CEDA NSW State of the State Keynote Address

Thank you so much that warm introduction.

Thank you to Uncle Allen for that generous welcome to Gadigal land.   

I'm looking forward to today the conversation, the engagement on social media. I'm a little bit worried about the password, New South Wales SOS, that’s not going to be our slogan for the upcoming election.

Appreciate you all doing it, and I understand the intent.

To Christine Bartlett, to Nell Hutton, to Peter Halliday, and former Premier of New South Wales Bob Carr, and thank you all for being here in an interesting week in politics, not just in New South Wales, but in Victoria as well.

I have to say that whenever I open the newspapers and see the headline "Premier deposed”, I have to think to myself, hopefully, this isn't in New South Wales, but it is happening in Victoria.

So, I'm sure you're all enjoying the Melbourne Commonwealth Games in Glasgow at the moment, and I'll be using that joke for a couple more months I think.

Thanks to the whole team at CEDA, it’s not easy to put one of these on and I genuinely appreciate the opportunity to be back here with all of you.

And I want to thank CEDA for their genuine commitment to elevating the economic debate in New South Wales and Australia, it’s really important, it's a service for our country, and we're here to discuss the state of the state, eight months out from the next election.

And it does, for me at least, bring to mind some of the challenges we have faced in NSW over the last three and a half years.  

I think, in fairness to the previous Liberal and National government, Labor did come to power with an important some built legacies for our state.

Not the least of which, was a brand new, fantastic Metro system for New South Wales. Stretching from Sydney’s northwest and through the city.

Now, because of the vagaries of election timing, I was the one who got to cut the ribbon on that project but the truth of the matter is, it was the previous government’s legacy and it was a good one for our state.  

We also owed them gratitude for competent and clear management when it came to the COVID emergency.

But I think a full rendering of the situation means that we did inherit some big challenges and problems as well.

A surging inflation rate, and while inflation is still too high today, it was topping out at close to 8% twice today's figure.

On housing, the second most expensive city on earth, with what was commonly considered and certainly voted on by the Business Council of Australia, the worst planning system in Australia.

An energy roadmap that admiringly did have bipartisan support, but was at the time being picked apart by members of the Coalition who had inaugurated that bipartisan energy roadmap.

A $15 billion deficit, the largest ever recorded and the biggest ever handed from one Government to another in the history of our state.

Now the temptation for any new Government, particularly a Labor Government, is to spend money.

We could have said that after twelve long years in opposition, that we’ve got three terms worth of policies backed up, needing to be funded.

We could have said, it doesn't matter how much interest we have to pay on that debt, or the fact that the interest on that debt was larger than the budget for both police and TAFE combined. We would just find the money to fund our priorities.

But we made a decision at the cabinet table that that would be irresponsible, particularly in a high inflation economy, particularly with warnings from the Reserve Bank Governor that State spending was as responsible as Federal Government spending for demand in the economy, leading to inflation and leading to interest rate hikes.

So we made a different decision, and as a result, we've had the lowest growth in spending of any jurisdiction, of any government, Labor or Liberal, anywhere in Australia.

We’ve kept it at 3.7 percent, which has largely been below inflation.

I can also report to you that we're on track for the second lowest rate of debt of any Government in Australia, with the exception of Western Australia.

And of course, WA has that treasure chest of iron ore and gas that they can tax lightly or heavily, whenever they feel like it.

Added to an unfair GST resolution that sucks out an enormous amount of wealth from taxpayers in this state.

I still find this stat shocking, but I think it bears reporting and repeating: For every dollar that New South Wales taxpayers send to Canberra in GST revenue, we receive back   
83 cents.

But for every dollar the Victoria sends the Commonwealth in GST, they get back $1.07.

Which is a huge inequality between the states, and it is my job as the Premier of New South Wales to fight for our state and our fair share of resourcing, and we need you to make that case with us.

But notwithstanding that shocking deal, we've been able to cut the deficit from fifteen billion, to two billion dollars, in just three and a half years, which means we're saving around 400 million dollars in interest payments alone.

And to get there, we had to make difficult decisions.

One of the hardest decisions that we had to take, particularly as a Labor Government, was reforming the uncompetitive, dysfunctional workers' compensation scheme in New South Wales.

In recent years, the number of people claiming psychological injuries in the workplace had doubled in number.

And disturbingly, the fastest-growing cohort who were claiming psychosocial injury in the workplace, were those under the age of 25 years.

Not older workers well established in their careers, but very young employees who had just entered the workforce and faced, in some instances, 10 years out of the workforce claiming psychosocial workers compensation benefits.

The scheme was costing New South Wales taxpayers $6 billion just to keep the scheme solvent, which, by way of comparison, is roughly equivalent to what we spend on the New South Wales police force every year.

And business and not-for-profits were getting thumped as well by wave after wave of rising premiums, 8% a year.

