Christian Kerr writes:

What on earth happened to the NSW state
economy? Did Bob Carr really have the media too entertained for anyone to notice?

“The NSW budget could be in deficit for the
next two years, the state’s new finance minister, Michael Costa, has admitted
on his first day in the job,” reports the SMH today.

plans an immediate audit of the
state’s finances, to be undertaken with premier/ treasurer Morris Iemma
and assistant treasurer John Della Bosca. What a charming NSW Labor
trio – and what
an interesting move.

Audits of state finances are
normally commissioned by incoming governments who need to find better reasons than
“core and non-core” for trimming back their more over-enthusiastic spending

“Mr Iemma denied his reshuffle was an
admission the state had been poorly run under Bob Carr,” the Herald reports. “It’s an acknowledgement that we are about driving economic activity,
investment, to keep us as the leading state,” says Iemma.

Chortle, chortle! Talk about a makeover!
First, there was Tuesday’s announcement
of a special infrastructure unit that will report
directly to the premier on key rail, water, energy and health projects,
and now this. It suggests there’s more to running a state than
knowing who
succeeded Zachary Taylor as president.

Costa has foreshadowed a round of cuts to
public expenditure and warned the state’s budget position will deteriorate
without “structural adjustment.”

“Mr Iemma’s decision to abolish the vendor
tax alone has probably wiped out the surplus,” the Herald says. “But the more
serious underlying issue is growing expenditure driven by rising salaries of
public servants. Mr Costa – who has never denied telling union officials it
would make no difference if 20% of public servants were sacked – said
yesterday the government would stick by its policy of no forced redundancies.”

At the same time, figures out yesterday
show “just 1,063 plans for new houses and apartments received approval from
Sydney’s local councils in June, fewer than in Perth or Brisbane and less than
a third than in Melbourne,” says The Australian.
Sydney is missing the housing recovery and the government is missing an
important cash cow.

Over at the Fin, Annabel Hepworth writes
about asset sales. More public-private partnerships are in the air. That’s a
big makeover of government. And what will it actually mean? A state election is
less than two years away. How much can you actually deliver in that time? Will
we see more “masterful inactivity,” as Nick Greiner put it – with just a sense
of urgency and crisis? Making Carl Scully infrastructure supremo isn’t a good
sign. Parramatta-Chatswood rail link, anyone?
Liverpool-Parramatta busway?

“He may have held the top job for a long
time, but history will quickly show it didn’t amount to much,” said Ross Gittins about Carr in the SMH on Saturday.
How did it happen? Too cosy a relationship with the media? Poor opposition?

Meanwhile, a dialect specialist corrects
our report yesterday that “Iemma” is Italian for Unsworth. There’s some important
subtleties here. Apparently “Iemma” means Unsworth – but without the grey

Peter Fray

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Peter Fray
Editor-in-chief of Crikey