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Good intentions not enough for good policy

Science and Innovation Minister, Steven Joyce hit back at us regarding our recent criticism of the Government's corporate welfare efforts, such as the millions of taxpayer dollars going into ‘company incubators’. The NBR reported on Thursday:

Eight new company incubators are to receive funding under Callaghan Innovation’s incubator support programme.
Callaghan, the government funded innovation hub, has included three new technology-focused incubators and five founder-focused incubators in its latest funding round. 
The three new tech-focused incubators are PowerHouse, Astrolab and WNT Ventures, and will be eligible for up to $450,000 worth in repayable government grants, with the incubator companies matching funding at a one to three ratio of up to $150,000.
...
The tech-focused incubators will focus on commercialising Intellectual property, primarily sourced from publicly funded research organisations, like universities and Crown Research Institutes.
The repayable grants are a trial programme, which was allocated $31.3 million over four years in the 2014 Budget.
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However, the Taxpayer’s Union executive director Jordan Williams has described the government grants as an “example of politicians thinking they know more than IT entrepreneurs.

On Friday, Mr Joyce went the offensive:

Joyce slams Taxpayers’ Union attack
Science and Innovation Minister Steven Joyce has slammed the Taxpayers’ Union’s attack on the minister as a “fundamental misunderstanding” by its executive director Jordan Williams.
Mr Williams described the $31 million worth of grants to eight new company incubators - under Callaghan Innovation’s incubator support programme - as an example of politicians thinking they know more than IT entrepreneurs.
Mr Joyce says Mr William’s comments show a fundamental misunderstanding of both technology-based start-up companies and the intention of the government’s policy.
Unfortunately Mr Joyce does not tell us what the 'fundamental misunderstanding' is, rather just explains what the 'purpose' and 'intention' of the policy is. The article goes on to say:
NBR ONLINE asked the Minister how Callaghan Innovation justifies a 3:1 funding ratio, with the taxpayer taking on 75% of the risk?
Mr Joyce replied that the incubators would be funding early stage companies that have arisen from public research organisations, where generally the taxpayer has paid up to 100% of the costs of the research.
“The projects that are funded via the incubator are still very early stage, with significant technical risk. The aim of the programme is to get private sector expertise in very early so that the projects have a greater chance of success. 

We have called on Mr Joyce to explain what the ‘fundamental misunderstanding’ is. Instead of rebutting our criticisms of the policy, Mr Joyce has just reiterated what the ‘intentions’ are. Unfortunately even the worst policies have the best of intentions.

We hoped to be proven wrong on our fear that the grants are interest free. Instead the Minister confirms the worst, with 40% of the grants expected to be written off and the rest not even adjusted for inflation.

In February the world's third largest software maker, SAP, which last year posted a profit of €1.80 billion, received a similar growth grant'.

For us, the key question are:

  • where is the evidence that the return taxpayers get from the successful start-ups compensate for the money lost on the half that fail?
  • Who is ensuring that the decisions made by politicians on what businesses to back are better than what would have happened had the money stayed in taxpayers' pockets?

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$15 Million Gifted to Multi-Billion Dollar Industry

Yesterday Stephen Joyce announced:

$15m investment in sheep and beef genetics

Science and Innovation Minister Steven Joyce today announced a $15 million investment over five years into advances in genetics research that will improve the profitability of New Zealand’s sheep and beef sector.

A new partnership, Beef + Lamb New Zealand Genetics, will also bring together New Zealand’s existing sheep and beef genetics research by consolidating Sheep Improvement Ltd, the Beef + Lamb New Zealand Central Progeny Test, and Ovita. Total funding for the new project from government and industry sources will be up to $8.8 million per year.

“Science and innovation are major drivers of economic growth and international competitiveness. The Government is committed to ensuring we invest in purpose-driven research that benefits New Zealand,” Mr Joyce says.

