean that the operation of Bankstown becomes increasingly problematic. Planning and consultation around developing it as an employment centre needs to be initiated now. Part of this process will involve resolving where Bankstown’s air traffic will go.

Some of it, of course, can be relocated to the new airport. The Bankstown site is situated between the M5 and the Hume Highway, and with the right planning, investment and infrastructure can be a major employment zone for the jobs of the future in south-western Sydney.

Our global economic corridor cannot be limited to Sydney’s north and east. We must stretch the global arc to Sydney’s south and west. It is easy to imagine Bankstown as the next Macquarie Park or Norwest Business Park – full of tens of thousands of high wage jobs - providing employment opportunities for local people. 

Madam Speaker.

There is a better way for NSW.

Labor understands that government should defend the public interest against vested interests.

Labor understands that health and education are not potential budget savings but essential public services.

Labor has new ideas for the delivery of public services.

Labor has a plan to spread prosperity beyond Sydney’s CBD to the regions, towns and suburbs of this state.

Labor is excited by the opportunities of the sharing economy and engaged with this Asian century.

Labor is focused on the future; focused on a sustainable economy delivering opportunity for all.