Archive
Handouts to the Racing Industry? So no more homeless then?!
.
.
Deputy PM, Racing Minister, and de facto godfather, Winston Peters announced on Sunday (28 January) that the New Zealand racing industry was due for tax-cuts for horse breeders and a taxpayer-funded all-weather horse racing track;
.
.
He’s promising the racing industry a multi-million dollar track that can be used even when its pouring with rain. Mr Peters says it is expected to cost around $10 million to construct.
It comes as several races throughout the country had to be abandoned.
The track could be in Waikato to boost the region and be closer to some of the breeders, with Mr Peters saying Waikato would be “a good option”.The Minister says both taxpayers and the industry will be helping to pay for the new track.
Mr Peters is also promising tax relief for owners who are breeding horses for racing. He says the current legislation, which he delivered last time he was Racing Minister, isn’t working like it should.
This, at a time when homelessness in this country has been steadily rising since the 2006 Census;
The number of homeless people in New Zealand rose between the last two Census counts, a new study says.
The University of Otago study, which is based on Census data, said one in 100 were homeless in 2013, compared with one in 120 in 2006 and one in 130 in 2001.
The study used the Government’s official definition of homeless, which is people living in severely crowded houses, in motels, boarding houses, on the street or in cars.
Between 2006 and 2013, the rise in homeless people outstripped population growth. New Zealand’s population grew by 4.8 per cent over this period, while the number of homeless grew by 25 per cent.
As Prime Minister Ardern said on TV3’s The Nation on 21 October last year;
“When you have a market economy, it all comes down to whether or not you acknowledge where the market has failed and where intervention is required. Has it failed our people in recent times? Yes. How can you claim you’ve been successful when you have growth roughly 3 percent, but you’ve got the worst homelessness in the developed world?”
For Winston Peters to be offering tax-breaks and taxpayer funded covered racetracks, at a time of critical need for boosting funding for housing, hospitals, mental healthcare, and other services is a return to the corporate cronyism we’ve experienced for the last nine years under National.
National’s corporate cronyism has included;
.
- In 2011 the National government bailout/loan of Mediaworks, to the tune of $43 million
- In 2011, National spent $271.6 million on the Rugby World Cup
- In 2012, National passed legislation exempting agriculture from the emission trading scheme, effectively subsidising agriculture to approximately $830 million per year
- In 2013 the National government bribed Saudi businessman Hamood Al Ali Al Khalaf $11.5 million to assist in the “facilitation” of a free trade agreement with Saudi Arabia and six other Gulf states
- In 2015, National gave a $30 million dollar bail-out of Rio Tinto
- By 2015, National handed over $191 million to Warner Bros for subsidising The Hobbit trilogy
- Since 2013, National has given at least $136 million to Crown Irrigation Investments, to subsidise irrigation projects for agriculture
.
There is probably more. National’s nine years in office has been less free-market and more corporate welfare than Muldoonism at it’s height. They’ve simply been more adept at hiding it.
In 2013, when it came to throwing taxpayers’ dollars at The Hobbit, Winston Peters was scathing at National’s corporate welfare largesse;
.
.
Peters even demanded that Warner Bros repay taxpayer’s money;
“Now the first movie has grossed more than $1 billion, Warner Brothers should repay the $67 million subsidy the movie moguls sucked from Kiwi taxpayers.”
After all the criticisms from Labour and NZ First at National’s corporate welfarism, the Coalition government has succumbed to the same folly of throwing money – our money! – at multi-million dollar businesses.
For an industry sector that turns over $1.6 billion, it beggars belief that they have their corporate hands out for taxpayer largesse and tax breaks. What other industry will be receiving tax breaks? Tourism? Wine and beer producers? Why not our nascent computer-gaming industry? Or Rocketlabs?
Key must be laughing his head off at this fiasco. After all the ‘stick’ given to Key and his National government for their corporate welfare, the Labour-led coalition have engaged in the same practice – only three months into their first term.
Was there no one with sufficient political nouse in Labour or NZ First’s Parliamentary offices to express reservations over this daft plan? That giving tax-dollars and tax-breaks to a “sport” enjoyed by predominantly affluent New Zealanders is not a particularly good idea? Especially when Labour and NZ First (and the Greens) made so much of New Zealand’s housing crisis during last year’s election campaign?
In effect, Peters has just handed the National Opposition a bloody big stick with which to whack the Coalition over their heads. English and his minions will be gleefully strategising over how they can best use this corporate welfare to attack the Coalition.
National’s strategists have already started by launching this attack-website carrying negative messages;
.
.
Side-note: Interestingly, the website is done in Labour Party colours – not National’s own blue livery. The National Party is not even directly mentioned anywhere on the main page. (Though the “Privacy Policy” link will take you to the National Party website. The authorisation statement is by “G. Hamilton”, National’s General Manager – though few people would know that.)
The racing industry has complained that a covered race-track is essential to allow all-weather events to be held. If so, let the racing industry pay for it. The “Sport of Kings” should not be paid from the taxes of hard-working New Zealanders who expect essential services in health, education, conservation, housing, mental health, policing, etc from their hard-earned tax-dollars. Not enhancing horse-racing facilities.
For perhaps the first (and hopefully the only) time, I find myself nodding in agreement with far-right blogger and former Libertarian/ACT candidate, Lindsay Mitchell, when she wrote her own critique of Peters’ plans;
Today [28 January] Racing Minister Winston Peters apparently promised an all weather track at the cost of $10 million (double it for starters) and either promised or called for tax breaks because the industry (breeding in particular) brings in so much money.
If tax breaks can make one industry stronger, then they can make any industry stronger.
Government picking winners is a recipe for corruption and injustice. We cannot expect New Zealanders who have not a skerrick of interest in the racing industry to disproportionately pay taxes to advance it.
Tax breaks are not subsidies if they are applied universally. Reduce tax period.
You are a guardian of public money Winston. Not a private investor.
On the upside, I am looking forward to our Prime anti-poverty crusader getting it in the neck today over her government’s support for “rich pricks”.
I, for one, will not be defending this policy from criticism from the Right. Because with thousands of New Zealanders homeless and struggling in poverty, it is indefensible. Absolutely, utterly, indefensible.
If the Coalition government wants to assist the racing industry, and they are incapable of raising their own funds, then a suitable compromise is available. The State could easily borrow on behalf of the racing industry and on-lend to the appropriate racing club. Governments with good credit ratings can generally borrow at lower interest rates than from the commercial banking sector.
But it would have to be paid back.
The responsibility of this Coalition government is simple: Putting roofs over homeless families.
Not roofs over race tracks.
.
.
.
References
NZ Herald: Jacinda Ardern arrives at Ratana Pa in first visit by Labour PM since Clark
TVNZ: Winston Peters announces a multi-million dollar all weather horse racing track is on the way
NZ Herald: Homelessness rising in New Zealand
Mediaworks: Homelessness proves capitalism is a ‘blatant failure’ – Jacinda Ardern
Fairfax media: Government denies MediaWorks loan
NZ Herald: Filling the Cup – cost $500m and climbing
Radio NZ: Farmers’ ETS exemption progresses
Fairfax media: Federated Farmers say moving to ETS will cost primary industry $83m
Radio NZ: Saudi sheep deal – MFAT didn’t provide legal advice on lawsuit risk
Interest.co.nz: Key says Government won’t add to NZ$30 million of support given to Rio Tinto to keep Tiwai Pt open
Fairfax media: $191m in public grants paid to Hollywood for Hobbit trilogy
Fairfax media: Government called on to stand by existing irrigation contracts
Radio NZ: Government defends Hobbit subsidies
Fairfax media: Peters – Hobbit subsidy should be handed back
Otago Daily Times: Peters signals intention to make ‘positive changes’
National Party: Let’s Undo This
Fairfax media: Winston Peters back at helm of racing as a return to the old days is heralded
Youtube: Bad Taste
Other Blogs
Lindsay Mitchell: Winston picking winners
Previous related blogposts
National Party Corporate welfare vs real welfare
National ditches environmental policies
ETS – National continues to fart around
“National Party Corporate welfare vs real welfare”
Corporate Welfare under National
The Corporate Welfare of Tiwai Point – An exercise in National’s “prudent fiscal management”?
