Governments spending money to stimulate the economy is all the rage nowadays. The Federal Government’s just done $10 billion of it. Obama is being urged to do it on a gargantuan scale. The Chinese have apparently promised 800 billion dollars of it over the next two years.
So what’s Australia’s most incompetent state government decide to do? Raise taxes, cut services, and cut back planned infrastructure spending. You’d swear Rees, and NSW Treasurer Eric Roozendaal, are taking their tax policies from Herbert Hoover.
To be fair, there are some good ideas, most notably peak-hour congestion tolling on the Harbour Bridge. But in the large, this is pushing NSW into recession, not out of it. And it’s probably going to be the Federal Government’s job to tip more money into NSW to make up the difference. Thanks, Nathan, for helping to make Malcolm Turnbull look prescient.
While I’m not against the idea of a congestion tax, this is a dumb move while Sydney’s public transport infrastructure is in a shambles. Especially for those who need to commute from North Western Sydney to the CBD.
Want to save $100 million or so, why not cancel the Iron Cove Bridge duplication that nobody wants and won’t work.
It’s not even a proper congestion tax, only taxing as it does, only one entrance to the city, and giving a 50 cent discount!!!! for off-peak travel.
It’s hard to believe that a government can be this incompetent. Maybe it doesn’t want to be re-lected and is leaving the state in as bad condition as possible for when the Libs take over. You know it makes sense. Well nothing else does.
Congestion taxes only work when there’s a transport alternative.
There isn’t one.
Seriously, Labor doesn’t even deserve be in Opposition after 2011. They should be wiped and replaced with The Greens.
Can this mob do anything correctly, and if so – can they do it competently?
I doubt it.
Exactly. Labor know they can’t win the next election. So the idea is that they leave the NSW in such a state that the Libs have no hope of doing anything positive betwen 2011 and 2015. Then, Labor comes back into power citing how hopeless the Libs are and hoping no-one remembers prior to 2011.
Keynes had a set of principles to work from Robert, but as I’ve said elsewhere, Nafe ‘n’ Eric do not.
There are no good ideas. Even the buses are suboptimal, slightly better than doing nothing. They were trying to slip in a bit of class warfare funnies with the “congestion tax” – if you think Victoria Road is bad now, wait until North Shore people start using it as a rat run. You don’t start “peak hour” at 6.30am, not even in Sydney. The whole idea of the tunnel is for bypassing the city to get to the airport. The inner west is a graveyard of half-arsed public transport ideas and the Rozelle light rail is just another one.
Always beware politicians describing their own stupidity as “toughness” – Howard and Reith and Kevin Andrews did it all the time, Nick Minchin and Tony Abbott still do.
I may be committing heresy here, but when I read articles about how terrible NSW is, I get a sense of cognitive dissonance. I commute in Sydney most weekdays by train or car, have some experience of the hospital system, spend a fair bit of time in the CBD and I honestly can’t see this ‘crisis’ and ‘shambles’ that the Herald assures me the state is in. Am I missing something important?
Meanwhile, the Herald does its best to personalise the story with the heart-wrenching tale of Llew Jenkins, a struggling banker from working-class Manly whose tragic 15-minute ferry commute has, with the cancellation of the Manly JetCat, become an unbearably hard half-hour boat trip on Sydney Harbour. Now he may be forced to move back to the urban hell of the eastern suburbs!
Look, by world standards Sydney, and NSW more generally, is a good place to live. But there is a fairly strongly-based sense that NSW is less well-run than it ought to be, and less well-run than the other states.
In this specific case, the NSW government is doing precisely the opposite to what the conventional wisdom is recommending right now, for no apparent reason other than a belief that they’ll be crucified for “losing the AAA credit rating”.
Is a buck really a congestion tax? Really? Doesn’t seem to have much in common with actual congestion taxes round the world.
When the GST was introduced, Howard promised that the money would be sent back to the states to fix their ailing infrastructure, but all through the Howard era, NSW got the bad end of the bargain. It never got as much as the other states on a per capita basis.
As a consequence, NSW’s public services have slipped behind the other states. Even Rudd has kept up the Howardist agenda of starving NSW.
Now we have crunch time. Rees has done the only thing he could do – raise taxes. The raised bridge toll is a de facto congestion tax, but this is a good thing. Congestion taxes discourage congestion. The other good thing Reed has done, and which no one here has mentioned, is the raising of land tax on commercial properties over $1.8 million.
The rate is being raised from from 1.6% to 2%. Big deal. The rich can afford it. Better them than the rest of us, I say. This measure is calculated to raise between $150 million and $200 million a year. I congratulate our premier on this excellent move.
