Australia's wealthiest state mired in scandal

Updated January 8, 2009 02:36:07

The famous sails of the Sydney Opera House and the graceful arch of the city's Harbour Bridge are iconic images around the world.

Presenter: Linda Mottram
Speaker: Nathan Rees, NSW Premier; Jeff Kennett, former Victorian Premier;
Michael Costa, former NSW Treasurer; Chris Brown, Managing Director Tourism and Transport Forum


REES: I won't mince words, it's been a bad year.

MOTTRAM: Nathan Rees, the latest Labor Party leader to take over as premier of Australia's premier state, New South Wales.

REES: Worse than the sectarian divisions of the 1950s, worse than the losses in 1965 and 1988.

MOTTRAM: And yes, things are as bad as all that in New South Wales, where the Labor Party has ruled since 1995 for the first ten years under Bob Carr, then for three faltering years under Morris Iemma. When Nathan Rees became the third Labor leader to take the reigns, just three months ago, he inherited a state with a $A600 million budget deficit, after eight years of decline and public confidence battered.

While the rapidly declining economy is one cause of the state's malaise, it goes much wider. A litany of unsavoury relations about the activities of some state government ministers has also eroded public respect, but more even than that, there has long been bitter public resentment at the sorry condition of the state's infrastructure.

New South Wales may have a glittering Harbour, the Opera House and the Harbour Bridge, but it also has a rail transport system recently defrauded of $A21 million, that was ranked below that of Mumbai and New Mexico. Hospitals are spoken more often for their health disasters than their healing, teachers regularly strike over poor resourcing, and the roads in Sydney at least, feel as though they are permanently gridlocked. The sense of decay, decline and mismanagement is everywhere. The answer the rest of the world seems to agree is spending and more spending; that's not the view in New South Wales.

REPORTER: Politicians love to appeal to working families, but working families are now turning on the New South Wales government.

MOTTRAM: A news report on the recent mini state budget, that many in the state hoped would commit to addressing the desperate needs, but which only fuelled the despair, when it cancelled recently promised and much needed infrastructure projects. And in perhaps the most symbolic of moves, it even cancelled free bus travel for schoolchildren. The government was embarrassed into a backdown on that, only cementing the view that those in charge were very much not in control.

KENNETT: It's hard to imagine that a group of men and women over a sort of 14 year period could have been so negligent in their responsibilities.

MOTTRAM: Jeff Kennett also used to run an Australian state, the more southerly state of Victoria and while some dared to hope that Mr Rees, a former garbage collector and greenkeeper, might answer New South Wales's very big needs, Jeff Kennett thinks differently.

KENNETT: It's the character of the person who occupies the premier's office that is of concern. More so, it is the culture of the government that he leads and that culture is not one that would led to any bout of enthusiasm. It has stubbled, there has been growth mismanagement, there have been failures in terms of performance and therefore it's as much about the culture of the government as it is about their actual performance.

MOTTRAM: Some put the blame on the man who kept Labor in power in New South Wales the longest, Bob Carr. Certainly the state's most recent treasurer, Michael Costa, directed some harsh criticism at the Carr economic legacy, when Mr Costa resigned dramatically last September.

COSTA: Well let's make it clear, these problems are accumulated problems over 12 years. These are not problems that the Iemma Government is responsible for. The structural reform that I'm talking about had to be done over a 12-year period.

MOTTRAM: But amid the blame and counter blame, the lurching from crisis-to-crisis, there's also the bigger picture.

BROWN: I reckon New South Wales has lost its mojo, particularly Sydney.

MOTTRAM: Chris Brown has headed of the state's major tourism organisation for years, and he says something went wrong after Sydney hosted the Olympics in 2000.

BROWN: We hosted the world in 2000. For some unknown reason, we decided the job was done; instead of opening the door, we thought we'd completed the task and we've moved on basking in our own glory.

MOTTRAM: And Chris Brown says Australia's federal government will be compelled to help pull New South Wales out of economic trouble.

BROWN: And I understand those in other parts of the country who complained about it, but the country is going to go backwards until New South Wales is fixed. So you can whinge and whine all they like around the nation. If the federal government does not help fix New South Wales, you can forget about the rest of Australia. It's a third of the national economy. You can't write that off.

MOTTRAM: But some question whether New South Wales is capable of properly spending money that the national government is pumping in to help fund infrastructure projects, as it tries to stave off the worst of the global downturn. And if New South Wales can't do that, then a good deal more of the shine will have come off Australia's gateway state.