Home' Future Building: The Australian Infrastructure Review : Volume 4 Number 1 Contents 4 futurebuilding Volume 4 Number 1
The Hon Mike Baird MP
downgrade would create with respect to access to
capital and the restrictions that might bring.
So the imperative remains to maintain the lowest
possible cost of debt so that you can invest the
maximum amount into infrastructure.
Ultimately, the debt levels are where the rating
agencies start to focus. If you're not controlling
your debt, and you've got no capacity and no plan
to reduce it, it's not long before you lose your
At the same time, New South Wales inherited
economic growth which was the slowest for any state
in 10 years. Jobs growth was also the slowest of any
state for 10 years.
Business con dence was at the lowest, or second-
lowest, level for a big part of the previous ve years,
and our housing supply was the lowest it had been in
many respects for 50 years. It was not exactly a good
dashboard of indicators that we inherited.
If you don't have the money, you can't spend it.
That's the challenge we've had. We've gone from
six per cent revenue growth down to about 4.2
per cent, so it's almost a 30 per cent reduction in
revenue growth during the period. In real terms,
that means a loss of about $2.5 billion per year --
and those are not the sorts of numbers any state
government can sustain.
Dealing with an infrastructure backlog is one
thing, but what also needs to be done is an analysis
of the future pressures that are going to be placed
on capital spending. Analysis by Infrastructure NSW
reveals that by 2031 we will need 5000 extra hospital
beds, more than 700,000 additional homes, the
capacity to handle a 37 per cent increase in daily
train trips within Sydney, and a 98 per cent increase
in passenger trips in and out of Sydney by air.
When you consider the metrics we inherited
-- the debt projections, falling revenues and huge
infrastructure demands -- it's not what you'd call a
So what do you do?
For a start, tiered and long-term planning, with a
clear understanding of where the city and state are
going, is essential. Victoria has certainly shown itself
to be a leader in this regard.
You also need to undertake rigorous project
selection -- something that was not done well in
New South Wales by the former Labor Government.
I think governments of all political persuasions have
failed this test. When an election comes along,
political strategy looks at where the marginal seats
are, and what can be built in the middle of these
marginal seats. Invariably, these proposals are not
costed, and have no economic analysis and no
funding allocated. That kind of process has held
back this state and this country.
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