Sunday, March 29, 2015
A lot less than the rhetoric of the election campaign may have led you to expect.
State elections are times when governments claim the credit for all the good things happening in the economy and get blamed by oppositions for all the bad things.
In truth, they should get only some of the credit or blame. That's because there is really no such animal as the NSW economy.
There are no barriers between NSW and the other states and territories, meaning it's just the NSW corner of the national economy.
So the government agencies with the most influence over our corner are the Reserve Bank and the federal government.
It is true the NSW economy has grown relatively strongly since the O'Farrell-Baird government took over four years ago. We were performing poorly compared with other states, but now we are doing best in various categories.
But that's mainly because market economies are cyclical: what goes up must come down, and what is down will go back up soon enough.
What came down was Western Australia and Queensland as the mining construction boom came to an end. What went back up was NSW and Victoria as things got back to normal.
Because NSW is by far the largest of the states, it is rarely far from the national average, and often a bit above it.
But the Coalition's economic policies have been good and it can take some of the credit for our improved performance.
Historically, NSW has had trouble building enough new housing to accommodate the state's growing population, a problem that does much to explain Sydney's exceptionally high house prices – and one the state government can do much to improve.
The undue regulation and high charges on developers have limited the supply of new homes on the outskirts of the city, and planning restrictions have permitted too little of the medium and high-density in-fill home buyers are demanding so as to be closer to jobs.
But a lot more homes are now being built, for which Mike Baird should get credit. This higher level of building is likely to continue.
State governments have no control over immigration and national population growth, but are responsible for solving the growing social and economic problem of traffic congestion and long commute times.
Both sides of politics have neglected the development of public transport. And road projects such as WestConnex are likely to offer only temporary relief.
The state's performance on employment has improved relative to the other states, but worsened with the national performance in recent years.
It will continue slowly worsening until the national economy picks up speed. Schemes offering payroll tax incentives to encourage businesses to increase employment are gimmicks to impress voters at election times.