.
.
.
.
This blogpost was first published on The Daily Blog on 31 January 2018.
.
.
= fs =
Tiwai Point – An exercise in National’s “prudent fiscal management”?
.
.
Timeline
3 October 2007: Meridian and NZAS/Rio Tinto sign agreement for the continuous supply of 572 megawatts of power to the Tiwai Point smelter for 2013 to 2030.
30 October 2011: National government announces partial asset sales, of Genesis, Meridian, Mighty River Power, Solid Energy, and a further sell-down of Air New Zealand.
9 August 2012: Meridian Energy (electricity supplier to Rio Tinto) announces that Rio Tinto/Pacific Aluminium is demanding to renegotiate its electricity supply contract between the Tiwai Point aluminium smelter and Meridian.
We were conned.
There is no other way to describe events between October 2007 and February this year; we were conned by a multi-national mining/metals giant that exploited National’s core-policies, for their own gain.
How else to describe the above events?
Once National announced their intention to partially-privatise Meridian Energy and float it on the New Zealand (and Australian) stock exchanges – Rio Tinto realised that the price of Meridian shares would be determined by the income they derived from selling electricity.
As Green Party co-leader, Russel Norman stated,
”Rio Tinto took advantage of Mr Key’s obsession with asset sales by threatening to derail the sale of Meridian by closing the Tiwai smelter, so Mr Key gave them $30 million of public money.”
Rio Tinto was Meridian’s biggest customer, supplying Tiwai Point with approximately 15% of New Zealand’s total electricity output. As such, Rio Tinto had Meridian (and by proxy, the National Government) by the balls. And on 7 September 2012 and 7 August 2013, Rio Tinto squeezed.
By making 130 workers redundant, it sent National, and it’s compliant leader, a clear message; “Don’t f**k with us, Johnny-boy. These 130 plebes are an example of what we can do to screw you over“.
Had Rio Tinto followed through on it’s threats (and make no mistake – they were threats), it would have brought down the government. That would have ended Key’s career and his reputation would have been in tatters. No Knighthood or beersies for Johnny-boy!
Key had no choice but to capitulate. Key admitted as such when he said on 14 February,
“At the end of the day I think the Government took a modest step to ensure there was a smooth potential transition there – that we didn’t have a glut of electricity we couldn’t use or that thousands and thousands of Southland jobs are out at risk.”
The resulting loss of 700 jobs at the smelter, and a further 2,500 downstream throughout Southland, would certainly have been embarrassing for Key and damaging to National . But this is a government that has overseen the sacking of approximately 3,000 state sector workers (up to August 2012) and 29,472 few jobs in the manufacturing sector, since 2006 (2013 Census results), so unemployment per se is not a problem that overly concerns right-wing government ministers.
What really threatened this government was Key’s reference to a “glut of electricity” – note the words. A glut of electricity would have de-railed the entire asset sales programme. Result; end of National; end of asset sales programme (and the neo-liberal agenda on the whole), and the end of Key’s career.
This shabby, self-serving, politically-expedient exercise, has cost us – the tax-payer – $30 million, plus an even cheaper electricity deal than probably anyone else in this country gets. No wonder the contract price is even more uber secret than the goings-on at the GCSB – the public would erupt in fury if they came to know what our electricity was being sold for, whilst the rest of us have mounting power prices, year after year after year.
Meanwhile, the lowest paid workers in New Zealand’s rest homes are paid just barely above the minimum wage;
.
.
To which our well-heeled Prime Minister responded thusly,
.
.
To quote Dear Leader,
“It’s one of those things we’d love to do if we had the cash. As the country moves back to surplus it’s one of the areas we can look at but I think most people would accept this isn’t the time we have lots of extra cash.”
Interesting. Key and his Cabinet cronies found $30 million to throw at a multi-national corporation – which only six months later posted a $4.43 billion ($US3.7 billion) annual after-tax profit.
But no money for the lowest paid, hardest-working people (predominantly women) in our community. Key responded to Russell Norman’s criticism of the $30 million welfare handout,
“If Tiwai Point had closed straight away then hundreds and hundreds and hundreds of jobs would have disappeared and the Greens would have said the Government doesn’t care about those workers and is turning their back on them so they really can’t have it both ways.”
If only we could believe Key. But considering that thousands lost their jobs since the Global Financial Crisis, and National has not bailed out any other company, the Prime Minister’s protestations ring hollow.
In fact, it’s fairly well obvious that the taxpayer-funded payout to Rio Tinto had nothing to do with jobs or the Southland economy – and everything to do with the state assets sales. As David Hargreaves wrote on Interest.co.nz,
“So, it will cost you, I and him and her a combined NZ$30 million of our hard-earned to keep the Tiwai Point aluminium smelter open just long enough so that the Government can flog off 49% of Meridian Energy.
That’s about the size of the deal struck between Meridian and the company controlled by global giant Rio Tinto, with additional sugar coating supplied by the Government, courtesy of us.
From the point the Government first stepped in earlier this year in an attempt to ‘help out’ it was always obvious tax payers were going to be forced to front up with some readies for the pleasure of keeping the always controversial smelter running for a while longer.
I have no doubt that the smelter will be closed in 2017, which is now when the owners get the first chance to pull the plug.”
The most asinine aspect to this deal (and there are many) is that Finance Minister, Bill English, told Radio New Zealand on 9 August 2013 that “ensuring the safety of those jobs was not part of the deal and no undertakings were sought on the operation of the company”.
No guarantee for preserving jobs?!
Question: So what, precisely, did $30 million buy?
Answer: Rio Tinto not rocking the boat and upsetting National’s asset-sales programme.
This was a most odious, repugnant deal.
Every New Zealander contributed some of their hard-earned cash, which ended up in Rio Tinto’s shareholder’s pockets.
All done to achieve the sale of state assets which we own.
John Key gave away our money; which ended up in shareholder’s pockets; to sell assets we own; to other share investors.
This is the crazy side of National’s economic policy. This is corporate welfare and crony capitalism rolled into one. Which begs the question to National’s supporters; is this what they see as “prudent fiscal management”?
How “prudent” is it to pay a subsidy to a multi-national corporation, that posted a multi-billion dollar after-tax profit, that will most likely close the smelter regardless in some near future date (2017?)?
And why was that $30 million not invested in other job creation industries in Southland, so that a multi-national corporation could not hold this country to ransom? After Rio Tinto and Warner Bros – who is next to hold a gun to our collective head demanding a taxpayer subsidy/payout?
This was an odious, repugnant and wasteful deal.
This should not be allowed to be forgotten this election.
.
.
*
.
References
NZ Herald: Meridian boss hails deal with smelter
Radio NZ: Details of Meridian share offer announced
Radio NZ: National announces plans for asset sale profits
TV3: Rio Tinto seeks new Bluff smelter terms
TV3: Rio Tinto eyeing smelter closures
Australia Mining: Rio Tinto’s New Zealand smelter to axe jobs
Fairfax Media: More jobs to go in smelter revamp
Interest.co.nz: Govt pays NZ$30 mln to smelter owners in a deal that will clear the way for the float of Meridian Energy
Radio NZ: No job guarantees sought in smelter deal
Otago Daily Times: Rio Tinto profit more than $4.4b
NZ Herald: PM defends $30m payout to Rio Tinto
NZ Statistics: 2013 Census QuickStats about national highlights
Dominion Post: 555 jobs gone from public sector
Fairfax media: Resthome spy hails saint-like workers
Fairfax media: PM – No money for aged care workers
Previous related blogposts
John Key’s track record on raising wages – 4. Rest Home Workers
“It’s one of those things we’d love to do if we had the cash”
.
*
.
Above image acknowledgment: Francis Owen
This blogpost was first published on The Daily Blog on 18 February 2014.
.
.
= fs =
Corporate Welfare under National
.
.
In case there are still one or two New Zealanders remaining who haven’t yet cottoned on to one very simple truism about National in office, let me spell it out; they are rank hypocites of the highest order.
And in case you, the reader, happen to be a true-blue National supporter, let me explain why.
