So many issues boil down to a question of values – these shape the choices that we make. The values of our Government have again been revealed this week. They are choosing to use taxpayers’ funds to help big business, instead of helping people in need.
These choices affect our children. As another school year starts, kids will face very different opportunities, depending on the schools that they go to. Despite years of evidence about the unfairness of our two tier education system, the government has decided not to invest more in our lower decile schools. We need all children to have a decent start in life and the opportunity of a good education. The international data makes it clear that we are failing kids in low decile schools. However, the Government says that they can’t afford it.
It’s a different story when it comes to helping our big business. There seems to be no problem finding money. The latest example is the $30 million profit made by a foreign investment fund, using a mix of their own funds and government money. Our taxpayer share of the profits went into the pocket of the foreign investor. Taking from the poor and giving to the rich.
The story started when questions were raised about how billionaire US investor Peter Thiel bought up a huge chunk of scenic land on Lake Wanaka. It became clear that the government had done a special deal to give Peter Thiel citizenship, even though he had spent little time in New Zealand and did not intend to live here. One rule for the rich and another for everyone else.
It then emerged that the government, through the New Zealand Venture Investment Fund (NZVIF), also gave public money to Peter Thiel’s company, Valar Ventures, to invest in Xero and other New Zealand companies. It was a sweet deal, for Thiel. The taxpayer took on all of the risk, but any profits went to Thiel’s company. The agreement allowed around $15 million of value, which would otherwise have been returned to the public, to be transferred to Valar Ventures.
The idea behind NZVIF was sound when it was established in 2002. At that time there was little money available to help small start-up companies to establish, and good ideas were not able to be commercialised. But there are now many venture capital funds operating in New Zealand. The purpose and rationale of NZVIF need to be questioned.
Further, there have been serious problems in NZVIF’s approach. The original concept that the taxpayer should take on the risks while private investors take the profits has been abused. Instead of funding for struggling start-ups, investors like Valar Ventures were investing in more mature companies like Xero that had already raised significant capital (around $100 million at the time of the investment). NZVIF became a mechanism for taxpayers to take the risks and wealthy private investors to take the profits.
The risk guarantee has now been dropped by NZVIF, but more fundamental questions need to be asked about NZVIF’s contribution to public benefit, rather than more public money going into helping already-wealthy investors. One set of rules for the rich, but very different rules for those who really need government support. If it was a beneficiary seeking income support to provide for her family, she would have to deal with endless layers of compliance, in a harsh and often vindictive system.
The Minister responsible was Stephen Joyce. As usual, he has blamed the previous Labour Government. However, he has been in government for the past 8 years and cannot avoid accountability for decisions taken while he was the Minister. As our new Finance Minister, Stephen Joyce will have choices to make about whether funding is focused on a few favoured businesses or on closing the shameful and persistent gap in educational opportunities between kids in our country.
It’s time we got our priorities right. The Green Party would make the right choices. We would support opportunities for all kids in our society, including through adequate funding for low decile schools and the establishment of school hubs to provide coordination and support for kids and their families. The Greens also have policies for boosting R&D and innovation, business start-ups and social enterprise, and ensuring the rules establish a level playing field for all business, not just wealthy investors and big companies.
We would crack down on handouts for investors and businesses – no more handouts for the likes of Peter Thiel, no Sky City sweetheart deals, no Hobbit deals, no more bailouts of South Canterbury Finance and no sweetheart privatisation deals. We will ensure that there was a comprehensive capital gains tax (excluding the family home), so those who are wealthy pay their fair share of what it costs to run our country and provide public services. And we would close the loopholes that allow multinationals and tax evaders to use transfer pricing and tax havens to evade paying their taxes.
The funds generated would help ensure that all kids get a decent education and a decent start in life. There is no better investment in our social and economic future.