Govt agencies should look at the big picture

Written By: - Date published: 1:15 am, May 4th, 2010 - 47 comments
Categories: Economy - Tags:

When making decisions, government bodies should act on what’s in the best interests of New Zealand as a whole, even if its not necessarily best for that government body. I would have thought that was unarguable. I mean, you expect your hand to work in the best interests of you as a unitary whole, even if it’s not in the best interests of the hand eh? Seems to me the same principle applies. The State is an artificial construct of our society and its sub-divisions like SOEs are artificial divisions of the State – the artifices exists for the benefit of the society, not the artifices.

But it seems like the Right doesn’t get that. It’s unarguable that as a country we will be better off if Kiwirail chooses to build Auckland’s new trains in New Zealand – we have the capability, the cost is in the same zone as foreign manufacturers would be able to offer, and we would gain jobs, wages, taxes, and all the associated gains that go with them, which we don’t get if the money goes overseas. But the Right’s response, as summed up by Steven Joyce in this appalling, cringing interview, is that Kiwirail must get the best commercial deal – it can only take its direct costs and benefits into account, not New Zealand’s wider interests

I hate the term New Zealand Inc with a passion because the Right uses it to reduce New Zealand to nothing more than a profit making vehicle for capitalists. But if NZ Inc does have any legitimate meaning it’s that we have to consider the impacts of decisions on the country as a whole.

What I would like to see is a fundamental redesigning of how government agencies tender for goods and services to consider the full economic costs and benefits to the country, not just that agency operating in splendid isolation.

This would see Kiwirail source the trains in this country. It would stop Solid Energy building its planned lignite-to-oil plant, which might make sense for Solid Energy alone but will leave the country with a huge carbon emissions bill.

There’s already a model for this. When NZTA undertakes projects it doesn’t look at the profit it can make because it isn’t mandated to make a profit, instead it looks at the costs and benefits to the country. It is on the basis of these cost and benefit ratios that it decides which projects to undertake (until Steven Joyce insists they build stupid projects where the costs to the country exceed the benefits, like his Holiday Highway). Why couldn’t a simplified version of NZTA’s process be used by other government agencies to decide which tenders to accept?

It just seems like common sense. But maybe the real reason the Right opposes this is because they fundamentally don’t believe in New Zealand and New Zealanders’ ability to do things for ourselves.

47 comments on “Govt agencies should look at the big picture”

  1. tc 1

    The right have an ideology which substitutes for logic/rational/fairness/research etc…….the performance thus far is classic park the brain in neutral and follow the ideology…….with ministers like Joyce/Wilkinson/Smith/Tolley/Brownlee etc etc it’s all they can do really.

  2. Gosman 2

    “It just seems like common sense. But maybe the real reason the Right opposes this is because they fundamentally don’t believe in New Zealand and New Zealanders’ ability to do things for ourselves.”


    Or maybe we haven’t forgotten the reasons why these commercial enterprises were reformed almost 25 years ago.

    If you want to turn them back into Government departments by all means campaign on that front. Id love to see that as official leftist policy.

    BTW has the Labour party come out on this issue? I haven’t heard anything official yet.

    • IrishBill 2.1

      You’re really arguing that the reforms that resulted in TrazRail, Telecom and the end of ECNZ were good for the country and the economy? Classic. I’ve got a great deal you might be interested in that involves a Nigerian prince a Swiss bank account and a small access fee…

      • Gosman 2.1.1

        So how come noone from any mainstream party is seriously arguing that the SOE reforms be rolled back?

        • IrishBill

          Righto. I accidentally smashed a glass last night and nobody argued that I should put it back together. I guess that means it was a good thing I smashed it.

          On the other hand the last government reversed the fiasco with Air NZ and Tranzrail so maybe some glasses can be unsmashed,

          Personally I’d go after the electricity sector next.

          • insider

            That would be the electricity sector that is already dominated by govt and community owned companies is it?

            • Bright Red

              yeah. try to keep up, insider. This is about government bodies making decisions on the basis of what is best for the country, rather than just what is best for that body. Currently, electricity companies don’t act that way – look at Genesis.

