On Why We Shouldn’t Buy New Planes For The PM

Published: Thu 20 Jun 2024 11:25 AM
Its not often that one has to agree with Judith Collins, but yes, it would indeed cost “hundreds of millions of dollars” (at least) to buy replacement aircraft to fly the Prime Minister on his overseas missions of diplomacy and trade. And yes, the public might well regard that spending as an extravagance when they’re doing it hard. Did 5,000 people lose their jobs in the public service so that the PM and the boardroom bosses can fly around the world reliably, in comfort?
Presumably, before any purchase deal for replacement aircraft gets brought forward and signed, there will be a public evaluation of the alternatives, and comparative cost savings. It is known well in advance when these missions will happen, and where they’re bound. Since the state owns a majority stake in the national airline, why can’t we charter an Airbus A320 from the Air New Zealand fleet for these missions?
That would seem less costly and more efficient than buying new planes. Routine maintenance on the chartered aircraft would also be carried out by the airline. Moreover, wouldn’t there be a splendid trade advantage to New Zealand if the PM and our most important corporate leaders were being seen to be proudly flying in and out of foreign locales on our national carrier?
It would be even cheaper of course, if the PM simply flew commercial airlines and invited his trade mission members to do likewise. Of course, this would limit the opportunities for schmoozing with the PM mid-flight. Yet surely, the foregoing of the PM’s company would be a small price for CEOs to pay, for the greater public good.Flights from transparency
Basically, do we really “need” to have a special plane to fly trade missions and media around the globe? Many people would also probably like to know to what extent they are subsidising the travels of the corporates on board –is it partially, or totally?
Presumably, not every small business owner with a few knick-knacks to sell can get a seat on the PM’s plane to Tokyo, or beyond. Also, when trade contracts are signed offshore- and some are – it seems more than likely that those deals were not the result of overnight contacts. Do we really need to fly people halfway around the world for a handshake and photo opportunity sealing a done deal, re-staged mainly so that the PM can share in the reflected glory? What evidence of prior (and current) trade success in Japan did one need to present, to be included among the chosen ones?
Famously, Christopher Luxon has made a big deal out of the superiority of his “A-list” business delegation compared to the alleged “C-list” members of the delegations led by his Labour predecessors; such as the mission Chris Hipkins led to China last year. (The delegation member lists can be compared below.)Grounds for resentment
Back to buying those Boeing 757 replacements. The public’s reluctance to buy these planes has been attributed to a general hostility to military spending of any sort. This week, Ron Mark and Michael Laws were of like mind in decrying the public’s feckless reluctance to spend money on the armed forces. “Until Cyclone Gabrielle hits, “ Mark grumbled.” Until you have massive fires. Until you have a major earthquake in Christchurch. Then everyone expects the Defence Force to turn up in their tens of thousands.”
Well no they don’t, actually, and with good reason. In reality, the Cyclone Gabrielle response illustrated just how incompetent the Defence Force can be when it turns up to help:
Commander Joint Forces, Jim Gilmour, emphasised the magnitude of the event, stating that virtually all available resources were utilised in the response efforts. Supplies, including crucial water tanks, were swiftly dispatched to affected areas like Gisborne. But it's now been revealed the tanks weren’t able to be used for drinking because the NZDF is "not a 'certified' drinking water supplier", according to the documents, posing a serious concern for communities in need.
“We are working with the water regulation authority to develop a way in which we can test and deliver water, that's a step that we need to now implement,” [Gilmour] said.
Not only did the NZDF fail to do the necessary paperwork. It also found the physical work involved to be a health hazard:
More reports indicate that some personnel were unable to participate fully in relief efforts due to health and safety concerns, including insufficient personal protective equipment (PPE). This left some communities feeling neglected and unsupported during crucial clean-up operations.
Weird. So the uniformed personnel we rely on in battlefield conditions found the health and safety aspects of the Cyclone Gabrielle response rendered them “unable to participate” fully in the clean-up.
This sensitivity – Ron Mark, please note – seems a recurring problem. When the armed forces were deployed to COVID-19 isolation facilities during the pandemic, their resentment at differing pay levels, the poor quality of the internal communications and the nature and management of the work became a staff retention problem for the armed forces. Responding to this community need had allegedly caused a “skill fade of core military competencies” and had not been the “ bang bang” action that many uniformed staff had signed up for.
