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Let’s see the options

Written By: - Date published: 10:45 am, January 22nd, 2009 - 24 comments
Categories: economy - Tags:

Over at the Dim Post Danyl is complaining about our complaining again. In a classic piece of sophistry he seems to have decided the recession is going long and from that (not so absolute) absolute he has constructed a premise that we need “massive infrastructure projects” which are funded at the expense of nearly every programme put in place by the last government.

Apparently, this is the reason National doesn’t need to be releasing any policy yet.

Bullshit.

There are predictions the recession could be over by the end of this year, that it could go for five years, that it could signal a permanent resetting of the global economy for the next 3 decades.

Personally I’m going with two years. If I’m right then Danyl’s remedy would be disastrous. Massive infrastructure projects tend to take time to get going and the last thing anyone needs is a whole lot of costly long-term government works taking off in the middle of an expensive boom.

Of course I could be wrong and the recession could go longer than 2 years. If that’s the case then spending the lot on massive infrastructure investment is a bloody good idea. Of course if you pick wrong the country goes bankrupt.

The truth is we don’t know how long this recession will last. That’s a good reason not to implement a whole lot of policy at once but it’s an awful reason to not even discuss appropriate responses.

In my last post I listed three stimulatory ideas. I deliberately picked three ideas that could be started up quickly and easily pulled back or stepped up depending on the economic situation. Essentially, three ideas that would fit in a first stage stimulus package and could be used as economic levers. Which is the kind of thing we should be starting to see.

There is nothing to stop the government releasing a paper outlining a series of costed stimulus ideas that cover several contingencies and a mix of short, mid and long-term scenarios. Indeed they should do so in order that all these ideas can be critically assessed and properly tuned through consensus. But they won’t.

My prediction is that they will have their talk-fests, take all the ideas from them and tuck them safely under the rug. They’ll then rush through a series of anti-worker and pro-(big)business policies that they’ve had blueprints for since 1999 and they’ll do so using the old “hard times call for hard measures” mantra. Anyone else who remembers the 1984 economic summit won’t be surprised either. I hope I’m wrong.

24 comments on “Let’s see the options ”

  1. Massive infrastructure projects tend to take time to get going and the last thing anyone needs is a whole lot of costly long-term government works taking off in the middle of an expensive boom.

    I can’t help but notice that out of your three stimulus suggestions, two (rail, insulation) are by any definition massive infrastructure projects . . .

    IrishBill: actually by definition both of these projects are scalable.

  2. It is correct that massive infrastructure projects take time. National is not talking about brand new projects but about speeding up projects that Labour has already planned for. The rail projects are well underway and acceleration would be good, but because of National’s ideological stance I cannot see it happening.

    There are a few large road projects that are getting close to the build stage but they are really underwhelming. Transmission Gully does not measure up in economic terms, it is too expensive and the actual benefits are small. As well it will result in the canibalisation of rail patronage at a time when we should be putting as many people on the rail system as possible. The Waterview project is getting close to a start but there is not enough money in the NLTP to build it. The Waikato expressway could be completed but again the economic benefits are not there. And more roads only make people drive more, not good when we are at a stage where for environmental and foreign exchange reasons we should drive less.

    As has been said on a number of occasions two areas where there could be a large spend with significant economic, environmental and human benefits are retrofitting of houses and building wind turbines. The retrofitting economic analysis especially looks great. We save having to burn oil, health benefits are pretty immediate, and instead of concentrating the benefits in a small part of the country it could be spread throughout. Wind turbines can also come into their own with a bit of imagination, bravery and foresight.

    I am not holding my breath …

  3. Tigger 3

    Anyone know much about the efficacy of tidal power here? I had a cousin lambast me at a funeral last week over how we could be producing a large percentage of our power through tidal generators. And, of course, we have a bunch of coastline with which to do this. If it’s an option then it would be a great job creator/green solution.

  4. Tigger 5

    Sounds like it could work…
    http://www.energybulletin.net/node/6046

    This raises the prospect of my right wing loudmouth cousin being right…

  5. Bill 6

    How’s about, (seeing as how Key wants to be all pally with Obama who wants to up the anti in Afghanistan) injecting a pile of money into military hardware?

    The longer the depression lasts, the more involved becomes NZ in Afghanistan (and elsewhere?) meaning more purchasing of military hardware. Maybe some production facilities built here as part of a free trade arrangement?

    Perfect, no?

    Hell, could even bring those unemployment numbers down a bit.

    After thought. I wish I could be this facetious secure in the knowledge that such a scenario would be utterly unthinkable.

  6. Joseph 7

    There’s a test turbine going in that’s going to be finished by the end of this year in the Cook Straight according to this article – http://www.stuff.co.nz/4505727a11.html

    http://en.wikipedia.org/wiki/Kaipara_Harbour#Tidal_power – There’s 200 turbines going in Kaipara Habour which at peak could produce more energy than Northland uses.

    According to Wikipedia, the Cook Straight has an ability to generate 12 GigaWatts of electricity, which is more than 1 and 1/2 what we use.

  7. randal 8

    hey Irish bill…unless the project is a big one with lots of kickback then no-one is interested

  8. Zorr 9

    Looks like John Key is finally leading the charge *rolls eyes*

    http://www.stuff.co.nz/4826690a6160.html

    Wow… declaring that politicians shouldn’t recieve pay increases just 2 months after getting a reasonably massive raise…

    I mean, if he was as principled as he says he is, he would step in and politicize the process like he did with Herceptin and PHARMAC and roll back the previous pay raise and freeze the salaries there rather than this worthless “gesture”

    IrishBill says: it was a neat steal from Obama.

