The NSW State budget has an especially important effect on how quickly the economies of Sydney and NSW continue to recover and build back better following the devastation of Covid. With Sydney’s economy is predicted to shrink up to nine per cent in 2019- 2020, how and where the Government spends and allocates funds has not had this level of significance for a generation.
According to leading economist amongst other challenges a key factor that the Treasurer must factor in is that Sydney is facing its slowest population growth rate for seven years, and with international and some State borders yet to reopen, a key driver for economic growth, population, has been neutralised. Turning then to measures to enhance participation and productivity the Government is expected to incentivise and support jobs growth and implement recommendations from the NSW Productivity Commissioners Report due in late November 2020.
This Report expands on the paper released in August that outlined seven major ideas to increase productivity, including reforming State property taxes, providing better VET skills training and building smarter infrastructure.
Confidence is likewise key to encourage both people and businesses to spend. Recent data including the NAB Business Survey shows positive signs with NSW recording the second highest level of business confidence amongst all the States and Territories. It is this confidence and attitudinal change that is essential to restore public confidence in the economy and the future.
NSW will also be looking to continue with its strong pipeline of infrastructure projects, following the lead of the Federal Government by borrowing more during this period of record low interest rates and deliver big and small projects that will fuel demand and drive the economy and employment. This is a strategy that rises the tide, that seeks to provide broad non-discriminatory stimulus measures, coupled with targeted industry support.
To complete the picture it is a strategy that must also consider the social benefits side of the ledger, to lift up those that have been hardest hit by the covid pandemic, provide additional access and spending on public and affordable housing, subsidise childcare to support return to work and provide increased access to training to fill key areas to skills shortage such as construction.
As the largest employer the NSW Government must also take a leadership role in the recovery of Sydney’s business districts. Many of these economic hubs have been stripped of the workers that filled offices, cafes, restaurants, hairdressers, and gyms. With many Sydneysiders working from home what has been the CBDs loss has been the local neighbourhoods gain, but it need not be this way. There is an opportunity to rebalance the economy by introducing local worker hubs that enable a flexible and distributed workforce across the city.
This new model of a distributed workforce has demonstrated that it can be productive, the challenge is whether this productivity can be sustained and whether it can drive the much needed accelerated economic recovery.