Coronavirus: Government's stimulus investment has to be job-focused
OPINION:In February this year, we heard the first rumblings of the potential impact of the coronavirus pandemic.
Initially, supply chains using Chinese products and materials were impacted. Some manufacturers and constructors would be inconvenienced. No biggie. America closed its borders to Chinese flights. No major problem for us - all good.
Covid-19 infections were tracked and reported with growing alarm in the media. Globally the term 'lockdown' grew in use, followed by the country 'locking down' in mid-March. Kiwis knew that the game had changed. A new normal was extant.
Early on, it became clear that shutting the economy for a period of time was a game-changer. Never in the recent past have such measures been introduced in a developed economy. Not unreasonably, we evolved strategy continuously. 'Disruptive Technology' was with us in virus form.
Consumers, industries, businesses and indeed, the Government changed their mode of operation overnight. Mass internet availability, software and skills to make use of it could bridge the gap. New Zealand became a nation of home workers. Investors in Zoom and Skype were euphoric. However, some industries were not easily transferable to 'distance delivery', irrespective of narratives in play.
Construction is not flexible, like white-collar work. It has little commonality with workers who 'labour' in the virtual space. Value cannot be added in any 'new normal' way. Blocks are physically placed on top of other blocks. Concrete has to be poured. Holes have to be drilled.
When alert level 4 lockdown arrived, construction was hit hard - more so than its peers in other countries that considered construction an 'essential industry'. Globally, 'essential' is about local priorities. In California, marijuana growers were in this category. Go figure.
But in New Zealand, construction projects shut down entirely as a result. Financial stress immediately hit contractors. Progress payments ceased. Construction tends to be hand to mouth. All of a sudden hands, and therefore mouths, were empty.
Currently, we are in a fool's paradise. Wage subsidies are still rolling. Mass layoffs have largely been avoided. However, the signs are not good.
In May, Leonie Freeman, with Property Council NZ, reported 70 per cent of construction projects and 100,000 jobs are at risk. Catastrophic numbers. But the report did not make the impact that may have been expected. Why?
The answer is simple. Seemingly we are well on to this. The Government has been touting economic stimulus in construction to help recovery. Shovel-ready jobs is the phrase that pays. Shovel ready infrastructure - implying we have legions of constructors with fully signed off designs prepared to build like coiled cobras. Give us the thumbs up, and we will spring into action.
But what is the truth of the matter?
This week saw 11 approved shovel ready projects announced, but those making the cut do not fill me with confidence.
The Northern Pathway, formerly known as SkyPath, over the Auckland Harbour Bridge to North Shore is presented as one of these projects. It was $67 million in 2018 when initially proposed - with new scope it is now $240m. That is a lot of money for the creation of just 50 jobs.
In total, some 1250 jobs in total are claimed with these announced projects. This is not a large number in the context of Fletcher's recent 1000 NZ redundancies and as many as 100,000 to come.
The one discernible light was the acceleration of high-density housing on Unitec's campus with 250 jobs claimed - fully 20 per cent of total jobs created by this stimulus plan. On a housing project, this is entirely to be expected.
As we have pointed out in previous articles, this type of labour-intensive project will always generate more employment more rapidly than horizontal infrastructure projects like roads. The flip side is KiwiBuild was supposed to achieve the same outcome at Unitec a year or more back. But this time we are on to it. Right?
We are racking up job losses quickly. We measure them in the days and weeks. They are immediate. The effects are catastrophic for workers, spouses and families. Real people, having real difficulties, today and tomorrow. But the rate of delivery of these stimulus jobs is much slower.
When the wage subsidy ends, and current projects are fully built out, we will see rapidly escalating layoffs. The 'shovel-ready' projects touted by the Government are taking too long, and they do not emphasise job creation in the short term.
Post-Covid stimulus-response appears to emphasise big infrastructure. Big infrastructure = big economic stimulus. Very 1930s.
However, Covid-19 has presented a differently-structured crisis in the 21st Century. We need a 21st Century effective stimulus-response. Jobs need to be the absolute focus more than ever. Delivering housing, deferred maintenance in schools/hospitals, and rapid action can deliver this outcome.
*Dr John Tookey is a professor of construction at AUT University. He is the Head of Department at the Built Environment School of Engineering, Computer and Mathematical Sciences.
*Dr Tony Lanigan MNZM is a distinguished fellow of Engineering NZ and a former director of Infrastructure Auckland, NZTA and Watercare.