Paul Keating's reforms have been "trashed by an opportunistic power deal between Labor and the Greens at a federal level," NSW Premier, Barry O'Farrell, told a CEDA audience in Sydney in his recent State of the State address.

"Turning its back on its 1980s economic reformist heritage, Labor is threatening our international competitiveness, it's threatening jobs, and it's threatening the living standards of all Australians," he said.

Mr O'Farrell said key focuses of the NSW Government included consolidating its fiscal strategy, boosting infrastructure and increasing housing supply and affordability.

Fiscal strategy

"Our fiscal strategy has always been to maintain our AAA rating, and to ensure expenses stay within revenues," he said.

"Retaining our AAA credit rating will minimise interest expense and maximise the amount available to spend on services and infrastructure over time.

"This Budget delivered a monumental turnaround, with the (NSW) Government recording expense growth lower than forecast for the first time since 1995 - we are the first government in 17 years to bring expenses in or under budget.

"A tough job got harder when efficiencies and funding choices hit a further hurdle with the news earlier this year that future NSW GST receipts would reduce by $5.2 billion.

"[But] our responsibility to taxpayers and citizens is to ensure that every taxpayer dollar is spent on their behalf as effectively as possible, which is why we have implemented fiscal reforms," he said.

Mr O'Farrell said his government would continue to "shine a light on wasteful lazy public sector management and poor services for citizens," and make the tough decisions.

"My colleagues and I will not shy away from difficult decisions if they are in the interests of taxpayers, and if we are convinced the right decision has been made," he said.

Market contestability and productivity

"Where there is a better way of delivering a government service or program, which maintains or exceeds appropriate standards, delivers results and defends public value, I believe government is morally and economically obliged to consider it," Mr O'Farrell said.

In reality customers have had to "endure poor public service offerings, because public providers have been shielded from the realities of the market…or public sector management has failed to create appropriate incentives and measures to improve public services which are legitimate monopolies," he said.

"We will continue to require organisations like Sydney Water, Roads and Maritime Services, and many others to face market testing," he said.

"If unions in Sydney Water want to take us on you may well see even greater private sector involvement in service delivery in that area."

Housing

The State Government is "determined to turn around" the "long standing undersupply of housing" in NSW, Mr O'Farrell said.

The NSW Government has allocated $561 million as part of its Building the State package to:

• Facilitate the supply of up to 76,000 new housing lots;
• Remove long-standing blockages in the development approval process;
• Give more incentives to boost new housing construction; and
• Deliver the most generous first homebuyer scheme for new homes with purchasers up to $19,245 better off.

Mr O'Farrell also said: "When you are opening up large tracks of land... there has to be employment lands identified as well."

"The best way to stop the long commutes in cities like Melbourne and Sydney is to ensure there are some jobs closer to home."

Planning

Following on the government's election commitment to overhaul the NSW planning system, the Green Paper - A New Planning System for New South Wales, outlines reforms and "invites a further round of community and industry comment, with a White Paper and draft legislation to be tabled in Parliament later this year," Mr O'Farrell said.

The reform of the planning system is aimed at unlocking job opportunities and attracting back investment that has gone to other states by increasing stakeholder consultation, taking the politics out of decision making and shifting to a performance based approval process, he said.

Infrastructure

On infrastructure Mr O'Farrell said: "By reinvesting capital into new economic infrastructure we improve our competitive edge, by supporting public and private productivity growth."

He said projects to be delivered from the budgeted 17 per cent increase in infrastructure spending over the next four years, included:

• Continuing commitments on the North West and South West rail links;
• $1.5 billion to the Pacific Highway duplication;
• $90 million to start major work on the Gerringong upgrade of the Princes Highway; and
• Other infrastructure priorities which will emerge from the Strategic Infrastructure Plan, which is expected to include the completion of a major road project.

"The scoping study on the lease of Port Botany will be extended to include Port Kembla, to unlock asset value for the state to reinvest in new infrastructure," he also said.

Business

The cost of public services and utilities and business regulation are another "handbrake on productivity," Mr O'Farrell said.

"We are tackling a range of pressures on cost of living and business," including a fairer system for the fire insurance levy, he said.

"And from July 1, reform commenced on the State's three electricity network businesses to reshape the electricity distribution industry and put downward pressure on electricity price rises.

"The Government is pursuing more than $400 million in savings over four years with efficiencies to be achieved through the new structural arrangements."

WorkCover

To get the Work Cover Authority's current $4.1 billion deficit under control, the NSW Government has "moved quickly to have legislation through Parliament," Mr O'Farrell said.

"Without these reforms, NSW businesses were facing premium hikes of thousands of dollars a year which the NSW Business Chamber estimated could cost 12,600 job opportunities," he said.

Mr O'Farrell said the legislation moved through parliament was aimed at "bringing the scheme back to doing what it should be", including a stronger focus on returning to work for less seriously injured workers, a stronger system of care for seriously injured workers and improving the costs of administration and ineffective medical inputs.

Internationalisation

Mr O'Farrell emphasised that NSW had to deepen the state's trade and export markets and encourage incoming investment into NSW. He said was looking forward to his next visit to China in August to follow up and further develop relationships made in his visit in 2011.

The Premier noted that NSW enjoys a 30 year relationship - "a relationship we value and which we see as critical to deepening trade engagement with China and to growing our export market for NSW products and services".