“I may be committing heresy here, but when I read articles about how terrible NSW is, I get a sense of cognitive dissonance. I commute in Sydney most weekdays by train or car, have some experience of the hospital system, spend a fair bit of time in the CBD and I honestly can’t see this ‘crisis’ and ’shambles’ that the Herald assures me the state is in. Am I missing something important?”
Absolutely right. The hysterical, “OMG! Mogadishu of the South!” screeching of the Herald and the Telegraph is almost Pythonesque.
I too commute by train and road and 95% of the time my train is on time and gets me to work in North Sydney (I live in the inner west) within a minute or so of the timetable. I try to travel outside max peak (revelation: all public transport systems – everywhere – are under stress at max peak) which means I tend to leave home a bit earlier.
If I go by road I also leave a bit earlier and around 7.00am it’s a pretty clear 20 minute run through Marrickville, Newtown, Ultimo, onto the bridge and into North Sydney.
If an accident happens or a train breaks down, it’s longer – but you’d expect that wouldn’t you? And 95% of the time trains don’t breakdown and accidents don’t happen. I find that listening to the constant barrage of traffic and rail updates provided by the dozens of radio stations here in Mogadishu on Port Jackson, usually allows time for alternative route/travel selection.
Millions of occasions of service occur in NSW hospitals every year and in the vast majority of cases, each is an experience redolent of a functioning, efficient developed world health system. And we never hear about a single one of them.
There is much to lament about the current government, not least of which is the fact that it is jaded, tired, reliant on a dwindling gene pool and has been in office for much too long. It should have gone at the last election but the opposition put up a “leader” so risible that Morris Iemma looked inspirational in comparison.
The current opposition leader is much more effective but he’s running solely on policy-free, media-provided soundbites which have built a perception of a state teetering on the edge of cataclysmic disaster. I have no idea what Barry O’Farrell would do to tackle the not insignificant challenges that NSW faces. More worryingly I suspect, neither does Barry.
heh – won’t somebody PLEASE think of the
childrenreal estate values!Losing the AAA credit rating will allegedly have significant material effects – there was some mention of taking a hit in asset values somewhere along the line. Does anyone know specific figures?
Poor NSW Lahor. These intellectual giants do grasp the fact that to cut deeply into the public service would be counter-productive if not suicidal and so of course they didn’t gut too much. Of course, it won’t save them, or Carmel Tebbutt or Verity Firth – two pieces of absolutely useless ALP froth – and the privatisation of regional prisons and “restructuring” of juvenile justice will be just mean more of the same for Aboriginal and working class youth, so who cares? Very few, it seems.
“Congestion taxes discourage congestion.”
Except it won’t work in this case since the only alternative is already at maximum capacity.
“Losing the AAA credit rating will allegedly have significant material effects – there was some mention of taking a hit in asset values somewhere along the line”
Which you would think would only be of concern if they were considering selling them all off.
Geoff,
I live not far from you and have similar experiences re PT. Trains before 8.30am are packed but after that I have no trouble getting a seat.
I actually had to laugh a few weeks ago when there was a problem on the Eastern Suburbs line and the Tele was lamenting that some passengers had been delayed by a whole half hour. I’m not even convinced they were delayed that long because I was at the station where and when the problem occurred (I even watched the train behind being used to push the one in front) and I didn’t have to wait for half an hour.
By the way, mode shifting to public transport is not the only way in which congestion taxes reduce congestion.
They can also encourage shfits to walking, cycling, and carpooling, as well as simply discouraging people from traveling.
The last one of these possibilities has obvious social equity implications…
In the last three years the Beijing government has built two whole new subway lines and a new airport. Can I please vote for them in the next NSW election?
It’s not that simple. Western Australia and Queensland get to bitch that NSW and Victoria grow fat on mining royalties which are in net terms transferred away from the home state.
Then you have the NT, which is the usual punching bag for this sort of political pantomime. The NT gets far more GST money per head than any other jurisdiction. On the other hand, 30% of the population is aboriginal and most of them live in small townships scattered across an area about as large as NSW and Victoria put together.
Plus, they executed who-knows-how-many people, brutally incarcerated still more, and drove hundreds of people off their land — with no compensation or semblance of due legal process — in order to build whatever it is they felt like building.
NSW is not quite that bad.
Yet.
Jacques: how does that explain, say, the NT Parliament Building?
Robert, the CLP pre-2001 never saw a white elephant they could resist.
