web analytics

Nats: economically illiterate

Written By: - Date published: 10:50 am, April 15th, 2010 - 22 comments
Categories: Economy, jobs, tax - Tags: ,

I thought the Nats were meant to be good with money. You know, they’re all ex-currency traders and Treasury officials, and one of the reasons people went over to National at the last election was the promise that National would deliver a ‘brighter future’ via a better economy (and tax cuts!).

But how economically illiterate do they have to be to send the NIWA research vessel Tangaroa to Singapore for a $20 million refit when VT Fitzroy at Devonport was ready and willing to do the work here?

Wayne Mapp’s excuse is that the Singaporean bid was several million lower than the VT Fitzroy bid.

Oh dear. Did the Nats really only consider the headline figure on the bids?

What about the corporate tax, GST, and income tax that would have flowed to the government if it had kept the work in New Zealand? What about the lower benefit payments by creating more work here?

And that’s just the first round of gains for the government. Then, you’ve got the multiplier effect of the workers spending their wages and creating more jobs for taxpaying workers.

The fiscal result for the government alone would surely be much better if they had kept the work in New Zealand. And that’s before we consider the wider gains for the country’s economy and society of keeping the work here.

On top of all that, the reality is that when you contract overseas you often get less reliable service. Just ask the Safe Air workers. They had been due to undertake refurbishment of the Air Force’s Hercules aircraft but the aircraft are stuck in upgrade work in Canada after the foreign contractor announced an indefinite suspension to the work in December. Result: 100 jobs lost in New Zealand.

But it looks like these supposed financial wizzs didn’t even consider any of that.

22 comments on “Nats: economically illiterate ”

  1. nzfp 1

    Well there’s the problem Marty “But it looks like these supposed financial wizzs didn’t even consider any of that.” Finance and Economics – while related – are not the same thing.

    • Bright Red 1.1

      so, you’re saying that the National government is totally ignorant of economics and that’s OK?

      • nzfp 1.1.1

        Not at all, I’m making a humours remark.

        However, while on the topic of Nationals economic and fiscal policies, when electing a government it is worth noting the financial interests of the key players within the government. For example, Bill English’s Trust/Rent/Tax Payer rip-off debacle where Bill English was invoicing the tax payer for rent paid for his rent of a house in Wellington which turned out to be owned by a trust controlled by him and his family – essentially he was charging the public to rent a house from himself – highlighted the fact that the English family – through various trusts and other financial vehicles – owns property around New Zealand. Consequently it is safe to assume that English would not advocate a imposition land tax in conjunction with the aboltition of income tax to create a tax revenue zero sum gain.

        A land tax would reduce the cost of housing to New Zealanders while providing a tax windfall to the government, while the abolition of income tax would reduce the cost of labour with the knock on effect of reducing the CPI by reducing the cost of products manufactured in New Zealand. However, a land tax would also reduce the profits of the landed gentry – like the English family – and would certainly reduce the profits of the banks and bankers like English and Key and all their mates. However a land tax – as demonstrated in the 1800s by the most influential of the classical economists David Ricardo, not to mention Adam smith, John Stuart Mills and Karl Marx – cannot be passed on to renters. This is because classical economic theory has proven that the tax on land is taken out of the interest paid to banks and not the rent – which is dictated by the market.

        So no I’m not saying National is ignorant of economics at all – I’m saying that Nationals economic and fiscal policies are geared to their interests – where I mean Bill English, John Key and their mates specifically and absolutely NOT the interests of National voters or the wider New Zealand community.

        If you still doubt me about land tax, take a few minutes to listen to American geo-onomist (geo-economist) in an interview on the Australia radio show renegade economist on 3CR. Wendell Fitzgerald discusses the conflict that land owning MP’s and bankers face as well as the merits of land tax vs income tax and how a land tax – a tax on unearned income, a free ride – could remove the requirement for income, value added, sales or any other tax on earned income.

        Wendell Fitzgerald — “Conflict on Interest” on Renegade Economist, 3CR (Thursday, 27 August 2009)

  2. toad 2

    Marty, I suspect it was because the Free Trade Agreement with Singapore precluded the Government from considering the corporate tax, GST, and income tax take it would have received if it had kept the work in New Zealand.

  3. Jim Nald 3


    Our wise Minister Wayne Mapp is determined to ensure NZ widens the economic gap with Singapore.

    Hey Kiwis who love to travel, how about moving to Singapore for work?

    Tip to VT Fitzroy peeps:
    See you in Singapore, whoop dee doo?

