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The art of more: How asset recycling is making our lives...

14 Oct 2016


Good afternoon everyone and welcome – it’s great to see so many people here.


  • Chairman of QBE and former Premier of NSW, Nick Greiner
  • Geoff Roberts, Greater Sydney Commission
  • Steve McCann, Group CEO & Managing Director of LendLease

This event has been a long time in the making.

So too has the building we are all occupying this afternoon – our brand new International Convention Centre.

The old one was built and opened over 28 years ago, way back in 1988, which some of you may remember as our bicentenary year.

On a personal level for me, I had just embarked on my career in kindergarten.

Back in those days, the number plates on cars were engraved with “NSW the Premier State” – and I remember thinking how lucky I was, by some accident of birth, to be born in the best state in the nation.

In 1988, Bob Hawke was our Prime Minister, Nick Greiner was our Premier, Ben Johnson won 100m gold at the Seoul Olympics and Home and Away was first launched by the Seven Network.

It’s reassuring to know that 30 years later, Home and Away is still going strong.

Actually quite a lot has changed in Australia since then – but this convention centre hadn’t.

Due to it’s small size and dated facilities, it was estimated that Sydney was losing – in revenue – the equivalent of a Rugby World Cup each year.

But despite the obvious case for change, for many years, nothing was done.

The spirit may have been willing, but the ability to deliver was weak – or in many cases, non-existent.

Yet today here we are in a state of the art facility, containing the largest exhibition space in the nation, built in a style and fashion befitting a modern, global city of our pedigree.

This building is not just a convention centre.

This building is a symbol of the transformation, the rebirth and the revitalisation of this entire city and state.

We are seeing this change everywhere.

Take Darling Harbour for example.

Just metres from this facility, Grocon recently obtained planning approval for a $700m hotel redevelopment on the site of the IMAX cinema.

A little to the left, Mirvac is proposing a new plan for the dated Harbourside Shopping Centre.

And directly opposite – GPT, Brookfield and AMP Capital are proposing a renewal of Cockle Bay Wharf.

Meanwhile, just around the corner, the old Entertainment Centre is being replaced, Barangaroo is buzzing, and Circular Quay is earmarked for a facelift, making it once again the jewel in the crown of Sydney Harbour.

We now have more cranes in the sky than any other city in the world, second only to Dubai.

We are building light rail through the city, heavy rail in the suburbs, roads where they are needed and opening new schools and hospitals all around the state.

$73 billion dollars is being spent on infrastructure over the next four years, employing hundreds of thousands of people, turbo-charging our once dormant economy and creating prosperity for our workers, families and communities.

Once again – we have become the Premier state.

After years of inactivity – you might be wondering what’s changed to make this possible.

Today I want tell you just how the Baird Government has been able to match dreams with dollars – bringing to life many of the projects that our city and state so desperately need – just like this convention centre today,

The Goal

Let me begin with a quote from Virgin CEO Richard Branson

When asked once by a journalist why he was in the business world, he replied he wasn’t interested in just ‘being in business’ – he wanted to offer people value, make a real difference.

“A business”, he said, “is simply an idea to make other people’s lives better.”

It’s noteworthy to me that those who succeed in business often tend to put purpose over profit.

I like that quote because I think it applies to governments as well.

Governments are successful when they have a purpose beyond just ‘being in government’ – they too should be in the business of making the lives of their citizens better.

Our mission, from day 1, has been to make NSW a better place to live, work and flourish.

We want a premier city, in a premier state that is the envy of the world.

I would say that state governments of all political persuasions would share a similar goal.

Yet the fact is that very few achieve this.

What generally holds them back are what I call “The usual suspects”.

Tight budgets and shrinking revenues.

Growing debt and rising interest payments.

Unsustainable spending and uncontrolled costs.

And a difficult global financial climate where the only certainty is uncertainty.

These are the shackles that bind many governments to the status quo, unable to make the necessary reforms.

Unless you can make the financials work, everything else grinds to a halt.

The traditional recipe for addressing these challenges include the usual mix of higher taxes on business and families, ramping up borrowing or poorly targeted cost cutting.

