Today nearly two hundred plucky workers from Hillside Engineering in Dunedin joined by dozens of cold, wet but staunch fellow Dunedin-ites stood in the Octagon in a freezing southerly to tell the National Government that we need a strong rail industry.
Kiwi jobs for kiwi workers was the message, along with Can we build trains in Dunedin? Yes we can is the answer. At a competitive price. And in NZ Inc’s interests.
The case has been made. We have the skills and the capability. If we can’t compete on labour costs with the likes of China, we certainly can on quality and whole of life costs. And ability to deliver on time. The case for kiwi content stacks up.
Across New Zealand, people think it’s important that we build here, rather than go overseas. It’s a no brainer. Especially right now. We need to build confidence in our homegrown industry. We need to retain a manufacturing base. It’s at the heart of Dunedin’s economy, let alone important for the rest of NZ.
Why should the profit go elsewhere? At the very least, the bulk of the actual work should be done here even if we don’t hold the contract.
The EOI contains a limp clause about NZ content. It’s not good enough. There are two particular people standing in the way of NZ’s rail engineering industry having a future. Transport Minister Steven Joyce and Kiwirail CEO Jim Quinn. Neither of them believe in rail’s future. Both are trying to talk it down and to cast those who do support it as emotional rail enthusiasts.
Interesting, given the huge resurgence that rail is having elsewhere in the world. Quinn has a job to do. Joyce has a political imperative. The thing about Joyce is that he’s too cold, too clinical and economic rationalists don’t always resonate.
And he’s made a mistake. He slagged off at Kiwi skills. And he hasn’t even bothered to come and have a look at Hillside.
Leaving aside jokes about animal behaviour, if Steven Joyce can’t make it to Dunedin to have a look at Hillside’s ability to manufacture trains, then he’s chicken. It’s obviously not a priority.
Today Labour had five MPs at the rally. Myself, Pete Hodgson and David Parker from Dunedin. Trevor Mallard from Hutt South (where Kiwirail has its Woburn workshops) and Darren Hughes, Labour’s Transport spokesperson. Phil Goff sent his apologies and his support along with a bunch of other Labour MPs.
Labour thinks that Kiwi content should have preference in the tender for the carriages and engines for Auckland’s rail system.
What does the Government think? Is this important or isn’t it?
So Steven, come to Dunedin. Are you chicken or what?
Watch this clip from Local Channel 9 to see footage from today’s rally
So lets be clear- Does the labour party oppose trade generally or just in the area of rail cars?
Nick, let’s be clear, does National oppose giving work to all new zealanders in the name of profit, or just those in rail?
Hey we can trade, but why not prioritise putting jobs here first?
I cant speak for the national party, but i would guess they support the market giving jobs to New Zealanders where there is actually demand for goods produced in NZ. All our successful industries opperate on that basis. Only the most marginal industries survive on the basis of protectionism and pork barrel.
How far would you take that spud? One could argue that the fact we trade at all compromises New Zealand jobs- every good or service we import is produce by an overseas worker where it could have been produced by a New Zealand worker.
Besides, giving someone a job is not an end in itself, its the product produced from that job. Otherwise why not give thousands of people jobs by creating squads to dig holes in the ground and fill them in again?
Well, I can’t see us getting into the banana plantations anytime soon
I have no objection with getting good and services from overseas (with the strong exception of call centres 
) as we cannot produce everything here. But if we have the chance to make our own stuff and provide jobs for the locals then that is my preference! 
You have to produce useful stuff!
Nick C – have you studied the cost benefit analysis of having the housing built in NZ? I’ve been trying to get a copy of it. there has NEVER been a suggestion we build from scratch, engines would be imported, as even China does this (I understand). IF it will cost the same to build them here or close, as offshore, why not build them here, better to pay the $600m back into our own economy?
But it won’t cost the same or can’t be done in the time frame required, that is why Kiwirail didn’t bid – apparently…
I know they are biased but the Union said they could.
Even IF it doesnt cost the same… their is a cost benefit in having the money circulate within NZ rather than in another economy, development and maintenance of skills, keeping people employed and so on.
