I believe that New Zealand can only control its own future with strong, sustainable local industries. I would imagine that everyone reading this would agree, even if we don’t agree on how you get them.
Today I released the Kiwi Jobs Bill (PDF link), my first Private Members Bill which aims to maximise opportunities for competitive local businesses when tendering for large government projects.
The Bill establishes a Commission of Inquiry to compare government procurement policies in Australia and other comparable jurisdictions, to determine whether the NZ Government can have a policy that gives preference to local procurement without breaching our international trade obligations.
The Commission of Inquiry would have a deadline of six months to report to Parliament and the Minister for Economic Development would be required to decide within 30 days how its recommendations could be implemented.
New Zealand industries should be given the best possible chance of taking up new work within our shores by getting full, fair and reasonable opportunities to compete for tenders and major projects.
The Kiwi Jobs Bill is timely and important to provide encouragement and certainty to New Zealand industries that their skills and capabilities are important to our nation and our economic future.
Currently we have a situation with KiwiRail about to embark on a formal tender process to build 13 electric locomotives and 114 ‘cars’ for the electrification of Auckland rail.
Both KiwiRail and the government have ignored the strong independent economic case by reputable Berl Economics detailing the benefits of having Auckland’s new trains built in New Zealand, which could create up to 1275 new jobs.
It is currently unlikely that the tender document will contain a preference clause giving a stronger weighting to a build that includes Kiwi content.”
Most of our trading partners have clauses giving preference to local companies in tendering for government contracts
These government procurement policies recognise that value for money is about a broader economic benefit and not just about lowest price.
Many New Zealand industries would receive a boost from such a policy, including manufacturing, engineering and ICT.
The most pressing example is obviously KiwiRail’s Hillside and Woburn workshops, whose skills and capacity would be taken more seriously with preference given to local content, in building trains for Auckland.
If we want to build the NZ economy, and one of the main ways to do that is to ensure our local industries are given maximum opportunities to flourish.
Instead, will we see a situation where the National Government will accept only the lowest-cost bid, or a bid from a big overseas company writing Kiwi skills off as irrelevant and ignoring them.
National is reviewing its procurement policies, but the review appears more motivated by saving money than by maximising opportunities to local industry and thereby boosting our economy.
I think it’s time we gave ourselves a better chance. I hope you will support the Bill.
Just so we’re clear though, you believe that other Governments should take job creation & economic benefit into account when procuring, and thus prefer not to purchase from New Zealand suppliers, right?
If so, then your position is valid – even though I don’t agree – but if not…
Daniel Miles, just so we’re clear, C.lare indicated that those other governments already do exactly that – slant the playing field in their own companies’ favour.
Our current Govt is quite clear about itw lack of faith in NZ industry and in NZ workers. Ironically of course, National always positions itself as the natural partner of NZ small enterprise – but it appears that is just talk, because National is actually the natural partner of large multinational enterprise, and the interests of those large corporates is not always going to be the same as the interests of this country.
Hi Loota – Not all of them, and my question was whether Clare supports that.
Clare, you may find that many local and central government procurement policies currently give qualified preference to local suppliers and providers. I suspect the Tory review will remove these, making the situation even worse for local Kiwi businesses than you think.
Yes Clare! Great idea!
Damn m oderation
From memory I think the Aussies even have a 25% extra weighting to their own companies due to economic multipliers…
As a Dunedin MP I’m sure your not too fussed by Aucklanders having to ride 50 year old trains for a few more years, under completed electrification wires, but the dwaldling, both Labour and National, means we can’t wait for the delay in building these trains in NZ, I realise it was before you were in Parliament Clare but Labour doesn’t really have a leg to stand on here via it’s decision to build Wellington’s trains overseas, with far more money per capita and far more time…
Any programme written to ascertain whether an NZ company should get government contracts should include the local economic multiplier but also the opportunity cost of extra time required for production…
…getting full, fair and reasonable opportunities to compete for tenders and major projects.
You’re saying they currently don’t?
Our current Govt is quite clear about itw lack of faith in NZ industry
“Faith”?
Daniel, we have a much-trumpeted FTA with China, and they do exactly that.
Huawei can waltz in here and win the entire contract to roll out our superfast broadband infrastructure. But do you think a NZ tech company has that sort of freedom in China? Of course not. First right of refusal goes to Chinese companies, then Chinese bank financed companies, then… a NZ company is by default way down the list of preferred suppliers, making entry into China a largely wasted effort (unless you’re selling milk powder).