    Tip for another National Govt Taskforce:
    ‘How to close the gap with Singapore?’

  4. Indiana 4

    “Wayne Mapp’s excuse is that the Singaporean bid was several million lower than the VT Fitzroy bid.”

    Why then did VTF not simply match the Singaporean bid? What can they do in Singapore that we can’t do to bid more competitively?

  5. ianmac 5

    VTZF said that their wages were about $60 per hour and they couldn’t compete with Singapore’s $30 per hour.

  6. wibblewithoutapause 6

    Has anyone got any information on salary differences between NZ and Singapore in the industry sector being discussed. I was interested to know how such an educated society like Singapore could pay almost half the salary rate of New Zealand… I went to http://www.worldsalaries.org/newzealand.shtml

    These give salaries in USD so far as I can see… and i dont see a 2:1 ratio of salaries as was being claimed was the difference between the NZ bid and the Singaporean bid. So was the New Zealand bid padded up by the JV thinking it was a sure thing being based in NZ or was the Singaporean bid under market rates for this type of work? Or, could there be certain Singaporean government furnished tax breaks, incentives etc that allowed them to come in as the lower bidder? Ie based in a special economic zone which means their business costs may be subsidised?
    Does the NZ JV not have modern enough plant and equipment to undertake the fit out in a more effective and person-hour efficient way to beat the Singaporeans and others when it comes to such bids? Since I do not for a moment really buy the wages argument being the point of difference….

    • Realist 6.1

      The Singaporean bid was 20% less then V T Fitzroy. When service contracts are in the millions range this is a huge saving. Apart from that it was NIWA who made the decision.

      As for Singaporean wages – it is cheaper to live in Singapore for many S’porean workers who do not aspire to the luxuries expected by NZ workers. They have cheap Govt. housing, free medical, do not expect airconditioning, SUV’s, Armani suits, private health insurance and do not drink to the extent that we do and live on a cheaper and healthier diet than the West therefore living an economical and more family orientated lifestyle. And they are bloody hard workers!

      • wibblewithoutapause 6.1.1

        I would be impressed to find a kiwi company offering any benefits other than a wage.
        *Private health insurance from a kiwi employer ?- yeah right!
        *air conditioning…? – heck we should be so lucky
        *Armani suits..? Unless its a cheap imported knock off..not on my kiwi salary
        *SUVs….haha when your city is the country I don’t suppose thats a luxury of much use to your average Singaporean but then most kiwis only have them when the rest of the world is dumping its gas guzzling shitty old stock…I couldn’t afford to buy one let alone try n run one on my kiwi salary for sure!
        *Singaporeans are bloody hard workers – SO ARE KIWIS especially when they are given decent tools to work with from a company willing to invest in its infrastructure with or without government backing.

      • Jim Nald 6.1.2

        You are joking, right? Or being ironic??
        How often have you visited Singapore? And how long do you stay each time? And since when? And when was the last time you were there?
        How many friends and relatives of yours live there who you visit every few months and skype every day?
        What is the basis of your observations?
        That is a string of the stupidiest, most ignorant generalisations of Singapore and Singaporeans – totally out of sync from reality!

    • wtl 6.2

      Basically, the average wages in Singapore are cheaper than here because they exploit unskilled and semi-skilled workers from other Asian countries – paying them sh*t and having them work in appalling conditions. In my opinion, it pretty much borders on slave labour.. Pablo discusses this over an kiwipolitico, have a read if you are interested.

  7. djp 7

    If that is the case Marty then we may as well shut down all foreign trade

  8. Jim Nald 8

    The issue is how we engage in foreign trade; how we intervene, protect and develop local industries; how we ‘play’ the enabling, ambiguous, grey areas of international trade rules and laws –> for the benefit of NZ

    Some countries that started off from below us in the OECD played the foreign trade game to their strengths and advantage. And they have now overtaken us and are enjoying higher standard of living, eg Singapore and South Korea. Meanwhile, we have only read half the textbook, poorly executed half of that half, and failed miserably to cleverly follow through what we began.

    • wibblewithoutapause 8.1

      Thanks for the clarification, Jim … 😉
      We have to learn to play the game on what is really a very un-level playing field and when working to different rules for the same game….
      I do think it is wrong that the works went overseas, especially a government contract. You can bet your bottom dollar our cousins across the ditch and further afield would be more circumspect…maybe thats how they get a better lifestyle – within the rules you protect your own, keep the skills onshore and have the revenue to generate future wealth from innovation built from experience…
      SO…how can we do this, and explain it to the government as a novel (!) approach to future wealth generation that doesn’t rely on selling the family silver or screwing the third world with derivatives and currency speculation?

