Muldoon's back with more subsidies

Back in the bad old days of Rob Muldoon, industries would clamour for a subsidy or a tariff or import quota, to protect them, promote exports or help “encourage jobs and innovation”. Those days were largely gone after the fourth Labour government, which ruthlessly purged corporate welfare partly to save taxpayers’ money, but also to ensure a “level playing field” with the government not “picking winners”.

After an initial shock, most businesses accepted that with the government out of the game of dishing out subsidies and protectionism there was no longer the need to lobby for such things and business could get on with producing and selling.

However, this started to be eroded with Jim Anderton converting the largely policy advisory Ministry of Commerce into the more interventionist subsidy Ministry of Economic Development. The “winners” picked by Jim Anderton’s subsidy machine – NZ Trade and Enterprise – are probably not worth looking at too closely, when you write off the losers. Of course since you didn’t want to “invest” in those businesses anyway, you were the loser either way.

Now according to the NZ Herald Labour is throwing $700 million of your money away on the food and pastoral sectors to promote innovation. Business NZ Chief Executive Phil O’Reilly responds to this by saying “This is an excellent model for commercialising research, based on research-industry collaboration”.

Commercialising? Since when it is commercial to use taxpayers’ money, which might otherwise have been used by OTHER businesses for their innovation?

Nobody would argue with innovation by business, but wouldn’t it be simpler to just forget subsidies and cut company tax some more? For starters, how about a company tax rate of 15% (half that of Australia, and lets bring income taxes down to match)? How much innovation might THAT bring?

Meanwhile National, showing a growing pattern of "me to" ism, has a press release saying "National Party Leader John Key says National will make a significant increase in funding for agricultural research and development, but it does not support the model announced by Labour today.... We will make long-term funding commitments that provide certainty to the sector because we see it as a way of lifting productivity and helping to make New Zealand a smarter nation."

Um, how about letting businesses keep more of their own money? "knock knock" any policy innovation at the National Party?