4. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
What criteria is he developing, if any, in relation to Government assistance for companies in financial trouble?
Hon BILL ENGLISH (Minister of Finance) Link to this
Government assistance could take many forms, and clearly there would be a high hurdle for any assistance. Our primary method of supporting the corporate sector is to ensure that the banking system is sound. All companies should look to all commercial options before considering any approach to the Government, and we have consistently said that any Government assistance would be a last resort.
Hon Dr Michael Cullen Link to this
I raise a point of order, Mr Speaker. I invite you to reflect upon the question and the answer. The question did not ask what forms of assistance would be available, but what the criteria for assistance would be. Apart from making a passing reference to a high hurdle, the Minister did not outline any criteria or whether any criteria were being developed. The question was very specific about whether criteria were being developed—yes or no.
Mr SPEAKERI listened carefully to the member, and I accept that he has raised an interesting point of order, but I cannot judge the quality of the answer. The Minister in answering the question gave one criterion, and that is that it is a high hurdle. I cannot judge whether that is a good quality answer. The honourable member has the chance to delve further into that matter with supplementary questions, and I invite the Hon David Cunliffe to do that.
Hon David Cunliffe Link to this
Has the Minister been surprised at the very cautious reaction of a range of business leaders to the Prime Minister’s possible bail-out of Fisher and Paykel Appliances, and in his view could this lie behind the Prime Minister’s clarification today that what was unthinkable—to allow a business to fail—on Monday does not now constitute an assurance?
No, I am not surprised at the cautious reaction. I think anyone would be cautious about the Government taking steps to assist a business in a recession, and that is why the hurdles for any assistance have to be very high.
Craig FossThe Government has supported a very significant programme of fiscal stimulus to the economy that will inject around $9 billion, which the Government will be borrowing, into the economy over the next 2 years. We have also announced a package that directly affects the compliance and tax obligations of a whole range of businesses. Just last week we announced that we were bringing forward $500 million worth of infrastructure. Businesses are fully supportive of the Government’s regulatory reform programme, which is intended to lighten the load on businesses and build confidence for them to invest with such steps as the changes to the Resource Management Act, which are now well under way.
Hon David Cunliffe Link to this
Does the Minister have any advice as to the costs to, say, Fisher and Paykel Appliances of the removal of the research and development tax incentives, and can he confirm that it was the Government’s own policy that in part lies behind the need for the Prime Minister’s quasi-assurance that the company should not be allowed to fail now?
The member may be surprised to know that many firms have much more challenging issues than the abolition of the research and development tax credit. I might say that in discussions I have had with firms, a number of them have told me that they spent more on the consultants they employed to work out what their company would be able to claim than they would actually be able to claim. One firm paid $70,000 on consultants who told it that it would be able to claim $20,000 in deductions.
Hon David Cunliffe Link to this
Can the Minister confirm whether he has provided any advice to the Prime Minister in relation to any Securities Act implications from his statement that the company could not be allowed to fail and whether that constituted an assurance that was material information in the market place?