In the last four years, National has been beavering away,
- slashing budgets
- sacking nearly 3,000 state sector workers
- closing schools
- attempting to close special-needs services such as Nelson’s Salisbury school
- cutting state services such as DoC, Housing NZ, Police, etc
- freezing wages for state sector workers (whilst politician’s salaries continue to rise)
- cutting back on funding to various community services (eg; Rape Crisis ands Women’s Refuge)
- and all manner of other cuts to state services – mostly done quietly and with minimum public/media attention.
In return, the Nats successfuly bribed us with our own money, giving us tax-cuts in 2009 and 2010. (Tax cuts which, later, were revealed not to be as affordable as what Dear Leader Key and Little Leader English made out – see: Key: $30b deficit won’t stop Nats tax cuts, see: Government’s 2010 tax cuts costing $2 billion and counting)
One such denial of funding for public services is an on-going dispute between PHARMAC and the New Zealand Organisation for Rare Disorders (NZORD) which is struggling desperately to obtain funding for rare disorders such as Pompe’s Disease,
.
Acknowledgement: Fairfax Media – Mum not prepared to wait and die
.
NZORD and it’s members have been lobbying National for the last four years to gain funding for much-needed medication. They are in a dire situation – this is a matter of life or death for them.
This blogger has blogged previously about their plight,
Previous related blogposts
- Priorities? (19 Oct 2011)
- Terminal disease sufferer appeals to John Key (12 Nov 2012)
- “There’s always an issue of money but we can find money for the right projects” – John Key (20 Jan 2013)
- “One should judge a society by how it looks after the sick and vulnerable” – part tahi (4 March 2013)
- “One should judge a society by how it looks after the sick and vulnerable” – part rua (4 March 2013)
- “One should judge a society by how it looks after the sick and vulnerable” – part toru (4 March 2013)
This blogger has also written directly to the Prime Minister and to Health Minister, Tony Ryall.
One response from Minister Ryall is presented here, for the reader’s attention,
.
.
So there we have it, folks. If you’re a New Zealander dying from a rare disease, and PHARMAC won’t fund life-saving medication – don’t expect an assistance from this rotten government. Their response will be, and I quote,
“While I share your concern [snort!!!] for people with Pompe disease, as I advised you in my letter of 22 November 2012, in the current fiscal environment, unfortunately funding is not available for all treatments.”
So “in the current fiscal environment, unfortunately funding is not available for all treatments“?!
But funding is available for;
$1 Rugby – $200 million to subsidise the Rugby World Cup (see: Blowouts push public Rugby World Cup spending well over $200m)
$2 Movies – $67 million paid to Warner Bros to keep “The Hobbit” in New Zealand (see: The Hobbit: should we have paid?) and $300 million in subsidies for “The Lord of the Rings” (see: Hobbit ‘better deal than Lord of the Rings’ – Key)
$3 Consultants – After sacking almost 3,000 state sector workers (see: 555 jobs gone from public sector) – and with more to come at DoC – National seems unphased at clocking up a mind-boggling $1 billion paid to “consultants”. (see: Govt depts clock up $1bn in consultant fees)
And on top of that, we are now faced with the prospect of a trans-national corporate – Rio Tinto – with their hands firmly around Meridian Energy’s neck, attempting to extract a greater subsidy from the SOE powerco. The story began in August last year,
.
Acknowledgement: NZ Herald – Rio Tinto seeks power deal revision
.
We know why. Despite implausible assertions to the contrary by National Ministers, Genesis Energy, and Rio Tinto executives – the partial sale of SOE powercos (Meridian, Genesis, and Mighty River Power) have made them vulnerable to the demands of Big Businesses.
Rio Tinto knows that the share price of each SOE will be predicated on marketplace demand for shares.
They know that if there is less demand for electricity, then the price of power may (note: may) drop; those SOE’s profits will drop; and the price of shares will drop.
That leaves shareholders out of pocket and National with egg on it’s face. And a whole bunch of Very Pissed Off Voters/Shareholders.
Think: Warner Bros. Think: corporate blackmail to shift ‘The Hobbit’ overseas. Think: National not wanting to risk the wrath of Peter Jackson and a thoroughly manipulated Public Opinion. Think: National looking at the 2011 election. Think: panic amongst National ministers and back-room Party strategists.
National capitulated.
This is precisely what is happening with Rio Tinto, Meridian, and National.
In the space of six and a half hours yesterday (28 March 2013), events came to a dramatic head. The following happened in one day:
9.15am:
Via a Press Release from Merdian Energy;
“Thursday, 28 March 2013, 9:15 am
Press Release: Meridian EnergyNew Zealand Aluminium Smelter’s electricity contract
For immediate release: Thursday, 28 March 2013
Meridian was approached by Pacific Aluminium, a business unit of global mining giant Rio Tinto Ltd, the majority shareholder of New Zealand Aluminium Smelters Ltd (NZAS), in July 2012, to discuss potential changes to its existing electricity contract.
Since talks began, various options have been discussed and Meridian has offered a number of changes and concessions to the existing contract.
Chief Executive of Meridian Energy, Mark Binns, says that Meridian has advised Pacific Aluminium of its ‘bottom line’ position.
“Despite significant effort by both parties there remains a major gap between us on a number of issues, such that we believe that it is unlikely a new agreement can be reached with Pacific Aluminium,” says Mr Binns.
In the event no agreement can be reached, Meridian will seek to engage with Rio Tinto and Sumitomo Chemical Company Ltd, the shareholders of NZAS, who will ultimately decide on the future of the smelter.
Meridian signed a new contract with NZAS in 2007, after three years of negotiations. This current contract commenced on 1 January 2013 and remains unaltered and binding on the parties.” – Source
To which Rio Tinto replied,
10.15am:
In a NZ Herald story,
CEO of Pacific Aluminium (the New Zealand subsidiary of Rio Tinto), Sandeep Biswas responded with,
“We believe a commercial agreement that is in the best interests of NZAS, Meridian, the New Zealand Government, and the people of Southland can be reached. We look forward to continuing productive negotiations with a view to achieving a positive outcome for all parties.” – Source
De-coding: “This ain’t over till the Fat Chick sings, and she’s nowhere to be seen. You guys better start hearing what we’re saying or this is going to turn to sh*t real fast; we’ll close our operations at Bluff; 3,200 people employed by us directly or indirectly will be told ‘Don’t Come Monday’; your Southland economy will collapse like a Cyprus bank, and National can kiss goodbye to it’s re-election in 2014. Ya got that, sunshine?”
11.15am:
That got the attention of National’s ministers Real Quick,
The Government has opened discussions with Tiwai Point aluminium smelter’s ultimate owners Rio Tinto in a bid to broker a deal after talks between the smelter and Meridian Energy reportedly broke down.
[…]
“With this in mind, the Government has been in contact with Pacific Aluminium’s international parent company Rio Tinto this week to discuss helping to bridge the gap in their positions over the short to medium term, if this could be of assistance in concluding an agreement.
“In the meantime, we understand Meridian’s existing contract with Pacific Aluminium remains in place at least until 1 January 2016 with significant financial and other obligations beyond that.” – Source
Barely two hours had passed since Meridian had lobbed a live grenade into National’s state asset sale programme, and it’s fair to say that the Ninth Floor of the Beehive was in a state of panic. It was ‘battle stations’. Red Alert. National ministers were, shall we say, slightly flustered,
.
.
12.00pm:
By noon, the markets were reacting. Though share-market analysts were attempting to down-play the so-called ‘Phoney War’ between Meridian and Rio Tinto, Devon Funds Management analyst, Phillip Anderson, remarked that,
“…the announcement had hit Contact’s share price – the company was down 3 per cent in early trading but is now down only 1.2 per cent.” – Source
If Contact’s (a fully privatised ex-SOE) share price had dropped 3% on the strength of these media stories, it is little wonder that share-market analysts were down-playing the brinkmanship being played out by Meridian and Rio Tinto. If the share-market was spooked enough, Contact’s share price would plummet, as would that of Mighty River Power – estimated to be in the $2.36 and $2.75 price-range. (see: Mighty River share tips $2.36 to $2.75).