With the off peak starting at 9:30am it also encourages people to travel
at slightly different times of the day which will reduce congestion. There are many workers out there that don’t really need to work 9-5.
I’ll add my voice to Geoff’s and those who take the train and say it’s a generally good service.
Ultimately it’s about priorities and choices, I order mine differently, I don’t personally own a car though I do have access to one from time to time.
Here’s my PT story.
I travel every weekday in peak and it’s consistent at about an hour door to door for me – I catch the 8:04 and arrive at work at 9.
I have a couple of short walks to and from the stations, my weekly ticket costs me $31 dollars.
I have an iPhone which I load with time shifted programs, music, feeds and of course I have my social media connections and I can read LP, I get a seat most of the time and relax with my entertainment choices (Usually Rachel Maddow, Bill Moyers, 7:30 Report and Lateline) – as a result I couldn’t imagine driving now, the time passes quickly.
Conservative estimates say not owning a car saves me around $8,000 a year. A rough tally says my 3G + home broadband and public transport costs approx $3300 annually (Yes, I spend a of of money on data of all types so I can enjoy the trips in connected comfort and be truly mobile) which still leaves me around $5000 ahead annually.
I should also add that I run a lot of errands locally on my sweet single speed mountain bike with a big ass Crumpler Fux DeLuxe to carry my stuff.
That said I do feel deeply for those Sydneysiders who live in the outskirts or some of our public transport deadzones, it’s a policy disgrace that this is not addressed – that should be a transport priority.
Likewise, I am lucky enough to be able to walk (4ks) to a station and catch a train to work after peak hour, which is great. But I think of the other poor sods who have no choice but to sit in traffic for 1 to 2 hours every day, or have to travel in an overcrowded and dirty train for a similar time every day.
Compared to similiar cities thoughout the world, Sydney is very poorly served by public transport for the majority of its population.
I blame that pompous bore, Bob Carr.
Frankly, while I love the inner west and indeed lived there for 7-8 years, I don’t think it representative of the woes other suburbs face.
The level of service regarding public transport does depend greatly on where you live as some areas are served better than others. For example, if you are in the North West, the only real option is to drive.
Even here on the Central oast, I commuted for three years by train and the service was variable. I drive every day down to Lane Cove which can take about 1 hour 10 to 1 hour 30 depending on when I leave. Public transport would be at least 2 1/2 – 3 hours.
I’d love to drive outside peak which is a joy but don’t have that luxury and neither do many of my commuting brethren who clog the Pacific Highway from Wahrooonga to Ryde or there about on a daily basis.
One thing the government could do is conduct a campaign for companies to start staggering their work hours. Or really push for working from home. I do get that luxury occasionally and reckon it helps with productivity.
“Could somebody tell Nathan Rees we’re all Keynesians now?”
Er, why not tell him yourself? Not that he’d listen to you, or to anybody else here for that matter, although he should. Congestion taxes, if targeted properly, are beneficial. And it should be easy to stagger the morning start times for (CBD) government departments, schools, and university faculties in order to make far more efficient use of public transport – without raising taxes.
Those of you who think NSW’s public transport is dysfunctional should visit Adelaide …
The latest bus timetable for my area is even less comprehensible than the previous one (an impressive achievement), and the bus service has been “improved” by reducing it even further.
I’d love to get rid of our current government (Media Mike and Kevin fucken Foley) except that the alternative offered by Martin Two-Fathers is even worse.
I think both of those are great ideas. There is no reason that many white-collar workers couldn’t have flexible working hours or work from home. It just requires a bit of self discipline on part of employees and employers that look at what people actually do rather than how long they’re in the office.
I’m lucky enough to regularly work from home and now going into the office is as much about getting some face to face social contact with fellow employees than anything else.
In The Oz, Michael Stutchbury gave a reason for why NSW is not pursuing an explicitly stimulatory fiscal policy:
http://www.theaustralian.news.com.au/story/0,25197,24639197-5017771,00.html
I’ve been thinking about that comment, which rather puzzles me. Why exactly would this “leak” occur, to a significant level, if NSW ramped up infrastructure spending or expanded government services?
Public sector or construction wages would be paid to NSW residents, and would flow into NSW consumption.
Profits earned by construction companies headquartered in other states might move out of NSW – but since most big companies in Australia are based in NSW, that shouldn’t be too much of a problem.
So what’s Stutchbury on about? Anyone got any ideas?
