Ministry of Works 2.0

  • By Mark Tammett
  • 23 Nov, 2016

Have the lessons of the past been forgotten?

I see Chris Trotter is peddling the re-establishment of a Ministry of Works (MOW) , just like decades past when most work was done by government rather than private contractors.

Aside from an ideological bias (towards more government being the solution to any problem), there are several holes in his argument:

1. Some look at back at the MOW days with fondness, justified to some degree because it was era where do-ers got in and did things without endless delays and bureaucracy. But the reason that has ended has nothing to do with private contracting, and everything to do with the RMA and a more regulated environment.

2. Anyone who knows civil contracting and has been part of a tender process, knows that every contractor will generally see a job differentially in terms of the most efficient and cost effective way to deliver the result,  and you'll get a wide variety of prices. Under a competitive tender situation the contractors are encouraged to find cheaper ways of doing it, and the more efficient/less costly proposals generally get the work. When it's a government department there's no such motivation.

3. Anyone who talks to ex MOW workers will generally hear stories of inordinate waste (i.e. point 2 is not just theoretical, it's backed up by what actually happened) in the MOW days.

4. The profit margin that Chris frets about going into private hands is a marginal component in the context of the issues above. Typical margin for a competitive NZTA contract for instance is 5-10%, often less, and sometimes the contractor will lose money. It's of no value to 'gain' that 5-10% profit margin but then actual costs to do the work ends up being say 50% higher.

Some talk about how service levels have dropped in recent decades, for instance when it comes to the maintenance of rural roads - and blame that on private contracting.  However any drop in service standards has nothing to do with private contracting and everything to do with the specification written by Council - which is under increasing pressure to cut costs, because our rates are increasingly being consumed by bureaucracy rather than core services.

You'd think that after the lessons of the 20th century, such as the fall of Communism, the failure of Socialism anywhere in the world to deliver anything but poverty; and to a lesser degree what's happened post earthquake with Christchurch -  that people would have learnt that government control of the economy never works, and never will. But judging may many comments on his thread, who enthusiastically support Trotter's suggestion, it looks like that lesson may need to be learned again in the 21st century.
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