In which case, National would be floating shares worth only a fraction of what ministers were seeking. In effect, if Rio Tinto closed down operations, Key could kiss goodbye to the partial sale of energy SOEs. They would be worthless to investors.
3.43pm:
By 3.43pm, and six and a half hours since Meridian’s press release, National had negotiated some kind secret deal with Rio Tinto. We don’t know the terms of the deal because though it is our money, National ministers don’t think we have a right to the information,
The Government is negotiating a new taxpayer-funded subsidy with Tiwai Point aluminium smelter’s owners and has all but acknowledged its assets sales programme is being used by them to get a better deal on power prices.
State Owned Enterprises Minster Tony Ryall this morning said the Government has opened discussions with the smelter’s ultimate owners global mining giant Rio Tinto in a bid to broker a deal over a variation to the existing electricity contract.
[…]
“With this in mind, the Government has been in contact with Pacific Aluminium’s international parent company Rio Tinto this week to discuss helping to bridge the gap in their positions over the short to medium term, if this could be of assistance in concluding an agreement.”
Mr Ryall indicated the Government had offered Rio Tinto “a modest amount of money to try and help bridge that gap in the short to medium term but there’s still a very big gap in the long term… We’re not interested in subsidising this business in the long term”. – Source
Ryall added,
“…they’re pretty tough negotiators and I’m sure they look at what else is happening in the economy when they make their various decisions…
…”they certainly haven’t got the Government over a barrel.”
Three questions stand out from Ryall’s statement,
- If State subsidies for electricity supply to Rio Tinto’s smelter are “short to medium term” – then what will happen when (if?) those subsidies are lifted? Will shareholders “take a bath” as share prices collapse in value?
- Does Ryall think we are fools when he states that Rio Tinto did not have the government “over a barrel” ?! Is that how National views the public – as morons?
- How much is the “a modest amount of money” that Ryall is referring to?
Perhaps the most asinine comment from Ryall was this, as reported by TVNZ,
“The electricity market is capable of dealing with all the issues relating to the smelter,” said Ryall.
Acknowledgement: TVNZ News – Talks break down over Tiwai smelter contract
Really?! In what way is “the electricity market … capable of dealing with all the issues relating to the smelter” when the government has to step in with what could be millions of dollars worth of subsidies? Is that how “the market” works?!
This blogger has two further questions to put to Minister Ryall. Both of which have been emailed to him,
.
Date: Thu, 29 March 2013, 6.43pm
From: Frank Macskasy <fmacskasy@yahoo.com>
Subject: Re: Your correspondence to Hon Tony Ryall
To: Tony Ryall <Tony.Ryall@parliament.govt.nz>Kia ora, Mr Ryall,
I am in receipt of your emailed letter to me, dated 5 December 2012, regarding the non-funding of certain medications for sufferers of Pompe Disease. Firstly, thank you for taking the time to respond to this issue in a thorough and timely way. Several of your other ministerial colleagues seem to lack that simple etiquette.
I note that, as Minister of SOEs, you have been in direct negotiations with Rio Rinto, and have offered the company subsidised electricity for the “short to medium term”.
This will no doubt cost the taxpayer several millions (hundreds of millions?) of dollars.If National is able to provide such largesse to a multi-national corporation, please advise me as to the following;
1. Why is the same subsidy for cheaper electricity not offered to ALL New Zealanders? Or even those on low-fixed incomes? Why provide a multi-million dollar subsidy just to a billion-dollar corporation when New Zealanders could do with a similar cut in their power bills?
2. In your letter to me, dated 5 December 2012, you point out that,
“While I share your concern for people with Pompe disease, as I advised you in my letter of 22 November 2012, in the current fiscal environment, unfortunately funding is not available for all treatments.”If National has millions of dollars available to subsidise multi-national corporations, them obviously your statement on 5 December 2012 that “in the current fiscal environment, unfortunately funding is not available for all treatments” – is simply not credible.
It is obvious that your government can find money when it wants to. This applies to Rugby World Cup funding, consultants, movie-making subsidies, etc.
As such, I hope you are able to find the necessary funding for medication for people suffering rare disorders.
You are, after all, Minister for Health as well as Minister for State Owned Enterprises.
Regards,
-Frank Macskasy
BloggerPS: Please note that this issue will be canvassed further on the blogsite, The Daily Blog.
.
Minister of Health. Minister for SOEs. Minister for corporate welfare.
Which ‘hat’ will Tony Ryall be wearing today?
And will he find the necessary funding to save the lives of sick New Zealanders?
This blogpost was first published on The Daily Blog on 31 March 2013.
.
*
.
References
NZ Herald: Rio Tinto seeks power deal revision (10 Aug 2012)
Scoop.co.nz: New Zealand Aluminium Smelter’s electricity contract Press Release (9.15am, 28 March 2013)
NZ Herald: Govt steps in to sort out stalled Tiwai power deal (11.15am, 28 March 2013)
NZ Herald: Tiwai stoush may affect Mighty River price (12.00pm, 28 March 2013)
NZ Herald: Govt offser Tiwai subsidy (3.43pm, 28 March 2013)
Related references
NZ Herald: Mighty River share tips $2.36 to $2.75 (20 March 2013)
Related to previous blogposts
Pharmac: The politics of playing god (16 June 2011)
$500,000 a year to keep toddler alive (5 Feb 2013)
Rare disease sufferers want pricey treatments (1 March 2013)
Rare disease takes awful toll on boy (1 March 2013)
Call for an Orphan drugs access policy to overcome Pharmac’s systems failure (28 Feb 2013)
Bill English – do you remember Colin Morrison? (4 Feb 2013)
Related Opinion
NZ Herald – Fran O’Sullivan – Govt intervention doesn’t cut mustard (30 March 2013)
.
.
= fs =
National Party Corporate welfare vs real welfare
People welfare, bad!
.
.
.
.
.
.
It’s fairly obvious what National thinks of New Zealanders who find themselves on the welfare safety net. Especially when those on welfare are there because of a global financial crisis brought on by unfettered, laissez-faire capitalism (aka naked greed) hitting a wall, and sending economies worldwide deep into recession.
But never mind. National has an answer for such dire events.
It’s called,
.
Corporate welfare, good!
.
Even as National continues to persecute, demonise, and blame the unemployed, solo-mothers (but never solo-dads), invalids, widows, etc, for their lot in life (because as we all know, the unemployed, solo-mothers (but never solo-dads), invalids, widows, etc, were directly responsible for the Global Financial Crisis that began in Wall Street’s boardrooms) – John Key and his cronies continue to lavish truck-loads of tax-payers’ money on corporate welfare.
.
1. ETS Subsidies for farmers
.
In June 2012, Business NZ CEO, Phil O’Reilly, wrote in the NZ Herald,
” There has been a lot of redesign and tinkering with the ETS. Established in 2008, reviewed and amended in 2009, reviewed again last year and about to be amended again – it’s no wonder that businesses involved in the scheme have review fatigue.”
See: Phil O’Reilly: Emissions trading scheme must bring investors certainty
Mr O’Reilly may well complain. But he is unfortunately too late. On the morning of 3 July, Dear Leader John Key announced that the 2015 postponement (of elements of the ETS) had formally become an “indefinite postponement” (ie; gone by lunchtime on that day).
Key stated,
“We’re not prepared to sacrifice jobs in a weak international environment when other countries are moving very slowly.”
See: Slow economy puts ETS plans on hold
Yet that hasn’t stopped National from levying ETS on the public. No fears there, evidently, of impacting on the pockets of ordinary Kiwis, and in effect, susidising farmers to the tune of $400 million per year since 2009.
In effect, this is a transfer of wealth from ordinary taxpayers to polluters [edited]. After all, what else can it be called when the public have to pay for an ETS – but farmers, industries, coal & oil companies, etc, – the very groups that produce CO2 and methane – are exempt?
See: Public to pay tab for polluters
So much for Tim Groser – Minister for Climate Change Issues and International Trade – insisting,
“The National-led Government remains committed to doing its part to reduce greenhouse gas emissions, but it is worth noting that we are the only country outside Europe with a comprehensive ETS.”
National’s “committment” to reducing greenhouse gas emissions has gone up in smoke and carbon dioxide.
