Sydney Revival Shows a Model to Cope With China-Led Slowdownby
State premier's record stands apart amid a national slowdown
Fund-raising, investment offer template for new prime minister
Sydney is starting to sparkle again.
A decade and a half after the glow of the 2000 Olympics faded, the city is returning to its preeminent position in Australia’s economy as other areas struggle with the end of a China-led mining boom. As the country’s newly installed prime minister and treasurer begin formulating their program, the economic model forged by a fellow Liberal Party leader offers a template.
New South Wales Premier Mike Baird, an affable former banker at HSBC Holdings Plc and Deutsche Bank AG, is plowing funds from public-asset sales into urgently needed roads and railways in a city whose congestion now ranks alongside New York’s.
“Baird has created good economic conditions that underpinned confidence, and the doors to reform opened,” said Stephen Walters, chief Australia economist at JPMorgan Chase & Co. in Sydney and a former treasury official of Western Australia, the mining state that previously drove the nation’s growth. “He’s made his own luck through the combination of being a very good communicator with solid policies. It’s a recipe that could work well at the national level.”
With the strongest jobs growth and the lowest state unemployment rate in Australia, and the fastest-rising retail sales and most rapidly expanding economy in the country, Sydney and New South Wales are riding high under 47-year-old Baird.
In contrast, national unemployment is near the worst in 13 years, growth has been less than its long-term average for six of the past seven years and wage gains are at recessionary levels. While Prime Minister Malcolm Turnbull and Treasurer Scott Morrison have little time to make inroads into those challenges before an election due within 12 months, a credible reform program could help them craft a fresh narrative.
Baird won re-election in March campaigning on plans to raise A$20 billion ($14 billion) from sales of electricity assets to fund railways, roads, schools and hospitals. At a national level, infrastructure remains poor: Aussies taking a Sydney-to-Melbourne train trundle along for 11 hours -- about the same as it took their grandparents.
Baird, who was rated as Australia’s most popular politician in a Newspoll Friday, was able to successfully sell privatization to voters even though a majority of them were against the plan three weeks before the state election. His success was at odds with fellow conservative premier in Queensland, Campbell Newman, who two months earlier campaigned on a similar platform only to be thrown out of office after just one term.
“Baird’s authentic and doesn’t take himself too seriously,” said Andrew Hughes, a lecturer on political marketing at Australian National University. “That builds trust with the public and helps them understand his story and what he’s trying to do with services like health and roads and infrastructure.”
Baird’s major drive has been infrastructure to cope with Sydney’s rising population. His infrastructure investment program includes A$30 billion for new motorways and rail projects in Sydney along with A$8 billion for schools and hospitals. Baird’s office declined a request for an interview to discuss the premier’s development model.
Baird on Monday announced plans to sell leases on a number of harborside sites and committed to using A$200 million of the proceeds to upgrade the city’s central ferry terminal.
At a national level, Turnbull will convene a summit of business, community and union leaders on Thursday, Oct. 1, to discuss policies that increase competitiveness and grow the economy.
The meeting will help the government “work towards a practical set of reforms that will help to create jobs, drive innovation and stimulate growth,” the new prime minister said in a statement Tuesday.
Turnbull’s government is due to deliver its mid-year budget update in December and Treasurer Morrison has said he is focused on developing domestic policy and plans to skip international events.
Baird has been helped by dynamics beyond his control. The national slowdown spurred the central bank to cut interest rates to a record low, propelling Sydney’s housing market and bringing windfall revenue to the state budget. Rising property values have also encouraged household spending.
While no state premier has gone on to become prime minister since World War II, Baird has entered the national reform debate, advocating an increase in the goods and services tax to 15 percent from 10 percent to pay for rising costs in areas such health and aged care.
Baird has faced criticism-- such as when he oversaw the eviction of impoverished residents from state housing near Sydney’s harbor to cash in on the property boom. Yet his political charm has limited the impact of his critics and kept the public’s focus on his championing of both public and private projects.
Last month, he opened the Barangaroo harborside park created from industrial wasteland, which is adjacent to a planned casino and six-star hotel project led by billionaire James Packer that is forecast to create more than 1,200 jobs.
Baird opened the park with former Labor Prime Minister Paul Keating, and then lured the famously combative 71-year-old into an interview on his Facebook page. He asked about the secret to political leadership.
“Imagination, fantasy, dreaming,” Keating said. Baird then teased the former Labor prime minister, saying, “That’s good. Dreams come true. So how far away am I from getting your vote?” Keating didn’t miss a beat. “You’d have to dream a bit longer, Mike. But I do like you, you know that.”