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Legislative Assembly for the ACT: 2000 Week 4 Hansard (30 March) . . Page.. 1189 ..
MS TUCKER (continuing):
Also:
... competitive use of selective industry assistance - particularly firm and project-specific assistance - has been seriously questioned during this inquiry by many participants. It seems to add little, if anything, to aggregate investment and employment, involves the costly transfer of funds from taxpayers and ratepayers to selected businesses and can result in a misallocation of resources which is harmful to economic growth.
And also:
Selectivity often is used by States in an attempt to target the marginal project in order to increase the effectiveness of the assistance provided. However, attempts to buy development with selective assistance can be at the expense of getting the fundamental business climate right, and the provision of other community services.
The Canberra Times editorial said that in more simple and direct terms, stating:
Governments would do better to concentrate on making their jurisdictions attractive places for everyone to do business.
The Industry Commission recognised the difficulty of changing this system. Governments which withdraw from this practice while other States continue to offer assistance could suffer the loss from their jurisdiction of businesses which are attracted elsewhere by financial inducements. It concluded that collective action by all States to minimise this harmful rivalry was needed.
In this context, it is quite clear that the Government is just perpetuating this economically negative practice. In fact, the Government seems to be making a virtue out of it by saying that we are getting a good deal, because it cost Queensland $60m to secure Virgin Airlines and we only have to spend $10m to get Impulse. The Chief Minister has said that this offer of assistance has not been part of a Dutch auction where we have had to outbid other offers, such as from the New South Wales and Victorian governments. Really, all the Government has done is pre-empt the auction by getting in first with an offer. The Chief Minister has not questioned the need for an auction in the first place.
In looking at the documentation about this offer and talking to Impulse management, I have come to the conclusion that there are really quite serious questions about how much this money is helping Impulse against how much it is actually helping the Capital Airport Group. The statement of intent is between the ACT Government and Impulse, yet so much of it involves the Capital Airport Group and so many of the benefits of the Impulse move will flow directly to the airport that I do have to wonder why they are also not a signatory to this agreement.
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