Next month’s NSW election is the most important ever: Robert Simeon
As Australia faces the reality of life after its mining boom, now more than ever it’s vital that we embark on a path of prosperity and sound government – just don’t hold your breath (just yet).
First and foremost it’s imperative that NSW embarks on the greatest infrastructure expenditure in the state’s history – at the end of the day the upcoming election is all about economic reform.
Based on the recent election results in Victoria and Queensland the word ‘privatisation’ has indeed become a dirty word. In the case of the Baird government strategy the proceeds from the sale of state ownership of the electricity network would be directed to the generation of pivotal capital works projects and not state debt reduction.
A 2013 report on the Electricity Network Regulation the Productivity Commission announced that electricity prices had risen 70% in real terms over the previous five years with structural problems most apparent in NSW. The Productivity Commission went on to say: “There are strong arguments for privatisation of those businesses. There is no evidence that the productivity, reliability, quality or cost performance of private – sector electricity network businesses is worse than their public sector equivalents. To the contrary, the evidence in Australia and internationally suggests that such private sector enterprises are more efficient.”
NSW Labor proposes to tax business more then cut and defer major projects whilst doing next to nothing to fix congestion in Sydney. Congestion is exactly what determines property prices in Sydney, which is why I have said if you own real estate within a 10 kilometre radius of the Sydney CBD you have nothing to worry about.
A recent report commissioned by the Property Council of NSW has found that Sydney is facing a housing crisis with an additional 190,000 homes needed to be constructed over the next 10 years. The report identified that since 2005 an average of just 17,002 homes had been approved by Sydney’s 43 councils each year. From a business perspective you’re not going to attract new housing projects unless you are rolling out massive new infrastructure community platforms.
The above graph clearly identifies what happens to property prices when you’re closer to the CBD and highlights what happens when governments drop crucial infrastructure spending – Australia’s train to nowhere. More than anything we see glaring highlights as to what happens when governments fail to invest in crucial areas such as public transport. As a result house prices to those areas located within that crucial 10 kilometre radius of the CBD skyrocket.
NSW faces an additional 1.600 million people requiring housing over the next two decades – which in itself explains why now more than ever before infrastructure has to be the key ingredient into guaranteeing NSW’s prosperity into the future. Privatisation should not be a dirty word rather the dirty word clearly is lack of infrastructure spending by past NSW governments.
Sydney must absorb Newcastle, Wollongong and western Sydney into its business model by creating a world class metropolis. Given what’s been achieved in other countries there is no excuse why Sydney does not have a very fast train that connects all the cities.
Given that investors today are getting next to no return given the record low cash rate – investors can purchase syndicates that would allow them to invest in infrastructure projects a neat fix to the politics of infrastructure funding.
Given that the self-managed superannuation funds are driving investment property in NSW due to a lack of choice such a proposal to attract these funds with infrastructure investment is a brilliant and a long overdue alternative. Naturally the big superannuation funds want as much of this pie as they can get so the state governments must offer allocations to ensure that everyone has equal investment opportunities.
From an investment perspective NSW can easily offer thousands and thousands of critical infrastructure investment funds for investors to diversify as against relying solely on the real estate markets.
Of course nothing can happen if we have a change in government given the alternative is simply too scary to contemplate. If NSW had previously had a strong infrastructure platform property prices would be nowhere near as high as they are today.
If the Baird government is successful at next month’s election and they stick to their infrastructure platforms there is a strong possibility they could become the most successful government in NSW history.
