Kiwirail electrification contract awarded to overseas companies

A $371 million contract for the Papakura to Pukekohe rail electrification has apparently been awarded to overseas companies from China and South Africa. Apparently cost was the deciding factor.

Winston Peters, Minister for State Owned Enterprises:

“KiwiRail cannot be influenced by ministers in their tender process, and must follow government procurement rules, which at this time do not allow them to discriminate against foreign-owned companies.”

Obviously government procurement rules have to be followed, but this is a bit awkward for Peters who has promoted New Zealand business.

Neither Labour nor NZ First have done anything effective to change the rules.

And now the Government is currently trying to promote local business to aid recovery from the economic impact of Covid-19.

NZ Herald: NZ firms Fletchers and Downer ‘fuming’ as $371m Govt KiwiRail contract goes overseas

Construction companies Fletcher and Downer are reportedly “fuming” after a $371 million Government rail contract has been awarded to overseas companies – costing the Kiwi firms hundreds of local jobs.

Three sources within the companies have told the Herald on Sunday they were unsuccessful in their joint bid for the Papakura to Pukekohe rail electrification contract in South Auckland.

Construction companies Fletcher and Downer are reportedly “fuming” after a $371 million Government rail contract has been awarded to overseas companies – costing the Kiwi firms hundreds of local jobs.

Three sources within the companies have told the Herald on Sunday they were unsuccessful in their joint bid for the Papakura to Pukekohe rail electrification contract in South Auckland.

The source said the contract would have saved many of the 1000 local jobs slashed late last month in response to Covid-19 economic losses.

KiwiRail chief operating officer of capital projects David Gordon would not confirm the contract was already decided.

Gordon admitted price estimates were a factor in judging the applications.

Minister for State Owned Enterprises, Winston Peters, would not be drawn on the wisdom of the KiwiRail electrification contract going overseas, but pointed out the unsuccessful firms could still win another $315m Auckland rail project soon.

“KiwiRail cannot be influenced by ministers in their tender process, and must follow government procurement rules, which at this time do not allow them to discriminate against foreign-owned companies,” Peters said.

Newshub in 2017:  The comprehensive list of Winston Peters’ bottom lines

Mr Peters wants all Government carpet procurement to be sourced from New Zealand woollen carpet manufacturers. It also applies to all other Government procurements: buy NZ-made products first.

LIKELIHOOD: HIGH. This is an easy win for Mr Peters, with both Labour and National unlikely to fight him on this one. It could mean higher costs for Government departments though.

 

It’s also embarrassing for Labour who kicked up a big stink about KiwiRail contracts not being kept local when they were in opposition.

Labour leader Phil Goff in 2011: Labour policy to retain jobs

Kiwi jobs will not keep disappearing overseas if Labour gains power, party leader Phil Goff said in Dunedin last night.

Launching Labour’s procurement policy before Hillside Engineering rail workers and others, Mr Goff said government departments would be required to look at the wider economic benefits when tendering contracts.

Keeping work local contributed to the tax base, while building workers’ skills and creating job opportunities.

Local firms would miss out only where there was an overwhelming economic case for tenders to go off-shore.

Labour leader Andrew Little in 2015: Labour will use buying power to create jobs

Labour will use the government’s $40 billion in buying power to create jobs and back local businesses by requiring suppliers to make job creation in New Zealand a determining factor for contracts, Opposition Leader Andrew Little says.

“Labour will require Government organisations to design contracts so that companies focused on job creation have a fair chance of winning them, and then oblige them to report on the value of contracts they have awarded based on this criteria.

“It’s time to put Kiwi jobs and businesses first,” Andrew Little says.

Five years later it’s as important than ever that local business is supported. Awarding a rail contract to overseas companies may be a reality of economics, but if this was a National government it’s likely that Labour and Peters would have been making a noise about it,

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12 Comments

  1. NOEL

     /  7th June 2020

    “.. costing the Kiwi firms hundreds of local jobs”.
    Were these locals employed on the basis they would be the successful tenderer or would these hundreds have been employed if the tender was successful?

    Either way strange business practice.

    Reply
    • Alan Wilkinson

       /  7th June 2020

      ???? What on earth is strange about hiring people to do a big job?

      Reply
    • Duker

       /  8th June 2020

      “And now the Government is currently trying to promote local business to aid recovery from the economic impact of Covid-19.”

      They are operating in NZ with local workers

      McConnell Dowell was founded in NZ in the 1960s has been a local contractor for decades , John Holland is Australian ancestry but has been operating in Auckland for some time.
      They use kiwi staff and contractors and will continue to do so like their many previous local contracts

      The Chinese connection is merely through the ultimate ownership , ie the shares. Same goes for John Holland with ultimate owner ship in South Africa

      https://www.mcconnelldowell.com/where-we-work/new-zealand-pacific-islands
      https://www.sitesafe.org.nz/guides–resources/case-studies/hunua-4/

      Effectively the story is a beatup and sour grapes from the losers

      Reply
  2. Why on earth is this sort of money being spent at the moment ? The commuter rail failed last time and probably will this time. There simply were not enough people using it because the times were no good for them.

    Reply
    • Wake up, PDTs, we are in recession, living on borrowed money and the last thing we should be doing is spending millions on this sort of thing.

      Reply
      • Duker

         /  8th June 2020

        Was out that way recently , huge new housing delevopment between Drury and Pukekohe. As planned it will homes thousands in a few years…..and has railway line alongside.
        Commuter rail to Pukekohe as been running for a long time , still using old Auckland diesel trains, this is just an extension of electric trains from Papakura, so he becomes a through train service rather than changing trains at Papakura
        Probabaly with new development at Paerata and expansion at Pukekohe, area might grow 50% in next 10 years.

        Some people just dont realise how much Auckland is growing , adding the population of Wellington or so ( 400k) since 2000

        Reply
  3. Gezza

     /  7th June 2020

    Now is the time when Labour & NZF & Greens should have pushed thru enabling legislation &/ or policy change under urgency. Fodder for Muller?

    If the NZ joint venture couldn’t be awarded this contract, what are the odds they might not be awarded the $315m one either?

    Reply
  4. David

     /  7th June 2020

    Remember all the shouting about the hillside workers from Labour and NZ First. So the economic stimulus is more off shoring, the new cook straight ferry will be built where ?
    Anyway I am delighted the leftards have finally learned basic economics and are on board with vale for taxpayers money and not playing favorites.

    Reply
    • Fight4nz

       /  7th June 2020

      What money do you think will go to those now not employed for those projects?

      Separate question, when is this due to happen? Can’t deliver while borders closed.

      Reply

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