Monday, 31 January 2011

In the shadows of think big

The New Zealand Herald business section has an interesting article on "Think Big", the cornerstone economic development policy of Sir Robert Muldoon. Honestly, I don't know why the media goes on about Think Big so much. By far Muldoon's worst policies were National Superannuation, and trying regulate inflation out of existence. Think Big has been fairly beneficial, it seems.

Interestingly, Bill Birch chimes in with a point I'd not considered before:
...a more fundamental concern was a "take or pay" agreement for Maui gas with Shell, BP and Todd.

Under the agreement, if the Government, which was a half owner of the gas discovery, did not buy specified quantities of gas it reverted to the ownership of the companies and so the value would be lost.

So, the Government was snookered by its own agreement into doing something with all that gas. And it seems a lot of good came from Think Big: 
  • The Official Information Act 1981 (albeit largely because the Government wasn't being honest about the Clyde Dam);
  • A whole lot of industrial infrastructure that continues to provide jobs and exports;
  • Greater technical capability in the engineering industry, which had its own flow-own affects into the private sector.
On the downside, there's clearly the huge cost of the projects, leading to the debt the Government took on its book. $7 billion in total, according to the article.

But as I've said before, that pales into comparison with the ongoing cost of National Superannuation.

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