Magazine article New Zealand Management

Economics: Pragmatic State Intervention

Magazine article New Zealand Management

Economics: Pragmatic State Intervention

Article excerpt

Byline: Bob Edlin

China was a good place for Weta Workshops founder Sir Richard Taylor to applaud John Key's Government for helping his industry. Since 1949, under China's socialist political and economic system, the government has been responsible for planning and managing the national economy. Large state-owned enterprises produce more than 50 percent of the country's goods and services and employ over half its workers, and 65 of the Chinese companies in the 2012 Fortune Global 500 list were state-owned.

Our Government believes state-owned companies are less efficient than privately owned ones, although our Prime Minister perhaps resisted the impulse to advise his Chinese hosts on the economic boost they could expect if they partly privatised the businesses that form the backbone of their economy.

Mr Key's Government has become interesting -- for those who study state interventions -- because its interventions are apt to be pitched at helping a favoured few private-sector industries (films) or companies (Sky City, which was given the inside running in a bid to build a conference centre in Auckland). Help to make The Hobbit movie, for example, was partly financial ($67 million of subsidies) and partly legislative. Our labour laws were changed under urgency to mollify movie moguls who otherwise might have taken The Hobbit elsewhere.

A grateful Sir Richard was reported to have hailed John Key at a gala dinner in Beijing, acknowledging The Hobbit movie "was made possible, in no small part" by our government. Key "came and helped facilitate the realising of this film for all of the film industry in our country", he said. Making films needed "understanding".

It's not so easy trying to understand the rules that apply when the Key Government decides to help and when it decides to keep out. It wasn't disposed to save the jobs of Spring Creek and Huntly miners, when closures and redundancies were announced last year, although it owns the company (Solid Energy) which owns the mines. Around 30 miners marched on Parliament only to be instructed in market realities: State-Owned Enterprises Minister Tony Ryall told them the job losses had "everything to do with the collapse of international coal prices". …

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