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New Zealand's longest-running online daily news and commentary publication, now in its 25th year. The opinion pieces presented here are not purported to be fact but reasonable effort is made to ensure accuracy.

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The best economic recovery plan

6 July 2020

The PM has announced "jobs for nature" as a key part of the government's economic recovery plan.

Don't you just feel warm and fuzzy in the wake of that announcement?

Hey, I'm all in favour of tidying up the country and looking after the environment, in fact this should always be one of our top priorities. However, I'm not so sure that it's going to be an effective way to restore NZ's economic prosperity or to create sustainable long-term employment as we continue to weather the CV19 storm.

In fact, I think it's going to become a huge burden on future generations to the extent that perhaps it's not a good idea at all at this stage of events.

In previous times of high unemployment and economic hardship, governments have embarked in public works programs that have created much of the infrastructure we still enjoy and benefit from to this day -- but should Joe Average public and their descendants be made to pay to clean up waterways polluted by farmers?

Ought not the responsibility for that be more fairly apportioned to those who have gained from that pollution? Geez Farmer Brown, that's a nice new car and wow you seem to have pocked a hell of a lot of tax-free capital gain when you sold the farm on retirement eh?

Oh, I've just made legions of enemies within the farming community!

But seriously, the measures proposed by Labour as strategies for saving the economy are almost ludicrous in their inadequacy.

Creating 2,000 jobs through the cleaning up of waterways scheme is, at best, a band-aid. These are very short-term jobs that produce nothing in the way of flow-on effect from a fiscal perspective. Once the waterways are clean, those jobs disappear and people go back on the dole queue. All we've done is rob Peter (the taxpayer) to pay Paul (the unemployed).

No new sustainable businesses are created, no new export earnings are generated and all we're left with is more long-term debt to pay back.

Oh, yeah, and those who created the polluted waterways get off scot-free. What's more, unless we significantly reform our agricultural sector, the benefits of this clean-up will be only temporary, as nitrogen continues to leach from pastures into waterways due to overly-intensive farming and poor management practices.

Of course let's not forget that we also have a fantastic $150m set aside for small business loands and R&D funding.

WTF?

Out of a total spend of tens of billions, the best we can muster for the *real* generators of national wealth is $150m??

And, having already been through this process myself, I know that to collect a single dollar of R&D funding you'll likely have to spend $10 worth of your time completing the onerous paperwork and meeting the compliance costs for uplifting that funding. This soft of technology funding creates jobs... but only the clerical jobs needed to meet the relentless demand for paperwork as part of the process.

Let me say (yet again) that if government really wants to stimulate new startups and hi-tech entrepreneurial activity in NZ then offer an over-unit tax credit for R&D expenditure. That'll create a boom in private venture capital and an inflow of investment from around the world. Best of all, it won't cost taxpayers a single bean!

Sadly, governments care less about pragmatic and effective solutions than they do about control. They would rather take a dollar, waste 50 cents of it in administration and bureaucracy and then use the remaining 50 cents as a way of trying to pick winners so that they can claim the bouquets associated with success stories.

Sadly (ie: Martin Jetpack and a long list of other failed ventures the government of the day "chose" to invest taxpayer dollars in), governments are notoriously bad at picking winners. What's more, as an entrepreneur, I hate knowing that in a system like this, a bunch of bureaucrats will be taking the tax *I* pay and giving it to one of my competitors so that they have an unfair advantage over me.

Why should *any* business have to subsidise a competitor in this way? It's outrageous!

If the government really wants to create an economic recovery they need to create *real* jobs that will persist and continue to provide jobs long after the handouts are gone. They need to create jobs that generate export dollars to replace those we've lost in the wake of the collapse of international tourism. They need to support every startup equally and not to engage in the folly of trying to pick winners.

Sadly, we don't live in a world where our politicians are smart enough to realise this so all we'll end up doing is burdening future generations with a huge debt-load that will cripple our real economy for generations to come.

Or do I have this wrong?

Is labour's plan a sound one?

Could National do any better? I for one strongly doubt it, they'd be even more inclined to try and pick winners I suspect.

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