            • Puddleglum

              “govt and community owned companies”. Exactly insider – their acting like companies and putting their own interests ahead of society and the ‘community’. That’s the problem. Thanks for putting it in a nutshell.

  3. Gosman 3

    I can’t wait until Air NZ decides it needs new Aircraft and someone from the left argues they should be built in NZ to help our fledgling aerospace industry.

    • IrishBill 3.1

      I can’t wait until we decide to become a financial hub and the right argues we shouldn’t pick winners.

    • Marty G 3.2

      Gosman. NZ doesn’t have the industrial capacity to build large aircraft. It does have the capacity to build these trains.

      Now, do you have an actual argument against the building the trains here or against government bodies considering the benefits and costs to NZ as a whole when they make decisions – or are you just going to keep floundering for extreme nonsenses? Because it doesn’t exactly make you look like you have a strong argument.

      • Jim Nald 3.2.1

        Who wanna bet the rabid right will next toss up the extreme example of a space shuttle ?
        Go on, you know you want to 🙂

        captcha: chaoss

      • Nick C 3.2.2

        Thats weak Marty. If your logic holds then maybe we should invest the money get the industrial capacity to build large aircraft. Think of the jobs/tax income/multipier effect!

        • Ari

          Maybe we should. But that’s a very long-term policy that won’t start with us saying “let’s build aircraft!” It’s not as if we have the factories and the expertise already in that case.

          I think it broadly makes sense to make sure we have a manufacturing and service base for the things we need to run our country.

        • Lanthanide

          Or, perhaps we should invest in what little heavy industry we have left, before it all dries up.

          There’s a big difference between investing $$$$ to create an entire new industry, and investing $$ to keep an existing industry ticking along.

          This gets even more clear if you consider the potential post-peak world where trains are going to be in much higher demand than planes…

        • Jim Nald

          Build large aircraft? Wow! That is like like … so Think Big … so 70s, so Muldonist!
          Hey, come live in the new millennium – the policy initiatives are more sharply defined, targeted and strategic like train which builds on our existing strengths and extends our capabilities.

      • Gosman 3.2.3


        So it is all about industrial capacity is it?

        Perhaps we can renationalise Telecom and then they can manufacture their own mobile phones. If a small country like Finland can do it why can’t we eh?


        You guy’s are classice. Once again why isn’t this official Labour party policy again?

        • Captain Rehab

          You fucking retard.

        • Jim Nald

          Classice indeed. Such comments display the dangers of a little knowledge and partially learnt concepts. Mouth the words, pick up some phrases, and string along some sentences that might seem to sound credible, but there is little real thinking.

          captcha: funny

  4. Gosman, or should that be Gooseman!
    For your info we actually build planes in NZ, just not bloody great big ones.
    As for rail units, we are quite capable of building them in the two workshops we have in NZ.
    If it was high speed trains, then it would be a different story but it is not and we have years and years of experience here to do the work.
    What is never taken into the equations here is the “Social” costs. By that i mean the likes of unemployment benefits, the loss of experienced engineers, etc.
    We as a country pay a cost if we do not manufacture in NZ that should be taken in to account when letting contracts to overseas. This is a cost that we as taxpayers should want to see added to the equation before major purchases are made overseas.

  5. Jenny 5

    This government are exposing themselves as ignorant enemies of this country.

    It is our money raised from our taxes.

    We want it spent here.

    Screw the stupid cycle-way.

    It’s way overtime that this government did something worth while that delivers real jobs.

    The government says; No way.


    Forget it.

    All the platitudes and hand wringing and concern about unemployment that they displayed at their so called Jobs Summit was just cynical PR.

    Writers to The Standard have accused this government of being “a doing nothing government”, when in fact they are an actively destructive government hiding behind lies and PR opportunities to push their actively right wing agenda.

    A jobless recovery, that only benefits the financiers and speculators and bankers. In other words… “Key’s People.