@spud: Why is it that you oppose Banana plantations in NZ? I think you will find the exact same logic applies to rail cars.
I’ve often wondered if North Canterbury would be better investing in cotton rather than Dairy farms.
@Tracey
Sweet starchyness 
@Nick – NZ is only subtropical, so I think hotter countries are better for growing bananas
So using the same logic, hotter countries are better for growing trains
As someone who escaped Dunedin I’d say good on him for not going down there
(Seriously though its a great place to visit but not so good to live there
)
Would be a better place if they had some train building to boost the economy!
@Tracey – that is just an argument for a protectionist economy, i.e. if everything was made here all the money would circulate here all the time… It is far better for the economy for ideas, people and monet to circulate overseas (at least in part)…
Clare, what do you mean by “dig deeper”? It seems like that means “wait longer for your trains until they fall apart”. Yes/no/maybe?
@Nick
‘So lets be clear- Does the labour party oppose trade generally or just in the area of rail cars?’
We don’t trade, we buy stuff from other countries. There’s a big difference
Ok maybe I worded that wrong trade is an exchange of goods/services so buying stuff from other countries is trading but what I meant was we Import way more than we Export and that brings up all sort’s of problems (Debt and Unemployment two of the major ones) so we have to either Import less or Export more, building our own trains would mean we Import less.
To clarify my above comment, I mean that it seems that Clare is asking Aucklanders to wait another three years for our new electric trains, while our 1960s Perth trains fall apart alongside trains hauled by 1950s locomotives.
We’ve just finished spending $420 million on double-tracking the Western Line here in Auckland. Would be pretty stupid to make such a big investment and then not have any working trains to run on it until 2016.
People specialise – countries don’t. If countries try to then two things happen:
1.) They fail to develop and will always remain a low wage economy
2.) The majority of their people, who don’t want to work in the industries that the country has specialised in, leave because there’s nothing that they want to do and no hope that it will ever happen.
Price is not the key – total benefit is and for importing train cars the price would have to be 1/3rd what we can build them for and that ain’t gonna happen (the price that we can build them for is quite competitive and that even includes the necessary capital investment).
He most certainly was.
Actually, they didn’t bid because they were told by their CEO not to without him even having a look at the economics. A call made purely on belief, in other words, a business call made pure on delusion.
JMH said:
Jeremy please think about this and don’t simply default to neocon freemarket liberalism. Why? Because Protectionism is sometimes good. (when it has very specific time limited competitive objectives) Realise this: Every rich country in the world got to their priviledged position by slanting the playing field in their own favour.
1) No nascent high tech, high value added industry can start up and be immediately competitive with the worlds’ best. If they are not nurtured – protected if you like – during their start up phase they will be crushed. Think about Toyota, Hyundai, Sony and Samsung. When these companies started up their products were rubbish compared to American stereos and cars. Derivative, unreliable, lowly regarded. According to your doctrine these companies should never have been allowed to survive. Yet today they are world leaders and competitive with the best.
2) We are not trying to keep money in NZ. That is the very short term view. We are trying to keep money in NZ to develop advanced capabilities and industry here. Then to use those abilities to bring in masses of foreign currency into the NZ economy for the benefit of our country and our citizens. Think about the $1B/year wine industry. 25 years ago it was a joke and NZ’ers thought wine was for girlyboys. Now it is one of the country’s biggest export earners and brings a huge amount of hard foreign currency onshore.
No advanced economy got to where it is today by using free market principles. Once their industries became highly competitive those same countries pushed the free market philosophy to deliver their corporations access to everyone else’s markets.
It starts with self-interest and it finishes with self-interest.
DTB said:
Uh…which advanced high capita per income economy has this ever occurred to? I think you are stating a hypothetical case which would never be realisable in reality.
People go to where the earning and career potential is. Generally that happens to be areas where advanced high tech or high value added specialisation is occurring.
Each of these specialist industries are going to require sales people, marketers, accountants, lawyers, cafeteria workers, cleaners, as well as their specialist engineers and scientists.
Why would they all leave if the money is rolling in?