As the Sustainability Council NZ reported in November 2009,
- Households would bear half the total costs under the amended ETS
during its first five years (52%), while accounting for just a fifth of all
emissions (19%). Together with small-medium industry, commerce and
services, and transport operators, they would pay 90% of the costs resulting
from the ETS during CP1 while being responsible for 30% of total emissions.
- Pastoral farmers would gain a $1.1 billion subsidy and pay an amount equal
to 2% of their fair share of the Kyoto bill during CP1, while large industrial
emitters would gain a $488 million subsidy (at a carbon price of $30/t).
See: ETS – Bill to a Future Generation
On top of that, National appears unwilling to release actual financial data when it comes to the ETS. Critical data has been withheld, as the Sustainability Council discovered last year,
” Governments are legally required to provide an update of the nation’s financial position just before elections but those accounts do not recognise carbon obligations until they are in an international agreement, hence there is nothing concrete on the books until after 2012. “
See: Simon Terry: Carbon books reveal shocking gaps
And the Council report goes on to state,
” The Sustainability Council requested a copy of those projections eleven weeks ago.
After various delays, the Treasury delivered its projections the day before the election
– late in the afternoon and with much of the key material blanked out.
What arrived is the carbon equivalent of a finance minister presenting a budget and
saying:“Here is the estimated tax take for the next 40 years, and here is the total
spending. But we are not going to tell you how much tax is coming from any sector,
and we are certainly not going to tell you how tens of billions of dollars worth of
carbon subsidies and other payments are expected to be distributed. And no, we are
not giving you the figures for the past four years of the ETS either”.It looks to be the closest thing in the public domain to New Zealand’s carbon books
and yet: future agricultural emissions are a state secret; future deforestation rates are a
state secret; even projected fossil fuel emissions are a state secret – all blanked out. “
So what do we have here?
- Ongoing subsidies to polluting industries, with said subsidies paid by you and me, the taxpayer.
- Secrecy surrounding future ETS agricultural, deforestation, and fossil fuel emissions.
- Constant deferring of including polluters in a scheme that was designed specifically for dirty industries and farming practices.
- Importation of unlimited, cheap, foreign carbon credits.
Final point:
It seems a crying shame (as well as a fair degree of sheer madness) that we are paying subsidies to industry – whilst not offering the same deals to the generation of renewable energy and further research into renewable energy options (wind, solar, tidal, etc).
Ironically, the one subsidy that might have helped our economy and environment was scrapped in 2011, making Solid Energy’s biofuel programme uneconomic. (See: Biodiesel loses subsidy, prices to rise)
Instead, the taxpayer continues to subsidise polluters. On 27 August 2012, National finally ditched agriculture’s involvement in the ETS, giving farmers, horticulturalists, etc, a permanent “free ride” from paying for their polluting activities. (See: Farmers’ ETS exemption progresses )
This is the inevitable result of electing a corporate-friendly political party into government.
.
.
2. Subsidies to Private schools and Tertiary Providers
.
Subsidies to private tertiary education providers continues to increase,
” The Government is investing a further $29.503 million in the Private Training Establishment (PTE) sector over four years. This increases the funding rates for private training providers in line with the Government’s promise to treat them more equitably with public providers. The resulting funding difference is now half of what it was previously. “
See: Tertiary Education Commission – Private Training Establishments
So, if you’re a private company offering to train someone a course in “xyz” – expect a hand-out from a corporate-friendly National.
In the meantime,
- ” Student allowances are removed for post-graduate study the parental threshold for accessing allowances is frozen for the next four years. The Government says the changes will save $240 million in the first year and up to $70 million a year thereafter. The Budget cuts all funding for adult and community education in universities, saving $5.4 million over four years. “
See: Radio NZ – Benefits for research, science and engineering
- “ It also saves $22.4 million over four years by ending funding used to help tertiary education providers include literacy and numeracy teaching in low-level tertiary education courses...”
See: Radio NZ – Benefits for research, science and engineering
- ” Sunday Star-Times recently reported one in five young people left school without basic numeracy and literacy skills, despite the future workforce depending on advanced expertise. “
See: Not adding up on Easy Street
- ” Early childhood education subsidy cuts worth tens of millions of dollars are likely to be passed on to some parents through increased fees.
Education Minister Hekia Parata has kicked a total revamp of ECE funding into a future Budget, opting instead to stop cost increases to the Crown by cancelling the annual upward inflationary adjustment in rates.
The subsidy freeze takes effect on the next funding round, stripping about $40 million out of ECE payments to 5258 ECE centres. About 1427 of those centres are eligible for “equity funding,” however, and will get a boost through $49m extra directed to them over four years in a bid to enrol more children from the lowest socio-economic parts of the country.
But the scrapping of an annual inflationadjustment for other centres will be an effective funding cut as inflation pushes the cost of running ECE centres up. “
See: Parents face burden of preschool squeeze
National’s most recent hand-out went to private school, Whanganui Collegiate,
.
See: Govt ignored advice before private school’s integration
.
For a Party that advocates the “free market”, it certainly seems odd that they’re willing to throw bucketloads of our taxes at businesses such as private schools. After all, what is a private school, if not a profit-making business?
And don’t forget Charter Schools – which is the State paying private enterprise/institutions to run schools – whilst making a profit (at taxpayer’s expense) in the process. Why don’t exporters get this kind of support?
That was certainly Gerry Brownlee’s attitude when Christchurch’s post-earthquake housing crisis became apparent,
.
See: Christchurch rent crisis ‘best left to market’
.
3. Media Works subsidy
.
In 2011, this extraordinary story broke,
.
Prime Minister defends loan to MediaWorks
Published: 8:28PM Friday April 08, 2011 Source: ONE News
The Prime Minister is defending his decision to loan $43 million of taxpayer money to private media companies.
John Key claims the loan scheme was designed to help the whole radio industry.
But a ONE News investigation has revealed MediaWorks was the big winner after some hard lobbying.
Key is known for being media friendly, but he’s facing criticism from Labour that he’s become too cosy with MediaWorks which owns TV3 and half of New Zealand’s radio stations.
It has been revealed the government deferred $43 million in radio licensing fees for MediaWorks after some serious lobbying.
Key and the former head of MediaWorks, Brent Impey, talked at a TV3 Telethon event.
“I just raised it as an issue but we’d been looking at it for sometime. My view was it made sense. It’s a commercial loan, it’s a secured contract,” Key said.
It’s believed the loan is being made at 11% interest.
But in answer to parliamentary written questions, the Prime Minister said he had “no meetings” with representatives of MediaWorks to discuss the deal.
Two days later that answer was corrected, saying he “ran into” Brent Impey at a “social event” in Auckland where the issue was “briefly raised” and he “passed his comments on” to the responsible minister. ”
See: Prime Minister defends loan to MediaWorks
.
Aside from another example of Key’s mendacity, when he originally claimed to have had no contact with Mediaworks,
… in answer to parliamentary written questions, the Prime Minister said he had “no meetings” with representatives of MediaWorks to discuss the deal.
Two days later that answer was corrected, saying he “ran into” Brent Impey at a “social event” in Auckland where the issue was “briefly raised” and he “passed his comments on” to the responsible minister.
See: IBID
… this affair was another example of selective subsidies being offered to some business – whilst others are left to their own devices to survive,
.
.
We’ve lost 41,000 jobs in the manufacturing and construction sectors over the last five years. To which National’s Minister-Of-Everything, Steven Joyce’s response was,
“Nobody’s arguing that being a manufacturer isn’t challenging. In fact, in my history in business, every time you’re in business it’s challenging.
“But going around and trying to talk down the New Zealand economy and talk about a crisis in manufacturing, I don’t think is particularly helpful.”
See: Exporters tell inquiry of threat from high dollar
“There is no doubt that economic conditions in the post GFC- world are challenging for some firms. The role of Government is to do things that help make firms more competitive and that is what our Business Growth Agenda is all about.”
See: Opposition parties determined to manufacture a crisis
Or Minister for Primary Industries, Nathan Guy saying,
“Our trading disadvantage has meant that we need to do more with less, and to work smarter.”
