10 Big Ideas to Grow NSW

11 June 2010
by Stephen Cartwright
CEO, NSW Business Chamber 

The time has come for NSW to look forward rather than backwards.

For far too long, NSW business leaders, community leaders and politicians have been caught up in a culture of negativity and complaint, or worse still apathy and acceptance.

We want to talk about making NSW the economic engine room of Australia once again. We recognise the problems, and we don’t deny them – but we want to focus on solutions.

NSW Business Chamber’s 10 Big Ideas to Grow NSW is about exactly that – growing NSW.

The 10 Big Ideas are about seizing opportunities to grow our skills, strengthen our infrastructure, encourage confidence and prepare for the future.

From the outset, I want to say this about these 10 big ideas – they are not our ideas. They are yours.

They were developed through the debates and discussions we held in our policy committees, in the four NSW – Reclaiming1st Symposiums, from our Council meetings, from Local Chambers of Commerce and through our interactions with other industry and community groups.

There is no copyright on these ideas. In fact, I hope that both sides of politics pick them up and claim them as their own.

Surprisingly, these ideas cost very little or pay for themselves in a short period of time. However, what they do require is a willingness to question the status quo, a capacity to challenge vested interests and a desire to make decisions based on the long term and broader public good.

We want these 10 Big Ideas to start a meaningful debate – that’s why we invited a range of groups to participate in this process, many of whom are not natural allies. But we took the view that our respective histories are not as important as our shared future.

We witnessed the potential power of this collective focus most recently when groups as diverse as the Property Council, Civil Contractors, Infrastructure Partnerships, NCOSS (the State’s peak social services group), UnionsNSW, the NSW Government and the Opposition - joined with the NSW Business Chamber to fight the Federal Government’s plan to cut $2 billion from our state’s GST allocation.

The first thing I want to highlight about the 10 Big Ideas is that they ARE costed. They are a mix of savings, new spending initiatives and tax cuts. They provide a total of $1.9 billion in tax cuts and yet still improve the Budget bottom line by $670 million over four years.

1. Ensure taxpayers get better value for money by auditing government services and performance.

The NSW Government manages over 300,000 employees and has an annual Budget in excess of $55 billion.

Small improvements can have a dramatic impact on the bottom line. For example, a 2% improvement in performance could deliver taxpayers an extra $1 billion each year.

It is too easily forgotten that a dollar wasted in one area is a dollar that can’t be spent in another.

We should be willing to test the performance of government and the quality of its services by undertaking a “whole of government” audit using local, interstate and overseas experts.

I believe a Commission of Audit, in place for only three years, could be a real driver of reform within the State Government.

Everything should be on the table – including public sector work practices, the costs and quality of service delivery, opportunities for contestability of services, the performance of local government and long term budget sustainability.

2. Create jobs by cutting employment taxes and red tape.

The NSW Government currently has a modest payroll tax reduction plan in place. The Government has reduced payroll tax from a peak of 6.4% in 2001 to 5.65% now.

However, we believe that the Government’s payroll tax reduction program should be continued past the next election and accelerated.

We can use about 60% of the savings generated by the Commission of Audit to fund these further cuts to payroll tax.

Our plan will result in NSW matching Victoria’s payroll tax rate of 4.95% by 2014/15, and the cost to the Budget over that period would be $1.9 billion.

Further, we propose that the ATO should act as the collector of NSW State taxes. This reflects the concern of small business regarding the levels of taxation red tape.

We think it makes sense for business to deal with one tax collection agency and not two. By having a single tax collection agency, we can integrate all aspects of the various tax systems. This isn’t about a Federal takeover of State taxes - it is about using Federal infrastructure and expertise to act as a tax collector for NSW.

As a final point, we are all awaiting the release of the Henry Review into Australia’s taxation system. Our concern is that both sides of State politics will respond to the political pressures of an election year and will therefore take a short term approach to tax.

That is why we believe that the bi-partisan Public Accounts Committee should determine the NSW response. Taxation reform is far too important to become a political football during an election year.

3. Protect the NSW Budget by fighting for a fairer share of the GST.

Whilst we are very pleased that the Commonwealth Grants Commission abandoned its plans to slug NSW with a $2 billion hit to our GST revenues, we still believe the current system of redistributing the GST is broken.

The GST formula is overly complex, it does little to answer issues of equality and uses absurd measures to determine the GST carve-up.

We simply start from the premise that NSW, Victoria, Queensland, Western Australia and the ACT have strong economies and should receive per capita allocations of GST – whilst recognising that Tasmania, Northern Territory and South Australia need additional funding to meet areas of social and economic need.

I’m glad that we won the last round of the GST carve-up fight, but that’s a short term win, and I believe we need to address the real issue of GST funding in a less reactive manner.

4. End the blame game in hospitals by handing funding to the Federal Government.

We support a national debate over health funding.

Federal Treasury projections are that by 2030, the costs for health funding in NSW will blow out to 55% of the State’s operating Budget. In today’s dollar terms, this is $15 billion more than we spend today – which is more than the total spending on transport, roads, police and emergency services.