This results in a number of entirely predictable consequences.

The first is a greater transfer of wealth from people to governments, meaning our families, communities and businesses have less money for themselves to spend on things they need and want.

The second is kicking the can down the road, piling up debt upon debt and hoping that another government, another generation somewhere down the track will fix the problem.

The third consequence is often the worst – a sense of disillusionment that governments cannot actually deliver meaningful reforms at all.

Here in NSW we have disrupted the old ways of doing things and turned traditional thinking on it’s head.

We are delivering a record spend on infrastructure.

At same we have delivered a sizeable budget surplus alongside zero next debt –  all the while maintaining a triple A credit rating.

The secret sauce to our fiscal success is a strategy pioneered by the Premier Mike Baird called ‘asset recycling’.

This is a fancy financial term for a very simple concept – making the most of what you have – or as I have called it ‘The Art of More’.

In a nutshell – asset recycling is about making better use of the assets we have on our balance sheet – leveraging them as a source of funding for infrastructure and capital expenditure.

This means we look inside for funding – rather than looking outside first.

This, combined with our openness to partnering with business and investment, means that finally, the financials can work.

At a macro level, we can see this with the poles and wires transaction.

Our citizens receive minimal benefits from owning these assets. But the billions of dollars derived from their long term lease will power our infrastructure ambitions for years to come.

But we have also used asset recycling to achieve excellence in property management as well.

Our Property Story

In 2012, a review found that the NSW Government owned over 270,000 different assets – around $70 billion worth of land and property.

When you include the general government sector as a whole, that increases to $131 billion.

Before that review, the government at the time did not know how much property they had, it’s value, who was using it or whether it was even being used at all.

As the old saying goes, if you don’t measure it you can’t manage it – and under the previous arrangements, agencies did not appreciate the cost of holding assets, particularly those that were surplus or underutilised.

This meant that many agencies in the past were putting in requests to buy new capital assets, without realising what they owned.

I used to see this first hand every week at Expenditure Review Committee or ERC.

This committee, chaired by the Treasurer and attended by the Premier and Deputy Premier has the job of approving new government spending.

Each week, government Ministers would pitch for funding for many worthwhile projects, some involving new capital expenditure.

But they did this while their portfolios were sitting on hundreds of millions of dollars worth of assets lying dormant on their balance sheet, some underutilised or not used at all.

These are taxpayer dollars that are locked away which cannot be spent on the things that are needed most.

This makes no sense.

Why for example, should the government own office buildings in prime CBD locations? Or vacant blocks of land? Or unused car parks?

It was out of this environment that our property management strategy was born.

It is predicated on the belief that we should make our money work for us, before we put out our hands asking for more.

At its most basic, it can be distilled into just one sentence – unless property assets are required for core service delivery, strategic objectives or have some special heritage significance, they should be sold or leased, with the unlocked capital put to better use.

It should be noted that before any asset goes through this process, a thorough cost/benefit analysis is conducted to carefully weigh up the sell or hold options.

As a result of the changes we’ve made, Ministers who attend ERC now need to have an asset recycling plan in place before new money is allocated for capital investment.

This is forcing agencies to be smarter about where they invest their capital and they often opt to swap old assets for new ones.

For example, the Opposition recently made hay of the fact that the old Windsor fire station in my electorate was being sold off. What they failed to mention is that the proceeds resulted in a brand new state of the art Windsor Fire Station being opened down the road.

In the last 3 years, the Government recycled more than $4.9 billion in property assets, diverting the proceeds to building infrastructure that our state needs.

To put this in context, our recycling pipeline represents only around 2% of the government asset balance and overall our asset base is increasing.

While this all sounds abstract, let me assure you that this strategy is having very real and tangible impacts for our community, allowing us to solve both financial and social problems.

For example, housing affordability is a problem our government is trying to tackle by increasing the housing supply.

Selling seven office buildings in the CBD, this yielded over $400m that was then diverted to the Housing Acceleration Fund.

But the best example of using asset recycling to solve social problems is what we’ve done in Miller’s Point.

