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5 Thoughts from the Executive Director

1. The Med School – Waikato Opportunity 


New Zealand needs a lot more doctors, particularly more GPs.
The two medical schools in Auckland and Dunedin are a Government-mandated and intrenched duopoly. [ Duopoly https://en.wikipedia.org/wiki/Duopoly ]

Why have we chosen to have only two medical schools, with severe restrictions on the number of students they will teach each year?

Every university has a business school, engineering school, social science school etc. A third medical school leads to healthy competition, the choice for the student and more places for more students and that leads to more doctors. 
Here in New Zealand, we have this artificial restriction on the homegrown supply of doctors which automatically ensures an increase in the price we pay as a taxpayer (read health system expenditure) and also costs us so much more when we go to the doctor.

The price of our health system is too high. We need to train and hold more doctors in New Zealand

The proposal for a new Waikato medical school takes a community-focused approach to health, selecting graduate students and providing them with another four years of practical medical education, as opposed to the current 6 years. 

New Zealand currently has one of the lowest ratios of medical schools to the population in the OECD, with one medical school for every 2.5 million people. Australia has one for every 1.25 million. The crazy thing is, each year New Zealand imports 1100 doctors to meet health workforce needs, and that is not enough to satisfy our demand. 

As anyone who has experienced the lengthy queues and time delays at Waikato Hospital or endured long waits trying to see their family doctor will say…. “We need more doctors now”


2. Black Swans

The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalised after the fact with the benefit of hindsight
The term is based on an old Roman saying that presumed black swans did not exist – until they were found in Western Australia centuries later. 

Covid-19 can now be seen as a black swan event, but for those who looked there were signs such as SARS to give a clue.

All business-people should be on the outlook for another black swan event. Two in one year would be crippling to commerce worldwide.
A good example is the escalating tensions in the South China Sea.
What would happen to your supply chains if hostilities increased?
To quote our Governor of the Reserve Bank, Adrian Orr, when he spoke to the Chamber members earlier this year “Be prepared”.


3. Four-lane means safety 

The Waikato Expressway to Auckland is quite special and so safe. Google Maps now predicts a 93-minute drive from the Chamber office in Hamilton to the Auckland Chamber in Symonds St, in downtown Auckland. The Huntly bypass is just beautiful and a joy to drive. It shows us what can be done.

And the Expressway is safe, unlike the rest of State Highway One. The Cambridge to Piarere stretch that locals say, the Green Party has driven so-called safety modifications, have increased the danger of driving on that two lanes unwired section of State Highway One. Multiple fatalities have been caused by drivers crossing the centreline south of Cambridge and also on State Highway 29 to Tauranga. As we all know the carnage of hitting oncoming vehicles head-on nearly always results in death.

Kiwis love the freedom of choosing when and where to travel. With the advent of eco-friendly electric, hybrid and possibly hydrogen-powered vehicles, four-lane highways such as the Waikato Expressway are the way to go.

Imagine….
Four lanes to Tauranga through the Kaimais
Four lanes to New Plymouth
Four Lanes to Rotorua
Four lanes to Taupo and over to Napier

Safe, quick, productive and a joy to drive. Ready for the coming generation of self-driving vehicles.


4. Is there more to Tiwai and can we nab a deal?

There is a lot more to the closure of Tiwai Point Aluminium Smelter than we have been told. Considering that the Waikato is one of the two biggest Aluminium manufacturing regions in the southern hemisphere this is a subject we need to discuss at length. It affects over 1000 jobs right here in the Waikato.

What we do know is that the Manapouri power will go to waste after Rio Tinto shut the smelter down next year. Meridian will simply be dumping water from Lake Manapouri because it is clear New Zealand cannot build a transmission line to the obvious users in Auckland quick enough given the 5 to 12 years it would take to pass through the current RMA legislation and build.

Then along came Sam Stubbs of Simplicity with a business idea. 

If Rio Tinto are keen to dump what they consider to be a strategically worthless asset, why doesn’t the Government pick up the smelter for nothing and Rio pay our Government a cheque to cover the costs of finally remediating the site? 

The Government owns the power station and the transmission lines. It can do a deal with itself to keep the smelter going whilst New Zealand takes the time to build a new 500kvA transmission line to Auckland.

See his full argument here    
https://www.stuff.co.nz/business/opinion-analysis/300066798/heres-why-government-buying-tiwai-point-is-not-a-crazy-idea

It is worth considering.


5. Analysing the Offerings

As business-people you need to know what the major political party’s policies are before you go into the polling booth. Clarifying issues such as expenditure, tax, health, wealth, and the effect on your business may help you to decide who to cast your vote for.
At the Chamber, we are apolitical. We will work with all shades of Government for your prosperity. One of our key functions is to inform our members on subjects that have a major bearing on their profitability.
The next few weeks to the election will see a plethora of policy so we will run the ruler over some of the key policies of Labour & National in a condensed form for you.
The first is on Transport.

THE ROAD AHEAD, for Business
With the upcoming election being only weeks away, political parties are starting to announce their plans for New Zealand’s transport if elected. So, what are the similarities and differences between Labour and National’s policy options for transport expenditure and what could they mean for you and your business?

