Another Offshore Billionaire is being subsidized by the Kiwi Taxpayer

A few days ago we commented on how Wilson Parking, which is chaired by a billionaire Hong Kong property developer, "received $3.1 million in government wage subsidies in the past year at the same time as profit increased 43 per cent to $16.7 million".

Now it has been reported that "$1 of every $20 of new Government spending in the [2020-21 NZ] Budget was set aside for film subsidies, which are uncapped .... A substantial portion of the money this year will go to companies owned by Jeff Bezos, the world’s richest man, who is behind the latest Lord of the Rings adaptation ... The grant scheme has run massively over the budget ... In the 2017 budget the scheme was given $55m a year for the years 2017-2021. But by 2019, the scheme already required topping up. An extra $155m was approved for the rest of that year. This year, the Government approved a further $206m.

It is not ultimately possible to address poverty and inequality in NZ when such vast subsidies are being paid by the poor to support the rich. Governments which react by trying to take money back from the rich to help the poor end up introducing so many tax and transfer schemes that the complexity becomes overwhelming. Along with a former Kiwi Finance Minister, I wrote a plan that would eliminate payments to the wealthy, which we refer to as "privilege", and instead use the proceeds to fund mandatory savings accounts. These accounts are designed to especially help low income folks by providing them with more funds to pay for their medical bills, support themselves in retirement and provide security should they fall unemployed.

Sources:

https://www.stuff.co.nz/national/politics/300176880/taxpayer-grants-to-lord-of-the-rings-represent-significant-fiscal-risk-to-government-finances

Could NZ ever become a Tech Hub?

National Party leader, Judith Collins, is championing the vision of NZ as a Tech Hub. Could that industry ever become a major part of our economy? Never say never but here are some observations which would appear to make it unlikely.

Remarkably, several of the most influential people in the Tech industry overseas are Kiwis, or are married to Kiwis. One is a founder of "Silicon Fen", the UK's answer to California's Silicon Valley. He is called Hermann Hauser. His wife is a Kiwi and so they know NZ well. Hauser did a PhD in physics at Cambridge University. Just as Silicon Valley is located close to Stanford University, Silicon Fen is located around Cambridge.

More than 1,000 high tech companies set up offices near Cambridge in the five years preceding 1998. Hauser was co-founder of ARM which has just been sold to Nvidia by SoftBank for about $US 40 billion. It's pretty clear that ARM needed its tight association with Cambridge to get going, which is arguably the world's best science university, with pedigree like Isaac Newton and Stephen Hawking, to name but a few. It seems unlikely we could ever build a Kiwi tech cluster around a local equivalent of Cambridge or Stanford, since that would require a radical reform of our tertiary sector. As for our schools, NZ's rankings in terms of the PISA mathematics scores, as reported by the OECD, are on a trend decline. Unless great maths and science teachers are able to be better remunerated to reflect their scarcity, this situation is unlikely change and is opposed by the teacher's union.

Although Hauser takes an interest in NZ, having contributed to a paper about our "post pandemic direction" and has set up scholarships here, he's also quoted in the Financial Times as saying "Europe doesn’t have a start-up problem. We have a scale-up problem". If that's a problem in Europe, it's orders of magnitude greater in NZ.

Furthermore, IT is replacing banking in the UK as the high pay glamour industry. Just as the big incomes of top bankers electrified that industry, now its the IT stars who are being paid like top sports pros. Few such career paths exist here. A Kiwi friend at Google in New York tells me he has no plans to return to NZ. "Why?", I asked. "The pay", he replied.

For sources, see:

https://www.ft.com/content/dd32f0f8-9c06-11e9-9c06-a4640c9feebb

http://www.hauserforum.com/about/