“Subsidising” Hobbit enterprise? Sounds like a great deal. [Update 2]

Labour leader Phil Goff isn’t dumb. He just thinks you’re stupid.

He and his lieutenants have been out in force today saying the unions were caught in “a trap” set by Warner Brothers to negotiate a better deal from the New Zealand Government—a deal, he says, that could net them “a subsidy” of several million dollars.

This, I’m afraid, is simply spin masquerading as substance.

First of all, if there were any “trap” into which local unions fell, it was one set by Australian Simon Whipp to help make New Zealand film-making more expensive. Since Warners were all set to film here before Whipp orchestrated a worldwide ban (set to film on the basis of the conditions and exchange rates already in place) all Warners have done now is take advantage of the disruption to see if they can negotiate something better.

And why wouldn’t they?

But what they’re negotiating isn’t a “subsidy,” it’s a tax break.  To describe a tax break as a “subsidy” is no more honest than to call what a burglar leaves behind a “gift.” 

It’s been objected that it makes no sense to offer tax breaks to get companies doing business here because there’ll be no revenue gain to the New Zealand Government.  Anyone saying this is more dumb than they look.  If companies come here and pay no tax at all every single person in New Zealand will still be richer by to the extent of the capital they do invest here, and by the jobs and wealth they create. And the extent they’re not stolen from by the tax man is the greater extent to which they’ll actually be able to create new wealth.

The objection to that I heard voiced this afternoon is that if Warners, or other foreign companies get a big tax break like this, then pretty soon every company thinking about working here will be wanting them.

And why wouldn’t they? Hell, even the numb nuts who object to any tax breaks being offered at all at least recognise it will make the company more profitable.

But since the reason everyone will be wanting them is because it will make them that much more productive (especially if they can re-invest here without fear or new impositions by the grey ones) I don’t see the problem.  Instead, I see potential.

What I suggest is that the New Zealand Government actually embrace this idea. Recognise that every company would like to be free of such restrictions, and embrace the idea for everyone, not just for Warners.

Use this as a kick-start for something real.

Start small. Start perhaps by declaring Enterprise Zones wherever Warners work—let’s start with Miramar and Matamata and anywhere else starting with ‘M’ in between—and announce that whatever tax breaks Warners get, and let’s whatever we do make them generous, that same deal would apply to anyone else working there, whether foreigners, NZers or anyone arriving from Mars.

Pretty soon, everyone working in those Enterprise Zones will be as rich as Croesus, and eager to work and re-invest here. (Well, everybody but the tax accountants in Matamata and Miramar, who will have to move away to seek work elsewhere.)  And everybody else in New Zealand will be able to reap the benefits of that greater wealth creation, to the extent of the much greater capital that can be re-invested here to create even more wealth.

How could anyone possibly object?

Hell, it worked for China.

UPDATE 1: You see, it solves so many political problems.

No-one can claim that the Prime Minister is offering special favours to a foreign company. What he’s doing is offering general relief for any company of whatever origin who wants to take advantage of these Zones to be Enterprising.

And while Helen Kelly objects that NZ would “lose sovereignty” if it accedes to demands from a foreign company to “trash” the employment law that protects NZ workers, it might perhaps be pointed out to her that if these Special Economic Zones were to be set up (with, perhaps, a nomenclatural tip of the hat to the Chinese success story) then no New Zealand worker would be forced to work there—all the rest of New Zealand, with all its present employment restrictions, will still be open to them.

New Zealand workers, however, being no dumber than any others, will realise very quickly one which side of their bread their employment protection is buttered, and by whom, and would undoubtedly begin stampeding very rapidly towards these Zones in search of work.

And who could blame them?

Except for Helen and her ilk who, to remain true to her principles, would have to stand astride their path yelling stop. Which would put all the naysayers like Helen quite evidently on the side opposed to workers making themselves better off.

Which is to say, in the same position as she is now, only more clearly.

UPDATE 2: Here’s some other of the sort of rubbish these Enterprise Zones can nix.  Let’s get Chuck into Miramar damn quick:

Hat tip Stephen Hicks.