NSW: nice and mediocre

Bookmark and Share Economics & Deregulation | John Roskam
The Australian Financial Review 26th March, 2010

At the rate it's going, NSW will end up like Europe. A nice place to go for a holiday, but you wouldn't want to live there. Or start a business there. As amusing as it is to contemplate a voting system in Tasmania that no one understands, and an election campaign in South Australia that centred on the status of the personal relationships of the premier, state elections are no laughing matter. State governments are not unimportant.

The decisions of state governments can have an impact across the national economy. Take, for example, Victoria and its water crisis. Successive Labor governments have refused to build new dams for Melbourne's growing population. This policy, when . combined with the effects of a drought, produced what in hindsight was always going to be inevitable - a water crisis.

As a state election is to be held in November this year, the government needed to be seen to be doing something. So it is that Victoria will have the country's largest desalination plant.

The problem is that to get the plant completed by the end of next year, the Brumby government has been forced to sign a contract that will make the builders pay workers the highest construction wages in the country. Already the estimated cost of the plant has gone from $3.1 billion three years ago to $3.5 billion today.

Carpenters on the site will earn at least $200,000, which is 30 per cent above the industry standard A worker lucky enough to be employed on the Victorian desalination plant could earn up to 40 per cent more than someone doing the same job on the Sydney desalination plant.

These wage rates have set the standard for infrastructure projects across the country. The desalination plant was a political priority for John Brumby. He is willing to allow the contractors to pay a premium of 30 per cent to the union movement to guarantee industrial peace and to have the project delivered on time.

There's no reason to believe that Kevin Rudd will act any differently if the national broadband network is ever built - a project 10 times the cost of Brumby's desalination plant.

Thanks to Victoria, workers on the broadband network will have a new industry standard against which to make their wage demands.

Next week will be the 15-year anniversary of Labor coming to power in NSW and the next NSW state election will be held on March 26, 2011 - in exactly one year.

The state is in desperate need of regime change, yet the Liberals' Barry O'Farrell is no certainty to beat premier Kristina Keneally. As O'Farrell recently pointed out, since 1995 the gross state product of NSW has increased by 46 per cent.

The comparable figure for Queensland is 90 per cent and for Western Australia, 80 per cent But because of those states' natural resources, perhaps they are an unfair comparison. Compared with Victoria, NSW has lagged - Victoria's gross state product has grown 65 per cent.

But the shocking thing (at least for anyone who still believes Sydney is the capital of the "premier state" is that even South Australia and Tasmania have outperformed NSW. South Australia's gross state product has increased in the past decade and a half by 51 per cent, and that of Tasmania by 48 per cent.

Maybe the Olympics are to blame. Premiers were so intent on making Sydney an "international city" and showing it off to the rest of the world, they thought making the trains run on time was beneath them.

If the Commonwealth did somehow succeed in gaining responsibility for the nation's health system, it couldn't do a worse job than NSW health ministers at running the state's hospitals.

On the conservative side of politics it's no wonder the Liberals have all but abandoned a commitment to federalism. Their last four leaders - Howard, Nelson, Turnbull, and now Abbott - have all come from a city where nothing ever seems to work.

Fifteen uninterrupted years of Labor government in NSW has bred a political culture of mediocrity. In the same ways, mediocrity is worse than corruption. You can send people to jail for corruption. But what do you do about mediocre policy, mediocre politicians, and a mediocre system of public

n NSW, the government, public service, and union movement comprise a triumvirate that has long lost any sense of the public good.