I support Clare’s bill or a form of it. Cost-benefit analysis of govt procurement contracts should have to address much wider positive/negative economic and social impacts. Sure, it’s possible that in the short term a foreign-based train-building contract could look better on the govt’s bottom line. But the requirement of a wider cost-benefit analysis may very well reveal that building them in NZ is better for NZ’s economy through job creation, retention and expertise.
Hi Decanker – yes, you’re right. China do a lot of things that I strongly disagree with, however the answer to that is very rarely “let’s do the same thing ourselves”. To condemn China for that while maintaining we should do it ourselves would be hypocritical in my mind.
Daniel – not so hypocritical if its about looking after your own national interests using smart strategies, and voicing perspectives to that effect.
I don’t understand, Loota. I accept that you’ve got a valid argument for us preferring local suppliers (I don’t agree, but that’s irrelevant), I’m just saying that if you believe that you can’t very well condemn anyone else for doing the same thing.
This ‘Berl Economics’ also say it may take an extra 2 years to build them in New Zealand. Doesn’t seem very efficient.
I didn’t see Loota or anyone else condemning anyone for going for the better option. All they, and I, have said is that we should be doing the same.
The BERL report on the trains shows that the cost of buying them overseas needs to be about 1/3rd what it will actually cost to get the same benefit as building them here. Getting them a little later will hurt a little but not to that extent.
Perhaps the condemnation of others is in light of us NOT doing the same thing?
I found this video yesterday – Sir John Rose from Rolls Royce jet engines talking about what it takes to build a high value advanced technology economy. Includes how advanced design should be considered a creative industry in of itself and how advanced manufacturing generates almost as much income again in the creation of the advanced services industry which necessarily goes along with it.
Its half an hour long but extremely worthwhile. Also note how he says that the UK economy and UK population base is too small to support true advanced industry on its own: the UK must learn to sell to the world, but the upside is that workers in these industries are very well paid.
http://www.youtube.com/watch?v=KKsIk0JY3lE
Hi Draco – that would be fine, if they did just say “It’s fine when China does it, and it would be great for us to do it too”. It just seems like people are trying to have it both ways – saying we should do it but refusing to say that China should as well. (excuse the possibly bad example of China).
I appreciate your intellectual honesty in saying that both we and other nations should procure from domestic companies. I don’t agree with you, but that’s just a difference of opinion – I can see where you’re coming from.
I just want it laid out really clear that we can’t have it both ways – hence the original question to Clare, to clarify that she would endorse other countries adopting legislation similar to hers, or retaining legislation they already have, to the detriment of kiwi exporting companies.
If this bill went through what policies do you think the commission might come up with? Will it be protectionist things like tariffs or other things? The bill is pretty devious in that it is pushing for protecionism without actually saying the word unless I am misunderstanding it.
Daniel Miles said:
Are you still pushing for one of our Opposition MPs to give her tick of approval to the trade policies of foreign industrial powers?
What the?
Well done Clare. You have opened up an important Labour discussion and look forward to getting on with it.
It’s not a difference of opinion at all. It’s me having read the facts that show, quite conclusively, that making stuff in NZ for NZ is better for NZ and you not believing those facts.
the facts that show, quite conclusively, that making stuff in NZ for NZ is better for NZ
It used to be the case that we assembled passenger vehicles in NZ for NZ… but that most certainly wasn’t better for NZ than importing vehicles directly, much more cheaply, and usually of significantly higher quality, from Japan.
Go and troll somewhere else. Clare
Isn’t this essentially Private/Public partnerships which is something the previous government was 100% opposed to.
Another `dead rat’ being swallowed as Labour moves away from Clarkism.
Hi Loota – do you honestly not understand my question, or are you just baiting me?
I’ll assume the former. What I’m asking is that if other nations that currently didn’t do this began doing it, it would clearly impact on the possibilities for New Zealand exporters to secure contracts with their Government. As it stands, we can protest this and argue for them not to, but if we adopt this legislation ourselves, I’d suggest that we can’t without being hypocrites. Hence my question is, is Clare arguing that this would be good for us but other countries shouldn’t do it, or is she arguing that we should do this, and it would be totally acceptable if other states did as well.
