Crony capitalism undermines sustainable growth

GUEST OPINION

As elected representatives of the people, politicians are stewards of taxpayers’ money. It is up to members of Parliament and their parties to articulate their vision for the country and, if elected to the Treasury benches, channel this tax revenue to projects that are intended to provide a nationwide social or economic benefit.

As a Labour MP, I believe the government has an important role to play in stimulating economic growth through ensuring the market variables that determine optimal outcome are set at the right level. 

As a former Labour revenue spokesman, I understand the power of the tax system to drive growth; but also to destroy it (or certainly limit it).

The tax system has two purposes in a modern economy: to gather revenue and to influence behaviour. One way to influence behaviour is to distribute revenue into areas that drive growth. I have, however, never believed in providing government grants to businesses that should be able to raise money from the market.  

In fact, by giving out taxpayer money to companies that have the ability to raise capital from either public markets or private investors, one could argue that the government is having a negative impact on the growth of our rather shallow capital markets.

The Monopoly Money report suggests a significant amount of the tax we pay is being channelled into corporate welfare. How is this fair to the thousands of small businesses that are the backbone of our economy? And is it really the best use of scarce resources at a time of record government debt? I personally don’t believe it is. (See report attached)

The National government’s economic vision appears to consist of little more than crony capitalism. This does not drive the type of sustainable economic growth needed to create long-term economic wealth and opportunities for all New Zealanders; but rather subsidises the very companies least in need of taxpayer-funded largess.   

The difference between National’s political rhetoric and reality could not be more striking. The report shows that rather than working hard to get the books back into shape and investing in a more prosperous, fairer New Zealand, senior National Party ministers appear to be delving into the country’s coffers to dole out money to their favoured business and industries.

Given that politics is a contest of ideas and vision, any government spending on the scale identified in the report should be transparent and open to public scrutiny. I therefore welcome the Taxpayers’ Union efforts in this area.

While my own politics and that of the Taxpayers’ Union differ significantly, I commend it on this report. It allows readers to think about the relative values and priorities from the spending the report outlines.

Stuart Nash is the Labour Member of Parliament for Napier. He has provided a foreword to the Monopoly Money report published by the Taxpayers’ Union