TL;DR: The new National-ACT-NZ First Government announced yesterday it had cancelled a $3 billion plan to build two new ferries and terminals that would have supported growth in the numbers of passengers, cars and freight crossing the Cook Strait for decades to come.
In effect, the decision will limit the ability of Aotearoa-New Zealand Inc to keep growing its population by 1.5%-2.0% and GDP by 3% per annum for the next 20 to 30 years because the Interislander is literally the connection point of two major parts of our economy.
The Cabinet decision announced yesterday shocked business leaders on both sides of the strait because it is essentially telling them they can’t plan for growth. It was framed as a short-term cost-saving decision that would be replaced by a more economical version of the same project. In reality, the growth part of the project was just cancelled.
That may be the right thing to do in a world that needs to reduce emissions dramatically and for a planet that cannot afford compounded economic growth of 3% per annum for decades to come. But that is not how the decision is being framed and it’s encumbent on the Government to now explain to its supporters and those shocked business leaders how it will deliver the growth it no doubt wants, but without the new ferries or connections.
Meanwhile, it’s worth considering whether this is what degrowth actually looks like in our modern political economy, where high inflation and interest rates caused by excess demand for limited supply forces a reduction in growth capacity in the long term. Perhaps this is the planet’s way of slowing us down.
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Bernard
Government chooses slower economic growth