The State Of New South Wales

The State of New South Wales is nothing short of abominable.

The new Premier is out of his depth (but if you live in Australia you knew that already). Eric Roozendahl, the Minister for Roads a couple of weeks ago, and now the Treasurer (and if Reese goes on sacking ministers at the rate he is going perhaps the two of them will be the last men standing as ministers for everything), has just delivered a budget that is so utterly wrong it just beggars belief.

Without taking it apart piece by piece, let me just cover a few issues.

We know that there is a shortfall in the state's finances. Bob Carr spent up big basically to get re-elected. Morris Iemma dithered and Nathan Reese now has to deal with pay back to his sponsors for getting the big gig.

There are some realities that he needs to consider:

If NSW was in this mess on its own I could understand the powers that be delivering the budget that they just did. But we are in a flat world and we are not decoupled from the nation or from the rest of the world.

Demand for commodities are down and since we are a country that produces commodities without too much value being added, regardless of price we are going to see companies laying off workers, reducing costs, and battening down the hatches for the coming storm.

As the financial markets continue to unwind companies in that sector are going to lay off people too. All that knocks a hole in the demand for real estate. And since the stamp duties on property transfer are a big chunk of the revenue for the state, clearly things are going to get a little rocky.

So what the state needs is stimulus in every area that will help compensate.

We may not be able to afford to build new rail connections and keep our AAA rating, but think of what could be done… We could introduce a totally free service for commuters on buses and trains. That would be a much better way to get cars off the road than to introduce a congestion tax. People would have to register for free travel passes by demonstrating that they live in one place and work in another and would only be permitted to travel from A to B. That immediately puts pressure on the travel infrastructure, granted. But it has a tremendous positive effect in terms of the reduction of green house gasses from private transport. Sell the carbon emissions saved to cover the cost of the lost revenue from the tickets issued for free. It also means that the fiasco of ticket machines can be forgotten, and instead of having people collecting tickets, put them to work on the trains to ensure that there is a reduction in crime.

Oh and one other important thing: Since the ministers in the government want everyone in the state to reduce their expectations of service from the government, then let the ministers take a salary cut… It would be a great example of what they expect from everyone else…

The power industry and the sale or non-sale, which is a key part of the problem… Introduce significant benefits for people to install solar. Not the half baked proposal that is in place at the moment – but a serious levy on power exported into the grid. Make it possible for ordinary people to make back the cost of the capital investment to install solar within two years. That will really boost the solar industry and will reduce the need to update the power industry. Then increase the costs of power to everyone, industry included, so that the incentive to install solar is even stronger!

This is all about needing to look at the unconventional wisdoms.

At the moment you can pretty much guarantee that everything that the current state government is proposing and unfortunately is doing, is 180 degrees wrong. So look at the opposite and a way to monetize it and forget about the triple A ratings…

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