“Genetic improvement in the sheep industry has contributed greatly to farm profitability, and for every dollar captured on farm, another 50 cents is captured off-farm. In just 10 years Beef + Lamb New Zealand Genetics expect that farmers will receive $5.90 extra profit per lamb sold at that time.”

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We think this is corporate welfare - the only winners are the sheep and beef farmers who will ultimately profit. Like most corporate welfare, it’s everyday taxpayers who will be left out of pocket.

As Mr Joyce goes on to point out in the release, New Zealand already leads the world in pastoral animal and plant genetics.

“As a nation, we are already leading the world in pastoral animal and plant genetics. This partnership will help us maintain this critical position and to continue to build on it through further research and development in sheep and beef genetics.”

The first part of that paragraph is correct - NZ does lead the word. What is not clear is why taxpayers need to stump up to keep us there. Why does this multi-billion dollar export industry suddenly need the Government pouring millions into it? Expecting increases in farmers' profits is not justification.

This funding is for good headlines, not good economics. What other industries have their normal research and development costs borne by the taxpayer?

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Policy victory

Last week we released material showing that millions of dollars is being wasted in a CTU/Business NZ deal for health and safety training that, according to ACC's experts, for every dollar spent 84 cents is wasted. As you'll recall, the Minister of ACC, Judith Collins, labelled the scheme a 'sham' and a 'rort'. It was clear that millions intended to improve workplace health and safety was being used for programmes that did little, if anything, except 'raise awareness'.

We are pleased to report that, despite the initial doubt, the Taxpayers' Union has now confirmed that ACC is cutting the taxpayer funding of the Council of Trade Unions and Business NZ for this dodgy training program. We understand that the final contracts revealed last week dramatically reduce the funding Business NZ and the CTU receive.

This is a big win for levy payers - who will no longer have the burden of funding a deal that achieves little, if anything. For workers this is a win - the money can now be redirected to measures that actually reduces accidents. It's also a win for Business NZ and CTU members - no longer are the two organisations conflicted in their ACC advocacy for members.

ACC has now publicly stated that the this training programme will end this year. That, combined with the CTU and Business NZ's new contracts is a policy victory.

 

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Business NZ finally responds to allegations of cosy deal

Stuff has just reported:

BusinessNZ rejects training scheme attacks

Business NZ has hit back at ACC Minister Judith Collins over her attacks on an ACC-funded health and safety training programme run by Business NZ, the Council Of Trade Unions and a private provider.

ACC announced this week that the $1.5 million a year programme would be canned at the end of of 2014 because it was not providing value for money.

Collins had joined criticism of the scheme, which has run since 2003, describing it as a cosy arrangement that had the hallmarks of a scam and a rort.

Business NZ today broke its silence on the issue, with a press release quoting its chief executive, Phil O'Reilly.

"For the record, Business NZ utterly rejects mistaken allegations made by lobbyist Jordan Williams since repeated by the ACC minister," O'Reilly said.

"The BusinessNZ family's involvement has been completely ethical at all times, and I am confident that this is also the case with the involvement of the CTU and Impac Services."

The CTU has also strongly rejected the criticisms by Collins and Williams.

O'Reilly said it was "unfortunate that important debate on workplace safety has been undermined by intemperate media comment".

Media reporting of uninformed assumptions by Williams appeared to have led to the minister's comments, O'Reilly said. continue reading...

Business NZ’s reaction ignores the fact that the criticisms we've highlighted are from ACC’s own experts - all the Taxpayers’ Union did was bring them to the public’s attention.  We made all of the material available online and before we went public we checked our facts with people within the industry. We stand by our statements.

Business NZ should focus on rebutting the criticism that it has accepted millions of dollars from ACC that did little, if anything, to improve workplace safety. Rather than getting personal Mr O’Rielly could tell us what exactly is ‘mistaken’.  All we’ve done is highlight ACC’s expert analysis which states that, even with optimistic assumptions, 84 cents per dollar spent was wasted. 

Click here to listen to Judith Collins on Wednesday's RadioNZ Summer Report ( 7' 08'' )

To blame us for the Minister labelling the Business NZ scheme 'cosy' and 'a scam' is flattering, but vastly exaggerates the influence of the Taxpayers’ Union.

