Yesterday Science and Innovation Minister Steven Joyce announced research and development grants that are set to cost taxpayers $140million over three years. The Herald reports:
Note that one of recipients of the grants is high profile technology firm Rakon, which share price has been in free-fall since 2007 and just announced to the NZX that it is closing its UK plant.
This is precisely why the government shouldn’t be trying to pick winners with taxpayer cash.
In 2007 Rakon’s share price reached $5.70. Today it is trading at less than 4 per cent of that, at around 19cents. In addition, the Shareholders Association, and others, have been vocal in criticising the governance of the company. See for example the NBR back in August "NZ Shareholders Association to vote against reelection of Rakon chair, director" and stuff.co.nz "Rakon profit warning 'disturbing'":
"The Rakon shareholders have sent a powerful message to the board that they are displeased with the performance of the company and are looking for either an improvement in performance or a change in the composition of the board,"
Later in August, this Businessdesk update "NZ Shareholders Association to agitate at Rakon AGM" said:
The New Zealand Shareholders Association will next month vote against the reappointment of Rakon chairman Bryan Mogridge and director Darren Robinson, citing erosion of shareholder wealth and the desire to improve company governance.
The Shareholders Association will use its proxies to vote against the reappointment of Mogridge at the Sept. 6 meeting in Auckland after shares in the maker of crystal oscillators lost half their value the past year, making it one the worst performers on the stock exchange.
If the government is going to give out taxpayer money, at least give it to companies that are succeeding, not failing.
This is a grant to a company that is shrinking rather than growing New Zealand exports.
Looks to us like a big win for Rakon shareholders, but not so much for the taxpayer...
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).
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.
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.
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.
Cr Nicola Young, whose motion to consult before Wellington implemented the living wage was defeated 8 votes to 5, writes in today's Dominion Post.
Wellington City Council has lit a fuse leading to a bomb of unknown size, with its vote to implement a "living wage" for its employees from January 1.
Councillors often stress the need for evidence-based, reasoned and clear decisions; correct process; and the need to avoid writing blank cheques but there was little - if any - consultation and analysis of the impact this wages policy would have on Wellington households and businesses. Ironic, considering the council has also committed to the capital being "open for business".
This is key. As we've pointed out before, the study by Auckland Council, and advice from the Treasury on the question of whether a living wage policy is a good tool to reduce poverty is damning.
Mayor Celia Wade- Brown has defended this Alice in Wonderland approach by pointing out the council didn't consult on the chief executive's salary either. The reality is that the CEO is paid the going rate in a competitive international market, whereas the "living wage" is an artificial intervention to boost incomes of lower paid workers who happen to work at the council.
The "living wage" proposed by the Living Wage Aotearoa New Zealand Campaign, is higher (relative to GDP per capita) than the United States, United Kingdom, Australia, and Canada. Incredibly, ours is higher than London's; the 18th most expensive city in the world (Wellington is ranked at 74th in Mercer's Cost of Living survey).
This is incredible. Wellington Council want low income Wellintonians to pay more in rates to fund a 'living wage' higher than London's!
We're all for higher wages, but taxing more in rates to artificially pay some more is not the way to get there.
Following the well publicised case of global warming scientists being stuck in record pack ice in Antarctica (ironically the expedition was intended to study the dwindling sea ice) and the efforts to rescue them, the Taxpayers' Union began enquires late last year to find out precisely how much taxpayers' money the NZ Government "supporters" listed on the expedition's website had contributed.
It appears that thankfully New Zealand taxpayers' haven't forked out the huge amounts feared. In fact, it appears that the Australasian Antarctic Expedition (AAE) is claiming at least one 'supporter' it doesn't have...
The expedition's website lists expedition supporters the Department of Conservation, Landcare Research, and the University of Waikato.
Click 'continue reading' for more info.
This morning the New Zealand Herald covered figures released by the Taxpayers' Union show that MPs are chewing through more than $65,000 per month on payouts to avoid messy employment grievances.
Parliamentary Service spent nearly $400,000 on payouts for former staff in the second half of last year, a period in which the agency was mired in controversy.
Figures released by the Speaker showed that since June, 20 former employees had received a severance payment. On average, former staff received nearly $20,000 each.
Parliamentary Service employed around 650 people including assistants and advisers for MPs in Wellington and regional offices, and also staff within the parliamentary precinct such as security guards.
Eleven of the people who received severance packages had worked for MPs.
Parliamentary Service group manager shared services Anne Smith said the number and amount of payments was higher than usual because the agency was being restructured and because of a high turnover of MPs in the second half of the year.
She said the costs would be offset by the improvements made in the restructuring.
Labour Party MP Grant Robertson said that the payments reflected a turbulent period for the agency.
"It would be fair to say that morale has been pretty low in the Parliamentary Service and obviously from the point of view of MPs we don't want to see that carry on."
General manager Geoff Thorn resigned in August after it was revealed that Parliamentary Service had passed on emails between Fairfax reporter Andrea Vance and United Future leader Peter Dunne to an inquiry investigating the leak of a sensitive report.
Taxpayers' Union spokesman Jordan Williams criticised the costly use of public money to pay out former staff. He claimed that Parliamentary Service was "buying the silence" of workers who had been sacked on the spot by MPs.
A clause in parliamentary staff contracts allowed instant dismissal of staff in cases of "irreconcilable differences".
Mr Williams said he knew of two dismissals in which a minor party leader refused to hear their employee's response to allegations made by other colleagues.
Parliamentary Service would not confirm how many of the payments related to the irreconcilable differences clause, but said the agency followed strict processes in dealing with employment disputes.
The payments usually covered three months' wages and any outstanding leave or other entitlements.
The figures released did not include ministerial staff.
MP support staff: Eleven payments totalling $122,935.
Other staff: Nine payments totalling $273,006.
The two instant dismissals referred to in the Herald story, were due to a minor party leader being unwilling to hear his employee’s response to a minor allegation made by a colleague. The former employees were offered confidential payouts from Parliamentary Service well above what the individuals were advised they would likely be awarded in court.
While every other New Zealander must follow the letter of employment law, information released to the Taxpayers' Union suggests that MPs are often ignoring it and having taxpayers fund the resulting payouts. It appears that parliamentary officials offer generous settlements to avoid cases going to the Employment Relations Authority. We think that protecting MPs with such a practise affords them a privilege that only invites further abuse.
To date Ministerial Services has refused to provide the equivalent information for ministerial staff. The Taxpayers' Union currently has a complaint regarding that decision before the Ombudsman.
Just after publicly launching in October, the Taxpayers' Union received an anonymous tip off that there was a massive cost overrun of a mismanaged IT project jointly commissioned by DoC and Land Information New zealand (LINZ). The National Property and Land Information System (“NaPALIS”) had allegedly been a failure, with DoC still picking up the pieces 18 months after the project was scheduled to be complete.
This morning a DoC official hand delivered the response to the requests for information by the Taxpayers' Union. We understand that the Director General will be making a public statement this afternoon.
The material includes two independent reports that are damning of DoC. They blame mismanagement and ineffective governance for the project’s failure. It appears that LINZ has walked away from the project and has left DoC to pick up the pieces.
We're still reviewing the material, but to summaries one of the independent reviews of the project (conducted by Deloitte), it found: