12 September 2012

Government’s local body reforms create false economies

The Government’s pressure on councils to cut spending is forcing them into false economies that will costs Kiwis jobs and wages, said Green Party small business spokesperson David Clendon today.

Auckland and Dunedin councils are signalling that they may have to abandon their local procurement policies to meet the Government’s demands that they reduce spending.

“If the Government’s demands force councils to abandon their local procurement policies, then local businesses will suffer, jobs will be lost, and it will ultimately hit the councils and the government in the bottom line,” said Mr Clendon.

“This is a classic false economy: in the name of small savings, National is forcing councils to inflict severe damage to their local economies.

“We’ve seen this time and again from National. They sent rail rolling stock contracts overseas because they could be built cheaper – but the cost was hundreds of New Zealand jobs. Now, their policies will cause councils to contract with foreign providers, and the costs will be felt throughout the economy.

“Councils might save a few dollars in the short-term but, in the long-term, if they kick the support out from under local businesses they bear the costs of a further depressed economy, and so does the Government.

“It is also concerning that doing away with local procurement policies may hurt Kiwis’ ability to get a living wage. Overseas, councils have made it a condition of their procurement policies that contractors paying living wages. That will be lost in a race-to-the-bottom, cheapest is best approach.

“The Government needs to talk with councils and make sure that local businesses are not being thrown to the wolves in the name of cost-cutting.

“Smart local procurement policies build local capacity and reduce the economy’s dependency on imported goods and services; false economies and short-sighted cuts do not,” said Mr Clendon.

ENDS

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