Is the government hatching another plan to take us back to the failed policies of the 60s and 70s?
A $90 million plan to turn Dunedin’s Hillside workshop into a world-class assembly plant has been revealed in a leaked government funding pitch.
But there are concerns importing parts to be assembled locally is not a good use of taxpayer money.
This week the Government reaffirmed its commitment to the South Dunedin facility as part of its 10-year rail plan.
In 2019 an initial $19.97 million investment was made in plans to expand the workshop through the Provincial Growth Fund.
But documents obtained by the Otago Daily Times show an additional $90 million is needed to turn it into a wagon assembly facility. . .
Concerns that this wouldn’t be good use of taxpayers’ money is justified:
KiwiRail needed to replace about 2300 wagons over the next five years. About half of those could be assembled locally, starting in July 2023, at a rate of two wagons a day.
A cost breakdown showed it would cost $219,800 per wagon if they were assembled locally, $23,000 more than if they were fully procured overseas.
That was an extra $35 million overall, based on 1520 wagons. . .
How hard would it be to come up with much better uses for $35m than this?
National’s Transport spokesman Michael Woodhouse, of Dunedin, questioned whether bringing in parts to be assembled at Hillside was a good use of taxpayer money.
“Now Labour, and probably half of Dunedin, are going to say ‘that’s a fantastic idea’, but the New Zealand taxpayer is funding that,’’ he said.
He said the Government had a “romantic notion about rail and the local production of that’’, but that was not where the modern New Zealand economy was at.
“What we should be investing in is what we’re good at, and what we’re competitive at.” . . .
This proposal is going back to the bad old days of import controls, high tariffs and subsidised production.
It wasn’t sustainable then and it is even less sustainable now when the government is borrowing so much money in response to Covid-19.
How bad the policies were became obvious in the mid 80s when the then-Labour government was forced to implement tough solutions to the problems they’d caused.
Anyone who learned from the mistakes of the 60s and 70s and the consequences of the policies of the 80s knows the stupidity and expense of trying to do here what’s better done elsewhere.
Anyone who learned from those mistakes also know the wisdom of what Woodhouse said – investing in what we’re good at and what we’re competitive at.
Anyone who learned from the mistakes of last century wouldn’t be stupid enough to repeat them.