  9. cocamc 10

    if John Key hand’t done the same thing as the US then you’d complain he wasn’t following suit. Can’t win

  10. burt 11

    Zorr

    I think Key has been listening to people complaining that MP’s get circa 9% pay rises every year while the piss weak unions only ever manage to negotiate CPI for the lowest paid workers.

  11. Zorr 12

    @cocamc – he should have done this sooner. Obama was inaugurated yesterday and he has already frozen the pay at the White House. First thing National did was enter urgency and rush a bunch of other stuff through. John Key could have won by actually taking the initiative after the election rather than waiting until now.

  12. Matthew Pilott 13

    Joseph – read in the paper recently that the Kaipara thing was out – will be keen to hear if anyone knows that’s not the case.

    Danyl M – when my mate insulated his loft was he undertaking a ‘Massive infrastructure project’? I think that’s what Irish means by scalable – finding projects that can be started fast, and stopped easily. Rail and insulation can fit the bill – individual rail upgrades (double tracking and electrification) can be incremental. A project shouldn’t be massive if we don’t know whether massive is what’s needed.

  13. Tigger 14

    I’m with Zorr – Key politicised the Pharmac process to spend money (on something that is pretty much snake oil) but now he’s all hands off, it’s an independent body? This is why I have no time for this man, classic flip-flop mentality.

  14. higherstandard 15

    Tigger

    Trastuzumab has proven clinical benefits in advanced and early breast cancer and is not in any way “pretty much snake oil”.

  15. Rex Widerstrom 16

    Interesting you mention the ’84 summit IB… that sprung to mind immediately I heard Key use the word. Similarly Rudd held a “summit” on attaining office, rolling out the country’s “greatest thinkers” (which seemed to include an inordinate number of actors and sportspeople… who’d have thunk it) who were expected to set the world to rights in the space of a weekend.

    Turned out the whole thing was an orchestrated con job – now there’s a surprise – with a handful of the braver participants revealing that rather than a think fest the government dumped well-advanced policies into the workshops as they were commencing. Then anything that was recommended but which didn’t accord with the government’s plans mysteriously disappeared off the final summations.

    And then of course the whole thing was instantly forgotten when the crisis hit.

    Any summit called by any government (and remember, the ’84 and the ’08 Australian examples were run by – nominally – Labo(u)r governments) is simply going to be window dressing.

    Australia, at least, has the excuse of having wasted everyone’s time and a lot of money during a boom when no one cared. NZ, on the other hand, has done so during two crises when decisive (but, as you say, scaleable) action is what’s needed.

    Why not simply set up an interactive website and start a national discussion, while moving forward on some of the safer options such as those you’ve raised?

    To answer my own question: Because they (politicians generally) think we’re stupid.

  16. Jasper 17

    Irish Bill

    I commented on a previous post that Key was waiting to see what Obama does.

    Key is taking “where america leads, we follow” rhetoric a bit too far.

    Fucking useless gobshite. Someone needs to push him down some more stairs.

  17. Tigger 18

    hs – will have to agree to disagree here. Based on all the studies I’ve read I remain unconvinced of Herceptin’s claimed benefits. This is National peddling snake oil as a PR stunt. And we’re paying for it.

  18. higherstandard 19

    Tigger

    Perhaps you should read some peer reviewed clinical studies then – they are fairly conclusive, as is the opinion of NZ and international Oncologists who are the experts in the field.

  19. Dean 20

    Jasper:

    “Fucking useless gobshite. Someone needs to push him down some more stairs.”

    I’m going to quote this every time LP, SP et al have a bit of a whine about the “kiwiblog right”.

    [lprent: The difference is that J (or for that matter the comment stream) only does this on the odd occasion. My issue with the sewer is that it is hard to find 5 consequtive comments without finding one that is that bad or worse about someone. There are only a few people on the left who sound like big bruv or some of the other idiots that I’ve banned from here (and the ‘sod gets regular bans). Most of the sewer appears to be made up of people I’ve permanently banned for a lack of social behaviour and no ability to improve.]

  20. Dean 21

    “[lprent: The difference is that J (or for that matter the comment stream) only does this on the odd occasion. My issue with the sewer is that it is hard to find 5 consequtive comments without finding one that is that bad or worse about someone. There are only a few people on the left who sound like big bruv or some of the other idiots that I’ve banned from here (and the ‘sod gets regular bans). Most of the sewer appears to be made up of people I’ve permanently banned for a lack of social behaviour and no ability to improve.]”

    So those “on the left” are allowed to say such things as long as it’s not too often?

    [lprent: Not too often regardless what side it is from. And anticipating – I don’t moderate the comment streams on other sites, just here. But the people here don’t spend a lot of time on spewing meaningless vitriol and flame-wars. The people that can’t hack it here go elsewhere. Effectively the trolls are tending to concentrate in fewer sites as they get excluded from moderated sites. That means that people who do want to discuss things concentrate on moderated sites. It has all happened before. ]

  21. Felix 22

    Effectively the trolls are tending to concentrate in fewer sites as they get excluded from moderated sites. That means that people who do want to discuss things concentrate on moderated sites. It has all happened before.

    A microcosm of society, really.

  22. Jasper 23

    Dean:

    And as for the Kiwiblog right, on the whole, the users there deliberately and purposely incite flamewars like LP says.

    That comment I made about Key is probably the first vitriolic comment I’ve made on here.

    Blame it on being borne out of intense and ever growing frustration and watching Nero twiddle his thumbs while Rome burns.

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