See: Innovation in New Zealand’s Agribusiness sector
To which exporters responded with this,
“We’re told to get smarter and I find that irritating and insulting. I’m about as smart as they get in my little field. How the hell do these people get smarter? For a politician to tell somebody else to get smarter – he’s risking his life.”
See: Exporters tell inquiry of threat from high dollar
Not very helpful, Mr Joyce. Though Opposition Parties may appreciate that you are pushing your core constituents into their waiting arms.
That’s how you alienate your voter-base.
.
4. Sporting subsidies
.
The Rugby World Cup
- Prime Minister John Key today announced a $15 million grant for an upgrade of Christchurch’s AMI Stadium for the Rugby World Cup in 2011.
See: Govt announces $15m for AMI Stadium (30 April 2009)
- Dunedin Mayor Peter Chin says he is “chuffed” the Government will contribute up to $15 million to cover shortfalls in private sector funding for the $198 million Otago Stadium project.
See: Chin ‘chuffed’ at $15m for stadium
- The Government blew out a $10 million budget to host VIPs at the Rugby World Cup – even though just a handful of foreign leaders attended.
See: $5 million overspend on World Cup VIP budget
- An extra $5.5 million will be spent on the Rugby World Cup to make sure there’s not a repeat of the chaos that unfolded on the evening of the tournament’s opening ceremony.
- Including the $350m spent to upgrade stadiums and provide IRB-approved facilities around the country and millions more pumped into infrastructure and preparations, the bill for the tournament has easily surpassed the $400m mark.
See: World Cup ‘absolutely worth’ price tag
Yacht Races
The Major Events Development Fund will invest $1.5 million on each of two Volvo Ocean Race Auckland stopovers to be held in 2015 and 2018 following an announcement today by Economic Development Minister Steven Joyce
See: Govt to support 2015 & 2018 Volvo Ocean Race Auckland stopovers
.
Meanwhile, Health Minister Tony Ryall refuses to provide additional funding for specialised medicines for patients with rare disorders. See: Letter from Tony Ryall, 5 December 2012
The message is crystal clear; National will subsidise rugby games and yacht races. But don’t expect help if you discover you have a rare disease.
.
5. Warner Bros subsidy
.
After Jackson made public noises in October 2010 that ‘The Hobbit’ could be taken offshore, there was a kind of mass-hysteria that pervaded the country.
Warner Bros wide-boys jetted down to meet Dear Leader, who kindly supplied a taxpayer-funded chauffeured limousine to bring the Holloywood execs to Parliament.
Dear Leader said “no more subsidies”.
Nek minit; Warner Bros demanded, and got, an extra $15 million. (see: Govt defends Hobbit jobs claim)
All up, the New Zealand taxpayer coughed up $67 million to give to Warner Bros. (Who sez crime doesn’t pay? Gangsterism obviously turns a healthy profit now and then.)
.
.
The film obviously didn’t do too badly at the Box Office – $1 billion is not too shabby by anyone’s standards,
.
.
Can we have our money back now, please?
.
6. Broadband subsidy
.
Funny isn’t it. Pro-business lobby groups always complain about State intrusion into the market place… Except when subsidies are being handing out.
One wonders why, if the Free Market” is more efficient than the State, that $1.5 billion in taxes has to be paid to private telcos to do what that they should already be doing.
Perhaps this is why it took the State to build this country’s infra-structure over the last hundred years. Infra-structure such as electricity generation. (See related blogpost: Greed is good?)
Which National is now preparing to part-privatise.
Private companies will soon be owning what taxpayers built up over decades, and which private enterprise was loathe to build in the first place. (If you’re wondering whether I’m referring to state power companies or broadband – there doesn’t seem to be much difference.)
.
Meanwhile, back in the Real World!
.
.
Dear Leader says,
“Some argue that people on a benefit can’t work. But that’s not correct.”
Correct.
Because as Welfare Minister Paula Bennett stated candidly on Q+A on 29 April,
“There’s not a job for everyone that would want one right now, or else we wouldn’t have the unemployment figures that we do. “
See: TVNZ Q+A: Transcript of Paula Bennett interview
Correct.
Which means that National’s “reforms” to push 46,000 of welfare is not just a meaningless exercise (the jobs simply aren’t there) – but is actually a political smokescreen to hide their own incompetance at forming constructive policies for job creation.
Unfortunately, there are too many right wing halfwits and Middle Class low-information voters who readily buy into National’s smokescreen. It’s called prejudice, and means not having to think too deeply on issues,
.
.
Fortunately, it is the job of those on the Left to dispel these unpleasant notions for the Middle Classes. (National’s right wing groupies are a lost cause.)
Let’s start by posing the question; why is welfare for corporations supposedly a good thing – but welfare for someone who has just lost their job, supposedly bad?
That’s what we need to keep asking the Middle Classes.
Eventually, they’ll start paying attention.
.
.
This blogpost was first published on The Daily Blog on 8 March 2013.
.
*
.
Additional
Scoop: Where’s National’s ‘corporate welfare’ reform?
Fairfax media: Doubt stalls biofuels growth (14 March 2011)
The Press: Solid Energy ‘wasted millions’ on biofuels (31 Aug 2012)
Southland Times: Biodiesel loses subsidy, prices to rise (30 May 2012)
TVNZ: Prime Minister defends loan to MediaWorks (8 April 2011)
Radio NZ: Data reveals drop in manufacturing, building jobs (22 Feb 2013)
Previous related blogpost
Once upon a time there was a solo-mum
Doing ‘the business’ with John Key – Here’s How
Acknowledgements
Tim Jones of Coal Action Network Aotearoa
.
.
= fs =
Dispatches from Planet Key…
.
.
This week has been a busy one for Dear Leader…
Trans Pacific Partnership Agreement
Perhaps the most far-ranging trade agreement that New Zealand has been involved with, since CER with Australia took effect in 1983, the TPPA (Trans Pacific Partnership Agreement) is currently under negotiation between eleven nations (including New Zealand).
Negotiations are being held in absolute secrecy, with no Parliamentary or public oversight. Quite simply, New Zealanders have no idea what National is signing up to, until the deed is done and we are committed to god-knows-what.
There are suggestions that part of the TPPA may contain,
(1) The right of corporations to sue governments for “loss of profits”. This is no better illustrated than the recent attempt by tobacco companies to force the Australian government to back down over plans to introduce plain-packaging in that country. (See: Tobacco packaging: cigarette companies lose Australian court case)
Tobacco manufacturer, Philip Morris, moved it’s subsidiary shares from Australia to Hong Kong so as to exploit a 1993 trade agreement between the two jurisdictions and was thus able to sue the Australian government. (See: Smoke signals: plans of Big Tobacco plain to see)
This barely-concealed attempt to exploit an obscure trade agreement should serve as a sign of things to come.
(2) Stricter intellectual property rights that may undermine Pharmac’s ability to buy cheaper, generic medicines, after patents have expired.
It is by this process that PHARMAC can purchase cheaper drugs from overseas and pass those savings on to all New Zealanders. The US pharmaceutical industry recognises the threat that PHARMAC poses to their profits – especially if the PHARMAC-model is adopted by other nations.
More of what pharmaceutical corporations are demanding can be found in this article, by Keira Stephenson; TPPA could ‘gut’ Pharmac, say critics.
John Key recently stated,
“We’re not prepared to see dairy excluded. And in terms of abolition, yeah, I mean that’s the aim. There might be a time frame under which clearly there’ll be a phase out. But in the end New Zealand can’t sign up to the TPP if it excludes our biggest export.”
See: Key says NZ won’t sign up to TPP unless dairy included
Key also said it would “not a good look” if concessions undermined the status of Pharmac.