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ACC cans useless scheme publicly, but extended the contract within the last month

Yesterday it looked like the Taxpayers' Union struck up it's first win, with ACC announcing that it would scrap the health and safety training scheme which has cost levy holders $19million to date, with 84 cents per dollar being wasted (even with optimistic assumptions).

ONE News, 3 News, the HeraldStuff, Radio NZ, and Newstalk ZB all reported that ACC had decided to scrap the programme late last year.

The Minister for ACC agreed with the Taxpayers' Union, calling the scheme "a rort" and a "cosy deal".

ACC dumps workplace training scheme

 

This morning we read the small print...

The contracts released to the Taxpayers' Union on 5 December note that the ending date is 31 December 2013.

We now know that ACC has just extended the contracts to 31 December 2014

Despite the ACC telling media yesterday that it decided 'late last year' to can the programme, we learned this morning that the contracts were renewed in December. The end date is now 31 December 2014.

It appears that ACC only changed its tune since the Taxpayers' Union publicly exposed the rort.

Remember, it’s not the Taxpayers’ Union who labelled the training scheme a waste of money, it’s ACC’s own experts. Telling the public that they will scrap the scheme but waiting for the new contracts to expire is not good enough. They conveniently failed to mention that the contracts have just been renewed...

The Taxpayers’ Union is also backing the Minister for ACC’s reported comments that Business NZ and the CTU should pay the wasted money back to ACC. With such clear evidence that the money did little if anything to improve workplace safety, we think Business NZ and the CTU are morally obliged to stop wasting this money and compensate ACC levy payers.

UPDATE: We've been told that the rolled over contract is 'transitional' and reduces the amounts paid to the CTU and Business NZ.  We are trying to confirm this with ACC and have requested the documentation.

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Media coverage of Business NZ/CTU ACC rort

Tonight's TV news coverage of the corporate and union welfare exposed earlier today.

ONE News: $19m wasted on health and safety training with 84c per dollar wasted

Click here or the image below for video on demand.TVNZ screenshot

3 News: ACC dumps workplace training scheme

Click here or the image below for video on demand. 

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ACC wastes millions on a cosy deal with Business NZ and the CTU

ACC has a cozy deal with Business NZ and the CTU despite knowing 84 cents per dollar wasted

Material released by the Taxpayers’ Union show a cosy deal between Business New Zealand, the Council of Trade Unions ("CTU") and ACC has cost ACC-levy payers $19 million since 2003.

The documents, available and summarised below show ACC knew that millions paid to Business NZ and the CTU to provide health and safety training did little, if anything, to reduce workplace accidents.

Recent ACC analysis concludes that, even with optimistic assumptions, for every dollar spent on the training 84 cents is wasted. 

A 2013 briefing to the Minister for ACC, Judith Collins, states that the CTU has found it “challenging” to meet its performance obligations even though it has been contracted for service since 2003. 

The documents show that Business NZ and the CTU worked together with ACC to create the venture and doubts about the value of the scheme have existed since at least 2008.

It appears that Business NZ and the CTU have created a nice little earner for themselves. But we think it's a disgraceful example of big corporate and union welfare chewing through taxpayer cash. We think members of Business NZ and the CTU should be asking hard questions of their respective management teams.

Even the report in 2008 shows that that whole scheme was achieving little more than ‘engagement’. While ACC, Business NZ and the CTU must have known the scheme was worthless, they all allowed further millions to be spent.

This is the worst example of government waste the Taxpayers’ Union has seen to date. It involves two quasi-political organisations from the left and the right complacent in receiving taxpayer funds, likely knowing that the benefit was a small fraction of the amount being spent.

The Taxpayers' Union is calling on Ms Collins to put an end to this hand out to Business NZ and the CTU.

Click "continue reading" for more information, including the full material obtained by the Taxpayers' Union under the Official Information Act.

 

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