  9. Pablo 9


    I believe that your figures might be incorrect. SG$30/hour (roughly equivalent to NZ$ 31-32) would only apply to supervisory and managerial staff. The vast majority of those doing the labour would be foreign nationals paid far, far less.


    The comfy conditions you describe only apply to Singaporean citizens. Foreign workers of any sort are not, under any cicumstances, entitled to the benefits you describe, and they constitute the vast majroty of the blue collar labour force in the country (including shipyard workers). As for hard working–that may be a function of employer-biased labour laws and employer pressure under such laws rather than employee disposition. Moreover, Singaporeans do expect air conditioning. cars, maids and the like–that is the Singaporean lifestyle bought on the backs of cheap foreign labour. So your assessment of the Singaporean ethos is a bit off.

    My take on the issue is found here: http://www.kiwipolitico.com/2010/04/niwa-knobs/ (thanks wtl for mentioning it).

  10. Nick C 10

    Actually Marty you are the one who lacks economic literacy and is completely shortsighted.

    Firstly for the sake of argument lets assume you are correct that the tax/other benefits to government from doing this in New Zealand would more than cancel out the several million dollar extra they would have to spend. Unlikely but possible.

    The governments position is economically efficient when one considers the benefits of trade. Lets also say that the singapore army needs to buy new winter uniforms for troops, and they can do that for $20million in New Zealand or $25million in singapore. The NZ option is cheaper but the singapore option will overall benefit the singapore govt more when tax/other benefits are considered.

    In a world where both governments choose to buy the goods in their local country they will both be paying a higher price and the tax benefits to each government will be equal (as each country has a $25+million project). In a world where each country buys the goods in the other country, the tax benefits are no different as again each country gets one project, but the costs are much higher for both governments.

    You may be thinking; “But what if the singapore government is selfish and doesnt want to to buy our clothing, then surely all the benefits go to singapore”. This is a silly position; given that the NZ government is paying Singapore $20million in NZ money the question is; what will they then do with that money? Its worthless unless they spend it in NZ. They could sell it on the international currency exchange, but then whoever buys it is going to spend it in NZ at some point anyway.

    • Marty G 10.1

      “Firstly for the sake of argument lets assume you are correct that the tax/other benefits to government from doing this in New Zealand would more than cancel out the several million dollar extra they would have to spend. Unlikely but possible.”

      completely likely, hard to see how it wouldn’t be the case.

      “You may be thinking; “But what if the singapore government is selfish and doesnt want to to buy our clothing, then surely all the benefits go to singapore’. This is a silly position; given that the NZ government is paying Singapore $20million in NZ money the question is; what will they then do with that money? Its worthless unless they spend it in NZ. They could sell it on the international currency exchange, but then whoever buys it is going to spend it in NZ at some point anyway.”

      oh. my. god. that’s in the top five dumbest comments so far on this site. You’re saying that when NZ spends money overseas it doesn’t really go overseas because the overseas buyer has to buy something in NZ otherwise they can’t enjoy the value of their money? That’s just retarded.

      First of all, we’ll be paying in Singaporean dollars or US dollars. Secondly, you need a lesson in the money supply and I’m not going to give it to you know because its sunny and i’m going outside.

  11. Nick C 11

    Marty you’re clearly an idiot, that statement is accurate as NZ dollars are ultimatly worthless unless spent in NZ. How will the government get those Singaporean or US dollars to pay them with? They will trade them for NZ dollars, and at some point whoever buys those NZ dollars will use them to buy NZ goods, regardless of how many times they are onsold on international currency markets. So the benefits flow back to NZ at some point anyway.

    • Marty G 11.1

      nick c. you’re getting confused because you don’t understand money supply.

      think about how inherently wrong your statement must be. If it were true then every purchase anyone in NZ makes of a foreign good or service must result in a purchase of new zealand goods and service of equal value. we don’t have to worry about the current account deficit (buying too many imports and exporting too little) because it magically takes care of itself.

  12. Nick C 12

    “If it were true then every purchase anyone in NZ makes of a foreign good or service must result in a purchase of new zealand goods and service of equal value. we don’t have to worry about the current account deficit (buying too many imports and exporting too little) because it magically takes care of itself.”

    EXACTLY!!! Well put!! In the real world its more complex than that when you take into account the full balance of payments, but if you isolate the current account then that is exactly what happens.

