Confronted last week with a bleak report on the NSW economy, the response of the Premier was to argue about the definition of recession rather than act to protect jobs and aid the economy.
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With predictions that NSW could lose up to 10,000 jobs this year, Nathan Rees's reaction is not good news for families and businesses doing it tough. At times like these the Government should not simply stand on the sidelines and watch.
That is why, as the alternative government, the NSW Liberal-Nationals Coalition has proposed a 15 per cent one-off, across-the-board cut in payroll tax.
No one should pretend there are silver bullet solutions to the challenging times that confront us. But a payroll tax reduction is a practical way for government to help business and families alike.
A medium-sized business employing 60 people pays 13 per cent more in payroll tax in NSW compared with the national average. Our state's payroll tax rate is the highest of any mainland state. It acts as a disincentive for business to expand and increase jobs or to invest in NSW.
Payroll tax is a charge on jobs, so the most direct way we can protect jobs is to lower that tax. A 15 per cent reduction would result in the effective rate of payroll tax falling to 4.89 per cent for this calendar year - giving NSW one of the most competitive payroll tax rates in the nation.
The tax cut would keep almost $1 billion in NSW businesses - the equivalent of a payroll for almost 16,500 jobs. This measure would give business owners the ability to protect jobs during the downturn.
A one-off reduction in payroll tax, in the face of extraordinary global economic conditions and dire forecasts about jobs, would be a practical way for government to help business and families. It would signal to families and business that the government understood they were doing it tough and that it was prepared to support them. It would acknowledge the critical importance of a strong economy to the future of families and the state. Most importantly, it would be a positive measure that could help boost business confidence.
The Prime Minister, Kevin Rudd, and his Treasurer, Wayne Swan, have spent 12 months talking down the prospects of the national economy. Rees and the team he appointed to run the state's finances, the Treasurer, Eric Roozendaal, and the Finance Minister, Joe Tripodi, have joined in. There is nothing to be gained by this - these types of prophecies can become self-fulfilling.
Rees has backtracked on several of his mini-budget decisions. Now, with the state's unemployment rate the second highest in the nation, it is time he recognised the need to help business and families keep jobs in NSW. He cannot afford to ignore the issue.
Before November's mini-budget, the NSW Coalition released an economic blueprint for the state, Planning For Prosperity . It laid out our economic goals for NSW and the fiscal commitments that will guide us in government.
A Coalition government's decisions will be geared towards our economic vision for the state, not Labor's type of ad hoc decision-making that has left the NSW economy vulnerable. The Coalition would borrow within the AAA credit rating to build economic infrastructure, such as road and rail projects, for Sydney and NSW. These projects, and the jobs they would create, make sense at this time - as does our payroll tax proposal.
It supports our determination to make NSW Australia's first place to do business. Lowering taxes and cutting red tape are the keys to achieving this.
Without a strong economy and people in work, governments cannot fund essential infrastructure, service upgrades and the other work the community expects of it.
Our payroll tax cut will help protect jobs and keep the economy afloat as we chart a course through the choppy waters ahead.
Barry O'Farrell is the NSW Opposition Leader.
