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Nats’ ‘stimulus’: $200K per job

Written By: - Date published: 11:45 am, December 15th, 2009 - 12 comments
Categories: economy, greens, national/act government, unemployment - Tags:

National claims it created 2,300 jobs with its stimulus spending. Of course, most of this supposed stimulus was smoke and mirrors – re-announcing existing spending – and 2,300 is bugger all when there are over quarter of a million Kiwis out of work. But I had a few more problems with this announcement.

Firstly, I can’t help but note that the government didn’t say how long these jobs lasted or if they were fulltime.

Secondly, hasn’t Paula Bennett been claiming to have created 4,000 jobs single-handed? I think it’s safe to assume that both 4,000 and 2,300 are total bollocks, with as much connection with reality as the Party’s production figures in 1984.

Thirdly, how did they manage to spend so much to create so few jobs? $500 million, 2,300 jobs – over $200,000 per job. That’s appalling. The Green’s Green New Deal scheme would create jobs for $50,000 each (not counting the multiplier effect).

Why the difference? Because National has spent the money on roads. A lot of money goes on materials and equipment that are imported, not creating jobs here. A lot of the roadworks are nice to have – new Kopu bridge, Rimutaka road straightening – but pretty low benefit to cost ratio stuff that doesn’t really boost the economy in any way.

A Green New Deal, on the other hand would create far more jobs for money spent by focusing on job intensive areas – forestry, home insulation, public transport.

National has flushed a lot of the money down the drain, creating few jobs on low priority, low-value work because of their myopic focus on roads. Meanwhile, a quarter of a million Kiwis who want to work can’t get jobs, and another 125,000 can’t get enough hours.

12 comments on “Nats’ ‘stimulus’: $200K per job ”

  1. fizzleplug 1

    Hah! When I saw the headline, I assumed they had employed 2300 public servants.

    (cue outrage that not every public servant makes that much money, I don’t understand, rah rah rah).

  2. Bennett has been claiming 4000 for some weeks now. I suspect she got the figures wrong because the 2400 jobs was not presented to her in a picture formate.

    Just a guess, because if she had lied when she said this and it had been recorded in say some where like Hansard then any credible political Journo would have picked up on it and reported that she has lied in the house.

    • Pete 2.1

      Bennett has been talking about ‘Job Ops’ and ‘Community Max’ job opportunities through MSD – the 4000 figure is ‘roles created’. As they stand they are short-term full-time employment – info is on the MSD and Work and Income websites.

      She talks about filling 3029 roles (and the number of roles created) on 24 November – Hansard here (sorry my linky skills are no good):

      So, either 729 jobs have been lost since then, or the left hand doesn’t know what the right hand is up to.

      The ‘Youth Opportunities Package’ these two processes were established under cost $152 (and I think has been expanded since) – was this included in the $500m cost estimated?

  3. ben 3

    This is a good post. Governments around the world have a horrible time in job creation, and it’s hard to find anything less than $100,000/job created (I’ll believe the green calculations when I see it). Furthermore, governments badly inflate jobs created by counting jobs saved that may well have existed anyway. the true cost/job reported by National is probably much higher.

    Where we probably disagree is whether a government even further to the left of the current one could have done any better. The horrible stimulus cost/job that governments all around the world suffer has, I would say, nothing to do with the political leanings of whoever is in charge, not much to do with the types of jobs being promoted, and everything to do with the massive difficulty governments have in handing out large gobs of money sensibly. The high cost/job is the product of the huge administrative costs and the cost of paying people to do uneconomic things, however good the intention is.

    • Clarke 3.1

      While governments may not be particularly flash at creating jobs, the private sector is certainly no great shakes either – the current consensus forecast is that unemployment will continue to remain high for some years to come:

      The forecasters expect unemployment to remain stubbornly high at 7 per cent over the March 2010 and March 2011 years, before improving to 6.3 per cent in March 2012.

      … hence the phrase “jobless recovery”. And it’s worth noting that even by 2012, unemployment will be nearly 3% higher than it was prior to National’s election victory.

      So given that the private sector doesn’t seem able to create jobs and you disagree with governments creating them, what should be done about the hundreds of thousands of New Zealanders who will be out of work between 2009 and 2012?

      • ben 3.1.1

        Well Clarke, the thing I take from the tremendous difficulty governments have in creating work is the contrast with the private sector. The performance of the private sector in finding work for 93.5% of the people who want it is not to be sniffed at. Add on frictional unemployment, people between jobs, and that number goes to 95.5%, give or take. Based on Bennett’s figures, the government would be bankrupt long before it could find the money to make work for 95% of the labour force.

        So its all a matter of perspective:

        So given that the private sector doesn’t seem able to create jobs

        Sure, you can call it a poor show, but only by ignoring the 95% of people in work or between jobs.

        • Clarke

          The performance of the private sector in finding work for 93.5% of the people who want it is not to be sniffed at.

          …. except in New Zealand the government accounts for 34.1% of GDP according to Statistics NZ (which, incidentally is lower than the 40.1% average for the OECD), and it seems likely that the government’s share of employment is similar.

          So your vaunted private sector only creates around 59.6% of the jobs in New Zealand, not the 93.5% you’re claiming.

          But that’s just nit-picking. Given that the private sector seems unable to bridge the unemployment gap – according to the economists – what is your proposed solution to having hundreds of thousands of New Zealanders out of work between now and 2012?

          • Chess Player

            “Given that the private sector seems unable to bridge the unemployment gap according to the economists what is your proposed solution to having hundreds of thousands of New Zealanders out of work between now and 2012?”

            Um, it is not the purpose of the private sector to create jobs, but to create profits.

            Creation of jobs is something that just goes along with the search for Profit, and could be considered by some to be a necessary evil.

            My proposal to having hundreds of thousands of New Zealanders out of work between now and 2012 would be for those people to stop looking for Employers and start looking for Customers.

          • ben

            Yes, alright, the distinction I was trying to draw was between the labour market and make-work schemes. As you point out “private sector” was the wrong term to use there.

            The labour market does a very, very good job IMHO – it is no trivial matter to not only find work for the great majority of people who want it, but to give them tasks that on average add rather than destroy value. The difficulty governments have in trying to mimic that process with make-work schemes emphasises the genuine complexity that the labour market handles effortlessly. For the people who have work, at least. Obviously it doesn’t solve every problem and unemployment is a problem.

            I don’t know what the answer to employing everybody who wants work is. It’s a hard problem.

  4. Draco T Bastard 4

    I still think that the lefts focus on jobs is the wrong focus. Being required to be in work 40+ hours per week plus travel time doesn’t really improve your life balance and freedom.

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