Monday 3 May 2010

Big numbers

So, the Rail and Maritime Transport Union and the City of Dunedin jointly commissioned BERL to come up with a number on just how great it would be for New Zealand if the government directed KiwiRail to ignore profitability and instead contract with New Zealand companies to build new rail rolling stock.

Any guesses if BERL came up with a suitably big number for them? Somehow they managed to, surprisingly enough.
KiwiRail has workshops in Dunedin and Lower Hutt capable of building and maintaining the rolling stock.

The report, commissioned by the Rail and Maritime Transport Union and Dunedin City Council, found 770-1270 full-time equivalent jobs would be created over the construction period, $232-$250 million would be added to gross domestic product, Crown revenue would rise by a net $65-$70 million and the trade balance would benefit by $114-$122 million.

Manufacturing the units and locomotives locally would also develop and maintain the skill base in New Zealand, opening the industry up to the $15 billion international rolling stock industry, BERL said.

It would also allow for ongoing maintenance contracts to remain domestic, and innovation and technology opportunities could spillover into other industries, the report said.
Would I trust the number? Of course not. A thousand jobs adding $240 million to GDP: $240K GDP per job? And $120K per job benefit to the trade balance? Some folks are really good at coming up with the numbers their clients want to have promoted....

3 comments:

  1. You know in Bastiat's broken window story, the window was at least presumed to be worth fixing.

    Here we have BERL not only committing the oft-committed broken window fallacy, but a broken window with more value if left broken!

    Has BERL just committed the broken Swatch fallacy?

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  2. "Manufacturing the units and locomotives locally would also develop and maintain the skill base in New Zealand, opening the industry up to the $15 billion international rolling stock industry, BERL said."

    If the international market is so great why do we need government involvement at all? Why aren't NZ companies building rolling stock anyway? NZ companies appear to be leaving $5 bills on the pavement.

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  3. "NZ companies appear to be leaving $5 bills on the pavement"

    Or $250m bills in this case :P

    ReplyDelete