It's time for NSW to stop living in the past and seize the day

The NSW government would be well advised to start planning immediately to ensure the state's momentum keeps moving forward well into the next decade – failure to do so would clearly indicate that managing the state of NSW is well beyond their capabilities.

They say success leaves clues, so look no further than the Sydney property market which has delivered the NSW budget a $1 billion windfall thanks to stamp duty and other related property taxes. NSW Treasury has just announced the final result for 2013/14 with a surplus of $1.247 billion – well up from the June budget estimate of $988 million.

The reality is that property prices have started to cool and commodity prices down 20% this year. Hence, it’s time to start fast tracking the next phase of NSW growth with confidence building infrastructure approvals. On current projections, Sydney will (at a minimum) need to double its 1,673,800 homes over the next 50 years – so there is no time like the present to get started – carpe diem.

It’s well documented that massive growth spurts follow new infrastructure developments – former NSW state architect Chris Johnson has forecast that Sydney needs to build 11 new highrise apartment towers each year for the next 50 years to protect suburban life from being ruined by overdevelopment as the city’s population grows.

“Five thousand new towers, containing 110 apartments each, would provide 550,000 new homes – that will accommodate only a third of our planned population growth over the next 50 years,” said Johnson.

It’s not hard to see where declines are quickly starting to take place with BIS Shrapnel pointing out this week: “The recovery to a net overseas migration intake of 242,800 in 2012/13 was underpinned largely by a rebound in such arrivals. However, with arrivals now trending downwards as resource sector investment slows, net overseas migration flows weakened to 235,800 in the year to December 2013 and monthly indicators since then suggest a further slowing.”

The latest figures from the Australian Bureau of Statistics reveal that Australia’s population increased by 160,000 births over deaths and a further 244,000 people through immigration – which is now the big driver in this demographic. NSW in 2013, had a natural increase of 50,000 extra people, net overseas migration added 68,000 extra people with 15,500 people deciding to reside elsewhere. As Chris Johnson pointed out: “The demographics for Sydney are clear. Growth is coming and is essential for the long-term prosperity of the city. It will keep house prices stable, it will provide jobs, it will support our ageing population and it will position us as a global city.”

Of course a major problem that requires immediate attention is Australia’s public transport which is hopeless given two-thirds of the country’s population resides in the capital cities. Everyone knows that the state and territory have neglected public transport for decades, so you can’t start announcing residential infrastructure initiatives without substantial public transport upgrades.

Cue the blame game between the states and federal government as to where these responsibilities lie. The latest in this ongoing debate is now clearly aimed at reforming Australia’s Federation – although this has major challenges in itself given the “vertical fiscal imbalance” with all the states and territories wanting more of the GST cake portions. This explains why a Federation white paper is being prepared to address Australia’s revenue and spending responsibilities of all governments.

In 2014 -15, NSW will receive 97 cents for every dollar of GST it pays, Victoria will receive 88 cents and WA will receive just 37 cents – so this explains why reforming the state and territories is such a difficult task.

In the case of NSW, you see businesses wanting to get going despite being constantly held back as they await the relevant approvals given NSW does not have a masterplan for development.

The most obvious case is that in 2013/14 the NSW government pocketed $1.247 billion in taxes for doing next to nothing – just imagine what those revenues might be if they were to announce a residential real estate infrastructure plan? Who knows, first home buyers may even be able to get in given a significant number of apartment developments would actually bring prices down.

The only problem for the NSW government is that it has a long history of living in the past.