See: Ibid
Unfortunately, we have good reason to be concerned. If past experience is anything to go by, John Key’s reassurances are mostly meaningless and more changeable than our weather. Key has changed his position on matters such as,
- not raising GST (See: Key denies ‘flip flop’ over GST increase)
- not implementing youth rates (See: Govt reintroduces youth wage)
- not selling state assets (See: Highlights from Key’s 2008 ‘no job cuts’ speech)
- Capping state sector workers, and not cutting numbers (See: Highlights from Key’s 2008 ‘no job cuts’ speech)
- To create 170,000 new jobs (See: Unemployment up to 7.3pc – a 13 year high)
- To implement a nationwide food-in-schools programme (See: National launches its Food in Schools programme, Key in poverty ‘la la land’)
- Implementing tax cuts in 2009 and 2010, and assuring the public that they were “appropriate for the current economic and fiscal conditions” (See: National Party Tax Policy 2008, John Key: Address to the CEO Summit, APEC Business Advisory Council)
- Double standards over sale of farmland to overseas investors (See: Investors should not have to live here, Key says)
- And statements in 2010 and this year, that taxpayers would not be giving subsidies to Warner Bros, as inducements to keep “The Hobbit” in New Zealand. Then gave extra tax breaks an cash subsidies to Warner Bros. (See: PM: I’m not going to write cheques NZ can’t afford, PM’s ‘special’ movie studio meeting, Key on Hobbit deal: ‘It was commercial reality. We did the business.’)
If there is one thing we’ve come to expect from John Key – he can flip-flop on his promises and committments with all the ease of a Nigerian scammer.
So when Dear Leader says he is committed to…
“We’re not prepared to see dairy excluded. And in terms of abolition, yeah, I mean that’s the aim. There might be a time frame under which clearly there’ll be a phase out. But in the end New Zealand can’t sign up to the TPP if it excludes our biggest export “…
And, it would “not a good look” if concessions undermined the status of Pharmac…
We should immediately be concerned.
The man is simply not to be trusted.
Corporate welfare
In October 2010, Key categorically rejected spending taxpayers money on corporate welfare for the movie industry,
Mr Key reiterated that the Government was prepared to move at the margins when it came to money but it did not have an open chequebook.
He said Warner Bros were asking for “lots and we’re not offering lots”.
“If it’s just simply a matter of dollars and cents, I’m just not going to write out cheques that New Zealand can’t afford.”
See: PM: I’m not going to write cheques NZ can’t afford
Two years later, and our Prime Minister is dishing out taxpayers money to the movie industry like it’s growing on trees,
The Government wants to offer better incentives to get more foreign TV shows filmed in New Zealand.
Prime Minister John Key, in Matamata yesterday for the opening of the Green Dragon Pub at the Hobbiton Movie Set Tours, said attracting television series was the next step to aiding the creative industry after movie work such as Sir Peter Jackson’s The Hobbit.
“Blockbuster movies are very, very large … but they have big peaks and troughs and during the troughs that’s really difficult for people working in that field, so we can fill those gaps with television,” Mr Key said.
Under Mr Key’s lead the Ministry of Business, Innovation and Employment, the Film Commission and the Inland Revenue Department are jointly reviewing the incentives offered to overseas producers to film TV series in New Zealand.
See: Key talks up sweeteners for TV
And yet, on 16 September this year, Key specifically rejected all suggestions of subsidies to other industries – especially exporters – to help save jobs,
“But there will always be job losses, Shane. There will always be parts of the economy where, for whatever reason, there’s a change in pattern. So years ago, we all did different things from what we’re doing today. The point for New Zealand is if we’re going to sell more to the world than we buy from the world, if we’re going to earn our way in the world and not spend more than we earn, then we have to have a highly focused, competitive economy. And we need to have three things: access to capital, access to markets and access to skilled labour.
[…]
If I just take you back to your point, many of the countries you are pointing to that are paying out these levels of subsidies are backed up by governments that are hugely indebted. So the whole problem in Europe, the whole reason why you’re seeing countries like Spain, like Greece and right through Southern Europe in the sort of mess they are is they have huge levels of government debt. So the answer in New Zealand is not necessarily coming up with a make-work scheme funded off taxpayers’ taxes. It comes off New Zealand having a competitive industry, making sure that we have flexible labour markets, making sure that we are investing in things that will make the economy go faster, like science and innovation.”
See: TVNZ Q+A Interview with Prime Minister John Key
When it comes to holding two diametrically opposed beliefs, simultaneously, (aka ‘doublethink‘) John Key excels.
I cannot recall any politician in the last forty years who can flip-flop so easily on any given issue.
Statistics & John Key
When the Household Labourforce survey was made public on 8 November, the data showed a dramatic leap in unemployment from 6.8% to 7.3%. (See: Unemployment up to 7.3pc – a 13 year high) There are now at least 175,000 people without work in this country.
Dear Leader’s response?
He rejected the figures outright, in this Fairfax story,
” In the end these things bounce around quite a bit… it’s at odds with what most of the economists thought would happen. Like a lot of surveys, from time to time, it can produced usual data, let’s see what happens in the next one. But it’s not going to make the Government change tack. These are challenging international conditions … but I don’t think we should change course I think we’re on the right track. “
See: Shock rise in unemployment to 7.3pc
On TVNZ’s Q+A, on 25 November, Key was just as reluctant to accept the HLFS results,
” The Household Labour Force Survey is a survey. It’s a survey of 15,000 people. It has a quite significant margin of error and it bounces around a lot. Quite a number of the bank economists, in their review of the last number, said it’s notoriously volatile. So I can’t tell you whether it might go up a little bit or go down a little bit. What I can tell you is that’s not the relevant point. The relevant point is is the government doing everything it can to create an environment to allow businesses to create jobs? “
See: TVNZ Q+A Interview with Prime Minister John Key
Which makes it even stranger and more comical when – having trashed the reliability of the Household Labour Force Survey over the last month – he suddenly invokes the very same Household Labour Force Survey to back up his position (which depends on what day it is),
” There’s always a range of different data series. QS [Quarterly Survey?] is one. That’s obviously another. Household Labour Force is another. All I can tell you is we’ve looked at [garbled gibberish] … The concensus view and that was the previous government’s view as well, is that HLFS was the best measure of the economy. Sometimes it produces numbers I don’t like. But if you look at their data series what they are saying is, in broad terms, over the last four years, the number of jobs in manufacturing is roughly about the same.” – John Key, 27 November 2012
Source: Radio NZ – PM rejects jobs statistics
It is fairly obvious to the ordinary bloke and blokette in the street that relying on John Key’s word will generally result in disappointment.
Back to Pharmac, the TPPA, and John Key’s “reassurances”
Last year, on 13 June, Fairfax reporter Nikki MacDonald wrote an excellent piece on how TPPA negotiations may impact on Pharmac’s drug-buying policies,
Pharmac was established in 1993, to rein in rocketing drug costs and distance the government from drug-buying decisions. Its task is to spend its $710 million annual budget to achieve the best health gains for Kiwis.
Broadly, Pharmac works by referring drug-company funding applications to the Pharmacology and Therapeutics Advisory Committee, made up of senior doctors and pharmacists, to examine whether or not the drug is effective, and whether it is significantly better than anything else already on offer.
The committee then gives the drug a low, medium or high funding priority and Pharmac’s board decides whether or not its benefits justify the price tag.
Pharmac’s cost-benefit analysis, which takes into account average patient age and the number of good-quality years gained by the treatment (called quality adjusted life years, or QALYs), is similar to that in Australia’s scheme.
The major difference is that Australia funds everything meeting a given cost-effectiveness threshold.
New Zealand, on the other hand, has a fixed budget, so has to decide whether it can afford to fund a drug in any given year. Pharmac must also consider the opportunity cost of a funding decision – what do you sacrifice to spend $20 million on the latest cancer drug?
Pharmac uses various bargaining strategies so it can buy more for its drug dollar. These include:
Reference pricing: Where a newer, patented drug has similar benefits to a cheaper generic drug, Pharmac might subsidise the newer drug only to the same level as the lower-cost alternative. The drug company then either drops its drug price to the subsidy level, or the consumer pays the difference.
Sole-supply tenders: When a drug patent expires, Pharmac tenders to get the best price for a generic replacement. Drug companies can offer much cheaper deals because they’re assured of a large market share.
A 2004 price comparison found Australia paid up to 20 times more than New Zealand for some generic drugs, because it did not use tenders. (Legislation has now bridged some of that difference, by enforcing staged price drops for generic drugs.) A Canadian study found generic drugs were up to 93 per cent, and on average 58 per cent, cheaper in New Zealand.
