If they get subsidised, what industries are going to need to be subsidised so they can compete with the subsidised video game industry in hiring programmers? The whole software sector, but also anyone else who needs programmers, right?
If Xero then gets a subsidy so it can compete for programmers with the subsidised video game sector, that will give it an advantage in hiring accountants too. And then the accountancy firms are going to need a subsidy so they can operate on a level playing field with Xero in hiring accountants.
Subsidies for everyone! And we will all be rich. Just like we were in 1981.
I'm quoted a bit in the Newsroom piece linked up-front, along with some rent-seekers.
Dr Eric Crampton, the chief economist at the New Zealand Initiative, rejected the idea the New Zealand Government should try and match overseas subsidies by using the example of film subsidies, which he called a “bad deal”.
“Film companies play countries off against each other, seeking the largest subsidies and tax breaks. While consultancy reports tout large benefits for the countries bidding the most, academic work struggles to find any real benefit at all,” he said.
He said subsidies like this have unintended side effects, like companies being able to outbid for workers whose skills may be needed in other industries.
“New Zealand learned in the 1980s that heavy subsidies are an unsustainable response to foreign subsidies,” he said. “Better to abolish our own subsidies, and encourage others to do likewise.”
Crampton argued making sure Immigration New Zealand is equipped to quickly process visas would be a more approach, making sure sectors like video games have access to overseas staff they may need.
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