NEWS RELEASE

Kickstart NSW: The Business Plan to Cut Taxes and Create Jobs - 10 January 2006

Australian Business Limited and its affiliate the Illawarra Business Chamber have today unveiled a $3.5 billion plan to reduce NSW State Government spending, improve efficiency and to cut employment taxes.

Kickstart NSW, submitted to the NSW Audit of Government Expenditure, details over 30 separate measures to bring the NSW Budget into balance and to reduce levels of State taxation.

The Kickstart NSW plan will over the next three years:

� reduce expenditure by $1.4 billion
� improve cost recovery of Government services by $500 million
� provide an additional investment of $1.6 billion in better services through improved efficiency
� reduce employment taxes in NSW to those of neighbouring states � cutting Payroll Tax to 5.25% by 2008/09
� return the NSW Budget to balance
� preserve NSW�s Triple A credit rating.

Some of the 30 measures include:
� abolishing the Public Service Unattached list
� privatising the Parliamentary Dining Rooms
� introducing a school transport pass co-payment of $2 per week
� scrapping the Back to School Allowance and the M4/M5 Cashback Scheme
� closing the Privacy Commission and the Office of Women
� reversing expenditure increases for the Premier�s Department and the Cabinet Office
� removing the employer and employee organisation exemption from land tax.

Kickstart NSW also includes proposals to improve efficiencies in key service delivery areas (eg Department of Community Services and Department of Housing) with the benefits of the improved efficiencies returned in improved service delivery.

�We need to start a debate in NSW about the role of State Government and the standards we expect from it in terms of performance reporting and efficiency�, said Mark Grimson, Chief Executive Officer of the Illawarra Business Chamber.

�After a decade of rising employment, Budget surpluses and strong economic growth, the economy of NSW has started to falter. Kickstart NSW brings the Budget back into balance and as importantly, takes over $1.5 billion off NSW employment taxes over the next three years. It should not be a surprise that NSW has the highest employment taxes in Australia and a very low rate of employment growth.

Mr Grimson said the key challenge facing the NSW Government and Opposition was cutting Government expenditure and making NSW competitive again.

�With a projected Budget deficit of $500 million expected next year, cutting Government expenditure will be a fundamental test of the Government. As importantly, the State Opposition needs to identify how it will pay for its promises for the years 2007/08 onwards.

�It should also be a concern to both sides of politics that Treasury has consistently understated expenditure growth. In recent years, Treasury has under-estimated expenditure by an average of 17.1%. If this was repeated going forward it would mean an additional $7.7 billion in unbudgeted expenditure in 2008/09.

Mr Grimson said many of the proposed cuts would be unpopular but that it was crucial for NSW to act sooner rather than later.

�I don�t expect that the recommendations will meet universal acclaim, but it is critical we start a debate in NSW about the cost and functions of Government.

�Both sides of the political divide have argued for spending increases in recent years - continued spending increases are not sustainable.

Mr Grimson said NSW businesses should also share the burden of expenditure reduction.

�Business groups should not be immune from any expenditure cuts. One of the savings we identified was a land tax exemption for employer groups and trade unions which will directly impact organisations such as Australian Business Limited.

Mr Grimson said he was optimistic that the Government would seriously consider Kickstart NSW and the plan to cut payroll tax.

�We have seen progress in the last six months with Premier Iemma scrapping the vendor duty, cutting workers compensation premiums by 5% and commencing comprehensive reviews of Government expenditure and red tape. The Premier appears to be listening and a payroll tax cut must be a central component of making NSW competitive again.

Full copies of Kickstart NSW are available from www.australianbusiness.com.au/kickstartnsw

The Illawarra Business Chamber is affiliated with Australian Business Limited which has 28,000 members who employ at least 830,000 people. Australian Business Limited and the State Chamber of Commerce (NSW) have announced they will merge, subject to member approval, creating the largest business organisation in Australia.

For further information contact Mark Grimson on 4229 4722 or 0409 155 240