Infrastructure key economic driver for NSW

The NSW Government will invest in infrastructure to drive the State's economy, NSW Treasurer, Mike Baird has told a CEDA audience in Sydney.

In order to combat fiscal and inherited challenges and global uncertainty, the infrastructure spend that NSW will see will be unprecedented, he said.

He said there is an infrastructure backlog, with Infrastructure NSW identifying this being at a cost of $31 billion. 

Mr Baird said some of the major projects include:

• The completion of the North West Rail Link and the South West Rail Link;
• Hospital upgrades and new hospitals to be built across the State;
• The WestConnex road project;
• New schools across the State; and
• The Sydney Exhibition, Convention and Entertainment Precinct urban renewal project.

He said work on these projects will assist to alleviate the current situation and create employment.

He said: "If you want (new) infrastructure, we are going to have to ask people to pay and contribute to that with a user-pays principle embedded in our infrastructure response."

He added that this is an appropriate response given the fragile economic conditions.

In addition he said the NSW Government must recycle capital, through the lease of assets such as the Sydney Desalination Plant, and the long term lease of Port Botany and Port Kembla.

He said employment growth is strong with over 50,000 jobs created in NSW, more than any other state except WA.

"We sit just on trend on economic growth. The outlook is uncertain but on the positive side we can see the performance of NSW is improving," he said.

"We must get to a position of expenditure growth within revenue growth…and the revenue challenge remains," he said.

"Households are uncertain and when they are uncertain, they're saving more and they're spending less…that rolls into GST.

"When you look at the total impact on overall revenue, a big proportion is GST."

As well as the NSW Government responding to challenges with infrastructure projects, Mr Baird said an online tax threshold for GST should be considered by the Federal Government to bring Australia into line with other countries.

"It will provide a level playing field for retailers and modelling suggests that…in NSW it will provide close to $700 million," he said.

"Online retail is growing greater than 20 per cent of physical retailing. We need to bring the tax system in line with that."

Mr Baird also acknowledged that the housing sector is a key driver of the NSW economy.

He said one goal is to get the housing sector back to its average percentage of the economy - close to $2 billion a quarter, equating to $8 billion a year.

To create demand incentives, he said grants for first home buyers and new home buyers will be shifted so grants will only be available on new homes and will no longer be available on established homes.

Mr Baird also said the NSW Government is putting $500 million towards infrastructure on the ground in roads, schools, police stations, bridges, rail, water reticulation and utilities.