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Government gambling with taxpayer money

John Luxton

National Trade Negotiations Spokesperson

8 November 2000

Government gambling with taxpayer money

The Government is effectively betting taxpayers' money on long-shots with its newly announced export credit guarantee scheme, National's John Luxton said today.

"By its very nature such a scheme risks public money on deals which are too shaky for private sector financial institutions. A similar Government venture, the Export Guarantee Office operated from 1964 until 1990, when it was sold off by the Labour Government of the time.

"In 1994 the idea reared its head again when a Coopers and Lybrand report suggested it might be worthwhile. However the Ministry of Commerce investigated the idea, and in 1997 recommended it should not proceed, a view fully endorsed by Treasury.

"The Ministry rejected the idea because it put taxpayers money at an unacceptable level of risk, and because similar exercises in other OECD countries resulted in considerable losses.

"It doesn't surprise me that this Government has revived an idea which has already been repeatedly branded a loser. The one relief is that they have made a very half-hearted effort with the scheme announced today.

"The scheme will put up to 350 million dollars of Government money at risk for a suggested possible gain of 100 million dollars in export gains. A third of a billion dollars is a big risk to taxpayers, but is small potatoes as far as our export sector is concerned, especially with the Government saying just 4 or 5 businesses a year would be involved in the scheme.

"Using taxpayer money for high-risk investments is a dubious endeavour. Fiscal responsibility has certainly been shifted to the back-burner by this Government," John Luxton said.

Ends


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