In the same way Chris Carter was out of place vetoing the Whangamata Marina when he lacked the experience, knowledge and understanding to make a reasoned decision, I don’t expect Steven Joyce to make a decision about a potentially expensive mistake. Leave it to the experts, and from the sounds of it, they have already said no.
@ Loota:
Did you actually read what I wrote? Seriously, because what you wrote doesn’t apply, at all, to what I wrote.
@loota, I’m happy to support “protectionism” as far as targeted tax credits or even tax moratoriums in certain industries, especially within time limits (an excellent idea)…
On point 1, I could name 100 companies that haven’t had an protectionism and grown and been successful… Think about what you advocate when you advocate for protectionism, basically companies are saying the competetion is too hard and we need help, the government passes a law to favour a company or takes other cmpanies money and gives it to it’s favoured company via taxation, small companies are edged out, monopolies grow, prices go up and people then wonder why we have big corporations writing their own regulations, corrupting our politicians and sticking their hand further and further into our pocket…
Ok Jeremy can you put down 5 decent sized NZ companies that remained 100% NZ owned and did not become a monopoly or oligoply and functioned fully with reasonable prices and no help from the state with no protectionism
What you said about Prices going up because of protectionism, remember that the most widely used form of protecionism is the Subsidy
We have built (and rebuilt) rolling stock – wagons, carriages and locomotives in NZ and can again. The benefits far outweigh the risks. Unlike other transport vehicles, rail vehicles have a very long life, by having a NZ build, generations of NZders would build and continue to maintain our rail vehicles. Clare also makes a very good point about this not just being about Hillside workshops, it is about NZ engineering space now and in the future.
Well done to all that organised and participated in the Dunedin march.
@Dylan, what is your point about the subsidy..? Subsidies were the worst thing about our old economy and almost killed us during the 80s and 90s… Subsidies don’t make goods cheaper they make some goods cheaper and other more expensive and cause people to work in less productive industries…
Fonterra
The Warehouse
Burger Fuel
2 Degrees
Trade Me
Off the top of my head without cross-checking all your critirea
@Jeremy
Good example of the Warehouse
Fonterra is a Monopsony and I dont care what anybody else sais, I don’t agree with food prices here and now
Why even mention 2 degrees? It’s a bad example on more levels than the requirements I said, our entire telecommunications structure is 4ucked it’s involved with monopoly and is amongst the worst cellphone pricing in the entire world
Burger fuel and trade me are good ones but anyway try and mention two more. And I was thinking of coperations bigger than accounting for a miserable fraction of our GDP.
And can you tell me how exactly Subsidies make other things more expensive? I can see how they would if you subsidised one firm in an industry but if you subsidise the entire industry I don’t see how it would cause a single other thing to rise
2 degrees have brought down prices quite significantly since they entered the market, as their market share grows they will do so more… I’m planning on changing to them (when I get around to it)…
Fonterra isn’t a monpoly it is a co-op of 10,000 competing businesses (farms)… It is one of the reasons we have the most efficient, unsubsidised farms in the world, able to out compete farms in low wage, fertile countries like Uragauy and Argentina… I love co-ops and think they are a real option for people (who can’t afford masses of shares, have a bit of get up and go but don’t want to start a company on their own) to have more democratic capitalism…
If you want to learn more about how destructive subsidies are economically I suggest you go to youtube and search for 3 videos called – Milton Freidman Free to Choose The Tyranny of Control, he is a libertarian and I don’t completely agree with the episode but he does a very good of explaining in easily understandable terms the problems with government subsidy…
Jeremy
Just coz somethings less $h1t than something else doesn’t mean it’s still not $h1t.
I said Fonterra was a monopsony not a monopoly (I know what a co-op is too). Monopoly = single seller Monopsony = single buyer. Monopsonies are just as capable as miscontrewing market equilibrium as monopolies or oligopolies are.
