Inflation might be coming down but unemployment is still high, company liquidations are high, skilled people are leaving the country, goods and services are expensive, and we are looking down the barrel of a situation where paying for our social services – health, education, police – is getting harder and harder.
Paying for our badly needed infrastructure is a parallel challenge – in particular, roads, energy, rail, water.
Over the next 12 months, we all hope things will improve with Government initiatives but any serious economic policy shift impact is like moving an oil tanker – it takes time to take effect.
In the meantime, we all try to stay afloat and make a living.
So, apart from waiting for the tanker to eventually move, what are we seeing?
Let’s talk about the fancy new kid in town – Foreign Direct Investment (FDI). It’s actually not new – it’s a tool that has been around a long time.
Local investment is preferred, but FDI is not good or evil in its own right. We need investment, we want investment – especially here in Northland. The issue is how it is implemented.
“Bad” FDI would be an investor putting up a hotel (infrastructure we need, especially if we are to grow the high-end tourist market) but using all overseas construction to build it, staffing it with all overseas or transient staff, bringing in its own tourist market and taking all the profits out of New Zealand.
Paul Linton, chief executive of Northland Inc.
“Good” FDI would be an investor working closely in partnership with local communities and iwi, using local construction workers and professional services, training local people to work there and creating secure long-term jobs, and reinvesting part of the profits locally.
There is a sensible balance between the extremes of free-market capitalism of profit before people (think of the history of Air New Zealand, KiwiRail, Marsden Point oil refinery) and full-on protectionism (think import licences, tariff protection, huge subsidies, closed immigration policies and quotas).
New Zealanders are some of the most fair and reasonable people on this planet - that’s why so many people globally love us. It’s time we stood up for a bit of balance for ourselves.
Successful countries started their economic path by protecting their fledgling industries and easing that protection as they became globally competitive. We still see this all over the world. To get that balance, we need a little bit of that for ourselves right now.
The Government’s economic growth agenda seems to say the right things – but what we also need is something right now to help keep our jobs, keep our companies afloat and continue to contribute to our national coffers.
Government and council procurement is massive in New Zealand – let’s start with that right now. Why are we consolidating huge Government contracts and issuing them to overseas companies to save a few pennies?
Our school lunch programme is an example of this, although we have yet to see how successful it will be.
We are already hearing from teachers and students what they think. However, what about the impact on our local suppliers who provided high-quality meals that students liked?
Why don’t we have instead a mandated high percentage of local content (and that means local to the area; Northland in our case) with large companies contracted to deliver on this – not a “best endeavours” – and helping to train locals if needed to meet contract conditions to be able to tender for small packages.
Some councils, especially here in Northland, already have a high local supplier base but we need a nationwide policy from central Government too – especially as the large infrastructure projects get going. As well as export growth, we need to look after the jobs that are already here.
It’s time for some balance in our economic thinking – foreign and local investment, export growth and looking after our people who are already here and working.
