Baird sets out emergency plan for next economic downturn
“We’re not dictating that this is what the Commonwealth must do” … Mike Baird. Photo: Michel O’Sullivan
THE prospect of a global financial shock that would threaten to tip NSW into recession has sparked an emergency plan to pump billions of dollars into key infrastructure projects to stimulate the economy.
The NSW Treasurer, Mike Baird, has revealed details of an ”action plan” that will nominate priority projects such as the upgrade of the Pacific Highway and building the north-west rail link as candidates for fiscal stimulus in the event of another severe economic downturn.
Mr Baird denied the plan, revealed in a speech to the Sydney Institute last night about the need for ”sustainable finances”, was an attempt to seize control of where the billions of dollars in federal stimulus funds might be directed in the event of another global crisis.
One of the priority projects … the Pacific Highway. Photo: Max Mason Hubers
”We’re not dictating that this is what the Commonwealth must do,” he told the Herald. ”What I’m saying is that I want to participate in the national debate on behalf of NSW. And here are some projects that are ready to bring the investment and jobs into the economy in the shortest possible time frame.”
He said the global economy had shown signs of improvement ”but we are not out of the woods yet”.
”The examples of the Asia crisis, the tech wreck, the global financial crisis and the current European financial crisis make us aware that [fiscal shocks] are not infrequent, that they do come … they are actually likely to come. So you need to be prepared.”
In the event of another crisis, the government would present its plan to the Commonwealth in the expectation that funding for priority projects identified by Infrastructure NSW would be brought forward. These might include acceleration of the Pacific Highway upgrade and the north-west rail link.
Mr Baird said the stimulus should be ”temporary, timely and focused” and aimed at creating jobs. The plan would include spending on maintenance of roads, rail and health.
He was not arguing that the federal government should not use cash stimulus, rather that the focus should be on capital expenditure. ”Things have improved economically, but it doesn’t mean you shouldn’t be prepared,” he said. ”I think NSW can shape the national debate.”
Mr Baird said the NSW government was committed to ”sustainable finances” which were important to ensure economic growth and employment and maintain the state’s credit rating.
This approach allowed the government to retain the financial flexibility to ”help those in need” by funding responsibilities such as the Fair Work Australia decision on pay rises for community service workers announced this year and the national disability insurance scheme.
He highlighted the funding needs he witnessed during a visit to the Weemala facility at Ryde which caters for people with severe disabilities.
”The battle back to sustainable finances is important because it reduces your discretion and flexibility and your capacity to absorb contingencies and ultimately your ability to [address] significant human need,” he said.
In his midyear review in December, Mr Baird said global economic turmoil had led to a forecast collapse in GST revenue for NSW of $1.6 billion over four years, plunging the budget into deficit.
Mr Baird has already outlined $6 billion in savings in last year’s budget but he said his speech last night was not setting up the prospect of a horror budget in June.
”I’m taking the discussion out of the day to day,” he said. ”This is not being done in the context of what we are going to do in the budget.”