Given that Clare’s clearly read this thread though (from her comment above), I’m not really expecting an answer, but I’m just trying to politely explain to you, Loota, why I think the question is relevant. You’re welcome to disagree, but “what the?” isn’t really a counter-argument.
Sorry Draco – I didn’t see your post until after my other reply.
You’re right of course, if putting that policy in was a standalone thing. If we could both lobby for other nations to take our exports without impediment, and full competitive tender with their Govts, while at the same time only procuring domestically for our own Govt, we would have the best of both worlds. I’d suggest we can’t, and so it does become a matter of opinion which of those two you would prefer.
Phil said:
What you said is true. And it is true because the local industry did not have direction or directive to become a world class stand alone automotive industry.
In your own measures, the South Korean car industry should have been let die by the mid 1980′s. Instead, they could have imported far cheaper, far better cars from over the ditch (Japan). However their vehicle industry had a vision. To take pride of place with the top tier Japanese and European mass car manufacturers. 30 years on – that’s where they are – Sonata has been car of the year in NZ, and no one looks twice at you if you decide to buy a Hyundai instead of a Toyota because the quality is nearly equivalent and the value sometimes better.
However by your measures, South Korea should not have this massive, high currency earning, high tech industry to benefit from today, its young car industry should have been let wither on the vine decades ago.
So cheaper cars which are higher quality, but lower safety than Australia, is better for NZ? I dunno… maybe if cars were more expensive we would have more political will and people will for decent rail and public transport.
@Tracey: If past history is anything to go by, high car prices haven’t put off NZers from driving, but rather, high oil prices have, or anything else based on usage rahter than ownership. We already have the 3rd-highest car ownership rate in the world – higher than even car-crazy America.
http://www.jackyan.com/blog/2008/01/car-ownership-rates-say-less-about-our.html
Also, for some time, there have been more cars being produced in the world than motorists buying them.
Here’s a thought – would people live in car-dependent suburbs and exurbs, if they were made to meet the costs of building and maintaining the roads to reach them?
From Urban Archipelago (scroll down to Urban Independence section)
“The lesson is simple for urban residents: Seattle shouldn’t cast its lot with the rest of the state. Rural and suburban voters have shown again and again that they aren’t willing to fund urban infrastructure. Throughout Washington State, transportation taxes like 2002′s Referendum 51 have tanked, while anti-transit measures like Tim Eyman’s I-776 have passed overwhelmingly. While that might seem like grim news for cities like Seattle, there’s a silver lining: When cities set their own transportation priorities, truly urban systems (like the monorail) get funded and built, while the suburban mega-highways that lard initiatives like R-51 go unfunded. We don’t use suburban roads. We can let the suburbs figure out a way to pay for them.”
Daniel Miles – I think my post was quite clear – why are you trying to ask ClCu to give the tick of approval or disapproval to the industrial policies of other Govts? Its clearly outside of her role.
No I am not trying to bait you but I am trying to make a simple point: many of our major trading partners, the ones with strong economies e.g. Australia/China/US implement varying degrees of onshore favouritism, some extreme, some less so but it is there. Lets follow their lead.\
As an observation: you only seem to be concerned with us being potential hypocrites, you do not seem to be concerned with them being actually hypocritical towards us.
Yeah, I agree Loota – you get some extremely hypocritical stuff out of the US especially on this stuff.
I think we’ll have to agree to disagree on whether Clare should have to reply – you see it as her commenting on something outside her role, which is a valid view, but I see it as her commenting on the international ramifications of her policy, which I think does put it within her role. But sure, it’s an opinion thing.
I guess it’s just a fundamental difference, that you think we should follow their lead, and I think we should keep pushing for them to follow our lead.
Hi Daniel, at the end of it, all I want to see is more numerous higher paying, interesting, high added value, high skilled jobs that our children can eventually move into so that they do not have to flee NZ and go to Australia or Asia for career/economic reasons.
Yeah, I don’t doubt you at all. I think we all do, we just disagree on how… such is politics I guess!
Loota,
Hyundai is an interesting example, but not as directly relevant to the NZ context as you suggest – South Korea was and is manufacturing vehicles. NZ, on the other hand, was only invloved in the assembly. There was no value-add from assembling here, rather than in Japan (or Korea).
The second point I’d make is that Japan in the late 70′s and early 80′s was by no means a powerhouse of automotive engineering. Korea’s manufacturing know-how, by comparison, was on a relatively even footing during that time (Hyundai was founded in 1946).