Rob, no argument that the NSW govt is incompetent, but state governments are way too small relative to the size of their economies to provide counter-cyclical stimulus. U.S. states are in much the same position, its up to the Feds to pump-prime. Saul Eslake was on the radio yesterday making this point…
… and yet, contra the view that State budgets are too small to provide stimulus, we have Ken Henry saying yesterday that the NSW budget “may well” have a contractionary macro-economic impact on the entire national economy.
http://www.smh.com.au/news/national/the-demolition-man/2008/11/12/1226318741512.html?page=fullpage#contentSwap1
If the budget is significant enough to be contractionary, then it would be significant enough to be stimulatory, if different choices had been made.
People are not lining up to sing the praises of the NSW Government at the moment.
Interesting to note that regarding ferry closures, it was noted in this morning’s SMH that the Parramatta River Cat, which was recommended to be axed along with the Manly Jet Cat, is still running.
Interstate readers can now amuse themselves with the game of which suburb, Parramatta or Manly, is in a Labor seat.
And given NSW accounts for 25% of Australia’s GDP, I’m not surprised that the NSW budget will impact the national economy.
BM-dog, what you’re saying is that only when you run out of people who are better off than you will you realise how badly you’re served by this government.
Accidents and breakdowns occur more frequently than is necessary because capital upkeep is patchy, inconsistent and inadequate. Rees does not know how to invest for the longer term because he only thinks in terms of tomorrow’s headlines: it’s understandable that the SMH and the Tele think this way, but it is a sign of an exhausted government.
See, this is one of the reasons why politics is different to public service. People who work in hospitals are just doing their jobs. The media hop in when they are manifestly not doing their jobs (miscarrying in toilets = suboptimal health service outcome). It is only politicians who expect public recognition and praise for basic competence, and who shirk criticism for failure in this regard.
The Victorian government is better at longterm planning and hence its failures have less of an impact on both policy and polling than the increasingly inadequate NSW.
Here is the failure of the Campaign All The Time mindset: once the campaign is over you have to realise that you’ve foisted a dud product on the public and you make amends there and then, not wait until the foreseeable bubbles to the surface and then cover up, deny etc.
Robert: I haven’t seen a theory so disconnected from the reality of 2008 since the last time I went to Catallaxy. Burns Bay Road (which leads from the North Shore to the Gladesville bridge) will become Australia’s biggest rat-run, increasing congestion from the inner west, which won’t be offset to any real extent by people canoeing from Manly.
Yes, the point about the ‘congestion tax’ is that it isn’t a congestion tax.
If it were a congestion tax it would be a good idea. The same as if the government had a coherent and well-funded, dare I say visionary public transport system, it would be a good idea.
Sometimes I think that we should get rid of state governments altogether.
Andrew E: not a local, but I would guess that Burns Bay Road is saturated at peak times anyway. Isn’t it?
“Frankly, while I love the inner west and indeed lived there for 7-8 years, I don’t think it representative of the woes other suburbs face.
The level of service regarding public transport does depend greatly on where you live as some areas are served better than others. For example, if you are in the North West, the only real option is to drive.”
Wasn’t suggesting that some areas aren’t poorly serviced by PT – just that the whinging about late trains was exagerated. From the whinging you would think most trains are late most days. If that were the case then they would also be late arriving at inner city stations, funnily enough most of the time they aren’t late.
“I blame that pompous bore, Bob Carr.”
He deserves some of the blame but the fact is that investment in PT (especially trains) has been neglected for the past 30+ years.
This is awesome.
Is that you, commenter Bismarck?
Well all Kevin had to do was give the ten to Nathan to spend of Kevin’s behalf and every thing would have been rosey. But,…no.
While supporting a congestion tax I recognise like Adrian that what was introduced is a claytons CT. Maybe some thought should have gone into a levy or land tax on all off-street parking spaces … if the intent was to squeeze the rich.
I’m encouraged by Treasurer Roozendaal’s comments that they want to extend the scheme which suggests some refinement when they figure out a way to cop those coming in from east, south and west. All the Daily Terror rantings from commuters complaining suggest to me that none of them has read about London recently or got their bums across a bicycle. Then again if the intent was to raise $$$ then you don’t want the squealers to complain too much …and leave their chariots at home.
Polly,
My experience if commuting from Gosford to North Sydney and it was a lottery. What was worse was when there was an issue with the line how ill prepared city rail were to deal with it. I can remember 4-5 significant delays going either way and how City Rail failed to cope with it (they seemed intent to not learn from their mistakes but simply compound them further the next time around).
If you experience is different so be it. But I’ll have you know that whinging about trains is enshrined a right in the NSW constitution. Along with talking about real estate.