Now this wasn't a state secret. Everyone knew we had a problem, it had been kicked around committee hearings and parliamentary inquiries for years.

What was needed was a government to grab the nettle and make an essential reform for our state.

And those changes, as a result of the legislation passing, will save businesses $4 billion over the next four years, compared to where premiums would have been if there'd been no reform in New South Wales.

Now there's an election coming up next year, and whoever wins, there'll be no hiding from the challenges facing New South Wales.

We will still be dealing with interest rates higher than where we want them, and inflation in our economy, hopefully lower than it is today, although we got some encouraging news at 11.30.

We will still have to provide essential services and funding for those essential services and we'll still have to keep paying down debt so that we're not handing over the worst kind of inheritance to the next generation: eye watering debt that can never be paid off. 

We have to manage an energy market that's in transition and a housing market that undeniably needs more homes. 

And I’d suggest to you that as we get closer to election day and the attacks become more populist in nature, and there's a rise in a new form of politics and a new political party, as part of our state and national conversation, the temptation will be to shrink away from the difficult issues and have easy answers to the problems facing New South Wales.

But there's some areas that we're going to have to show backbone.

That it won't do to walk away from our obligations, and that where controversial and difficult answers are still the right answers for New South Wales.

And one of those areas is energy policy in our state.

Now we've taken heat from both sides of the political spectrum when it comes to energy policy in New South Wales.

The Greens have been – well, it's not hard to upset the Greens – but the Greens have been upset about the Government's plan for gas exploration in New South Wales and to use that gas as part of our energy needs, particularly for industry and manufacturing.

The reality is that we have gas in New South Wales, and we need to use it for industry.   
We were also criticised for keeping the Eraring power station open longer than had previously been announced – in order to provide extra capacity for our energy networks during the transition, to put downward pressure on energy prices as much as we possibly could, and to provide some stability in energy markets in our state.

Now I know that it's coal-fired, but we looked at the AEMO report when it came to supply in the market, and there was no other way of managing the energy transition without disastrous blackouts if we didn't have that power going into our energy markets over the last four years.

I'll add to that, that the easiest way of seeing diminishing support for renewable energy transition in New South Wales is if the lights start going out on a regular basis and bills rise even farther and faster than they currently are.

But the third element of our plans, were renewable energy plans.

We are transitioning from one source of energy to another in our state, and it's taking time. And I'm not going to lie to you; it's not cheap.

But to stop now and junk those plans after record investment in that sector of the economy would be disastrous for New South Wales and ruinous for our economy.

All those manufacturing companies, the people that employ Australian workers, the people that sweat on the next contract, the people that are ambitious about new contracts and new export partners, hopefully overseas.

I don't know how I or anyone else in our government or our parliament could look them in the face and say to them, we're pulling out of renewable energy, and we've got no appreciable, understandable, realistic plans to produce energy in our state for the next five or 10 years’ time.

So, we've embraced what was a bipartisan energy plan, and we've expanded it. We've stood by it, often in the face of enormous opposition in different parts of the state. And here is why: Seven years ago, we generated 90% of our energy from coal. 

Tonight, that number will be 60% and 40% of that will be from renewable energy, and that number continues to climb day after day, month after month, as that investment in capital is invested in the sector.

Thank you. I might have to bring you on the road with me.

So, the stakes are incredibly high, and I put it to you, perhaps self-servingly, that the fact that we're hit from the left and sometimes the right tells you that we're on the correct track.

Down the middle with a pragmatic but common-sense approach to energy that focuses on price, reliability, as well as emissions in New South Wales.

The second issue, which we can't backslide on and is too important for New South Wales, is housing.

Now there's been a big debate over the past three years, which I think we can say for some justification, has seen a shift from more NIMBY elements in our public conversation to a more open approach when it comes to new housing in New South Wales.

That's particularly the case from opinion leaders and a lot of the newspapers, but also some, what I would regard as very courageous Mayors who’ve stood up in support of new housing in some of our big cities.

Since we began that long process of re-establishing sensible planning outcomes closer to the city, it's been harder to find self-declared NIMBYs in our political ranks.

Because no one wants the risk of being seen to oppose that unit or apartment that may house a nurse or a young parent or a single mother or, in many cases, the largest cohort of growth in our homelessness ranks is regrettably single women after a divorce, who are older, and we need housing for them.

But as we progress from theories to plans to actual developments, we have regrettably seen a re-engagement with that NIMBY instinct.

Often dressed up in language that their area needs a break, or it's often expressed as that while they support the idea of development in someone else's area, well, their patch just couldn't touch another house.  

But this is exactly the time when we need to hold our nerve, because we can't go back to the old days of just three years ago, when the Productivity Commissioner told us that if we didn’t start building more houses, we would be a city without grandkids.

That's why since we've come to Government, we've overhauled the planning system and introduced the most comprehensive housing reform plans in decades.