Package deals: A costly new drug that works well but is not cost-effective can be funded by negotiating cheaper prices for other drugs made by the same pharmaceutical company. Glivec was funded using this method.
Negotiated contracts. On the numbers Pharmac has been spectacularly successful. In 1985, a basket of commonly prescribed drugs cost 37 per cent more in New Zealand than in Australia. Between 1993 and 2006 New Zealand’s drug spending grew by 11 per cent, while Australia’s soared by 212 per cent. Pharmac estimates its aggressive pricing policies save almost $1 billion a year.
See: Pharmac: The politics of playing god
Most New Zealands either have no idea what the potential impact on Pharmac may be, if US pharmaceutical companies get their way through TPPA negotiations – or are too busy watching the latest “Masterchef Botswana”, “X Factor Bolivia”, or gawking at a celebrity’s tits on some vacuous “reality” show.
It is only when Pharmac’s ability to buy cheap drugs is undermined by the full power of pharmaceutical companies, levied through the TPPA, and the costs for medicines suddenly doubles, trebles, quadruples, will New Zealanders wake up to the fact that we’ve been rorted.
And it all happened on the watch of our smiling, waving, Prime Minister – that ever so-nice Mr Key.
By then it will be too late.
So when Key reassures New Zealanders that,
“…it would “not a good look” if New Zealand made concessions that undermined the status of its drug-buying agency, Pharmac.”
See: No TPP deal unless dairy and Pharmac are in, says Key
See: TPPA could ‘gut’ Pharmac, say critics
… it is time to be worried.
Like all his other assurances, pledges, promises, and committments that have been broken or backtracked, our Prime Minister is not a man who stands by his word.
When it comes to the health of our economy, he has failed.
Let’s not allow him to do the same to our own health.
.
*
.
Sources
US free-trade deal suspect (19 Dec 2010)
Pharmac: The politics of playing god (13 June 2011)
Pharmac faces trade ‘threat’ (26 Oct 2011)
Leaked TPPA document leaves NZ position on software patents unclear (22 June 2012)
Leaked document on Investor Rights to sue sovereign governments
No TPP deal unless dairy and Pharmac are in – Key (26 Nov 2012)
TPPA could ‘gut’ Pharmac, say critics (29 Nov 2012)
Navigating the choppy waters of the TPP (1 Dec 2012)
Right Wing Reaction
Anti-trade camp running debate (28 Nov 2012)
Other blogs
The Standard: TPP Negotiations Auckland next week
Tumeke: Citizen A TPP special with Professor Jane Kelsey & Lori Wallach
Gordon Campbell: Gordon Campbell on the NZ Herald’s attack on Jane Kelsey
Idle Thoughts of an Idle Fellow: TPP in crisis?
Werewolf: Into The Cave of Dreams – Trans Pacific Partnership
Werewolf: Selling the Farm – Trans Pacific Partnership
Werewolf: The Neutering Of Pharmac – Trans Pacific Partnership
Werewolf: Head First Into The Spaghetti Bowl – Trans Pacific Partnership
Public Citizen: Controversial Trade Pact Text Leaked, Shows U.S. Trade Officials Have Agreed to Terms That Undermine Obama Domestic Agenda
Groups
Additional
NBR: OPINION: TPP – Groser trades away tech to save agriculture
Fairfax: CTU seeks answers over trade agreement
NBR: Govt accused of ‘sellout’ on trade pact negotiations
NBR: NZ must stay staunch on TPP
.
.
= fs =
Guest Author: Where’s National’s ‘corporate welfare’ reform?
– Penny Bright
.
.
“How many billion$ of public monies could be saved by ‘CUTTING OUT THE CONTRACTORS’?
Where’s National’s ‘corporate welfare’ reform?
Which of the major political parties are pushing for ‘corporate welfare’ reform and shrinking the long-term dependency of the private sector on our public monies?
Where is the ‘devilish detail’ at both local and central government level – which shows EXACTLY where our public rates and taxes are being spent on private sector consultants and contractors?
Why aren’t the names of the consultant(s)/ contrators(s) – the scope, term and value of these contracts, published in Council or central government Annual Reports – so this information on the spending of OUR public monies is available for public scrutiny?
Where are the publicly-available ‘Registers of Interests’ for those local government elected representatives, and staff responsible for property and procurement, in order to help guard against possible ‘conflicts of interest’ between those who ‘give’ the contracts and those who ‘get’ the contracts?
Where’s the ‘transparency’?
Given that New Zealand is ‘perceived’ to be the least corrupt country in the world – along with Denmark and Singapore, according to Transparency International’s 2010 ‘Corruption Perception Index – shouldn’t we arguably be the most transparent?
Going back a step – where are the New Zealand ‘cost-benefit’ analyses which prove that the old ‘Rogernomic$ mantra – public is bad – private (contracting) is good’ can be substantiated by FACTS and EVIDENCE?
At last – someone – somewhere has actually done some substantial research – which proves the opposite.
That ‘contracting out’ services that were once provided ‘in-house’ is actually TWICE as expensive.
“USA Project On Government Oversight (POGO)[1] decided to take on the task of doing what others have not—comparing total annual compensation for federal and private sector employees with federal contractor billing rates in order to determine whether the current costs of federal service contracting serves the public interest.
http://www.pogo.org/pogo-files/reports/contract-oversight/bad-business/co-gp-20110913.html
Executive Summary
Based on the current public debate regarding the salary comparisons of federal and private sector employees, the Project On Government Oversight (POGO)[1] decided to take on the task of doing what others have not—comparing total annual compensation for federal and private sector employees with federal contractor billing rates in order to determine whether the current costs of federal service contracting serves the public interest.
The current debate over pay differentials largely relies on the theory that the government pays private sector compensation rates when it outsources services. This report proves otherwise: in fact, it shows that the government actually pays service contractors at rates far exceeding the cost of employing federal employees to perform comparable functions.
POGO’s study analyzed the total compensation paid to federal and private sector employees, and annual billing rates for contractor employees across 35 occupational classifications covering over 550 service activities. Our findings were shocking—POGO estimates the government pays billions more annually in taxpayer dollars to hire contractors than it would to hire federal employees to perform comparable services. Specifically, POGO’s study shows that the federal government approves service contract billing rates—deemed fair and reasonable—that pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the total compensation paid in the private sector for comparable services. ”
The implications of this both nationally and internationally are HUGE.
If NZ central government figures are comparable with those of USA Federal Government – could the current NZ $82 billion central government spend be sliced in half by $40 billion ‘CUTTING OUT THE CONTRACTORS’?
http://www.treasury.govt.nz/budget/2011/estimates/est11sumtab.pdf
Which political parties / candidates are focussing on the SPENDING of public monies, rather than debt and borrowing?
If central and local govt departments /SOEs / CCOs / Crown Research Institutes are all defined as ‘PUBLIC- BENEFIT ENTITIES’ as defined under NZ Equivalents to International Financial Reporting Standards (“NZ IFRS”) – then their primary objective is to provide services and facilities for the community as a social benefit rather than make a financial return.
So – how come so many services that USED to be provided ‘in-house’ are now contracted out to the private sector – whose primary objective is most certainly to ‘make a financial return’?
What magic is this that transforms public (ratepayer and taxpayer) monies into private profit?
WHERE IS THE NZ EQUIVALENT OF ‘POGO’ the USA ‘Project On Government Oversight ‘ which has just completed first-ever research which proves that private contractors cost twice as much as ‘in-house’ providers of Federal Government services?
HOW MUCH MONEY could be saved in NZ at central and local government by cutting out all the private ‘piggies in the middle’ with their greedy snouts in our public troughs?
Why aren’t the statutory ‘third party’ Public Watchdogs, as well as other major political parties demanding this accountability?
How much public money at central and local government level could be saved by ‘CUTTING OUT THE CONTRACTORS’?
Who else is even asking this question?
.
*
.
Additional
Govt depts clock up $1bn in consultant fees
Government’s spending on consultants skyrockets
PM’s ‘special’ movie studio meeting
Government denies MediaWorks loan
Emitters get ‘$1.4b corporate welfare’
.
.
= fs =
News Archives
Crony Watch
Keeping an eye on dodgy government appointees, crony-by-crony!
Frankly Speaking... 
