Deborah Hill-Cone on Corporate Welfare

Following on from Cactus Kate and her post on corporate welfare, Deborah Hill-Cone has written a brilliant piece in the Herald about it:

And I couldn’t help noticing last week the Government handed out $50 million in Technology Development Grants, including almost $6 million for research and development to NextWindow, a Canadian-owned company. Also, last week in Britain, the Telegraph reported there is concern that banks there failed to meet their half-year small-company lending targets.

“Small-company lending targets”? Ever heard of them? Not here, I haven’t.

In June the Reserve Bank ordered trading banks to tighten their credit criteria for farm lending. So presumably they could just change their algorithm for small-business lending, too, if they wanted to.

So even though this has nothing to do with cottage pie – try nutmeg, it’s brilliant – I do wonder why it’s so hard for businesses to get money from a bank but it’s seemingly quite easy to get rather a lot from the Government? Seems odd to me. I thought National didn’t like corporate welfare? What’s the chance of NextWindow delivering the hoped-for pay-off after it pockets its 5.9 million clams of government largesse? Paid for by your taxes, sunshine.

A very valid question. Why did a Canadian company get corporate welfare from the New Zealand government?

Isn’t John Key supposed to be a financial whiz? So why don’t we have a proper capital market to lend to these companies if they really are a good bet? And if they’re not a good bet, then why is our muggins of a Government funding them?

Perhaps John Key could ask Mark Weldon about the state of the capital markets in New Zealand and while we are at it perhaps we could ask the Labour Party why it is that they don’t want to enhance the capital markets through the listing of SOEs.

Remember Right Hemisphere? Didn’t think so. It’s a 3D software company that got more than $14 million in handouts from taxpayers. It was touted by the Labour government as a potential Kiwi success story, taking on the world yadda yadda. Last year Right Hemisphere said it may have to lay off staff and its auditors have raised questions about its future.

Governments shouldn’t be picking winners. Precious few of them are actually winners, instead they are the best at filling in corporate welfare forms.

 


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