Corporate welfare costs every New Zealand household $752 - report

According to the Taxpayers' Union, KiwiRail is the biggest benefactor of corporate welfare.
DEREK FLYNN/FAIRFAX NZ

According to the Taxpayers' Union, KiwiRail is the biggest benefactor of corporate welfare.

Government spending on "corporate welfare" jumped by more than $150 million in the latest Budget, a new report claims.

On Tuesday the Taxpayers' Union releases its report on the Budget, saying that subsidies for the private sector in the latest Budget came to $1.34 billion.

The report, Any new kids at the trough? says the spending amounts to $752 per household a year, up from $663 a year ago.

The biggest spending was on KiwiRail, the state-owned rail company, which received $239m simply to keep the network running.

Finance Minister Bill English defended the spending, which came from funds set aside from state asset sales, but admitted that the operation needed to change.

"I think we imagined three or four years ago that by now, KiwiRail wouldn't require so much ongoing investment," English said on Budget day, describing the level of top up required to keep the rail company going as "unsustainable".

"KiwiRail's made some huge strides in its efficiency and productivity but it's still got some way to go."

The Taxpayers' Union said that the fastest growing area of corporate welfare was agriculture, with an increase in grants to agriculture businesses wanting to install irrigation.

Budget documents estimate that $99.8m will be directed towards the Crown Irrigation Fund, a co-investment fund for irrigation schemes, on which the Crown hopes to make a commercial return.

The Government is committed to investing in irrigation. In April, Federated Farmers president William Rolleston called for more Crown funding to be given for water storage, claiming it could help solve future disputes between farmers and Maori over water rights.

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Responding, Primary Industries Minister Nathan Guy said the lack of water storage was "wasteful".

"There is potential for an extra 420,000 hectares of land across New Zealand to be irrigated by 2025," he said.

"The Government is committed to look at ways to help realise this potential."

Jordan Williams, executive director of the Taxpayers' Union, said the report showed an ongoing unwillingness by the Government to walk away from failing businesses as well as subsidising private investment.

"Corporate welfare is where politicians try to pick winners and the taxpayers lose. It robs middle class taxpayers to reward the well off and politically connected."

 - Stuff

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