If Seymour has done his sums correctly, each PGF-funded job is costing almost $1m

Provincial Growth Fund supports more full-time orchard jobs.

In May TVNZ took a hard look and decided (according to the headline on this reportJobs created by provincial growth fund may not be quite what they seem.

The report proceeded to reveal: 

The $3 billion provincial growth fund might have created more than 500 jobs but figures obtained by 1 NEWS show those jobs may not be quite what they seem. 

A total of 562 jobs have been created through more than 60 projects. Of that, 272 are full time jobs, 193 are part time jobs, 52 come from the one billion trees programme, meaning some are trainee jobs. Officials can’t say whether the remaining 45 are full time jobs or not.  

Some of the jobs might not even be new and may be taken up by local contractors on a short term basis.

ACT leader David Seymour today has thrown more light on the PGF.

By his reckoning (or the reckoning of one of his staff) –

“Shane Jones is paying almost $1 million to get each ‘neph’ off the couch through his Provincial Growth Fund” …  

On Newshub Nation this morning, Seymour explained, Jones said the PGF “slush fund” has created well over 1000 jobs so far.

Alas, we missed the programme.  But according to Seymour (or his economic team) –

“If we assume the Provincial Growth Fund has created 1500 jobs through the $1.38 billion of taxpayer money committed, Mr Jones is paying almost $1 million dollars to get each New Zealander into work.

We have assumed Seymour has done his sums and – more or less – come up with the right answer.  If he’s wrong, we can expect Jones to thunder his rebuttal pretty quickly – or get a ministry official to put the record straight.

Seymour says he and the rest of us are used to seeing waste in Wellington and recalls how Steven Joyce and Simon Bridges built a formidable corporate welfare machine.

But Jones is taking it to another level. He is running a taxpayer-funded political campaign on behalf of NZ First as he travels around the provinces dispensing largesse at every stop.”

Seymour proceeds to pull out the ACT Party economic textbook and observe that

“ …  no one creates jobs as efficiently as firms investing their own money. Businesses must invest for results, but politicians are simply buying votes. It’s no wonder Provincial Growth Fund jobs come at a cost of $1 million – outcomes don’t matter to Jones when they’ll only become clear after 2020.”

Then (inevitably) comes the party policy plug:

“This is why ACT would cut wasteful handouts for the private sector like the Provincial Growth Fund and cut the company tax rate to 17.5 per cent.

“That would ensure that all firms – not just those that are politically-connected in Wellington – have a shot at getting ahead.

This is a reminder that cutting company taxes is part of ACT’s $10 billion tax cut plan “to give New Zealand taxpayers a fair go.”  

It’s not the only way to give us a fair go, of course.

But it is disconcerting that the size of the corporate handouts and the enterprises to which they are given is the only obvious difference between this government and its predecessor when it comes to encouraging business growth.

2 thoughts on “If Seymour has done his sums correctly, each PGF-funded job is costing almost $1m

  1. Your simple analysis of grants divided by jobs = $1 million per job begs some complex questions.
    Part of Government’s task is to maximise the “social cake” per capita. So in part it is about welfare to individuals, and in part via “business & NGO” social welfare, creating market rules, attracting investment, and subsidising services, to ensure that there are essential services which would not otherwise exist, or which users cannot otherwise access or afford directly. “Corporate Welfare” is in large part the way the State competes internationally to attract international business, and directs businesses to otherwise disadvantaged locations. In making the choice between ways to carry out these tasks, Government ought to think carefully about how to get the result it wants at the least expense, and with the minimum “losses” to smart operators who skim the system – citizen beneficiaries or corporate beneficiaries.
    The real question is about how one evaluates the benefits of every welfare payment, and its impact on citizens, not only on average, but relative to the extent to which the State is attempting to provide more support to its disadvantaged citizens. We have to remember that corporations are a construct; they are not citizens. They have no a priori rights like humans.
    The organic nature of the redistribution eco-system is also important. For Example: Trade support to an exporter to sell a product in the USA has potential benefits to the Exporter, and to his (future, additional) employees, and to the Crown (in reduced unemployment, and providing more taxes.), so indirectly to the citizens collectively. It is quite hard to even conceptualise the flow-on network effects, never mind estimate their proportion. But at a policy level, money for that route to social benefits should compete with money for any other Government policy aim. (For example, to ensure all 0-3 year olds learn to read and converse, and are “school ready”.) Using limited information, public officials have to make choices on behalf of society. So they have to implicitly assess the benefits (right across society) and the risks/ probabilities of success, and the collateral consequences. This is hard, and so it’s usually not done. We need the concept of a “Societal Benefit Case” analogous to a Business Case, to broadly set out why some (Welfare) redirection of wealth from taxpayers to recipients makes good social sense, and which route to provide it seems most likely to be effective.

    The sustainability of Mr Jones jobs is important; and so is the flow-on effect. Will a Jones job now lead to the creation of future jobs next year; or will the business fail, and the job be lost.
    There is a basic issue of whether Government can pick sustainable opportunities, and discriminate between such projects and opportunities that are grant dependent for support.


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