A Productivity Commission inquiry into improving the resilience of the New Zealand economy to persistent supply chain disruptions is to focus on eight industries.
The eight are; food and beverage, construction, agriculture, digital technology, forestry, fishing, tourism and manufacturing.
The Commission says it will, however, remain open to suggestions to narrow or broaden this list.
"A range of major societal challenges that impact economic resilience - such as social inequality, climate change, or security - will be discussed largely within the context of the selected sectoral strategies," the issues paper says.
"This approach reduces potential duplication with major cross-sectoral instruments such as the National Adaptation Plan, Emissions Reduction Plan, international trade and security work, or child poverty reduction and wellbeing legislation. At the same time, the Commission will strive to align its recommendations on economic resilience with broad policy goals stipulated in the major cross-sectoral strategies and broader government objectives, such as creating a high wage, low-emissions economy."
The Commission's inquiry comes after Cabinet asked it to identify policies and interventions that can enhance the resilience of NZ’s economy and living standards to persistent supply chain disruptions.
It also comes at the same time the Ministry of Transport is working on a national supply chain strategy. A draft of this is expected to be released for consultation in April or May. (Also see: Can NZ have a national supply chain strategy?)
The issues paper notes the disruptive impact of the Covid-19 pandemic and Russia's invasion of Ukraine on global supply chains. Productivity Commission Chairman Ganesh Nana says these massive disruptions mean supply chains are now featuring more in economic conversations.
"The concept of economic resilience to potential supply chain disruptions has, for some time been relatively invisible compared to the push for efficiency, cost savings, and production gains alongside increased trading opportunities. However, with recent influences gathering momentum at home and abroad, the concept of economic resilience to supply disruptions has come to the fore," says Nana.
"It is possible to under-invest or over-invest in economic resilience. Under-investment exposes a society to adverse impacts of disruption. Over-investment wastes valuable resources that have better uses. With a more volatile and uncertain future on the horizon, now is a good time to examine if the country has the mix right," adds Nana.
The Commission's issues paper is accompanied by reports commissioned from economists Brian Easton and David Skilling. (See more here).
Submissions are sought by April 17. Ultimately the Commission plans to provide the Government with a final report in February 2024.
16 Comments
Good point.
Take the inter-islander, owned by Kiwi Rail since 2008, and breaking down on what seems to be a daily basis this season. Begs the question, why not keeping up with maintenance? Possibly someone is not doing their job, a skill shortage, or maintenance monies are being siphoned elsewhere. We can control this one vs international shipping lines.
No, a completely incorrect point. Other than education and healthcare, government services are outsourced to the private sector. Typically, if you see inadequate service delivery you are seeing under-resourcing by private contractors.
Who is fixing the pipes and roads washed away by the cyclone? Not public workers, but outsourced contractors who operate in monopolistic ways and charge the public purse whatever they want with cost plus contracts and endless variations.
What is lacking is skilled contract oversight by public agencies. This is still tough when you only have a choice of 2 suppliers, who swap staff and equipment between them based on who won the latest tender.
Legacy arrangements like KiwiRail (and Air NZ) exist because the private sector has already shown in these sectors that it will cut services and double prices to extract the margins it requires. Govt eventually decided this was unacceptable for critical transport services and retained the in-house service model.
PPPs can be tried, but Transmission Gully showed that private contractors can wriggle out and make sure the buck stops with the tax payer.
Maybe bringing back the Ministry of Works is the logical next step?
"What is lacking is skilled contract oversight by public agencies." Agree. I suggest my general point stands & in fact is even more essential for the reasons you argue. Outsourced services are only as productive as the contract terms, specifications, deliverables & administration by the Govt. agencies spending/wasting our money.
Totally agree
back in the Ministry of Works days they would employ contractors but would be in overall charge
They would be on site each day and if things were not done right ,the contractors would be told to fix it at their cost
Also if timeframes were not met there were penalties. talking to a chap the other day who used to contract to the Ministry of works building roads
He is shocked at even how they build roads today, To compact the road they put tiny rollers over the road and then seal it
He said they used to dig out the area much deeper than they do now and then run all their big machinery over the road to find any soft spots then they would put the traffic over the road for a while before they seal it
The Waikato Expressway is a prime example of a really poor job
These private contractors don’t seem to have any accountability.
I think a lot of these contractors string out jobs much longer than they should take,use inadequate machinery ,perhaps it’s because they don’t have a long term work schedule.
If the contractors can get away with it, then they will.
As pointed out up thread, it points to weak contracts and poor oversight of the contracts. Cynically I'd guess a certain percentage of that is deliberate where works and programme managers in the ministeries know they'll be long gone to the next job before any warranty issues come to light on works they were meant to be keeping a close eye on. Get the quickest (LOL) and cheapest (LOL LOL) job done, then let someone else deal with any remediation down the track.
These private contractors don’t seem to have any accountability
This problem goes back to the way the public sector manages (or mismanages) contracted outcomes. Most local/central govt bodies lack strategic approach towards procurement. Not hard to find overpaid bureaucrat in Wellington managing a portfolio of contracts with no qualification or experience in the domain, mostly just generic "project management" training/certifications.
Resilient supply chain for Gov should be focused on best ROI road and rail links and ports. It also means cheap energy - if not coal then more hydro and gas. Industry will take care of the logistics, distribution centres (given consent) technology and sourcing.
I encourage people to make a submission, it sounds like the grads are in charge here and the big consultancies are lining up for an expensive, aloof and detached academic consulting fiasco. Can you imagine the working groups spent on this BS? "This approach reduces potential duplication with major cross-sectoral instruments such as the National Adaptation Plan, Emissions Reduction Plan, international trade and security work, or child poverty reduction and wellbeing legislation. At the same time, the Commission will strive to align its recommendations on economic resilience with broad policy goals stipulated in the major cross-sectoral strategies and broader government objectives, such as creating a high wage, low-emissions economy."
The fact that the word wellbeing comes into any legislation or framework shows how pervasive woke-ism is within central and local governments. Thsi is a subjective term that can be interpreted differently by anyone and also wielded by those in power for however they see fit.
I attended a FMA meeting last week in Chapman Tripp's posh new offices on Wgtn waterfront. From the meeting room 180deg harbor view I could see the posh new buildings on the waterfront named by PWC & KPMG (I might have missed Deloittes) - all funded by NZ taxpayers on behalf of Govt SOEs etc
Nobody - Gareth included, has yet pointed out the salient fact:
"such as creating a high wage, low-emissions economy."
Can't be done - not enough energy to do the work, to produce the stuff, t underwrite the wages, that lived in the house that....
Without fossilised carbon, we have NO economy. And therefore effectively NO wages.
Sigh. Pulling teeth would be easier.....
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