We support Federal Government funding of hospitals. Not necessarily because we question the competency of state hospital systems, but because we believe only the Federal Government has the right tax base to fund such an enormous social and economic burden in the future.

It is early days in terms of seeing this reform become a reality – but we support the concept of Federal funding. We believe it is in the interests of all Australians.

5. Move economic growth to the centre of State Government decision making by establishing the Department of Business Growth.

NSW needs an aggressive, pro-jobs philosophy to permeate the whole of government.

Our proposal to create a Department of Business Growth, made up of the existing Department of State and Regional Development, the Office of Fair Trading, the Better Regulation Office and a newly created Small Business Commissioner, is about re-orientating the current state development model to one that focuses on existing businesses.

We believe that it is actually easier to get an existing business to create a job than to find a new business to create a job. Our approach integrates state development, red tape reduction, licensing and small business advocacy into one agency. That agency should be headed by the State Treasurer, who is the only Minister other than the Premier who can work across all Government agencies.

We propose the establishment of a Small Business Commissioner. We believe this should be modelled on Victoria’s highly successful Small Business Commissioner. This Commissioner will be an advocate for small business, and can help resolve disputes between small business and government or big business. This initiative would deliver tangible support to our state’s very important 300,000 small businesses.

6. Encourage growth in regional NSW through funding government and business relocations to regional areas.

We propose the establishment of a $250 million fund called the Develop Regional NSW Fund. This fund, which builds on and amalgamates existing regional development funds, seeks to use a competitive process to provide funding for the relocation of government agencies and businesses to regional NSW.

We want the $250 million fund specifically directed towards the relocation of businesses and government agencies that would make the largest impact in a regional community.

7. Get the politics out of infrastructure by establishing Infrastructure NSW.

Our approach to infrastructure in NSW is modelled, very much, on the Rudd Government’s approach to Infrastructure, which is that infrastructure priorities should be determined at arm’s length from government.

We need a single dedicated infrastructure agency to determine priorities, maximise outcomes for taxpayers and accelerate infrastructure renewal and development.

Importantly, the establishment of a PPP unit will ensure the government develops greater expertise in managing PPPs and develops broader measures for maximising public value that go beyond simply maximising the immediate financial return to government.

8. Take charge of Sydney traffic by appointing a Transport Tsar

The Government has already established a super ministry within transport, and this is welcome. The test, however, is to consolidate decision making and to actually deliver better transport outcomes.

The new MyZone ticketing system is a great initiative. However, it needs to be backed up by an integrated and electronic ticketing platform. The weekly queues at railway stations for tickets are another disincentive for commuters to use public transport. One electronic ticket, that can be topped up online, and is usable across all modes of public transport, should be the goal.

Sydney needs a demand based strategy for transport and roads because, for too long, we have only focused on supply.

We need to have greater emphasis on peak and off-peak pricing in public transport, peak and off-peak pricing of tolls, incentives to encourage different morning start times for public servants, and we need to investigate other possibilities like different school starting hours.

Changing behaviour is always difficult, but it can provide more immediate results to peak traffic times, and more cheaply than building additional roads or buying additional trains and buses.

9. Help Sydney prepare for the future by creating 10 super councils.

41 councils in metropolitan Sydney is far too many. The focus of local government continues to get smaller as the challenges facing Sydney continue to get bigger.

Sydney needs larger councils with more powers, that are better financed, with full time elected representatives who focus on bigger issues, rather than inefficient, smaller councils that aren’t delivering for local communities.

Victoria and Queensland both embarked on programs of Council amalgamations, and public opinion now backs these stronger, better performing councils.

At a governance level, I believe local councils would be better served by representatives who are not in State Parliament.

There is a Federal ban on Federal MPs also acting as State MPs or councillors, and a similar ban on State MPs also acting as councillors should be enacted.

10. Better prepare young people for the workforce by improving the HSC for students not attending university.

The vast majority of students undertaking the HSC have no intention of going on to University – for a variety of reasons.

Employers are saying we need to work harder at preparing these young people for the workplace.

We need to start a meaningful community debate about the quality of vocational education and training provided for the thousands of students undertaking the HSC who won’t then go on to undertake tertiary study.

The HSC is a pathway to adulthood that has a very positive social impact on those students who complete it.

However, the vast majority of students who undertake the HSC do not go on to tertiary study, and we need a community debate about how we can make those last two years of schooling even more relevant to the workplace.

The development of a Green Paper and White Paper into the HSC can facilitate a broader community debate about improving the vocational education and training options within the HSC.

Next Steps

We have sought to start a debate – a debate which is not about personalities, not about party politics, not about blame, but rather it is a debate about policies and about how we can grow NSW.

I hope that in launching, 10 Big Ideas to Grow NSW, we have taken the first important step in galvanising broad community support for necessary change. I strongly encourage you to make your contribution to the debate about how we grow NSW.

 About the author:

Stephen Cartwright Stephen Cartwright is CEO of the NSW Business Chamber.