Government caught providing more corporate welfare

There is a bit of a beat-up about it from the Herald based on a Tax Payers’ Union press release because the company that received free taxpayer money also folded, but that’s not relevant. ?Why did they get it at all?

New Zealand’s biggest off-site housing manufacturer, which owes creditors $17.5 million, received a $287,500 Government grant before Prime Minister John Key opened its Kumeu factory.

Jordan Williams, executive director of lobby group the Taxpayers Union, discovered the money was paid three years ago to eHome Global (NZ), now eHome NZ, in receivership.

He wants to know more about why that grant was given and how it was used.

The money came from the Ministry of Science and Innovation on December 5, 2012, because eHome had “a manufacturing process and construction techniques for conventional homes using panelised components”, the ministry said.

The ministry’s functions have now been taken over by Callaghan Innovation and the Ministry of Business, Innovation and Employment.

Key opened eHome’s big factory in 2013.

Kumeu is of course rather close to home for John Key. ?Not that there is anything wrong with that, but it doesn’t help the look. ?

Receivers estimate eHome owes creditors at least $17.5 million and are trying to sell it as a going concern to recover as much money as possible.

Williams said his organisation checked whether grants had been given to high-profile organisations when there was trouble.

“Politicians don’t have a particularly good track record of picking winners. This is a classic case of corporate welfare and a big photo op for politicians and then a big flop, leaving many people out of pocket.”

Philippa Norman of the Ministry of Business, Innovation and Employment said questions should be directed to Callaghan Innovation.

“This grant used to fall under the former Ministry of Science and Innovation but when MBIE and Callaghan were established this function transferred to Callaghan,” she said.

Williams said that answer was not good enough. “Officials can shuffle the deck as much as they want but taxpayers supported this organisation and officials should say why,” he said.

Apart from the question as to why the taxpayers?are in the business of giving money to companies that aren’t in a form of a loan, as soon as money is handed over the company immediately becomes liable for timely and accurate reporting on how that money is spent.

When taxpayers put money into something, it needs to return value. ?It also needs to be justified in terms of opportunity cost – what couldn’t we do because of the money handed to these clowns, even if they had not turned the company into a black hole?

Governments should not be giving free money; no strings attached money, to anyone, even?companies that aren’t even going to hand it back in the event they do manage it well. ?There is never enough of it, and we seem to be happy to hand it to SkyCity, Team New Zealand and dodgy building companies that are near Key’s electorate.


– Anne Gibson, NZ Herald