Big firms ‘unfairly advantaged’

Former Labour Finance Minister Sir Roger Douglas says the Government should use the coronavirus crisis to attack economic privilege and reduce inequality.

But, unlike his contemporary Labour colleagues, Douglas said this should be achieved by reducing stimulus spending, including on things like the wage subsidy and infrastructure building.

The Government’s current policies, in particular the wage subsidy were ‘‘unfairly advantaging big business and the professional elite’’, he said.

Douglas said this money would be better directed ‘‘towards assisting the newly unemployed – namely workers, their families, and small business owners’’.

The comments come in a discussion paper co-authored with Professor Robert MacCulloch of Auckland University.

Douglas said his paper was about reducing handouts to big businesses and dealing with entrenched inequality and poverty. The theme of the paper was better targeted spending and debt reduction.

The most radical proposal was to ‘‘identify, and eliminate, unnecessary spending, privilege, and waste’’ from the Government budget totaling $15 billion. This would mean cutting or reprioritising 18 per cent of the last budget. That’s roughly the amount spent on superannuation each year.

Douglas was particularly critical of the way that large businesses

‘‘Why, when the good times suddenly come to an end, have they gone cap in hand to the Government?’

Sir Roger Douglas

with healthy balance sheets had been claiming the wage subsidy, which has now paid out more than $10b. He singled out The Warehouse and large law firms Simpson Grierson, Bell Gully and MinterEllison in particular.

‘‘Why haven’t they been required to fend for themselves and their businesses? Why, when the good times suddenly come to an end, have they gone cap in hand to the Government?’’

The paper argued that spending should be far better targeted and it should be paid to employees directly, rather than to their employers.

He was also critical of the idea that New Zealand might build its way out of Covid-19, saying that a crisis is no reason to build infrastructure projects that make no economic sense.

One area where there should be increased stimulatory spending is housing. In this area, Douglas described something like a supercharged KiwiBuild paired with planning reform and a shared-equity scheme.

Douglas said the key to getting housing right was ‘‘making a large quantity [of houses] available’’.