ZORAN RAKOVIC: The Economy of Deferred Maintenance

New Zealand’s slowdown isn’t just inflation or rates. It’s deferred maintenance. Why households are cutting back - and why bigger local councils won’t fix it.

A man stands in his driveway, staring at his car as if it were a philosophical problem. The brake pads squeal, the engine light flickers like a nervous tic, and yet he decides, with quiet heroism, to do nothing. “It can wait,” he tells himself. And in that small, almost invisible decision, the entire economy quietly rearranges itself.

The strange thing is that restraint feels like responsibility. It feels adult, prudent, even moral. One saves a few hundred dollars today by postponing the service. But this tiny act contains a hidden inversion. What appears as discipline at the level of the individual becomes fragility at the level of the system. The more everyone behaves sensibly, the more the economy begins to wobble.

Keynes called this the paradox of thrift. Not because saving is foolish, but because mass saving during uncertainty can turn private prudence into public contraction. The mechanic loses bookings. The builder delays hiring. The café has fewer customers. Income falls somewhere else, and that somewhere else becomes the next household postponing its own small expense. The economy becomes a hall of mirrors in which everyone is sensibly protecting themselves from everyone else’s sensible protection.

Irving Fisher saw the darker version: debt-deflation. People do not cut spending because they have discovered monastic virtue. They cut because the mortgage reset, the rates notice, the insurance premium and the power bill all stand in the hallway like debt collectors wearing cardigans. Spending becomes defensive. A posture. One leans back from life just enough to avoid the next blow.

Milton Friedman adds the crucial psychological point: people spend not simply according to today’s income, but according to what they believe tomorrow will demand of them. If tomorrow looks unstable, even households with money behave as if trouble has already arrived. Confidence is not a decoration on the economy. It is part of the machinery.

So what should government do when ordinary people begin deferring ordinary maintenance? Not lecture them. Not call them negative. Not produce another glossy document featuring diverse stock photos and a diagram of “stakeholder alignment”. It should steady the ground beneath them. Reduce avoidable cost shocks. Lower uncertainty. Keep useful work flowing. Make the future feel less like a trap.

And here the contrast with Singapore becomes useful, not because New Zealand should become Singapore, which would be absurd, and possibly require every Kiwi to iron their shorts before mowing the lawn, but because Singapore understood something our political class often forgets: confidence is built through continuity.

Lee Kuan Yew’s governing instinct was brutally practical. The state was not imagined as a theatrical stage for virtue, but as an operating system. Housing, transport, savings, industrial policy and infrastructure were not treated as separate moral crusades. They were parts of one machine. If the machine worked, citizens could plan. If citizens could plan, businesses could invest. If businesses could invest, the economy did not need constant adrenaline injections.

The Central Provident Fund is part of this story. It forced savings, yes, but not as dead money. It linked savings to housing, healthcare and retirement security. The point was not merely thrift. It was structured security. A household with a firmer balance sheet is less likely to panic at the first shock. It does not immediately cancel maintenance, dentistry, small repairs, or ordinary services because the entire future has suddenly become a fog bank.

Then there is the Housing and Development Board. Singapore’s public housing model is not just about shelter. It is about continuous asset management. Estates are upgraded. Lifts, walkways, facades, precincts, transport links and amenities are renewed systematically. Maintenance is not left until decay becomes scandal. It is built into the rhythm of governance.

The Land Transport Authority works in a similar spirit. Transport planning is long-range, integrated and sequenced. The key lesson is not “build trains everywhere” or “copy Singapore’s density”. The lesson is discipline: infrastructure should be a steady pipeline, not a political fireworks display. Work should not arrive as feast or famine. It should sustain capability, contractors, trades, suppliers and confidence.

This matters enormously for the workshop in the driveway story. An economy with a steady infrastructure and maintenance pipeline creates a floor under local activity. Contractors keep staff. Staff keep spending. Small firms have predictable demand. Apprenticeships make sense. Equipment purchases make sense. The mechanic, the electrician, the drainage contractor, the engineer, the café near the worksite, all participate in the same circulation.

Singapore’s deeper achievement was not that it avoided all downturns. No economy does. It was that its institutions cultivated credibility. When the state acted, citizens and firms could usually see the line between announcement and execution. That line matters. In New Zealand, too often, we announce like Romans and deliver like a committee trapped in a printer jam.

Now, let’s turn our minds to the proposed local government amalgamation, that stone that splashed into New Zealand’s election-year pond.

