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NSW, a basketcase?

Well almost certainly not but this report is disturbing.  For a decade NSW has been declining relative to the rest of Australia.  The poorly-performing Labor Governments of Bob Carr, Morris Iemma and now Nathan Rees have been a factor in this decline.

Since the Sydney Olympics growth, business investment, home building, wages and jobs in NSW have performed poorly relative to the rest of Australia.  The whole country will soon officially be declared to be in recession but NSW is doing particularly badly.  It now contributes less than 32% of national product compared to 34.5% at the time of the Olympics.  The population share in NSW has shrunk.

The slump in business investment is dramatic with just 23 cents of every dollar spent occurring in NSW compared to 35 cents in 2000.

NSW is home to one-third of Australians but only 15% of new building approvals are occurring there.

NSW’s unemployment rate is among the highest in the country and the wage premium paid to NSW workers in 2005 was $3500. Now it is just $500.

The poorly performing NSW is a drag on the national economy.

6 comments to NSW, a basketcase?

  • MikeM

    The link to the report isn’t working.

  • hc

    That should work. Thanks.

  • JimS

    Could NSW be our California? http://blogs.ft.com/rachmanblog/2009/05/california-a-nightmare-vision-of-the-future/

    There are a few good reasons why NSW has underperformed so (besides the incompetence of Labor Unity in NSW). They are:

    Sydney’s not an easy place to move into. Its high prices are not translated into value by potential migrants. The only reason I could think to move there would be an enjoyment of Rugby League, bad beer, and gang violence.

    Newcastle, its second city, seems permanently marked from the BHP closure in 1999. No amount of foreshore development, it seems, can lure the critical mass of professionals into this bland town. Last time I was there, I had to visit 4 Woolworths before I could find some mustard seeds.

    It has few mineral deposits; this fact alone will makes it look sick compared to the Rest.

    Finally, it was the most developed part of Australia. Given Australia more or less has the same `system’ throughout, and the same technology, the returns to investment elsewhere should be greater (should those places not be encumbered with fatal problems).

  • hc

    JimS, I am not sure about the descreasing returns argument but the high property prices do seem to fdrive people elsewhere.

    I am not a Sydney-knocker by-the-way. In fact I think the northern beaches (Manly->Palm Beach) are heaven. This drives the high prices and the difficulties with economic livability.

  • conrad

    I lived in Sydney for 4.5 years, and another big problem I found is that the transport system is completely dysfunctional — the roads are clogged from 6am and the train system is pretty poor. It appears that the only way you can get to work in any reasonable amount of time is to live next to your work. This of course means that if you have a partner that doesn’t work close to the same place, it’s impossible, and in case you buy a house, you are locked into certain places that you can work. Melbourne has some of these problems, although it isn’t nearly as bad.

  • derrida derider

    I’m with Conrad. Anybody who has had to commute to work in Sydney is quickly impatient of people in other States grousing about transport. It’s the hopeless transport system that drives the huge disparity in house prices, which in turn makes Sydney far the most segregated city in Australia.

    And the roots of that go back a long, long way. Not that recent NSW governments have actually helped, but there is much more to Sydney’s malaise than their incompetence. In fact the incompetence may be endogenous – highly segregated voting patterns lead to the predominance of machine hacks in both parties.