You are right that the co-op has prooven really beneficial for our farmer’s but that’s not the issue, the issue is what the larger bulk of the population living in urban areas have to pay for farmer’s good’s when they are buying off a co-op that’s ‘internationally competitive’ and it’s not fair when our urban population has to pay what richer overseas consumers are willing to pay for. Why do taxes pay for peoples Education + Health care + State housing for the exceptionally poor? Because they are necessities of life and I don’t see why Food should be any different. Subsidise food to keep it cheap I couldn’t care less over what effect it has on the farmer.
I agree with you that some subsidies/state injections can be really destructive, just realise that there are different kinds of subsidies (subsidising one firm and subsidising all firms producing a kind of good/service are completely different stories)
@Todd Vastler
Your right we did once build our own vehicles and I hope you and all the people in that march realise that the Exact and Single reason why we don’t anymore is because of free trade.
There is no good reason for them not to built here if the over all benefit the NZ economy and society outweighs the the additional cost.
As someone smart than me said:
The uncontested absurdities of today are the accepted slogans of tomorrow. They come to be accepted by degrees, by dint of constant pressure on one side and constant retreat on the other – until one day when they are suddenly declared to be the country’s official ideology.
@Dylan, never heard of a monopsony before, thanks for that – to quote Ralphie, “I’m learnding”… Anyway Fonterra doesn’t serve a monopsony, they don’t have a single customer – they have about 6 billion… You are free to go and start a farm and if you can produce food cheaper than a farm in Fonterra, sell it to NZ supermarkets and grow rich, anyone is…
Why should we pay international rates for food..? Because we then pay international market rates for electronics and plastic toys and resources and any of the billion other consumables, many much cheaper than we can produce and when amny nations do more and more of the world’s population focusses on doing what they can do most productively, cumulatively making the world wealthier, healthier and happier…
If you want us to make, for example, cars in NZ again you have to realise that that means we might have to pay $15,000 for a quality second hand car instead of $5,000, that is $10,000 less for living or buying consumables and guess what, to produce cars in NZ again we had to introduce a tariff and our trading partners respond in kind, Japan introduces one on TVs meaning we have to start producing TVs here, again at much higher cost than the Japanese can, the spiral continues till everyone in NZ has a job (producing things that we aren’t the best in the world at producing) but we are all getting paid a lot less, with our money not going as far, our exporters markets are drying up further shinking the economy and welcome to 1976 again… Watch the video I recommended…
You said:
“Why do taxes pay for peoples Education + Health care + State housing for the exceptionally poor? Because they are necessities of life and I don’t see why Food should be any different. Subsidise food to keep it cheap I couldn’t care less over what effect it has on the farmer.”
Where do the subsidies come from to magically keep food cheap..? Why they would come from PAYE and companies, meaning less money is going into people’s pockets at the end of the pay week, less money for food and less money is available for private people and companies to invest and expand business and jobs, all to create artifically low food prices… You would also have poor people then subsidising rich people’s food…
State control, subsidy and regulation of food production has been tried throughout history and in communist countries it destroyed food production, in democratic countries it slows the economy and it leads to waste on a massive scale – for example in the US the government subsides quit smoking campaigns/programmes AND tobacco farmers…
Education and Health Care are not necessities of life, maybe State Housing, food, water, air and clothing are necessities… State Education and Health Care are services we CHOOSE to fund as a wealthy nation because we deem them desirable…
Darn I misposted this on the wrong topic:
JMH you really need to watch this video
http://fora.tv/2007/09/10/Robert_Reich_on_Supercapitalism#fullprogram
Ahhhhh did you just criticise regulation of food production and then use cigarettes as an example to make your point?
Did you suddenly go right wing in the last month?
Frankly short termism doesn’t work here. You make people unable to afford good food and they will default to eating sh**. Cheap empty calories.
And guess what, society pays for that in the end as well.
Damn you have been studying out of a bad textbook.
Ahhhhhh OK, education and healthcare are not necessities of life in that you can go without them for 72 hours and not die but they are necessities for a sustainable productive economy/society which looks after its people.
So yeah, that is desirable, hope you are not suggesting that it is “optional”.