We are told bigger councils will be more efficient. Bigger units, fewer boundaries, cleaner lines, economies of scale. It sounds sensible in the way many bad ideas sound sensible when placed in a PowerPoint template. But Max Weber would warn us that bureaucracy does not disappear when enlarged. The iron cage is not melted down by amalgamation. It is often welded into a bigger cage with a more impressive reception desk.

Mancur Olson would recognise the danger too. Large institutions accumulate internal interests. Processes multiply. Veto points appear. Everyone becomes responsible in the abstract and no one in particular is accountable in the concrete. The system becomes very good at existing.

This is why the reform feels scrambled. Not because every existing council boundary is sacred. It is not. Not because reform is unnecessary. It is. But because this proposal arrives as a weak political virtue-signal: bigger councils equal efficiency. The equation is childish. It is administrative bodybuilding. Look at the size of the structure! Surely it must be strong.

But the real economy is not asking for bigger diagrams. It is asking for stability.

The man delaying his car service is not doing so because Selwyn, Canterbury, or some future mega-council has the wrong boundary line. He is doing it because his household costs feel unsafe. The mechanic is not short of bookings because councils are insufficiently amalgamated. He is short because customers are tightening. Local businesses are not primarily crying out for a grand structural rearrangement. They need predictable costs, faster consents, useful local work, fair procurement, roads that are maintained before they fail, and councils that know their communities closely enough to make intelligent decisions.

Foucault’s ghost might quietly enjoy this moment. Power often avoids material problems by changing the language of the problem. Instead of asking why people feel poorer, why local work is uneven, why infrastructure is neglected, why costs are rising, we are invited to discuss “scale”, “efficiency”, “regional alignment” and “governance architecture”. The vocabulary becomes a curtain. Behind it, the brake pads still squeal.

And the timing matters. Dropping a large amalgamation agenda into the pre-election period gives it the air of decisiveness without the discipline of real economic repair. It lets government appear bold while touching the edges rather than the substance. It says: behold, we are acting. But the action has the quality of a knee-jerk. Precisely the opposite of the steady-keel government required in a tightening economy.

Fast-tracking projects has the same danger if it becomes the main governing imagination. Fast-tracking can be useful in narrow cases. But it is not a substitute for a long-term pipeline. It is the ambulance, not the health system. A country cannot build confidence on exceptions. It must build confidence on rhythm.

The Singapore lesson is therefore painfully simple. Do not govern by spasms. Govern by sequence. Do not merely announce infrastructure. Maintain the pipeline. Do not merely promise efficiency. Remove friction. Do not merely restructure institutions. Build credibility between decision and delivery.

A steady pipeline of infrastructure and maintenance work is not glamorous. No one composes heroic music for culvert replacement. No child says, “When I grow up, I want to live in a country with excellent procurement sequencing.” Yet this is exactly where economic resilience lives. In roads repaired on time. Water systems upgraded before crisis. Schools maintained before scandal. Local contractors given enough certainty to keep staff. Households spared sudden cost explosions. Small businesses allowed to breathe.

The amalgamation push misses this because it mistakes scale for seriousness. It is the politics of the big gesture. But big gestures are often what weak systems produce when they cannot perform the small disciplines. It is easier to redraw Canterbury than to ensure a drainage programme runs on time. Easier to abolish a boundary than to control rates. Easier to say “efficiency” than to prove value for money line by line.

And this is the ideological trick. The public is asked to admire decisiveness as such. But decisiveness is not a virtue when detached from diagnosis. A man who amputates the table leg to fix a wobbling chair is decisive. He is also an idiot.

What New Zealand needs now is not a government addicted to the theatre of motion. It needs one capable of boring competence. The courage to do maintenance. The discipline to reduce household pressure. The humility to keep decision-making close enough to communities that officials can still smell the potholes.

The neglected car remains our symbol. Not ruined. Not yet. Still running, but noisier. Still legal, perhaps, but accumulating risk. It is what happens when people lose confidence in tomorrow and begin cannibalising maintenance to survive today.

The tragedy is that governments can behave the same way. They defer the hard maintenance of the economy, then announce a structural reform and call it courage. They avoid the engine, repaint the garage, and hope we mistake movement for repair.

But the economy knows. The mechanic knows. The man in the driveway knows. And the engine light keeps blinking.

Zoran is a retired structural engineer, standing as independent candidate for Selwyn electorate in 2026 general election. His website is www.zoran4selwyn.nz