    • Jim Nald 5.1

      oh don’t forget our gloriously aspirational leader wants to turn us into an international financial hub
      we would be so fantastically successful
      we’ll have milk cows and cash cows to squeezzzee soon, one in each hand!
      i’m so looking forward to the north and south islands being turned into cayman island v.2 and v.3
      we’ll look forward to hosting some top, very successful money launderers
      i wanna be aspirationally getting jobs to cook for them, clean their toilets and live in accommodation i rent from them
      quick quick bring them here

    • Jum 5.2

      …and bankers rhymes with…

  6. Adrian 6

    Forgive my mathematics, but at a rough estimate if 1200 carriage builders were to be paid say $600 aweek to not work ( unemployment, housing support, kids allowance etc ) that is about 14.4 million a year added to the Government bill if the trains were made elsewhere. Over the life of the project the total could be in excess of an extra $50 million. But, of course, how stupid of me, it’s the same amount of money to build the cycleway. Give those men a shovel, right now.

  7. Rob M 7

    The government is in a position where it’s current business expenses can be a source of future revenue and not only that reduce it’s future expenditure. By awarding contracts to NZ companies jobs and businesses are created that pay tax, dole numbers are reduced, families are bumped into higher income brackets where income subsidies like WFF are also reduced. It’s that simple. A 10 year old could understand it but we have a whole lot of whallahs like economists and treasury wonks warping on about comparative advantage and keeping government out of business. They’ve carried the ideological box for their big business sponsors for nigh on 30 years, lending the rape and pillage of our economy some intellectual/academic respectability. The scary thing is they actually believe the shit their spouting while it brings them no more comparative advantage than a steady job on a bureaucrats wage. Their corporate masters, who will trumpet which ever fashionable ideology brings them greatest reward and take a state handout when it suits them, benefit enormously.

  8. Trevor Mallard 8

    Gosman – Labour (Clare and I then Darren) were involved from last year. Talked with union and CTU and in Clare’s case local chamber and from those discussions came the BERL report.

    Darren did media statement and was on the radio supporting the bid yesterday. Red Alert blog and media statment from Clare yesterday.

    Clare and I are local members for the two workshops which together could do 70% of the work. Develop skills, do later projects etc. News for Joyce – we can’t all milk cows.

    • Jim Nald 8.1

      Might he have another cow in mind? He should give the Finance Minister another squeeze before the latter announces the budget.

    • Draco T Bastard 8.2

      News for Joyce we can’t all milk cows.

      Nor do we all want to. This NACT government seems intent in forcing everyone to either become farmers or leave the country to be able to do what they want.

    • Gosman 8.3

      So requiring Government owned businesses to purchase local goods and services on the basis of political decisions rather than if it makes good business sense is Labout party policy now?

      • Jim Nald 8.3.1

        Gee, wot refreshingly narrow thinking can be assumed about the Labout [sic] party policy.

  9. the sprout 9

    Joyce’s “No We Can’t” attitude really does illustrate how this Government is only planning to a 3 year time horizon.

    Total myopia for NZ’s longer-term interests.

    And of course total blindness to NZ’s social interests despite an acute awareness of corporate interests – but we’ll take that as read.

    • Roger 9.1

      I beg to differ on your argument. They don’t appear to be acutely aware of corporate interests either. The different in costs of the project being carried out from various countries was not significantly greater that doing it domestically if at all. The idea of having the job done in other countries by other firms creates distance and uncertainty due to lack of supervision to ensure things are done to specification and costs with logistics. You are right that they only have a short term view. John Key’s aspirations don’t go far beyond being the Prime Minister. You are right that they are blind to social interests. I suggest that this blindness is of greater severity in most other areas that involve anything more complicated than smiling and waving for cameras.

      • the sprout 9.1.1

        Fair enough Roger.

        I should have said “acutely aware of the interests of their corporate mates, in this instance offshore rolling stock manufacturers and vendors”.

  10. Roger 10

    Interesting point about the trains from Korea for Wellington. Claiming that Labour and the Greens buying trains from Korea as ironic is ridiculous. Since he is asking us to use our memory, I remember that Kiwirail came into existence in July 2008, only a few months before National got in. I remember that under private ownership, our rail system was a joke. I don’t understand the irony of buying trains from overseas when there are no other avenues. I do understand the irony though, of coming up with a stupid idea like a cycle way and pretending it will create thousands of jobs and then getting trains made overseas when the capital and labour are here and the contract to build will actually create jobs. Since Steven Joyce asks us to remember government actions and irony, lets remember the words of this lying snake and his corrupt mates when we go to vote again in 2011.

