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Same cracks, just a new coat of paint

By Adam Creighton - posted Friday, 9 September 2011

Forget the 'Wranslide' of 1978. Barry O'Farrell's government holds a bigger chunk of the Legislative Assembly than any NSW government since the Liberal party emerged in 1944. Its mandate is massive, its position unassailable, the scope for serious reform vast.

In that light, Treasurer Mike Baird's first budget, delivered yesterday, was disappointing. John Howard's government was elected on a small target strategy too, yet brought out the scalpel in 1996.

To be sure, Mr Baird's budget provides money for hundreds of new nurses, teachers, police and hospital beds – the bread and butter of state politics. It shaves $8 billion from expenses over the next four years, projecting small surpluses after a modest deficit of $718 million this year.


It even plans to let market efficiencies seep into Port Botany, flagging long-term lease of the facility to pay for upgrading the Pacific Highway.

Moreover, the introduction of social development bonds, which will pay returns only when particular measurable social outcomes are met, is a novel and promising proposal.

But far from 'turning the state around', as the Treasurer claims, the budget keeps NSW on the same course, albeit with a new coat of paint.

The 'toughest' budget measure entails offering 5,000 public servants voluntary redundancies over four years. Such cuts are barely a flesh wound on the army of NSW public servants – 386,200 last year, growing about 1% a year. It is difficult to believe all those remaining staff are essential to efficient government.

The government's laudable decision to enforce the previous Labor government's 2.5% wage cap will have more impact in the long-run.

Reducing public subsidies to a few thousand buyers of existing houses is the second 'tough' measure. Enough said.


The 12 per cent increase in infrastructure spending is welcome but timid. Sydney and NSW need a lot more than new buses and rail links in the north and south west. Town Hall station symbolises the entire NSW public transport system – decrepit, putrid, and dysfunctional. The comparison with Hong Kong and Singapore, two competing cities, is shameful.

Bold infrastructure should not be beyond state governments. NSW built the Harbour Bridge (with debt) and the Opera House, after all.

Australians' aversion to public debt at the federal level is useful, but a AAA credit rating for states should not be sacrosanct. It hobbles necessary infrastructure spending, which is a fundamental responsibility of state governments. Nevertheless, the Treasurer enshrines the AAA rating in the budget.

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This article was first published in The Australian Financial Review on September 7, 2011

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About the Author

Adam Creighton is a Research Fellow at the Centre for Independent Studies.

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