Where is the money going?
Labour                                                                          

  • Labour has released their policy statement for land transport indicating that they will focus their attention on road and highway maintenance, spending as much as $18.6b over the next decade.
  • They are also committed to their new ‘Road to Zero’ safety strategy launched in December 2019. They will allocate $10.4b to improve safety across all areas of the NZ transport system over the next decade.
  • Labour outlines New Zealand’s freight network as a key area of focus. In their 2021 plan they state that they want to improve the freight network for primary producers to markets. How is unclear.
National
  • National has announced a $31b transport infrastructure plan which they describe as “the biggest infrastructure programme in New Zealand's history”.
  • The plan aims to reduce congestion with a focus on the upper North Island (including Waikato), taking $17.5b of the $31b. The plan includes projects such as: finishing the tunnel under the Waitematā harbour, as well as a four-lane expressway from Whangārei to Tauranga, coming through Hamilton.
  • ‘Reallocation’ of funds to support these projects will see money cut from areas of the National Land Transport Fund (NLTF), such as the state highway budget and Auckland’s Light Rail Project.
Where is the money coming from?
To date neither party has announced their general Tax policies, or how they see NZ will pay for the Covid 19 support

Labour
  • $6.8b has been invested by the current government through their new “New Zealand Upgrade Programme”. This is a one off, debt financed investment from the crown to progress new infrastructure projects.
  • They have reconfirmed there will be no increase in fuel excise or road user charges in the first 3 years of the plan.
  • Labour has not released any specific detail on how projects will be funded, stating that “all appropriate funding and financing approaches will be considered”.
  • In regard to Auckland’s Light Rail Project the current government openly stated that they hoped the initial investment of $1.8b would leverage more private sector investment, indicating a potential direction for other projects.
National
  • National is steady on their longstanding commitment to abolish the Auckland Regional Fuel Tax. The tax brings in $150m a year to the Auckland Council which is used for funding a series of transport projects. Reprioritisation of Auckland Transport Alignment Project will offset this loss of income.
  • A key strategy to fund the proposed projects will be reallocation within the National Land Transport Fund. National plans to reallocate $6.2b over the next decade.
  • National will allow the NZTA to borrow an extra $1b per year independently from the government. This will give the NZTA more autonomy over their finances and also allow them to fund more projects. This extra borrowing would not count towards the government’s debt pile, which means that general taxpayers will not necessarily be paying for roads they do not use, and road users will bear a greater portion of the cost of new projects.
  • In a re-introduction of “user pays” National is also looking at bringing in more road tolls and congestion charges for using busy roads at peak times.
What does this mean?
Labour
  • With little information on how Labour will fund their projects, we are left guessing at how this will affect families and business in New Zealand.
  • Re-election of a Labour government would maintain the strategic direction from 2018, seeing minimal restructuring of current funds, projects, and policies.
  • Labour will put a greater focus on maintaining the roads we currently have rather than on building new infrastructure. This could mean that there is more money being allocated to the regions, potentially benefitting smaller maintenance focussed Waikato business.
National
  • The promise from National is to reduce the net core Crown debt down to 30% within the next decade. To achieve this, we should expect to see a string of budget surpluses. Reallocation of the National Land Transport Fund is one example of how this goal can be achieved.
  • Under the proposed transport plans the cost of developments should be more targeted to the end users (mainly business owners). With more independence in the NZTA and increasing road tolls/road user charges, general taxpayers will not bear the cost of developing roads they do not use.
  • The projects will be developed over two decades, however once finished should radically improve the capacity and efficiency of transport within the upper North Island (Auckland alone loses $1.3 billion a year in productivity to congestion).
How will this affect you?
Labour
  • Labour’s plans are less ambitious. They have not announced any big projects or changes of policy. This makes Labour the less risky of the two options.
  •  However, the opportunity cost of maintaining New Zealand’s current roads is the loss of investment in new roads and infrastructure for the future. This is representative of Labour’s shorter-term vision.
  • As the saying goes: the definition of insanity is doing the same thing and expecting different results. If you are happy with the way New Zealand’s transport has been tracking, then Labour is your party, if you are not and you want to get NZ moving, then you may look to place your vote elsewhere.
National
  • National has been very enthusiastic with their transport plans, especially in the Waikato. They are taking a long-term mindset and are chasing a more ambitious future.
  • Investment in new roads and infrastructure means more productivity in the future, which is great for business. However, because their projects are so ambitious, they are more risky and will take a time to develop. We will not see all of them operational in one term.
  • These new projects are going to need a lot of resources to get going, which will be good for some businesses, but we can expect to see funding cut from other areas of the transport budget. If you are willing to live with less maintenance in the short term for some serious intergenerational upgrades in the long term, then National will be your party.

Further Reading
https://www.transport.govt.nz/assets/Import/Uploads/Our-Work/Documents/draft-government-policy-statement-land-transport-2021.pdf
https://www.stuff.co.nz/national/300035442/long-read-how-dead-is-light-rail
https://www.stuff.co.nz/national/300064552/how-to-build-a-road-or-a-cycleway-and-who-pays-for-it
https://d3n8a8pro7vhmx.cloudfront.net/nationalparty/pages/14331/attachments/original/1594939184/National's_Transport_Funding.pdf?1594939184
https://www.stuff.co.nz/business/95383973/traffic-congestion-costs-aucklands-economy-13b-a-year-report

Have a great week!

Regards
Don

 
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