Sponsor's Message

By taxing one company, then giving (yes *giving, not lending) some of that tax to one of its competitors so that they can develop a better product at a much reduced cost -- this system is not only grossly unfair but also very much open to graft and corruption.

In fact, the sheer ludicrousness of this system becomes obvious when you read this story in today's NZ Herald where it's revealed that NavMan has just received $1m in taxpayer funding.

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For those of you who have been living in a cave somewhere for the past year or so, NavMan is one of New Zealand's technology success stories. The company is expected to generate about $400 million in sales this year alone and was recently purchased by the US corporate Brunswick.

The government's justification for handing over $1m of money, collected from NavMan's competitors, low-income earners and even solo mothers -- is that it will create jobs for NZers.

Well excuse me -- but didn't I just see an item on the TV news last night where IT companies were finding it so hard to recruit staff that they were walking the streets with billboards in the vain hope that some of the visiting Balmy Army might have the skills they need?

So what's the point in spending taxpayers' money to create new jobs in a field where there's already a skills shortage?

One also has to ask -- why does what is effectively a US company with revenues of $400m need a handout from NZ taxpayers at all?

If the $1m in funding was really that much of a critical factor in NavMan deciding to go ahead with the project for which it is provided, why not make it a no-interest loan rather than a straight hand-out?

I also wonder how much more that $1m could have done to foster investment and job-creation in hi-tech NZ ventures if it were used more cleverly by way of sensible R&D-friendly tax policies?

That government appears to have sufficient funds to hand out grants that need never be paid back is surely indicative that business is being overtaxed in the first place.

As I've always said, the best way to encourage genuine R&D investment and activity is to provide proper tax incentives for such things.

If, for example, a company earns a tax credit equal to (say) twice its R&D expenditure by doing this work in NZ then it's going to be much cheaper in the long term for them to base such activities here than in other countries.

Even better, such a system requires *no* handouts of taxpayer funds and simply results in a foregoing of a portion of tax revenues that would not otherwise have been earned anyway. It's a win-win.

Unfortunately, in the case of government, ideology seems to have gotten in the way of pragmatism and common-sense -- so we're left with an overly bureaucratic and unfair system of robbing one taxpayer to favour another -- with absolutely no guarantees of any benefit to NZ as a whole.

When I was offered a $36K Technology Grant, I turned it down as a matter of principle. It would seem that others see the seeming injustice of such a system somewhat differently and would rather have the money.

But, as I said at the outset, my perspectives on this matter are very much biased. What do *you* think?

Does it make sense to spend $1m of taxpayer's money to create 10 new positions for which there probably aren't suitably skilled workers to fill anyway?

Should blue-collar labourers and solo-mums be taxed to provide a handout to large US corporations -- with no guarantee of payback or returns of any kind?

It's not my intention to knock NavMan, after all -- a fool(ish government/taxpayers) and its money are soon parted and if NavMan had not taken it, someone else would have. From that perspective, NavMan did the right thing -- but surely most taxpayers would have rather seen that money go into something more "worthy".

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