With the New Zealand dollar at a record high and the high costs of borrowing, New Zealand’s industry is suffering. Rather than support local industry, the current Government has made life even harder by pursuing policies that have seen jobs exported. The Government is willing to invest taxpayer dollars in the Rugby World Cup and re-write legislation to support the Wellington movie industry and yet it only makes things harder for our domestic manufacturers and exporters. The decision to tender a $500 million contract to an overseas company to build railway carriages for Auckland’s light railway network lacked common sense. The Bureau of Economic Research made a strong economic case for keeping the jobs, tax dollars and industrial capacity in New Zealand and yet the government opted instead for the short-term gain to the bottomline. Common sense procurement policy is not about protecting industry but investing in industry.
The Productive Economy Council supports a procurement policy that would balance the costs of providing large infrastructure projects with the wider benefits of procuring a contract to local industry and the flow-on effects on jobs, wages, income tax and GST, and the long-term effects of building New Zealand industry. The KiwiRail contract was expected to add 770 – 1270 full-time equivalent jobs over the construction period; $232 – $250 million in added gross domestic product; Crown net revenue increase of $50 – $70 million and an improvement in the trade balance to the value of $122 million. BERL concluded that it made economic sense to pay up to 25% more for an infrastructure project if it was delivered by a New Zealand business. read more »