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Saturday, October 22, 2016

Training and job creation

While I was lighting the log burner this morning, I paused to read an article on a paper I was using to start the fire.  The article was on the connection between training and jobs.  The article suggested that all that is needed to get the unemployed working is to give them the appropriate training.  Fine as far as it goes but it is missing the point by a country mile.

As long as there are no jobs to go to, all we create is some better qualified out-of-work people or people who will leave the country to somewhere that jobs exist or remain in the country, drawing welfare and assaulting their wives and children from the frustration of not being able to provide for them.

Here in New Zealand, we have been both throwing away existing jobs and ignoring obvious measures we could take to create jobs.   I'm pretty sure what the motivation is but more of that later.  Let's examine some concrete examples.

Our Fisheries
You would think that a sophisticated, modern country like New Zealand would fish her own waters.   We have one of the largest Exclusive Economic Zones in the world and definitely one of the largest in relation to the size of our country. Only a couple of the Island nations of the Pacific have larger economic zones in relation to their size and none come near to the absolute size of New Zealand's economic zone.  Instead, of looking after this vast resource, what do we do.

We allow foreign fishing boats to fish in our waters, many of them from Korea,  employing desperate workers from third world countries.  The abuses of these workers by their Korean officers have been an ongoing scandal in New Zealand and there is a case in our courts at present with a couple of confiscated boats been held until the Korean fishing companies pay the wages promised to their workers.  The treatment of these indentured workers has been beyond belief.  The ones that dare to talk, have told  of workers even being killed and tossed overboard.

The New Zealand government in her usual fashion has put a sticking plaster on the problem and insisted that all boats that fish in our waters must be registered in New Zealand.  Cameras have been installed in some, but far from all, boats.  In cases where the cameras have shown violations, they have been completely ignored by the government.

We even had an observer on one of the most abusive boats and somehow, her information never got to the appropriate officials or they ignored what she said.

And do you think that these foreign fishing boats look after the fisheries resources of New Zealand.  Of course not.  The first of these boats that was revealed to be treating her workers abysmally was later found to have caught a particularly valuable net of fish and so jettisoned her already frozen catch to make room for the more valuable fish.

And do we really think that they land all their fish in New Zealand as is required by the New Zealand regulations.  Pleeeese.  Give me a break.

We are in danger of following the Canadian example.  On the Grand banks off the coast of  Newfoundland, the Canadian Fisheries Department, one of the most sophisticated in the world, cow-towed to crass commercial short term interests and allowed that legendary fisheries to be destroyed.

 If we restricted fishing to our boats, the fishing pressure would lessen, stocks would increase and our own fishing boats would find a very nice increase in their catch-per-unit-effort.  In other words, their boats would be more commercially viable. Politicians are not expected to be fisheries experts but at least they could listen to those that are.  At least they could show a little simple common sense.

Our Rail Stock
New Zealand has entered into an upgrade of our railways including engines and other rolling stock.  What a great move in an era in which we must reduce our output of Carbon dioxide into the atmosphere.  Even if these are diesel engines, their output of Carbon dioxide per ton-kilometer of goods moved is far below that of trucks.  When we use electricity to power our engines the reduction is truly amazing.  New Zealand generates about 70% of her electricity renewably and rising*

*note that in a recent extensive poll in the UK, 73% of the population, both rural and urban, said they were very much in favor of on shore wind turbines while at the same time the government promotes nuclear and fracking.  Something rotten in the state of UK here.  I bet our stats would be similar.

We could eventually go the extra mile and have containers, carried by rail, delivered to their end destination by electric trucks.

So what do we do.  We contract to have the rolling stock built overseas.  The NZ Rail workshop in Dunedin and the city of Dunedin commissioned a report by the BERL institute to calculate if this would be a good thing to do.  The bottom line of the report was that with all the spin offs to the New Zealand economy, we would have to be able to obtain the rolling stock for 38% of the local cost before it would be worthwhile to buy them overseas.  Think taxes going into the exchequer from all the workers in the NZ rail workshop and all the sub contractors, Reduced welfare payments for people now not out of work, efficient repair and maintenance and so forth.

But the spin offs would have gone far beyond this.  Our manufacturing industry would have had to upgrade her construction techniques, electronic capability and a whole range of other skills to make modern rolling stock.  All this added capacity would have spun off into other industries.  Who knows.  We might have even eventually started to produce The Affordable Electric Car, called, of course, the Kiwi.

Mind you, we mustn't be too starry eyed about our own KiwiRail workshops.  I live in a railway town and some of the old timers tell of the incredible abuses of their position that occurred some of the workshops with engineers using the equipment during working hours for their own businesses, not turning up for work but getting paid and so forth.  I have no idea if such practices were common recently but it is hard to get back a reputation lost.

Our Lumber Industry
We have just had a massive (in terms of the damage it did) earthquake that trashed Christchurch.  In the early days of Christchurch, there were some tremors and people built as best they could at the time to survive earthquakes.  However as usually happens, we forgot or thought, somehow in one of the most seismically active countries of the world, it wouldn't happen again.  We started to build with unreinforced masonry.  The inevitable happened.  When a relatively small earthquake happened right at the south of Christchurch where the flat meets the banks peninsula (an extinct volcano), the vertical acceleration was an incredible 2g and buildings fell right and left.  What an opportunity.

The most resilient material to rebuild the city is engineered wood.  That is to say, laminated beams for the skeleton and engineered wood cladding for much of the rest.  In Vancouver Canada, I saw a 7 story building going up, completely of wood.  What an opportunity.  We could then have been levering off this experience to send custom engineered wood to other earthquake prone countries to build or rebuild their structures.  Instead what do we do.

We sell our raw logs to China and receive value added products made from our own wood back from them.  Our mills have been closing in droves and we hardly have an industry left compared to what once was.

Incidentally, China has an interesting "ploy" she uses in this and other industries.  I can't swear that it is done on purpose or if it is just the way things  happen but here it is how it unfolds in relations to our lumber industry. Put milk powder, meat or any other commodity in place of logs in the following paragraph and you are pretty well on the money.

China has huge monetary reserves from selling their goods to America and other countries.  This money is devaluing from day to day and is likely to crash at some point.  America is deeply in debt, a highly corrupt society and if they loose their status as the holder of the world's reserve currency, the dollar will plunge in value.  China knows this and wants to trade this ephemeral wealth for solid value.  She pays top dollar for our logs and of course, is competing with our local industries.  It is a free market so, of course, our loggers sell the logs where they can get the best price.  This causes our whole down stream wood industry to collapse.  Then what happens.

China, generously proposes to build a large modern lumber mill in New Zealand and of course ensures by doing so, a vertically integrated supply of wood for her country in which she can take the profits in China instead of New Zealand.  And we are immensely grateful to them for doing this. (this is not what might happen, it is already happening).  Ditto with milk products.

These are just three examples but you can see the trend.  What we need is a government with concern for the bulk of her citizens and a vision that extends to more than a 4 year election cycle.