Filed under: NSW News, NSW Politics, Sydney News, Uncategorized
In a predictable move, the NSW state government, led by Nathan Rees, has cancelled several major rail infrastructure projects – namely, the North West Metro and the Richmond Line duplication, which has been ‘deferred‘.
These had been promised for many years and are needed to cope with the growing population in these areas. Housing has become highly unaffordable in inner-city Sydney, so people were encouraged to move to the outer areas in the expectation that the these Government transport projects, when completed, would be able to take them to their places of employment in the inner city.
The government of course states that these projects, which they previously claimed to be ‘fully funded’, have to be abandoned due to the budget ‘black hole’ created by the financial mismanagement of the past NSW Labor governments led by Morris Iemma and Bob Carr, and the global financial crisis which has led to reduced tax revenue.
Despite having cancelled these projects, the NSW government is desperate for cold hard cash and is prepared to sell all the public assets they can at any price. The latest assets up for sale are the electricity retailers, NSW Lotteries and Waste Services NSW. These are all profitable and income-generating.
One major reason cited by the state government for refusing to borrow money for infrastructure is that they want to maintain their ‘AAA’ credit rating. Correct me if I’m wrong, but isn’t the whole purpose of having credit ratings in the first place to allow reliable borrowers to obtain loans on good terms?
Now is the perfect time for the government to spend borrowed money. NSW is in recession and the economy needs to be stimulated – capital works projects have been historically effective in these situations.
Reviving the cancelled infrastructure projects will remove bottlenecks and lead to increased taxation revenue and economic growth. As we are are now in a higher inflation environment, the net present value of future loan payments will keep falling, reducing the future costs of servicing these loans.
Furthermore, keeping those public assets will ensure that their income is retained, and this income will of course reduce the burden of loan repayments.
In what must be an absolute surprise, the new Premier Nathan Rees stated in an interview with the Fairfax media that he is ‘pulling back’ from the much hyped North-West metro link. in light of the ‘surprise’ $1 billion budget shortfall discovered a few days ago after the cabinet reshuffle.
According to the front page of today’s Sydney Morning Herald, a ‘buried report’ commissioned by the State Government indicated that the proposed $12 billion Sydney Metro line would be a disaster. The article has some logical sounding arguments explaining why the proposed route is unsuitable.
It is my personal opinion that the State Government did not issue this plan in good faith. On a number of occasions, they have announced so-called plans to dazzle the media and boost their popularity with voters, only to scrap them later.
$12 billion is a lot of money. The State Government simply does not have it, and it would not have the stomach to raise the money through a massive bond issue. They could not even manage to implement a new ticketing system which is a comparatively trivial task. It would be more prudent to fix the problems with the current system, that is used by lots of people, rather than spend lots of money on new poorly planned infrastructure.
I do have a word of advice for the Premier, Morris Iemma. Instead of demonstrating your self-proclaimed “strength of character” by forcing through a power privatisation that nobody wants, why don’t you instead deal with the corruption in Railcorp and State Rail, and break the power of the Transport union, so that additional drivers can be hired? Maybe then, our trains will arrive on time.