Currently there are over 58,000 people on the social housing waiting list in this state.

Meanwhile, a small group of people were living in government owned public housing in Millers Point.

The problem is that these are unique, heritage style terraces that are no longer fit for purpose – meaning taxpayers are slugged with millions of dollar in repairs, maintenance and heritage preservation.

And so over the past 2 years we have sold around 100 of those Miller’s Point properties, relocating most of the existing tenants to social housing in other areas in and around the city.

Most importantly, the sale proceeds of $280 million have been directed solely to build new social housing stock to help address the backlog.

As a rough guide, every house sold in Miller’s point results in 3 new social houses being built in another location.

The maths of that equation seems pretty clear to me.

And so does the morality – it is simply unfair to outlay millions of dollars for a select few in Millers Point, while thousands of others are left with nothing.

Make no mistake – this is fundamentally an issue of social justice – and asset recycling lets us deliver for the people who need it most.

Our property strategy also includes the divestment of the Sirius building – which I recently described as about as sexy as the car park at my local supermarket.

Whatever your thoughts on the aesthetics of Sirius – and I think what happened in the 1970s should probably stay there – the key point is that the sale will deliver another $100 million in new social housing – money that otherwise wouldn’t be there.

Making better use of our assets is also high on the priority list.

For example, if you stroll down Bridge Street, you will have noticed two imposing sandstone buildings – the Department of Lands and Department of Education buildings.

Right now, these buildings house thousands of public servants and again cost taxpayers millions of dollars in maintenance.

But late last year we announced that they would be leased out and converted into high end luxury hotels – boosting the visitor economy, creating local employment, getting rid of our maintenance bill and opening the heritage for everyone to enjoy.

The public servants that were occupying prime CBD real estate are now being relocated to Western Sydney, joining over two thousand who have been shifted from the CBD  so far.

This has freed up more than 35,000 square metres in CBD office space – and we are currently going through a process to source over 60,000 square metres more in Western Sydney – the largest ever agency public sector leasing commitment in the region.

Now whilst we are focused on building for our future, we’re also committed to protecting our past.

It’s why we’ve invested over $15m to breathe new life into the Rocks, drawing on successful strategies in other heritage precincts around the world, including SoHo in New York City and Le Marais in Paris.

We’ve also boosted funding to our in house team of Stonemasons, allowing them to expand projects using the famous Sydney sandstone.

One project you may have seen in today’s papers will involve opening up and breathing new life into Macquarie St – a dead zone when it comes to foot traffic, especially on weekends.

This could mean a new rooftop bar on top of the State Library, with sweeping views of the Botanic Gardens, Opera House and the Harbour.

It could mean a new adaptive reuse for the Land & Property Information Building, opening it up to the public with perhaps a museum space, with retail and dining opportunities close by.

It will mean that the heritage of some of Australia’s oldest public buildings – like the World Heritage Listed Hyde Park Barracks, the Mint, Parliament House, and the State Library –  is preserved, restored and opened up.

Property NSW has worked with the Government Architect on this project, and we now have a draft strategic framework to guide the rejuvenation program.

We are calling on the public to comment on those guidelines, and we are also calling on the public for new ideas to restore the Macquarie Street heritage strip to its former glory.


Ladies and gentlemen, all of this change is possible because of two things – our policy of asset recycling and our openness to work with the business community to drive new investment.

It’s meant that we haven’t had to raise taxes – in fact, we’ve cut them.

It’s meant that we haven’t had to borrow money – in fact our net debt is zero

And it’s meant that our infrastructure pipeline is the envy of the world, creating jobs and lasting prosperity for our state and our people.

This isn’t actually a matter of ideology or political belief.

It’s all about what’s actually happening around you.

In a few years time, this city will have been fundamentally transformed.

When you walk through Wynyard Walk

When you stay in the Sandstones.

When you visit the Macquarie St rooftop.

When you dine in the Rocks or bike through Barangaroo or wander around Darling Harbour.

You should remember – it is asset recycling that has made this possible – and has made our lives better.

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