Dawn chorus: Where's the wellbeing analysis?

Govt giving $1b to Amazon, but won't increase welfare benefits as recommended by $5b to reduce child poverty. Where is Treasury's wellbeing analysis on the long term costs and benefits of the options?

TLDR: The Government looks set to give $1b in rebates over the next five years to Amazon, a US$1t company, to ensure it keeps a ‘Lord of the Rings’ television production in New Zealand, but why is this being prioritised over reducing child poverty?

Stuff’s Thomas Coughlan initially reported the plan on Friday morning, then Economic Development Minister Stuart Nash announced details later on Friday. Thomas then followed up with a piece on all the details on how the deal was done, including the discussion behind the scenes in MBIE and NZTE about the benefits.

But Treasury was not involved in the analysis of this deal and is a serial-sceptic on these subsidies. But all this begged the question: where is the wellbeing analysis on decisions such as this to spend $1b over five years, vs the alternatives for the money?

For example, that $1b would fund a good chunk of the $5b per year in welfare increases recommended by the Government’s Expert Advisory Group. PM Jacinda Ardern has refused to deliver that all in one lump, saying variously it could not be afforded and/or it was not politically sustainable. Her suggestion last week was that any change of Government could lead to the benefit cuts being reversed.

The govt has essentially decided the $1b being spent on Amazon will create more benefits, at least in the form of jobs and GDP, than spending $1b on benefits, which would lead to a bigger reduction in child poverty, thus improving productivity, health, justice, welfare and education results, including the potential for less spending in the long run on those areas.

But does she have the wellbeing analysis to make such choices? Treasury has talked a good game about making decisions on a wider set of measures than GDP, jobs and taxes, but I have yet to see such an analysis on a decision such as this.

Thomas reported Finance Minister Grant Robertson as saying he was comfortable with the trade-offs that the subsidies involved.

“Once you're into the game of film subsidies you have to be in it – the rest of the world is in it and if you want a film industry this is part of the price you pay,” he said.

But where is the analysis of the long term benefits of spending that money elsewhere, and in particular the long-term actuarial-style analysis of the forgone education, health, justice and welfare costs of reducing child poverty faster?

These are questions I’ll be asking Treasury and the Govt in coming days, and welcome your suggestions for who to ask and the particular questions.

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