February 4, 2016 Print

Stores in this Upper Hutt mall are among those receiving corporate welfare subsidies. Photo: Aidan (CC BY 2.0)

Politicians often gain support from economically powerful interests by providing select businesses and industries with special deals and corporate welfare. The New Zealand Taxpayers’ Union has been calling attention to government giveaways of taxpayer funds to fast food franchises, hairdressers, movie theaters, and more by the city council in Upper Hutt, a city in the metro area of New Zealand’s capital, Wellington.

“Back in June we slammed Upper Hutt City Council for giving a $32,000 Business Development Support grant to listed fast-food retailer BurgerFuel to set up a shop in the City,” wrote Ben Craven, NZTU campaigns coordinator. “Now we can reveal that Subway, a hairdresser, a cinema and even a Bed Bath and Beyond also received ratepayer-funded grants. So far in the 2015/16 financial year, Upper Hutt City Council has spent more than $160,000 of ratepayers’ money on subsidies to eleven businesses.”

NZTU’s work exposing these ongoing corporate welfare handouts has been reported by Stuff.co.nz, a journalism portal that includes the country’s second- and third-highest circulation daily newspapers. Upper Hutt Mayor Wayne Guppy appeared on Newstalk ZB to respond to the reports, followed by an appearance on the same program by NZTU Executive Director Jordan Williams, who handily debunked Mayor Guppy’s claims that the subsidies create jobs and economic growth (Williams begins his remarks at 5:11 in the broadcast).

“Taxing people more through rates for corporate welfare isn’t economic development, it is economic trickery benefiting only the favoured businesses,” concluded Craven on the NZTU website. “Take the example of Prodigy Hair. There are at least 29 hairdressing firms in Upper Hutt and surrounding area, but the Council picks this one out for a handout. Previously the Council has defended this corporate welfare scheme on the basis that the Council is creating jobs. Of course the politicians and officials ignore that every cent spent on these initiatives is another cent taken out of the community they are supposedly helping. It is intellectually dishonest.”