by HERA Industry Development Manager Nick Inskip
On April 15, Minster for Research Science and Technology Wayne Mapp announced that the research vessel Tangaroa operated by the Crown Research Institute, the National institute for Water and Atmospheric Research (NIWA) would be heading to Singapore for an overhaul and conversion work. The vessel, which could have been ably handled by Devonport-based VT Fitzroy, is instead being sent to a Singaporean shipyard.
New Zealand has a Closer Economic Partnership (CEP) agreement in place with Singapore which is similar to that with Australia. The agreement allows goods which are manufactured at least 40percent in either country to be traded duty free. The agreement says that “Under the CEP, contractors in each country have equal status when bidding for most government purchasing”.
Andrew Little, Secretary of the Engineering, Printing and Manufacturing Union said that, “Even though the Government will show a small saving by getting the job done in Singapore it would have served New Zealand taxpayers better in the long run to keep such high-value high-skilled work in New Zealand. The investment in our own marine engineering sector would surely have been more valuable than the small saving to the public purse by sending the work overseas”.
The implications of sending the Tangaroa upgrade overseas are simple: We export 40 skilled jobs, we fail to develop an industry capability that we can market to the world, we fail to attract the company supplying the technology for the upgrade to set up an office in New Zealand, and we forgo the income and company taxes that would have been paid.
Meanwhile across the Tasman; the state of West Australia has just launched a A$60Million floating dock as part of A $170Million upgrade to their ‘Australian Marine Complex’ which is expected to generate A$2Billion to the State’s economy over the next 25 years. West Australia is about half the population of New Zealand and seems to be geared around ensuring that support is provided for the development of local industry.
A comparison of average wages between Singapore and New Zealand shows that average wages are higher in Singapore at NZ$50,852 pa, versus NZ$40,456 pa in New Zealand. So the question must be asked; how can Singaporean companies undercut a New Zealand company in its domestic market?
Further examination shows that shipyards in Singapore make extensive use of Bangladeshi ‘guest workers’. One such worker, who was working for a marine engineering company, was reported in 2007 to be owed unpaid wages of S$2,100 for five months work. This would equate to NZ$5,040 pa, which is around 10 percent of the average Singaporean wage.
Andrew Little says that, “The exploitation of guest workers by Singaporean companies is well known. It provides them with an advantage that means that New Zealand companies who compete with them will eventually be driven out of business. There is something seriously wrong with Government procurement when these things happen”.
The existence of a CEP where the other trading country imports the steel, imports the labour and imports the technology, and can still qualify as having 40percent of manufacturing within the country seems like a sad joke played on New Zealand companies trying to compete on what is supposed to be a level playing field. Exporting New Zealand jobs is not something we should be proud of, especially when the ‘cheap deal’ comes only from the other country importing cheap labour.