Bill Ralston: The problem with the Provincial Growth Fundby Bill Ralston
There are a couple of problems with this idea, one of which is that $3 billion of our tax money is being used for party political purposes. Still, that’s not a real difficulty for Jones and Prime Minister Jacinda Ardern as Sir Michael Cullen’s Tax Working Group contemplates new ways to prise cash out of us.
Another glitch is that people are notoriously ungrateful for state charity. Sure, some provincial boards of directors will be breathing sighs of relief that they’ve got their desperately needed dollars to go on with for a couple more years, but the denizens of the provinces are unlikely to change their vote just because the Ministry of Business, Innovation and Employment has dropped more loot into their locale.
The Government does not seem concerned that banks have made a commercial decision not to fund particular projects for very good reasons, namely that the figures don’t add up and that the projects are too high a risk.
Some of us are old enough to remember the spectacular collapse of the Development Finance Corporation (DFC) in 1991. Funding commercially risky projects is a great way to ensure your liabilities soon outstrip your assets. Eventually, the bubble pops and then you go bust.
Last year, the Provincial Growth Fund pumped $32 million into the Ngāti Hine Forestry Trust and it bought 1.2 million pine seedlings. However, only 200,000 could be planted, because scrub had not been cleared. The rest were mulched or sent elsewhere.
This single blunder cost $160,000. It’s a relatively small sum, but how many more costly mistakes lie in the 100 or so projects funded at a cost of $400 million? These include forestry, roading, high-speed gondolas, a $20 million Rotorua waterfront development, and a Northland mānuka oil distillery. Over the Waitangi Day period, Ardern announced $100 million in development aid for Māori rural landowners and $20 million to be put towards boosting economic growth in Kaipara. That means there is still at least about $2.5 billion to be spent before the next election.
Unlike the ill-fated DFC, which had been privatised, the Provincial Growth Fund cannot go bust, because it is backed by you and me through our taxes. It can lose a lot of money, but the taxpayer can be counted on to continue topping it up and making good the money wasted. Remember that when you peruse the Tax Working Group’s findings and its ideas for leveraging loot from your wallet.
Opposition regional development spokesperson Paul Goldsmith makes a good point that the money being poured into the pork barrel is at the expense of such things as the downgrading of Lumsden’s maternity centre, the cancelling of new funding for cochlear implants for the deaf, and the broken promises of universal cheap GP visits and more spending on mental health initiatives.
Recently, in response to an Opposition statement, Finance Minister Grant Robertson asked National to show him the money. Easy, Grant, Shane’s got it.
This column was first published in the February 16, 2019 issue of the New Zealand Listener.
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