For course not, they’d be rioting in the streets if they ever tried to get rid of state health and education – and rightly so…
Haven’t gone right wing, I just think we need to run our economy better so we can pay for the things we want at a relatively low level of taxation…
My point about the cigarettes and tobacco was subsidies are a slippery, slippery slope and one we should avoid in favour of tax credits, IMHO…
I’d support removal of GST on healthy food for example…
Ahhhhhh I think you have the right idea, but I would suggest that this is not about running our current economy better, but transforming our current economy into something which does not exist right now.
High added value advanced industries and advanced services based economy is the way to go. An economy where we largely own as a country the means of value generation therefore we get to keep all the hard foreign currency generated on shore for use in NZ for our people and companies.
I think where we disagree Loota is that you want the government to be actively involved in leading the changes in our economy via direct production or through “picking winners” and investing, Japan-style while I think measures such tax credits in specific industries and a float of 49% of SOEs on the NZX over a period of 10 years that are only are available to NZ citizens and PRs, copying the French Health system, trying some fundamentally new ways of schooling are needed and leaving the rest of the economy to entrprenuers is the way to go…
I watched the video and I agree 110% with what Reich is saying, I’ve said it myself, the US is f****d, the corruption there is almost irredemable but I’d agrue that is the result of the government getting overly involved in the US economy and their citizenry overdoing it on greed… As Reich said the government gives one company an advantage and it’ll higher lobbiests to increase it and then the competition have to hire some, etc, etc all the while hurting the consumer’s pocket and making it harder for a small business to compete… I’d agrue that isn’t a true free market or capitalism at all and not a good argument for more involvement…
In NZ we can always use the power of taxation to set the tax level to pay for our health and education system… I think what many people argue for is a return to the pre-84 economy, completely based on us finding an incredibly profitable niche then setting up a protectist economy around it and that is just a recipe for Rogernomics 2, the last thing I think any of us wants to see…
JMH, sounds like we have a lot of common ground for discussion.
I should say that I haven’t seen anyone on this blog argue for a “back to the future” 1970’s or 1980 style of economy.
Don’t forget its not just Japan which created an advanced industry via picking winners, South Korea, Singapore, Ireland did as well, and the US maintains a massive subsidy of their high-tech industry e.g. by buying each F-22 which rolls of the production line at an amortised cost of US$350M apiece.
“I should say that I haven’t seen anyone on this blog argue for a “back to the future” 1970’s or 1980 style of economy.”
Well a few posts ago, Dylan was arguing for state subsidies for farming, very ‘72…
You might just change my mind on high tech subsidies, but not yet…
Also I would change the language from “subsidies” (very 1980) for high tech industries to “active nurturing”. And yes, things like tax credits and rates breaks are perfectly acceptable tools.
I think making Kiwisaver compulsary (which is desperately needed asap) would help in having funds for start ups, HT R & D, the Cullen fund legislation could be changed to allow some risker investment in NZ Inc…
Check out the McDiard (sp?) Institute for an group that needs it funding tripled (from $5m to $15m) and has already produced 4 spin off companies…
JMH, an interesting exercise would be to think – what would attract to NZ
- an Intel architecture group
- a Microsoft development programme
- a Ford design house
A local entreprenuer, finds an empty lot in East Tamaki, sources funding for a Top 10 in the world supercomputer, secures contracts with researchers from Auckland Uni, AUT, MIT to ensure it’s viability…
The supercomputer is centrally located on the lot with wings coming off it, one is a software wing, all wings has access to the centrally located computer, the entreprenuer then uses the advantage of NZ’s diversity to build a team of software engineers using the principals of highly successful teams, i.e. people from different cultures (different solutions to problems), groupings of two people who know each other or have worked together before (familiarity yet uncertainty in the group) and of course talent, the admin office houses the marketing team that then sells the service of the researchers to the highest international bidder…
The entreprenuer then looks for opportunities to use the remaining wings or expand the research facility/the power of the computer…
Just off the top of my head…
Nice one JMH…very nice…and actually you can put together something which will put through a whole bunch of TFLOPS for not that much money (one hundred thousand to two hundred thousand NZD should do it).
And I know just the guy up in AKL with the technical expertise too…