When the Government goes shopping

Governments do a lot of shopping. Our navy needs ships, our health system needs drugs, our railways need trains and every government department seems to need a new IT system.

You and I expect the Government to drive a pretty hard bargain on our behalf. As tax payers we don’t want to pay anymore than we have to. So we demand that big ticket items are put out to tender, and that the Government uses its size to keep costs low.

In the case of drug buying, we even have a specialist outfit called Pharmac to do it for us. Pharmac is very effective at its job and the money it saves is re-directed into other parts of our health system.

But there are also times when driving the hardest bargain isn’t the sharpest thing to do. For example when the Government purchased the ANZAC frigates it made sure that a certain proportion of work would be done in New Zealand. So too with the more recent purchase of 6 inshore petrol vessels. The end result is that a bunch of marine engineering and construction expertise has been developed and retained in New Zealand and is now deployed in a range of marine industries.

Which raise the questions of trains. For over a hundred years New Zealand has built and maintained much of its own rolling stock, both at railway workshops and in the many private engineering companies that support those workshops.

Almost twenty years ago, under National, the railways were privatised and then systematically asset stripped. A decade or more later they were brought back, under Labour, and the re-build of the system began. New coal wagons or trans-alpine tourist carriages were needed. Urban passenger trains had to be re-built or modernised. Most of this work was done in New Zealand. Had it gone off shore then our rail engineering and construction expertise would have been lost.

In this instance the Government went shopping with two objectives; a good price and the development and retention of skills. Hillside Railway Workshops, and other Dunedin businesses, flourished.

However, in the last couple of years most of the construction business has gone overseas. The present government displays no commitment whatever to the New Zealand economy. They seem perfectly happy to collect our taxes, write a big cheque, and send it off shore. There is no requirement that part of the work is done in New Zealand. There is no commitment to further modernising Hillside so it can sharpen its pencil still further.

It is a very blinkered approach to shopping – the lowest price is not necessarily the same thing as the best value for money. In this case it isn’t.