  11. graham 11

    does anyone here remember how usless the govt depts were before SOEs
    a mate of mine took 6 months to get a new phone line for his businesss in auckland
    he bribed a post office staff member with a bottle of scotch and 100 dollars and got pushed up the list
    and you want to go back to the days of crap service ,strikes
    what next rebuild the berlin wall?

    • felix 11.1

      Cool story bro.

    • Clarke 11.2

      Hey, I’ve got a story just like that! I’ve got a mate whose toll calls are being put up more than 25% because the foreign managers need to increase the profits being paid to the US hedge funds who want bigger shareholder dividends at his expense!

      Or maybe there’s the one about how power prices have increased despite the government’s so-called market-based reforms!

      Isn’t it a pity that my stories come from today’s paper and yours come from 25 years ago – it rather undermines the credibility of whatever point you’re trying to make.

    • the sprout 11.3

      hmm, that sounds like a perfectly well substantiated argument to throw the baby out with the bathwater. well done graham 😆

    • Bright Red 11.4

      so, graham. any actual argument against the actual suggestion of building the trains in NZ and Marty’s suggestion of getting government bodies to consider the whole of economy impact of their purchasing decisions?

    • Draco T Bastard 11.5

      Graham, stop lying. 20 to 25 years ago in Auckland you would have been connected within 3 weeks unless there was a hell of a lot of work to do first (laying the cable to the subdivision, putting in an exchange, etc) and no amount of “bribery” was going to change that.

      As for crap service – it’s actually worse today. I worked for a time on TelstraClear’s help desk and got a call from a customer with a noisy line that also had a lot of crosstalk. The normal way to address crosstalk is to shift the line onto another pair (crosstalk tends to be due to the physical alignment of the pairs within the cable) but this couldn’t be done because the cable in question was in full use. When under government ownership this would never have happened as the cable would have been replaced before it was full. This isn’t a waste either as some pairs in the cable will always have crosstalk on them and other faults.

      Oh, and you should see how long it takes to get ADSL connected in some areas. 6 months? You’d be lucky.

  12. Hamish 12

    >>> Interesting point about the trains from Korea for Wellington. Claiming that Labour and the Greens buying trains from Korea as ironic is ridiculous. Since he is asking us to use our memory, I remember that Kiwirail came into existence in July 2008, only a few months before National got in. I remember that under private ownership, our rail system was a joke

    Sure, Tranz Rail did run down the rail network, which is why we brought the rail network back in 2004 and renamed it Ontrack. Toll was only the operator, and they were doing a fantastic job at it.
    The rail cars for Wellington were ordered by the Wellington Council, signed off and approved of by Labour. I hope poor old 7% does not jump on this bandwagon, as it will be ANOTHER “shoot….fooot….self” moment for the poor guy…

    • Bright Red 12.1

      Um… link that labour signed off on the Wellington Council’s decision?

      Since when does central government approve council purchases?

    • Roger 12.2

      Ontrack only look after the rail network, not the carriages, therefore the argument that Steven Joyce brings up about the irony still doesn’t hold.

  13. Richard 13

    This kind of thinking is also endemic in large corporations. Frequently one division will make decisions that cost other divisions long-term.

    For example, I do a lot of work consulting on the energy efficiency of processing plants. A lot of the time, how energy efficient you can operate a facility is constrained by the decisions made when the facility was built. Frequently, building a factory comes out of a capital cost budget controlled by department A, whereas operating it comes out of the operating budget of department B. The managers of department A do not care about the budget of department B; they almost always buy the lowest capital cost — which is never the most energy efficient — and thereafter cause department B to incur large costs. It’s not only the fault of the managers of department A. It’s the way that the businesses are setup. The managers of department A can literally be fired for not pursing and purchasing the lowest capital cost equipment.

    Business “thinkers” frequently seem to be incapable of thinking about their own business holistically. It’s no surprise that they can’t think about the whole economy holistically. That would, afterall, be communism.

  14. Hamish 14

    >>> Ontrack only look after the rail network, not the carriages, therefore the argument that Steven Joyce brings up about the irony still doesn’t hold.

    True. They are owned by the local council body who send them to Hutt or Hill Side to be looked after… So his quote still stands…

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