From Transport-Oriented Developments to the Low and Mid-Rise policy, to the establishment of the Housing Delivery Authority and landmark legislation that passed the Parliament in November.

Not to mention 74 state-led rezonings for new houses in New South Wales, from Woollahra to the Inner West, and some of our big regional centres.

On top of that, is the plans that I announced here at CEDA just two years ago to rebalance housing in Sydney from just the west to the east as well, from adding another street to the western fringe of Sydney to having more in-fill closer to the city.

Now those changes have made a difference. Approvals are up 11%.

The number of homes under construction in New South Wales is the highest it's been for seven years.   
And keep in mind it takes around 3 years to complete an apartment building, so we expect the numbers to climb even greater in the years ahead.

But the truth is, we're nowhere near where we need to be.

No one, no one from my Government, and no one with a straight face would claim that we've solved the housing crisis here in New South Wales.

We've got a long way to go. We're still not building enough, even in the face of those changes to the planning laws.  

So, what can we do?

Or to put it another way, at first principle, what does it take to successfully complete a new house?

Well, we're told it comes down to two main things.

First, a planning system that allows more homes to move from application to approval in a reasonable time frame, in as short a period of time as possible. 

When we came to Government, it took 116 days for councils to approve a single Development Application on average.   

Some councils were a lot better than others.

Today, that number is 82 days. 

It's a 30% improvement. 

Our hope is, and our plans are, that by late 2027, councils will approve Development Applications in just 65 days, nearly halving the time from when we came to government.   
But the next question is, what happens when you get that approval?

Well, today we received a report from the Productivity and Equality Commissioner, which argues that housing feasibility is perhaps the biggest barrier to building new homes in Australia today.

For those not fluent in the jargon, let me translate that term: feasible housing capacity.   
It's one thing to legally rezone an area for more housing; another for it to be a viable place to build.

If a builder looks at a project and it doesn't stack up financially, even if it's permitted under the zoning plans, they won't build it.

Young people need a future in the city, so we need to keep going. 

And today, I can announce that the government will further help secure the future of Sydney's housing supply by ensuring our planning controls provision for at least 30 years of feasible housing capacity across local government areas.

That will mean that councils must show their rezonings, taken together, will include the required number of new dwellings to meet their housing target, and that these new dwellings must be realistic housing options for builders.

In other words, it will stop more cynical councils paying lip service to Governments and stakeholders and residents about mandates and accepting new housings, while artfully rezoning parts of their local government area, knowing that at the end of the day it will never economically stack up to build there.

This new requirement will be outlined in the Sydney Plan, it’ll be released in the coming weeks.

But it means while we're already doubling the city’s feasible housing capacity with our centrally led liberalisation of the planning laws. We'll be doubling that again with this proposed change.

It's not just technical, notional permitted housing, but viable housing that stacks up, that can be built that is ready to go right across New South Wales.

Over the next two years, the Department of Planning will work with councils to update their local planning controls, so they meet these new requirements and support the delivery of new homes where they're needed most.

And I have to say that if councils refuse and say to us or their constituents that they're not prepared to make these changes, then regrettably but inevitably we will step in again to deliver those new homes.

This will become Sydney's long-term housing vision by providing a long-term pipeline of land that means households and builders and councils can make long-term plans about their communities, moving us away from that boom-bust cycle that's characterised the housing market for so many years.

And it actually made a huge impact on productivity in our economy by wrapping up so much potential capacity in our housing plans with unrealistic zonings that will never result in new homes.

I think it's also a message to the city and the state that when it comes to housing, the Government is not backing down. 

We've got to keep building. 

And the reason we have to keep building is so future generations won't feel compelled to pack their bags at the prime of their life and leave Sydney or other parts of New South Wales for somewhere else. 

These are the people that we want joining New South Wales firms.

We want them starting and establishing businesses right here in Sydney. 

We want them being President of the P&C and teaching and coaching the cricket teams, the football teams, and the gymnastics teams. 

But that is not going to happen if the most productive age of our life sees young people leave our state in massive numbers for other jurisdictions that have got cheaper houses.   
Next March, anyone putting up their hand for leadership of our state needs a credible plan to deal with those issues.

They're big, they're complicated challenges that don't have easy answers, and they require strong, steady, responsible leadership. 

Right now, New South Wales has the fastest-growing economy in Australia. 

We want it to be faster. It's not where we need to be, and my job here today is not to do a lap of honour. 

But our economy is growing faster than other states, and it's being driven by private sector demand and investment in our state, not being propped up by government demand and spending.

We also have the lowest unemployment rate of any state in Australia. 

This is the time to hold our ground, to endorse the changes and reforms that are working but need more time, and to give our economy the certainty that business absolutely needs. 

That's how you deal with tough times, how you set up for a brighter, stronger, more confident future, where the world and Australia know that New South Wales is unambiguously open for business.

Thanks so much.