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Solid NSW Budget – More Support Needed for Energy Efficiency as Industry's Power Costs Surge

"The NSW Budget reaps the benefit of a diligent and transparent approach to managing the State's economic engine and public finances," Mark Goodsell, Head of Ai Group NSW said today.

"We commend the NSW Government's continued focus on driving investment in infrastructure and importantly the relative funding certainty that underpins it. This will continue to be critical in creating more local jobs and boosting productivity across NSW industry.

"Building infrastructure is not an economic end in itself. The focus needs to be on quality infrastructure spending initiatives that build NSW's capacity to support a broadly based, innovative, productive economy that is globally engaged and a great place to live. Other elements are also essential for achieving these outcomes, including on the fronts of business costs, skills, industry-university collaboration, and sensible regulation.

"We stress that in the roll-out of all infrastructure projects and the sourcing of the operational technology they use, it will be important that the Government's purchasing policy supports full and fair participation of Australian suppliers. This includes conformity with appropriate standards, where relevant, to ensure the safety of the built environment as well as making sure taxpayers get value for money throughout the life of infrastructure, and not from just from buying cheap up front.

"Housing affordability is an important social and economic objective. The Government has correctly identified the need for accelerating housing supply to meet the demands of population growth and improve affordability. This will lend further support to industry and job creation in the short to medium term but it also delivers the social equity that a sustainable economy thrives on.

"We note that the Government has taken steps to reduce the costs of doing business in NSW. We welcome the actions taken in the removal of some inefficient State-based insurance duties for very small businesses with a view to promoting growth in the State.

"However, the real dividend for business will come from broader tax reform, including removing the State's reliance on payroll tax and stamp duty and working towards a tax system that is fit for purpose in a modern economy.

"As demonstrated in our recent Ai Group report,State taxes on business: how do they compare?, continuing lack of uniformity across states in the application of taxes and inherent complexity in tax scales and rates also adds to business costs.

"NSW companies are facing the same power price shock as the State's consumers. The real risk for households is that employment is threatened by companies moving off-shore or curtailing local production and investment in the face of these unprecedented cost increases. It is disappointing that the Budget neither highlights this risk nor provides more targeted support particularly in the form of industrial energy efficiency programs.

"The Government has generally maintained funding for vocational education and training including for TAFE. However, its own performance measures on enrolments, completion rates and graduate satisfaction show that much more needs to be done in understanding how this money is used and how well the vocational educational system is working. The experience with the Commonwealth's VET Fee Help system in recent years has shown that we still need a better understanding of the decisions that students, their families and employers are making about post-school education. That is no less important than funding levels," Mr Goodsell said.  

Further comment: Mark Goodsell – 0418 408 871