Mike's Minute: Can corporate welfare be good?

Mike Hosking ,
Publish Date
Friday, 8 February 2019, 9:01AM

So the question is, corporate welfare or a smart community business move? 

We're seeing more of this. Westland Milk got millions from the Government and their provincial fund by way of a loan. Thus leading to many saying, if they're a viable business why didn’t they go to the banks? Further, the Government won't say what the interest rate is, leading to more suspicion and questions. 

Then we got millions more Government money handed out to corporates to build charging stations for electric cars. Now one, there are hardly any electric cars. Two, the companies who got the money all have money. Three, many of the companies not only have the money, but stand to gain from the increase numbers of EVs. So they get free dough to go and make bigger profits of their own, does that make sense? 

Then we come to the latest example, the Palmerston North City Council and Toyota. The council gave Toyota a nearly $400,000 grant because they were afraid the extension facility they were looking at building, wouldn't go ahead if they didn’t. 

Toyota is a big deal in Palmy, so big clearly that they look like they can bend a council in their direction. The fear was that they weren't going to build because the contribution cost was too high. 

But here's your real scandal - the contribution fee, that's the fee the council invents to let you build something, it was $600,000. Toyota in Japan were expecting $50,000 to $100,000, they'd clearly never heard of the New Zealand council predilection for charging like a wounded bull. 

Anyway, at that price the fear was Toyota would lease a facility and if they leased, it might be out of Palmy, hence the council panicked and wrote of $400,000. 

Now, was that a rort or a smart move? I go with the latter. Like all of these examples, it can't be, nor should it be a “one rule suits all cases” scenario. If a council's role is to enhance the business environment, attract jobs, and investment, it behoves you to make it work. 

Especially given, in this case, it’s a small town. Toyota isn't one of 50 major players in town, it's 'the' major player, along with the university. 

That sort of model is, of course, potentially dangerous. Which Sunderland are currently finding out with Nissan in Britain, but while it works everyone loves it. And woe betide the council who cocks it up, sticks to its rules and watches a major player walk. 

Now, the EV money is a scam. It's an ideology rort. It's using our money to fund a fanciful dream. 

The Westland Milk loan might make sense. We don’t know because the Government wont give detachments, which is highly suspicious. 

But in the Palmy case, the council's fee was ridiculous to start with, therefore in not collecting you’ve hardly lost anything, have you? But if they build, they're further entrenched in the community, there is more money, more tax, more jobs and how is that anything other than a smart move?  

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