August 19, 2012 2:42pm by David Farrar

Should we emulate Brazil

Clare Curran tweeted:

NZ Govt take note “@rnz_news: Stimulus package announced by Brazil http://bit.ly/PF0Pei ”

This got me interested in the details of what Brazil had done, and which a Labour MP was asking NZ to emulate.

Brazil has announced the first phase of an economic stimulus package designed to boost growth in the economy.

More than $US60 billion will be invested in roads and railways over the next 25 years, with more than half in the next five years. This includes 8000km of new roads and 8000kms of railways.

Now US$60b sounds like a lot of money. But Brazil had GDP of $2.5 trillion so we need to adjust for the size of the economy. NZ GDP is around US$135b so the equivalent in NZ would be US3.2b or NZ$4.0b. However this is over 25 years, so is annual expenditure of NZ$160m a year. Not exactly a huge stimulus. To be fair it says half over the next five years so it is $400m a year for five years.

But I suspect Clare did not look at the details of this spend on roading and rail. CNN reports:

Among the initiatives, the government will sell rights for private companies to operate 7,500km of roads and 10,000km of railways.

Superb. That is my sort of stimulus package. $60b of PPPs!

The measures would double the capacity of the country’s main highways, transport minister Paulo Passos said at the event.

However I suspect the Greens would not be so keen. And hasn’t David Shearer just been making speeches against increasing the capacity on the roads of national significance?

The centre-left coalition government led by Ms Rousseff’s Workers’ party has traditionally been opposed to privatizations.

But she has proven pragmatic in the face of infrastructure bottlenecks.

Good to see a NZ Labour MP tweeting in favour of a privatisation programme.

Earlier this year, her government awarded projects to redevelop and operate three major airports to private sector-led consortia

Great.

And Radio NZ concluded:

In addition to the announcements on Wednesday, President Dilma Rousseff is preparing to lower the price of energy for industry and abolish some federal taxes, which could cut the price by 10%.

So Brazil is also planning to increase greenhouse gas emissions by reducing energy prices, and also plans tax cuts.

I look forward to questions in the House from Labour demanding the NZ Govt implement a Brazil style stimulus package.