Corporate welfare cements in losers
Thursday, 23 July 2026
EDITORIAL: The deputy prime minister, David Seymour, also ACT Party leader, described his government’s decision on Monday to transfer $60 million of taxpayers’ money to the Fletcher Building-owned Golden Bay Cement as a “necessary evil”. He was half-right.
One of Mr Seymour’s intellectual inspirations, Adam Smith, warned in The Wealth of Nations that, whenever businesspeople meet, their conversation invariably ends “in a conspiracy against the public, or in some contrivance to raise prices”. Add politicians and lobbyists, and the mischief is compounded. Whatever geopolitical or other case can be made for a particular instance of corporate welfare, collectively it saps productivity and lowers our wages, profits and living standards, and lifts prices.
The Minister of Finance, Nicola Willis, used less inflammatory language than Mr Seymour, describing the handout as “the least worst option”. But what could be worse than borrowing another $60m from the bond market, adding again to the burden on current and as-yet unborn taxpayers, to bail out another failing subsidiary of one of New Zealand’s more notoriously under-performing companies?
Even had Ms Willis balanced the books this financial year and begun reducing debt, as promised before the last election, her latest handout would still have been taken from the wages of hard-working employees, the profits of successful, productive companies and from GST paid on groceries, and given to a perennial loser.
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If she is right that some of her Government’s other policies mean the cement operation is no longer commercially viable – implying it would be impossible for its plant and workforce to thrive under new ownership – then perhaps, as Minister of Finance and also Minister for Economic Growth, she ought to revisit those policies rather than reflexively reaching for future taxpayers’ credit cards. That would deal with concerns the alms to the company are needed on national security grounds.
All other appeals to the public interest as justification should likewise be met with the highest degrees of scepticism by consumers, taxpayers and voters. Here, again, Professor Smith’s Wealth of Nations may provide assistance to Mr Seymour and Ms Willis: “I have never known much good done by those who affected to trade for the public good”. For its part, Fletcher Building struggled over recent years to trade for the benefit of its own shareholders let alone anyone else.
For 30 years, New Zealand Governments, Labour and National, have become increasingly malleable to demands for taxpayer indulgences from the governance, senior management and lobbyist classes. The tendrils of the state have steadily grown to satiate these political imperatives while choking the potential competitors that might have emerged to provide a more productive, higher paying and more profitable alternative.
The legacies of the Fourth Labour and Fourth National Governments remain contested. But their dismantling of their predecessors’ propagation of subsidies, handouts and commercial favouritism seemed, for a time, like settled policy. To the extent the arguments of the political right and their corporate donors against social welfare have some merit, they apply tenfold to corporate welfare.
Social welfare, after all, is at least about helping the disadvantaged and maintaining a civilised and cohesive society. Corporate welfare involves taxing workers and successful businesses and transferring the money to those – like Fletcher Building – with a record of destroying shareholders’ value. By definition, it involves moving capital from its highest and best use, lowering the nation’s productivity. It is not even about picking winners. It picks losers.
The return of corporate welfare began on a modest scale when the then-Prime Minister, Helen Clark, acquiesced to demands by the left-wing Alliance, led by Jim Anderton, to set up a so-called “Jobs Machine” and new Ministry of Economic Development. It is unclear how many of the 193,000 jobs the economy created in the following five years should be credited to the ministry and how many to the private sector as the global economy and New Zealand property industry boomed through to the 2008 correction.
Ms Clark, to her credit, kept the corporate-welfare beast in its box. Not so the next National Government whose Prime Minister, Sir John Key, argued New Zealand did not have a debt problem, but a growth problem.
Sir John’s first Minister of Economic Development, Gerry Brownlee – with the exception of his indulgences to Warner Bros. to secure the production of The Hobbit in New Zealand – was relatively restrained. His successor, Steven Joyce, was more enthusiastic. He folded Mr Anderton’s original creation into his new Ministry of Business, Innovation and Employment (MBIE), which has evolved into an increasingly elaborate distributor of taxpayers’ largesse. Most notorious in the Key Government’s second term was the deal with Sky City allowing it to increase its number of pokie machines and other gambling operations at no cost, in exchange for building the much-delayed International Convention Centre. The centre was sold as “free” to the taxpayer. It was anything but.
The list of Government support has steadily lengthened: NZ Steel received funding for an electric arc furnace; film and television productions continue to receive generous subsidies; the Luxon Government has underwritten commercial tourism events including Tottenham Hotspur, Robbie Williams and the Michelin Guide; there has been NZ First’s Provincial Growth Fund, renewable energy and fossil fuel subsidies, and governance grants for small businesses. There are many, many more.
The jungle brought under control in the 1980s and 1990s has returned. Christopher Luxon, as Leader of the Opposition, spoke out against subsidies and other forms of corporate welfare. As Prime Minister, he seems to have a different view. The Post suggests he should return to his pre-election position. So too should Mr Seymour, the Leader of the Opposition, Chris Hipkins, and the leadership of any other party that claims to want to govern in the public interest.