Note that the Daily Terrorgraph has stated a campaign to get the NSW government to call an early election. They could have saved their time and spent 5 minutes with a constitutional scholar.
A few thoughts on leakage.
First, the marginal propensity to consume out of current dispobal income is not one. So part of any fiscal stimulus will “leak” into higher savings. Given the destruction of wealth that has occured recently, and the need for many households to repair their balance sheets, one could argue that a reasonable proportion of any stimulus will be simply saved (including by paying down debt).
Second, NSW is not a closed economy. NSW residents will have a marginal propensity to import, not just from overseas, but also from interstate. Thus, part of any fiscal stimulus would benefit residents outside of NSW. Whether that effect is large (in absolute or relative size) or not depends on the how large those imports are relative to total consumption and income. I don’t have those numbers on hand at the moment but they can be obtained from the ABS website.
Third, assuming that the stimulus would have to be large to have a meaningful effect on the economy, ratings agencies will form a view of what the increase in debt means for NSW probability of defaulting on that debt. A lower credit rating will increase NSW borrowing costs, meaning that a higher proportion of NSW income will have to be devoted to servicing that debt. In a sense this represents another “leakage” from any stimulus. Whether this is large enough to worry about is another problem.
Fourth, abstracting from the credit rating issue, an alternative way of stimulating the economy would be to increase infrastructure spending. It seems likely to me that infrastructure spending would be more likely to benefit NSW residents in the long run. One, you don’t have to worry about the spending leaking into saving. Second, greater infrastructure spending should raise the productive capacity of the NSW economy. A caveat to this of course is that the infrastrcture spending needs to be properly targeted and timely. If we really think the NSW goverment is so poor, why would we trust it to choose the right projects. Thus, I think it is possible to support the idea in principle, but doubt whether it will be implemented well. Another issue of course is that the NSW economy needs the stimulus now, not in 18 months time. It can take goverments along time to ramp up infrastructure spending meaning that the stimulus comes on line just when it isn’t needed.
One also has to remember (and I am not implying here that the NSW government has been a good one) that the fiscal imbalance between the commonwealth and states is part of the problem here.
On balance, given all the leakages I mentioned above, doubts about the quality of NSW decisions, and the greater capacity for the Feds to take on debt at the moment, I would would argue that the Federal government ought to take the responsiblity for further fiscal stimulus, but should consider targeting it at regions where they expect demand shortfalls to be most pronounced. Of course, this still implies that pro-cyclical fiscal policy in NSW is a bad idea.
“If you experience is different so be it.”
My experience is different. I happily admit though that the North Coast/North Shore does seem to draw a short straw re trains. As I said before I reckon the whinging is exaggerted (not totally unjustified, just exaggerated). Particularly those poor petals in the eastern suburbs who have the best train service in Sydney.
Robert: no, not really. The point is that this is a moderately busy road which will become jammed with people who wish to approach the city from the toll-free west rather than the north, along roads (Victoria Rd, the Anzac Bridge) that are plenty full as it is, thanks very much.
Polly: Greiner would have killed to have the sort of boom following the Olympics until early last year. You bet your bottom dollar he would have invested in infrastructure until it hurt. Who was the Premier 1995-2005? C’mon, I’ll give you a hint: part dilettante, part pissant …
I’ve been on trains bound for Blacktown, Liverpool and points further afield in order to get to Strathfield. I’ve seen people weep when the train is stranded between Central and Redfern, knowing that a short delay means they miss their connection to a bus in those outer suburbs and have added 30-40 minutes to an already long commute. Nobody who lives closer to the city than Strathfield has any right to complain about poor public transport – those further out can, do and have every right to. As with every accident scene, it’s the ones who don’t cry out who are worst off.
Nathan Rees is Mark Latham without the wit or the economics degree. Come to think of it, I’ve never seen Rees and Latham in the same room …
It is interesting that last week the Californian Governor was raising taxes, mid week it was New South Wales and this weekend it is the Mayor of New York City defending these tactics.
“A year before the next mayoral election, Michael R. Bloomberg appears to have settled on his campaign message: higher property taxes, smaller school budgets, shuttered dental clinics, more parking fees and a new surcharge on plastic shopping bags.”
http://www.nytimes.com/2008/11/15/nyregion/15bloomberg.html
BM-dog @7
has a valid point – are things any worse than they were 20 -25 years ago in NSW vis a vis hospitals and/or public transport?
I’m not sure if I agree with BMD’s conclusion. that’s a matter for another stoush…
It would be really nice if the major ‘news’ media/ mafia were challenged every time they came up with headline grabbing truthiness.