As IrishBill has said, National’s so-called ‘kick-start’ is pretty underwhelming – bringing forward a few more roads and a bigger bridge so that a couple of times a year those Aucklanders that can afford to holiday in the Coromandel won’t create such a big traffic jam, 69 new State houses in six months (= bugger all, the net number of State Houses grew by 500 in the last fiscal year), and an average of $8,000 per school, most of it already announced spending. National has purposely made its ‘plan’ confusing to make it sound larger, knowing that will help it get its spin past most journos. It has conflated new spending with spending that announced in last year’s Budget and obscured the fact that much of the really new spending won’t happen until after Bill English reckons the recession will be over. But when you strip away all the bollocks, it’s a big pile of not much.
Despite their claims, National has announced next to no economic stimulus to counter this recession. In fact, National’s biggest response to the recession has been de-stimulatory (albeit the right decision) – that was to reduce its tax cut package, which was going to be larger.
Where’s the vision? Where’s the plan to not only get the economy moving but to use this opportunity to rebuild a better economy?
Here’s some of what we should be doing:
The Greens’ housing insulation project. National is now saying it will be doing insulation on State houses but no-one’s sure what they mean by that – State houses are already being brought up to modern insulation standards, in fact the project is nearly complete. The Greens’ project would provide modern insulation to hundreds of thousands of Kiwis living in low-quality private (mostly rented) housing. It’s a great project that would pay for itself in reduced health costs alone while also also providing jobs and lower power bills for low-income families.
Energy efficiency. The Electricity Commission has a fascinating report on energy efficiency. It says that the technical means are available to improve our energy efficiency by 23% – ie we could get the same end use using only 77% of the electricity if we used the best available technology and procedures. It also reveals that we could make a 14% cut in our electricity use for less than the cost of producing the electricity. That means, if the Government were to fully subsidise the extra cost of using a set of energy efficient technologies (we’re not just eco-bulbs and insulation for hotwater tanks, we’re talking industrial and commercial equipment too) then the country as a whole would actually save money, as well as using 14% less power, which would mean we would hardly ever have to burn coal and other fossil fuels. If the Government only offered partial subsidies, the power saving would be less but the economic saving larger – if the Government spent just $37 million a year on incentives it would save 5% of our power use and have a net economic benefit to the country of $180 million.
Electric transport.Yesterday, to much excitement, it was announced the first electric cars will be going on sale in New Zealand later this year. We should certainly encourage the uptake of electric vehicles, especially electric public transport. I would like to see the Government investment in conjunction with the major bus companies and the bus assembly plants to create an indigenous electric or hybrid bus for large-scale production. It’s not rocket science (it’s automotive and battery science) and we have the technical capacity for this kind of project. It would create hi-tech jobs, exactly what we need. But don’t forget that the energy for transport has to come from somewhere. If its not coming from carrying around hundred year-old device that’s basically a controlled version of a gun firing powered by blowing up the remains of ancient plankton, it has to come from stationery electricity generation. And we’re not talking small amounts of energy here. Transport burning oil uses nearly half the energy generated in New Zealand, 50% more than the amount of energy get from electricity.
Organic farming. The fertilisers we use for non-organic farming are based on phosphorus. The world-supply of phosphorus is peaking. The price of milk powder is dropping because it was driven by an explosion in demand in China that has now dried up. Demand for organics, a more high-end product, has not suffered so much. Although demand growth for organics is slowing because of the recession, the price of organics has not tanked like it has for commodity foods. Organic farming doesn’t pollute our waterways like industrial farming does. And its more labour-intensive, perfect for creating useful jobs. The Government could encourage organic farming by charging farmers for the costs of their pollutant run-off and offering tax breaks for those that go organic.
Upskilling. Government departments once provided initial job experience for new workers. They saw it as a public service in parallel to their primary one to train-up workers above the level required. Many of these people then moved into the private sector, which reaped the benefits of what was essentially a massive apprenticeship programme. Since that was largely abolished by the idiot neo-libs, investment in upskilling the workforce has plummeted – the public sector doesn’t do it, the private sector is too cheap. If we want a brighter, better workforce we need to invest in it, the Government is the only organisation that is going to do it on any meaningful scale, and the recession is the perfect time to do it. It would mean National braking its commitment to cap the dreaded bureaucracy but they’ve already done that with nearly all their new policies and, frankly, we’ve got bigger worries than keeping some daft, populist promise.
Sovereign Wealth Fund. The depth of a recession is the right time to be buying assets. A fund comprising government investment, funds people choose to investment via Kiwisaver, and funds invested via Kiwibank could be tasked with buying assets of strategic value to our economy both in New Zealand and overseas. We would get great prices for these assets while the recessio lasts; no-one else has the money to buy. It would help reduce our current account deficit. It could even inject some life into our stock exchange (people who want to get hold of some nice cheap investments always say we should be selling SOEs to boost the stock-market, that’s rubbish, the Government selling a huge asset would just drive down the prices of other stocks, but if the Government started buying stock in important companies, that would lift prices across the market). If we don’t invest in buying these assets, the Chinese will – just look at what is happening to Rio Tinto, which owns the Bluff smelter.