Shopping Local

Tom Pullar-Strecker and Claire Rogers of the Dom Post report:

Labour Party leader Phil Goff is wooing the domestic information technology industry, saying it would be a key beneficiary of the party's proposed reforms of government procurement.

Goff has been touring technology companies and said agencies had "drifted" into a situation in which they were discriminating against local providers in managing their $2 billion annual spend on ICT. Labour intended to positively discriminate in their favour, recognising the broader economic benefits.

Economic Development Minister David Carter believed that could breach trade agreements "placing at risk the ability of Kiwi firms to bid for government procurement contracts in valuable offshore markets".

The objection by National is a typical one given whenever anyone suggests we should try to protect our own. For the last couple of decades we have opened our economy up to overseas investment and overseas trade, but arguably in a way that hasn’t greatly enhanced our own economy. Our policy of removing almost all barriers to trade may well see us as one of the most open economies in the world, but it also means we do nothing to protect our own industries.

I’m not generally a fan of granting subsidies to people to do things that can and should be done cheaper offshore. Most manufacturing, for example, would be better done offshore, where economies of scale and access to resources make such activities more efficient.

And, generally speaking, a free trade system is good for New Zealand, because it gives us access to markets that we would otherwise struggle to enter.

But our free trade system is not really “free”. Many of the countries we trade with still protect their industries, particularly in the agriculture and primary produce areas. We may have dropped our pants for our trading partners, but they have mostly failed to reciprocate.

In some areas, such as ICT and high-tech manufacturing, we should be looking after our own. These are industries that, with a little bit of initial support, can kick on and (in the medium to long term) become sustainable, high-earning and internationally competitive.

So requiring government organisations to factor into their decisions the desirability of buying local sounds like a pretty good idea.