4 May 2021

Govt's 20k shovel-ready jobs promise 'too good to be true' - mayor

From Checkpoint, 6:08 pm on 4 May 2021

A regional mayor says the government's forecast of 20,000 new jobs through its multibillion-dollar shovel-ready projects scheme always seemed too good to be true.

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Finance Minister Grant Robertson. Photo: RNZ / Dom Thomas

Before last year's election, the government announced it would pump $2.6 billion into more than 150 shovel-ready projects to create jobs to kickstart the country's Covid-19 rebuild.

Pre-election, Finance Minister Grant Robertson touted a forecast that 20,000 jobs would result from the package.

But, in response to written parliamentary questions by Opposition MP Louise Upston, Robertson said the forecast was for 11,740 jobs, a drop of more than 8000.

One "shovel-ready" project is Te Kuiti's new sports stadium. The project value is $3.5 million and the amount funded is $500,000.

Waitomo Mayor John Robertson said the project was yet to break ground.

"It hasn't started, it's still in the completion of a business plan process, and its proposer is a community trust and they're expecting the project will start in the next year."

He reckoned the initial forecast always seemed far-fetched.

"The concept that you could put billions of dollars into communities through New Zealand and expect immediate, shovel-ready results on big infrastructure projects was a concept that really had a lot of risks because big projects are slow to get started - they need design, engineers, some of the skills were overseas ... and so to get the stimulus for local communities to suddenly get employment it was somewhat unrealistic to expect jobs to be suddenly created in such quick time."

The mayor said several projects were put forward in the Waitomo district; the funding for Te Kuiti Sports Stadium was there and ready to be used.

He described the stadium project as "on the drawing board" and "expected to take place", but did not believe that would be the case for all of the projects.

"There was just so much money put out ... it's going to be interesting to see how much of it actually hit the ground."

There was also some doubt in local government circles that the shovel-ready scheme could deliver on promises like job creation, he said.

"From a council's perspective, they weren't meant to be in projects that were within ... the long-term plans of councils. So, there was a fair bit of scepticism as to whether this could work that quickly.

"We applauded the employment subsidy programmes ... for industries that were really impacted ... but the shovel-ready projects realistically could not have delivered jobs quickly in a way that perhaps policy makers expected."

The minister however said he did not believe the 20,000 jobs forecast was misleading, however.

"The initial number was simply adding up what all of the outside parties who had proposed projects to us said would be the number of jobs. When we do the due diligence, the final contracting, we come up with the final number. That was a number based on the projects we had approved in principle, given by other people."

Upston said the lower number of 11,740 were not necessarily brand new full-time jobs for people who were not previously working.

"When you start to dig into it some of the jobs are for consultants and engineers and people who are already in work as opposed to the intention of this jobs plan - 20,000 new jobs was aimed at supporting people who had lost jobs to get into work with the shovel-ready initiative."

However, Grant Robertson said Crown Infrastructure Partners had done its own due diligence on how many full-time positions would be created by the shovel-ready projects.

Only then - 10 months after the 20,000 jobs forecast was in headlines - was the significantly lower forecast discovered.