Podcast: Two Cents' Worth
In the footsteps of Think Big: Ardern’s big spend-up
Think Big was a bold move by the Muldoon government in the late 1970s to invest billions in industrial infrastructure and stimulate the economy. It turned into a debt disaster. “Think Big” became an insult; government spend-ups became a political no-no. Until now. In the light of Jacinda Ardern’s $12 billion infrastructure announcement, Nikki Mandow and Bernard Hickey examine Think Big. Maybe it wasn’t such a bad thing in the long term? And why has it taken 40 years to get over the trauma?
When Jacinda Ardern launched her $12 billion infrastructure spending programme late last year, a few commentators started muttering about “Think Big”.
Like Victoria University public finance professor Norman Gemmell. “Borrowing has never been so cheap,” Gemmell said. But that doesn’t mean New Zealand politicians and their advisers should “head down the dangerous Muldoonian road of another Think Big public investment spree.”
“Government goes back to the future to grab infrastructure initiative,” said a NZ Herald headline, referring to “the biggest infrastructure spending programme since Think Big”.
But can you really compare the two? And remind me:
What exactly was “think big”?
To most people born after 1990, “Think Big” probably means very little. A vague hint from a long-ago history class.
But to anyone around in New Zealand in the late 1970s and 1980s, Think Big was National Prime Minister Robert Muldoon’s infrastructure spend-up that was going to save the country from unemployment and the threat of rocketing oil prices.
Instead it mired New Zealand in virtually unpayable debt.
Slumping oil prices, high interest rates and a relentless campaign by the Labour opposition under David Lange to blame the country’s economic woes on Think Big, gave the words “Think Big” new meaning.
It would have been better to have gone along the Harbour Bridge and thrown $1000 million into the sea.
As the then Labour finance spokesman said at the time: “Think Big has been an absolute disaster for the New Zealand economy. It took very large amounts of money and put it into very large engineering projects that the private sector was not prepared to invest in because they didn’t think they would work. We’ve had to meet t bills, about $7000 million-worth of debt, and the cost is ongoing.”
Or as future Labour Finance Minister Roger Douglas described the plan to expand New Zealand Steel: “[Energy Minister] Bill Birch would have been better to have gone along the Harbour Bridge and thrown $1000 million into the sea.”
The reputation of “Think Big” didn’t survive the economic realities - or the political onslaught. No more was it a bold, brave, if a bit risky, move by the charismatic, dictatorial Muldoon to set New Zealand up for energy security and independence.
Think Big became shorthand for reckless big government. Its failure paved the way for the equally dramatic and controversial neoliberal economic policies of Rogernomics.
But was it really so bad?
But what of the legacy of Think Big? A few of the projects failed or didn’t get off the ground, like the planned aluminium smelter at Aramoana, and a synthetic fuels plant which opened in 1986 but closed in 1999.
But serious infrastructure projects from the Think Big era are still operating today; the Clyde Dam, the methanol plant at Motunui in Taranaki, and the ammonia-urea plant at Kapuni came out of that economic initiative.
And there were major expansions to other plants: the Glenbrook steel mill, the Tiwai Point aluminium smelter, and the Marsden Point oil refinery.
Paul Zealand, managing director of Refining NZ which owns Marsden Point says investing in the refinery back in the 1980s was a good decision.
"It laid the foundations for a highly valuable asset which is providing 1100 jobs into Northland, it's more than seven percent of Northland's economy and it gives New Zealand a security of supply which is important in turbulent times."
He said importing crude oil and refining it here gives us more flexibility and less vulnerability.
And if at first glance it seems an oil refinery would to more harm than good to New Zealand's ambitions to be carbon neutral by 2050, Zealand says they're looking at that too.
Refining NZ has already announced plans to build the country's largest solar farm, to produce renewable electricity for the plant. Zealand says they are also looking into using that renewable power to make so-called "green hydrogen.
If all goes to plan, one day that hydrogen could supply the refinery and also be used in hydrogen fuel cell cars.
"Think Big laid the foundations of some very important energy infrastructure assets across New Zealand which have stood the test of time. We are still here 40 years later and are looking forward to how do we take ourselves forward over the next 30 to 40 years producing the fuels of the future."
In this latest Two Cents' Worth podcast, Nikki Mandow dons a hard hat and high-vis dungarees and visits the Marsden Point oil refinery. She finds it not at all ashamed of its Think Big past; instead looking forward to a role in a Zero Carbon 2050 future.
And she and Newsroom colleague Bernard Hickey examine Think Big, past and present, and its role in shaping New Zealand’s economic landscape.
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