    The logical proof of this is: why would a foreigner sell us goods (which involves them putting in hard work and us recieving the actual benefit) if they didnt want something in return from us? The thing they get in return is cash, which they can then use to buy stuff off us. Logically they must buy it off us, otherwise what is the cost to us from paying for the good (consider here that money is really just a voucher for goods)? The current account deficit merely indicates that we owe the world some net exports, which will be payed off in the future.

Recent Comments

Recent Posts

  • Radhakrishnan to attend international forum tackling people smuggling and trafficking
    Associate Minister for Workplace Relations and Safety Priyanca Radhakrishnan will lead the New Zealand delegation at the Eighth Bali Process Ministerial Conference tomorrow. Minister Radhakrishnan will join other Ministers and business leaders from the Indo-Pacific region to promote international cooperation in the global fight against people smuggling and trafficking in ...
    BeehiveBy beehive.govt.nz
    5 hours ago
  • Carbon positive project to research impact of regenerative farming practices
    The Government is backing new research on the potential of regenerative farming practices to boost soil carbon in arable, vegetable and other crop growing systems, Agriculture Minister Damien O’Connor announced. “We’re committing more than $2 million over six years in Hawke’s Bay to help build up an evidence base on ...
    BeehiveBy beehive.govt.nz
    6 hours ago
  • Government takes new direction with policy refocus
    Work on the TVNZ/RNZ public media entity to stop; Radio NZ and NZ on Air to receive additional funding Social insurance scheme will not proceed this term The Human Rights (Incitement on Ground of Religious Belief) Amendment Bill to be withdrawn and not progressed this term. The matter to be ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • $5 million support package for flood affected Auckland businesses
    The Government is providing a $5 million package of emergency support to help businesses significantly affected by the recent flooding in Auckland. This includes: $3 million for flood recovery payments to help significantly affected businesses $1 million for mental wellbeing support through a boost to the First Steps programme $1 ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Temporary Accommodation Service activated to help flood affected Aucklanders
    The Government’s Temporary Accommodation Service (TAS) has been activated to support people displaced by the severe flooding and landslips in the Auckland region, Housing Minister Megan Woods says.  “TAS is now accepting registrations for people who cannot return to their homes and need assistance finding temporary accommodation.  The team will work ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Prime Ministers’ meeting reaffirms close trans-Tasman relationship
    Prime Minister Chris Hipkins and Australian Prime Minister Anthony Albanese today held their first bilateral meeting in Canberra. It was Chris Hipkins’ first overseas visit since he took office, reflecting the close relationship between New Zealand and Australia. “New Zealand has no closer partner than Australia. I was pleased to ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Immediate humanitarian support to Türkiye and Syria following earthquakes
    New Zealand will immediately provide humanitarian support to those affected by the earthquakes in Türkiye and Syria, Foreign Minister Nanaia Mahuta announced today. “Aotearoa New Zealand is deeply saddened by the loss of life and devastation caused by these earthquakes. Our thoughts are with the families and loved ones affected,” ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Pākinga Pā site to be gifted back to local hapū
    An historic Northland pā site with links to Ngāpuhi chief Hongi Hika is to be handed back to iwi, after collaboration by government, private landowners and local hapū. “It is fitting that the ceremony for the return of the Pākinga Pā site is during Waitangi weekend,” said Regional Development Minister ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • New initiatives to unlock Māori science and research resources
    The Government is investing in a suite of initiatives to unlock Māori and Pacific resources, talent and knowledge across the science and research sector, Research, Science and Innovation Minister Dr Ayesha Verrall announced today. Two new funds – He tipu ka hua and He aka ka toro – set to ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Advancing our relationship in India
    Foreign Minister Nanaia Mahuta departs for India tomorrow as she continues to reconnect Aotearoa New Zealand to the world.  The visit will begin in New Delhi where the Foreign Minister will meet with the Vice President Hon Jagdeep Dhankar and her Indian Government counterparts, External Affairs Minister S. Jaishankar and ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Government Northland housing investment to spark transformational change
    Over $10 million infrastructure funding to unlock housing in Whangārei The purchase of a 3.279 hectare site in Kerikeri to enable 56 new homes Northland becomes eligible for $100 million scheme for affordable rentals Multiple Northland communities will benefit from multiple Government housing investments, delivering thousands of new homes for ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Government investment safeguards Waitangi Treaty Grounds
    The Government is supporting one of Aotearoa New Zealand’s most significant historic sites, the Waitangi Treaty Grounds, as it continues to recover from the impacts of COVID-19. “The Waitangi Treaty Grounds are a taonga that we should protect and look after. This additional support will mean people can continue to ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Battle of Ohaeawai remembered
