Economy of New South Wales

Source: [http://www.dfat.gov.au/geo/fs/nsw.pdf dfat fact sheet]

History

At the time of Federation, New South Wales was a free trading state (as opposed to protectionist) with a broad revenue base including income tax. The state earned more revenue that it needed to run its services. This situation was reversed during World War 2 when the Commonwealth took responsibility for the collection of income tax. Following the war, the states attempted to re-enter the income tax field but were rebuffed by High Court rulings (Income Tax decisions).

The loss of income tax collection meant NSW became totally dependent on Federal Government funding in order to deliver the services it was constitutionally entitled to do (e.g. health, primary/secondary education, transport). It also forced a greater reliance on indirect taxations such as excise duty on cigarettes, alcohol, and gambling. However this was challenged by an individual who argued the constitution forbade the states from collecting taxation in this way. The High Court upheld the complaint and the Commonwealth was forced to collect these excises on behalf of the states. Fact|date=June 2007 The gradual eroding of an independent revenue base has weakened the economic independence of NSW as has the tying of grant money to specific programmes as directed by the Commonwealth.POV-statement|date=December 2007 Since NSW expends far more than in can ever earn it has little choice but to comply with Commonwealth demands.

Australia's Dominant Economy

NSW has the largest economy in Australia, valued at $320 billion in 2005-06 or about 33% of Australia's GDP. This is one third larger than that of the next State and Sydney alone accounts for almost one quarter of Australia's GDP.

The NSW economy is larger than each of the national economies of Hong Kong SAR, Thailand, Malaysia, Singapore, the Philippines and New Zealand.Fact|date=April 2008

NSW has a diversified and knowledge intensive economy. In Australia it accounts for:

*46% of the Australia's finance and insurance industry
*39% of the property and business services industry
*50% of the film and television production industry
*33% of the communications industry
*33% of the manufacturing industry.

NSW has the largest manufacturing industry in Australia, contributing $31.4 billion in 2005-06 to the State's economy.

The NSW Government has triple-A credit ratings from both Moody's and Standard & Poor's, proof of the State's strong economic credentials.

NSW is home to more than 65% of all Asia Pacific regional headquarters located in Australia as more than 600 companies recognise the State as the centre of Australian business.

About 600 contact centre companies operate 60,000 seats in NSW, 42% of the total for contact centres in Australia. Of all international multilingual contact centres in the Asia Pacific, 32% are in NSW, testimony to the State's multicultural strengths.

Employment in the financial services industry in Sydney is now nearly half the size of London's and more than one-third the size of New York City's.

In Australia NSW is home to:

*81% of Asia Pacific finance and insurance regional offices
*80% of domestic and foreign bank headquarters
*73% of property and business services regional offices
*60% of manufacturing regional headquarters
*76% of all information and communications technologies (ICT) regional headquarters
*46% of information and communications technology (ICT) businesses
*80% of multinational pharmaceutical companies in Australia and 70% of pharmaceutical companies with regional headquarters
*about 48% of the national market capitalisation of ASX listed biotechnology companies. These 41 companies have a market value of $11.65 billion.

Growing economy

In 2005-06, just under 39,000 new companies registered in NSW, compared with 38,000 in Victoria and fewer than 25,000 in Queensland.

NSW also has many more companies overall than the other States. Over 510,000 companies are registered in NSW with the Australian Securities and Investments Commission, almost 50,000 more than in Victoria and 269,000 more than Queensland.

Investment Climate

Business investment in NSW reached $39.5 billion in the 2005-06 financial year, a rise of 9.2% compared with the previous year. Over the same period NSW represented 28% of Australia's total business investment.

Capital spending on machinery and equipment by NSW businesses rose by 8.3% to $20.5 billion, encouraged by high levels of capacity utilisation and strong profitability.

Engineering and commercial building construction reached $14.1 billion in the 2005-06 financial year, an increase of 12.4% over 2004-05.

Businesses in NSW also increased their spending on intangible fixed assets, mostly in computer software and mineral exploration, with an investment of $4.3 billion, up by 7.7% in 2005-06.

The NSW Government is actively helping companies invest and grow their businesses in NSW. Since April 1999, the Department of State and Regional Development (DSRD) has facilitated over $10.1 billion in new private sector investment, and helped to create and retain more than 49,100 jobs. This includes 29,600 jobs and over $6.3 billion worth of investment in regional NSW.

Export

In 2005-06 NSW recorded $17.4 billion or 42 per cent of Australia's total services exports.

In 2005-06, total goods and services exports from NSW amounted to more than $44 billion, with the five largest exports being:

*travel services (19%) – goods and services purchased by travellers and foreign workers
*coal and coke (11.4%)
*transportation services (7.5%) - freight and domestic travel for non-residents
*non-ferrous metals (5.4%) – largely copper and aluminium
*metal ores and metal scrap (4.7%).

NSW merchandise (goods) exports for 2005-06 were worth A$26.8 billion, up 16.5 per cent on 2004-05.

In 2005-06, manufactured exports from NSW totalled $10.6 billion and accounted for 40% of the State's merchandise exports. Total elaborately transformed manufactures amounted to $7.1 billion in 2005, with significant contributions from medicinal and pharmaceutical products, and professional, scientific and controlling instruments.

See also

*Economy of Sydney
*New South Wales wine

Footnotes

*Source: [http://www.business.nsw.gov.au/investment/economy/ NSW Economy]
*Source: [http://www.nsw.gov.au/docs/NSW_Financial_Statement_230206.pdf Economical and Financial Statement] Morris Iemma MP February 23, 2006.