Government loses plot on supporting Kiwi jobs

Two announcements today show the Government missing two opportunities to preserve and build good Kiwi jobs, said the CTU. More Kiwirail rolling stock is being manufactured overseas, and the management of two Auckland prisons is being privatised, with likely job and income losses.

Kiwirail has announced that a $29 million tender for 300 rail wagons has gone to China CNR Corporation. Kiwirail’s Hillside workshops tendered for the deal but lost out. The future looks bleak for Hillside to supply any of the remainder of the 3,000 wagons needed, except perhaps to assemble from CNR components. Kiwirail has also ruled out their own workshops building or assembling any more locomotives.

Bill Rosenberg, CTU Economist and Policy Director said: “The work that unions and Dunedin City Council commissioned from BERL regarding the Auckland commuter rail rolling stock earlier this year showed significant benefit to New Zealand from building them here. It created skilled jobs, increased the tax take and reduced New Zealand’s international debt. It also built a base for possible diversification and exports.”

Hillside is experienced in building wagons, but this decision puts the viability of the workshops in doubt.

“It is crazy to put hundreds of skilled jobs at risk by this narrow approach to purchasing,” said Rosenberg. “Sensible government procurement arrangements which are used widely internationally would use this kind of purchase to build local industry and skilled jobs.”

The government also announced today that the transnational Serco has won a tender to manage the two Auckland prisons, the brand new Mt Eden and the Auckland Central Remand Prison (ACRP). “Internationally this kind of step has led to loss of jobs and lower pay,” says Rosenberg. “That is how the contractors lower costs. Labour costs account for most of the costs of running a prison.”

“Even then, we have yet to see whether there will be lower costs to the public purse. PPPs have a record in the UK of being a huge waste of public money.”

In the UK basic pay is 8-44 percent lower in the private sector than the public sector, and on top of that, private sector prison officers get fewer benefits such as superannuation and holidays. Staffing levels are also lower. A study of Scottish prisons concluded that private sector cost savings are also made by employing staff with less skills and experience.

“Once again, the government is showing no faith in publicly run operations, and is cutting jobs at a time of high unemployment.”

ENDS

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