But there is a way forward with the right tools
Auckland, July 8, 2020
As the numbers of people made redundant as a result of Covid-19 rises, there is ever increasing pressure on the government to fix it.
The government started strongly by throwing $12 billion of wage subsidies at the problem, but this massive expenditure only sees us through until the election.
Its next effort is to spend an additional $3 billion on “job creation schemes,” alongside $12 billion of infrastructure already announced in January.
This money will catalyse “shovel-ready” infrastructure across the country and was advertised last fortnight as helping to “create more than 20,000 jobs.”
Unfortunately, while this makes for a great electioneering roadshow, this 20,000 jobs claim is more spin than substance. The truth is that the government has no real idea how many jobs will be created as a vast majority of bids have not been fully checked by anyone other than the bidders themselves. Many of these jobs will only appear years in the future, if at all.
Part of the problem is that “shovel-ready” lolly scrambles of government money simply leads to local Councils running around trying to scoop up as much of the money as they can.
This impacts on the quality of the proposals and creates incentives to subtly oversell benefits and undersell costs.
I am hopeful that the application process will weed some of this economic fudge out with some revised, and hopefully, some rejected.
Not ready to go
But it is also that the magic “shovel ready” name, gives the impression that these projects are literally “ready” to go — they are not.
Already it has taken months to get to a central government Budget decision.
It has taken another month and a half for the first few projects to be announced.
It will be many, many more months before all the projects are scrutinised, revised, and then finally signed off. Then there will be the consenting process, more arguments at Council meetings (over the exact design of the cycleway verses the loss of carparks outside shops or shadows cast on neighbours) then finally tendering for contracts, the finding of sub-contractors and procuring of equipment.
By the time there are actually “shovels in the ground” there is a real risk the economy will already be well into recovery mode. Then we will find government funding competing with the private sector for resources, with the associated waste. So what might work?
The way forward
What we need to do is to realise that these job creation type schemes are mid-to-longer term investment, and should contain a focus on investing in creating longer-term skilled workers along the way. This gives people a way to pivot into a new career, rather than just filling time in a temporary and unskilled job.
Any project that attracts government funding should do something that private investment would not do otherwise: include training requirements in any infrastructure or shovel ready project, providing training, upskilling and mentoring for workers as part of our investment in the future. Investing in upgrading our workforce alongside our built infrastructure will pay dividends well into the future.
Julian Wood is a Researcher at the Auckland-based Maxim Institute.