NSW economy needs to rely less on coal and explore the feasibility of becoming a regional financial services hub to maintain prosperity, NSW Premier says
New South Wales needs to reduce its reliance on coal as its main export product and diversify its activities if it wants to retain the level of growth it has seen in recent decades.
Positioning Sydney as a global financial services hub and cutting red tape to stimulate investment into infrastructure, housing and technology are some of the key solutions to tackle the state’s key economic challenges, Chris Minns, Premier of NSW, said in a presentation at the Sydney Financial Forum on 2 July.
Every single jurisdiction has [told] us that in the coming years, they'll reduce their reliance on coal-fired power by the year's end. So we know that the state's biggest export, a leading driver of wealth and opportunity, not to mention royalties for New South Wales government coffers, will be under increasing pressure in the years ahead
“90 per cent of the coal that we dig out of the ground, we export to other markets. Every single jurisdiction has [told] us that in the coming years, they’ll reduce their reliance on coal-fired power by the year’s end,” Minns said at the forum, which was supported by Aware Super and First Sentier Investors.
“So we know that the state’s biggest export, a leading driver of wealth and opportunity, not to mention royalties for New South Wales government coffers, will be under increasing pressure in the years ahead, and we frankly have to get smarter and explore new markets with new products if we want to be as prosperous and as growth oriented as the state’s been.
“And I think that’s where financial services play a massive role. We believe that Sydney is the natural place for a Financial Services Centre, not just for Australia, but for the surrounding regional geographic area.
Last year, NSW exported $33 billion worth of coal, while its second-largest export product, gold, only represented $8 billion in exports, according to data from the Department of Foreign Affairs and Trade.
The idea to establish Sydney, or Australia, as a financial services hub for the region is not new, but has so far been thwarted by the tyranny of distance to centres of economic activity in Europe and the US, and the rivalry of Singapore and Hong Kong as destinations with favourable taxation rules to businesses.
But Minns argued that the growing capital pool under the superannuation system has made Australia an increasingly attractive destination for investors and financial services companies.
“We have one of the biggest pooled capital reserves in the world, and I think that’s beginning to dawn on some of the biggest financial markets around the world. This is a place to come to invest, but also to take advantage of this extraordinary amount of money that’s been accumulated as a result of superannuation,” he said.
Investment Delivery Authority to Fast Track Infrastructure
A key policy initiative to help make NSW a more attractive destination for investment capital is the budget proposal to establish an Investment Delivery Authority (IDA), which will aim to fast-track approvals for major projects across all industries, including advanced technologies and energy.
The IDA is modelled after the Housing Delivery Authority, which aims to speed up development proposals for residential developments.
“We’re stealing that HDA proposal and applying it to infrastructure, data centres, renewable energy projects, major initiatives that are hugely important for the states that are getting stuck in the same red tape I spoke to,” Minns said.
The IDA is expected to help around 30 large projects per year, bringing forward up to $50 billion of investment each year.
The authority will consider applications from eligible domestic and international investors for projects valued over $1 billion, starting in the 2025-26 financial year.
During his speech to the forum, Minns described how much existing loopholes in legislation can impact new projects. He recalled an incident where loopholes were used to delay or block renewable energy projects and said the IDA would put reforms in place that help investors to reduce bureaucratic hurdles.
“I won’t name the Regional Council, but I spoke to a mayor, who said that they had their housing approval time frames have blown out because all of their planners have been redirected to block a renewable energy project within their community.
“That’s the definition of unproductive; you’ve got a community that’s not having new housing, it’s been blocked as a result of bureaucracy, all in a vain attempt to stop new energy projects,” he said.
The IDA (Investment Delivery Authority) ... is going to make a major difference, and hopefully it becomes, and is sold as, an attractive incentive for people to invest in New South Wales, knowing that they can only get fast track approval for much needed infrastructure
Last year, the Australian Energy Council raised the issue of phantom dwellings being used to block renewable energy projects. Phantom dwellings are proposed residential developments that are likely never to be built, but can be used to delay or block renewable projects by exploiting legal and planning loopholes around proximity rules to residential buildings.
These proposed developments are intended to trigger additional environmental, social, and community impact assessments, thereby delaying approval processes and raising the cost for developers.
“In many cases, the planning applications for these phantom dwellings are subsequently withdrawn or left to lapse after the renewable project is either delayed or modified,” the council said.
The council pointed out a particular case near Nundle, southeast of Tamworth. The development of a $833 million wind farm, called The Hills of Gold Wind Farm, faced intense opposition from landowners, who ‘lodged speculative residential applications to prevent its construction’.
The NSW Department of Planning initially only approved 47 of the 64 proposed turbines, citing the impact on a planned, but unbuilt, house located just 330 meters from one of the proposed turbines.
The developer Engie warned that allowing phantom dwellings to influence planning decisions would make renewable projects commercially unviable due to the inflated costs associated with such delays.
Minns had good hopes the IDA would address some of these types of tactics.
“The IDA …, we think is going to make a major difference, and hopefully it becomes, and is sold as, an attractive incentive for people to invest in New South Wales, knowing that they can … get fast track approval for much needed infrastructure, as well as investment in New South Wales,” he said.
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