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NSW Budget to improve infrastructure, productivity & competitiveness

24 June, 2015

The NSW Budget is a credible plan for building the state's productive capacity and laying the foundations for stronger economic growth in the longer term, according to Australian Industry Group Director Mark Goodsell.

"Ai Group commends the Government's commitment to a strong infrastructure program which is critical to improving productivity and enhancing the competitiveness of the NSW economy.

"It will also boost the state's construction sector directly, and create the potential for substantial flow-on benefits for the State's manufacturing and services sectors. The formation of a Priority Projects Branch within the Planning Department to halve the assessment time for state significant projects is very welcome. It is also evidence of wider efforts to bring a problem solving approach to the traditional structures of Government.

"It will be important that in the roll-out of major projects, opportunities for competitive local suppliers are maximised. This includes consistency in relation to conformity with Australian standards where relevant. Recent incidents involving non-conforming building products show that this cannot be taken for granted. It also means ensuring taxpayers get value for money throughout the life of the infrastructure, and not just from the cheapest initial build costs.

"We welcome the extension of payroll tax incentives for local businesses to create new jobs, including measures to ensure jobs incentives apply to companies not caught by payroll tax. However, the need for such incentives really highlights a greater problem and the need for fundamental reform of the tax system by state and federal governments to remove the state's reliance on payroll tax and stamp duty.

"As outlined in our pre-Budget submission, the NSW Government should announce an intention to pursue the lowest payroll tax rate in Australia and examine opportunities for the reform and removal of inefficient State-based taxes.

"The Budget's forward outlook puts much faith in a recovery in non-mining business investment, for good reason. NSW's strength is its balanced economy – a robust mix of agriculture, resource, ,manufacturing, construction and services sectors that can help the state ride better than most through the inevitable cycles that confront each sector.

"For the middle part of that equation – manufacturing – to play its full part needs to be globally engaged, and not burdened by unnecessary domestic costs and regulations. This requires reliable and well-priced energy, hard and soft infrastructure that links it to the world, and world class skills.

It requires a workforce that is solidly trained, in school and beyond, in STEM (Science, Technology, Engineering and Maths) skills and innovative thinking capability. We note the Government's Focus on Maths and Science package for teacher training as a sign of the education and skills realignment that must continue in this area.

"Ai Group welcomes the additional funding for housing infrastructure. The Government has correctly identified the importance of accelerating housing construction and improving affordability as key social and economic imperatives. It will also lend further support to industry and job creation in the short to medium term.

"Business acknowledges the importance of strong programs of social support in the budget, including initiatives on social housing and responding to domestic violence and ice addiction.

"The budget papers usefully include a statement of the government's election commitments. This initiative provides welcome transparency. It also serves to highlight the importance of governments, and oppositions, thinking carefully about how they frame public debates on important policy issues," Goodsell said.

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