Finally… Defence spending is, relatively speaking, bad for the economy. That’s not simply because we’re spending billions – and thinking of joining AUKUS and spending billions more – on weaponry that’s targeted at our main trading partner. In addition, serious opportunity costs arise with Defence spending. Some of them have been graphically outlined here.
Why is Defence spending so bad for the private sector, relatively speaking? Because unless you’re working in the arms industry, there are none of the wider investment benefits to the private sector that get delivered by spending the money on health, education, the environment, the building of core infrastructure and the tackling of social inequality:
While the private economy benefits from military spending on durable, physical assets... there are no “spill-over effects” in terms of the long-run productivity of the rest of the private sector. In addition to productivity losses, over-investment in military assets has other opportunity costs, including lost environmental and employment opportunities.
In other words, the public’s reluctance to throw hundreds of millions more good money after bad on Defence to counter imaginary threats is extremely well founded. It is not a kneejerk response, and the likes of Ron Mark should cease depicting the public as a bunch of short-sighted ingrates. Spending these huge sums of money on more rational needs makes better economic sense, as well as being justified on social equity grounds.On Board the Gravy Plane
As I’ve indicated, it would be interesting to know what the selection criteria are for being included on these prime ministerial trade junkets. Since taxpayer money is being spent on them, what cost/benefit analysis is conducted by the Treasury afterwards to assess the net gains to New Zealand from each trip?
And please, don’t tell me these missions are about fostering intangibles like goodwill and visibility. A lot of public servants have just lost their jobs because they couldn’t quantify in dollar terms the net value of their work. Surely, these trade missions overseas should be subjected to the same market disciplines, and to similar cost recovery imperatives.
All of this data needs to be fed into the decision matrix for buying new planes, as opposed to pursuing the chartering/leasing options. Not merely to see which option delivers more bang for the buck, either. When it comes to the net returns to the country from these trade missions, how many bucks are we usually talking about?
Footnote One: As the A list vs C list spat goes to show, Christopher Luxon has a weakness for these political pissing contests. (My trade mission is better than your trade mission!) In April a senior delegation member on a trade mission to the Philippines asked Luxon to stop using terms like New Zealand being “open for business again” and being “under new management”– because, in reality, business had maintained trade contacts in the Asia region before, during and after the pandemic, and had never actually been “closed for business.”
The A list/C list claims have been just as embarrassing. The corporate members of the team Luxon led to Japan can be found here. The membership of the trade delegation that Hipkins led to China last year can be found here, at the bottom of the OIA link. Hipkins took with him to China third-raters like Auckland International Airport, Synlait, Weta Workshop, Air New Zealand, Ngai Tahu, the Employers and Manufacturers Association, Sealords, Tourism Holdings, Christchurch International Airport, Zespri, Silver Ferns Farms and the NZ China Council.
Many of those names were on both lists. For good measure... Luxon’s photo opportunity at Costco in Japan involved him eating gold kiwifruit, one of the products developed by the same Zespri company he had just derided as a C-lister. One of the other alleged “C-listers” on Hipkins’ China trip – Tyrone McAuley of the gaming company Pik Pok – has spoken out about the value the trip had for his firm, by helping Pik Pok make inroads into a difficult market.
Footnote Two: One other odd aspect of Luxon’s trip to Japan was that his trade mission showcased Rocket Lab – and its new, 10-satellite launching contract with the Japanese firm Synspective - as if Rocket Lab is a New Zealand company. It isn’t, and hasn’t been for several years. Rocket Lab is now a listed US company headquartered in California. One of its primary launch sites is on Wallops Island, Virginia. Reportedly, only just over a third of the Rocket Lab workforce is based in New Zealand. Rocket Lab became a US company partly to be able to win the security-sensitive US military contracts that have become part of its current success story.
Footnote Three: Much is being made of the current 757s being 30 years old. True. But in 2008, they also received a $221million overhaul, which – at over $100 million a plane – must have involved more than a facelift. We can continue to use these 757s on the route to and from Antarctica. For the purposes of the PM’s occasional trade missions, surely the chartering of a plane from the national carrier would more than suffice.Nobody Speak, Nobody Get Choked
And in case you’ve wondered what can happen when things get down to the nitty-gritty in boardroom negotiations, DJ Shadow and Run the Jewels are happy to share...

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