    A memorial event at a key battle site in the New Zealand land wars is an important event to mark the progress in relations between Māori and the Crown as we head towards Waitangi Day, Minister for Te Arawhiti Kelvin Davis said. The Battle of Ohaeawai in June 1845 saw ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • More Police deployed to the frontline
    More Police officers are being deployed to the frontline with the graduation of 54 new constables from the Royal New Zealand Police College today. The graduation ceremony for Recruit Wing 362 at Te Rauparaha Arena in Porirua was the first official event for Stuart Nash since his reappointment as Police ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Further support for upper North Island regions hit by significant weather
    The Government is unlocking an additional $700,000 in support for regions that have been badly hit by the recent flooding and storm damage in the upper North Island. “We’re supporting the response and recovery of Auckland, Waikato, Coromandel, Northland, and Bay of Plenty regions, through activating Enhanced Taskforce Green to ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • The Princess Royal to visit New Zealand
    Prime Minister Chris Hipkins has welcomed the announcement that Her Royal Highness The Princess Royal, Princess Anne, will visit New Zealand this month. “Princess Anne is travelling to Aotearoa at the request of the NZ Army’s Royal New Zealand Corps of Signals, of which she is Colonel in Chief, to ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government and horticulture sector target $12b in exports by 2035
    A new Government and industry strategy launched today has its sights on growing the value of New Zealand’s horticultural production to $12 billion by 2035, Agriculture Minister Damien O’Connor said. “Our food and fibre exports are vital to New Zealand’s economic security. We’re focussed on long-term strategies that build on ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Cost of living support extended for families and businesses
    25 cents per litre petrol excise duty cut extended to 30 June 2023 – reducing an average 60 litre tank of petrol by $17.25 Road User Charge discount will be re-introduced and continue through until 30 June Half price public transport fares extended to the end of June 2023 saving ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • More Kiwis in work as rising wages match inflation
    The strong economy has attracted more people into the workforce, with a record number of New Zealanders in paid work and wages rising to help with cost of living pressures. “The Government’s economic plan is delivering on more better-paid jobs, growing wages and creating more opportunities for more New Zealanders,” ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government boosts fund for Auckland flooding
    The Government is providing a further $1 million to the Mayoral Relief Fund to help communities in Auckland following flooding, Minister for Emergency Management Kieran McAnulty announced today. “Cabinet today agreed that, given the severity of the event, a further $1 million contribution be made. Cabinet wishes to be proactive ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Cabinet focused on bread and butter issues
    The new Cabinet will be focused on core bread and butter issues like the cost of living, education, health, housing and keeping communities and businesses safe, Prime Minister Chris Hipkins has announced. “We need a greater focus on what’s in front of New Zealanders right now. The new Cabinet line ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Prime Minister to meet with PM Albanese
    Prime Minister Chris Hipkins will travel to Canberra next week for an in person meeting with Australian Prime Minister, Anthony Albanese. “The trans-Tasman relationship is New Zealand’s closest and most important, and it was crucial to me that my first overseas trip as Prime Minister was to Australia,” Chris Hipkins ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government makes first payment to Auckland Flooding fund
    The Government is providing establishment funding of $100,000 to the Mayoral Relief Fund to help communities in Auckland following flooding, Minister for Emergency Management Kieran McAnulty announced. “We moved quickly to make available this funding to support Aucklanders while the full extent of the damage is being assessed,” Kieran McAnulty ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Government steps up to assist Auckland during flooding
    As the Mayor of Auckland has announced a state of emergency, the Government, through NEMA, is able to step up support for those affected by flooding in Auckland. “I’d urge people to follow the advice of authorities and check Auckland Emergency Management for the latest information. As always, the Government ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Poroporoaki: Titewhai Te Huia Hinewhare Harawira
    Ka papā te whatitiri, Hikohiko ana te uira, wāhi rua mai ana rā runga mai o Huruiki maunga Kua hinga te māreikura o te Nota, a Titewhai Harawira Nā reira, e te kahurangi, takoto, e moe Ka mōwai koa a Whakapara, kua uhia te Tai Tokerau e te kapua pōuri ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Enhanced Task Force Green Approved following Cyclone Hale
    Carmel Sepuloni, Minister for Social Development and Employment, has activated Enhanced Taskforce Green (ETFG) in response to flooding and damaged caused by Cyclone Hale in the Tairāwhiti region. Up to $500,000 will be made available to employ job seekers to support the clean-up. We are still investigating whether other parts ...
    BeehiveBy beehive.govt.nz
    2 weeks ago