Editorial: Criticisms of Tokelau ferry contract misguided

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The local boat-building industry says it is outraged that it was not awarded a government contract to build a ferry which will link the New Zealand territory of Tokelau to Samoa. On almost every level, its anger is odd.

The 43-metre vessel will be built in Bangladesh for $8 million. According to this country's Marine Industry Association, the cheapest price for building it here would have been $14 million to $15 million. Awarding the contract to a New Zealand company would, therefore, have involved what amounts to a substantial handout to that boat-builder. In such circumstances, it is puzzling that the local industry feels even the slightest bit annoyed.

There is, however, one obvious reason for its dismay. That is the strong possibility that it believes the Government is again in the business of providing such largesse, rather than expecting private enterprises to stand on their own feet. There has been grounds for such thinking over the past year. First, the Government provided a $30 million subsidy to keep the Tiwai Pt smelter open and save jobs. Just before Christmas, it went one better by providing lavish rebates to the film-making industry to ensure the Avatar movies were produced in this country. One of the chief motivations was, again, the provision of jobs in a flagging industry.

The local boat-building industry is, likewise, struggling. Some companies have done well and won international plaudits for the building of America's Cup catamarans, benefiting in the case of Team New Zealand's boats from a taxpayer subsidy. But others have been barely surviving for the past five years. The industry maintains that awarding the ferry contract to a New Zealand company would have generated an additional $9 million in gross domestic product and the equivalent of 127 employees for a year. Given the precedent set in film-making and aluminium smelting, it has a case for asking why it was not accorded the same treatment.

That, of course, is the problem with mixed messages. Confusion is inevitable. But on this occasion, at least, the right decision has been made. Clearly, the Government was mindful of the pluses that would come from building the ferry locally. It indicated there was some room for manoeuvre by telling a Nelson boat-builder that its quote would need to be in the region of $9.5 million to $10 million. But the lowest bid from a New Zealand company, according to the Government, was about $23 million. That is almost three times the price of building the ferry in Bangladesh. For all the talk of the gains from buying New Zealand-made and of a new Government procurement policy that aims to create more incentives for local manufacturers, this was simply too wide a gap.

Other criticisms of the awarding of the contract are similarly misplaced. Chief among these is the perception that any ferry built in Bangladesh will not be up to the task of making the often dangerous voyage across the Pacific. This disregards the fact that Bangladesh has a long tradition of boat-building. While best known more recently for breaking up ships, it has now become a major constructor of small ocean-going vessels as Asia's traditional builders, such as South Korea and China, focus on larger container ships and tankers.

Western Marine Shipyard, which will construct the Tokelau ferry, is one of its most successful ship-builders.

There is no reason to suggest other than that the Government has got the best value for its money. There is also no reason to doubt that Tokelau will be well served by its new ferry. Indeed, there would be no questions whatsoever if the Government applied the right policy all the time.