Marc My Words.by Marc Alexander MP

Government Help To Business Is The Kiss Of Death

Every so often we hear from the humourless Jim Anderton. Just when you've forgotten that he's in Parliament he pops up from his comfortable seat to promote the glorious wonders emanating from his self-promoted Economic, Industry and Regional Development Ministries. Like a once-in-a-thousand-year planetary alignment, this week was one of those occasions.

Since no one else would ever willingly volunteer, he had his lacklustre sidekick Matt Robson (remember him? - the Corrections Minister whose contributions in that sphere could be assembled, with commentaries, on a postage stamp), to ask a couple of patsy questions that were really only a pair of Trojan mule queries that provided a wobbly platform for Anderton to puff up his chest and pretend to be a friend of business. He predictably cited the number of jobs created - 200 under its 'Best Shore' programme! $1.765 million funding to close skill gaps in information and communications technology !! and a grant of $40.000 to assist an impact study!!! Wow!

But before we pop the champagne corks and gnaw on expensive nibbles in celebratory self-congratulation, let's ask some fundamental questions: Why is the Government involved in providing funding to encourage business in the first place?

On the face of it, how can it not be sensible to have Government foster business - after all won't that raise production, provide jobs and generally raise the wealth of the nation?

Well, no, not really.

Ordinarily businesses obtain their capital funding through people risking their own capital, borrowing investors' capital, or a mixture of both. In all cases the resources extended to the business will be given prior scrutiny to ascertain the risk, is there accountability (to shareholders etc), and most importantly, such resources are voluntary. No one is forced to invest.

Now, if the Government operated with similar assessments on the adequacy of the assets pledged, the business acumen involved and an appropriate evaluation of expected results, then there would be no good argument for government being involved at all. After all, what grounds could be given for using taxpayer money to do what private agencies already do?

The reality however is that governments only fund those businesses that can't get funding elsewhere. In other words, the Government will risk other people's money (ripped out of the taxpayers' bleeding pockets) that private lenders will not risk with their own. Inevitably this gives the power of patronage to the State, puts the capital resources of investors at a greater risk than investors themselves are willing to take; and diverts those resources from the most efficient and potentially productive enterprises that have the confidence of private entrepreneurs.

And now back to Jim Anderton. While he lauds his artificial 'employment creation' schemes masquerading as investment (because that is usually the reason given) - he should pause to think about all those potentially efficient and productive businesses denied capital, including the jobs they would create!

What self-deluded Socialists, camouflaged as great innovative business thinkers invariably fail to understand, is that the capital they misuse has a limited supply; it was created not by government but by private citizens working in private enterprises. The general taxpayer is forced to subsidise bad risks that the business community, after careful scrutiny, will not.

Anderton and his kind, if they must play at business should at least do it with their own money. The business of business is business. It is not the preserve of governments, and it is worth remembering that the Government cannot 'give' to business except that which it takes from business. And the kind of 'help' that the Socialists at the grandly named Ministries of Economic, Industry and Regional Development Ministry 'give' should cease forthwith.

Their 'help' to business often looks a lot more like hostility. They should instead turn their attentions to reducing company and personal tax rates. That would be the greatest benefit of all.

ENDS

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