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Bernard Hickey says the government will change the rules and give subsidies to those sectors and companies it likes the look of and he wants manufacturing exporters included
By Bernard Hickey
This week voters and people in business started to get a more granular idea of how this government does business behind the scenes.
Details from emails released under the Official Information Act show how the government dealt with Warner Brothers over the various threats to the green light decision needed to start filming The Hobbit.
There wasn't much negotiation.
Warner Brothers asked for a law change to specify all film workers were contractors rather than employees and the Government changed the law under urgency in a day.
It also kicked in US$25 million in extra tax rebates and marketing costs to keep Warner Brothers sweet.
It was classic John Key dealmaking: do whatever it takes to make the deal happen.
The Auditor General's report into the negotiations around the Sky City convention centre show how the government gave Sky City special treatment after a series of dinners in which John Key's office suggested 'regulatory relief' to get the deal done.
There is a pattern developing here.
The government will change the rules and give subsidies to those sectors and companies it likes the look of. Another set of examples crop up around farming.
The government has set aside NZ$80 million in this year's budget to invest in irrigation schemes to help farmers convert sheep farms into dairy farms and intensify production.
Also this week the government declared a drought in Northland, which meant government grants were available to Rural Support Trusts and special Rural Assistance Payments to farmers.
Yet regularly, the government claims allegiance to the principles of 'level playing fields' and 'laissez faire' policy when it suits. The government's refusal to intervene in the currency markets or to consider helping manufacturing exporters is an example where it chooses to say there is nothing it can or should do.
It also refused to invest in a second Internet cable, claiming the market was working to solve the problem.
How is a weather event, a supposed act of god, different from the 'economic headwinds' of a painfully high currency?
How is a faster and cheaper broadband connection to help export services different from subsidies for dairy farmers?
The difference is in who is doing the asking for a tilting of the playing field.
Manufacturing exporters such as Hamilton Jet have pointed out they cannot profitably invest in new production and productivity-enhancing equipment with a currency at such high levels. Hundreds of exporting jobs are being lost every month as the government sits on its hands in the no-mans land of a currency war and twiddles its thumbs.
Unfortunately for those exporters and their workers there are more votes in cheap petrol prices and discounted flat screen televisions than there are in a fairly valued exchange rate.
What is desperately needed is for the right types of people to start asking for a tilting of the playing field.
Warner Brothers consistently complained about the high New Zealand dollar in asking for more subsidies. There is no way the Lord of the Rings movies would have been green-lighted in the late 1990s with a currency over 80 USc. It averaged 54 USc during the lead-up and making of the first Tolkien trilogy.
One of the government's biggest supporters, Federated Farmers, has until now also been remarkably quiet about the currency.
Its comments this week about the drought highlighting the currency's unjustifiably high level were the first signs of a cracking of that resolve.
This only serves to highlight the government's lack of consistency and adherence to a coherent strategy and its penchant for doing deals with mates.
This article was first published in the Herald on Sunday. It is used here with permission.