Welfare Bums: Adding up the cost of corporate welfare in the 2016 budget

Welfare Bums

adding up the cost of corporate welfare in the 2016 budget

SPARE CHANGE?

Your Money, Your Voice Promoting sensible restraint of government expenditure

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ABOUT THE AUTHOR Jim Rose is a Research Fellow at the New Zealand Taxpayers’ Union and has worked at the Ministry of Business, Innovation and Employment, the Department of Labour, the Ministry of Social Development, and the New Zealand Treasury.

In Australia he has worked in Canberra for the Productivity Commission, the Department of Prime Minister and Cabinet, and the Department of Finance.

Jim has Masters degrees in economics and in public policy from the Australian National University and from the now National Graduate Institute for Policy Studies in Tokyo respectively.

Jim blogs at www.utopiayouarestandinginit.com

Copyright Š 2016 James Rose All rights reserved. This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the author except for the use of brief quotations in a book review or press release.

Printed in New Zealand, First Printing, 2016. ISBN (softcover): 978-0-473-36211-9. ISBN (digital): 978-0-473-36212-6.

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EXECUTIVE SUMMARY Nearly $1.4 billion in taxpayer funded handouts to mendicant businesses Budget 2016 increased corporate welfare to $1.36 billion from $1.2 billion spent in the 2015/2016 financial year. The main growth areas in corporate welfare are irrigation and the “commercialization” of research and development.

KiwiRail continues to fail with Solid Energy making matters worse Taxpayers continue to throw good money after bad with KiwiRail subsidies passing the $3.5 billion mark since 2008. The costs of acquiring and bailing-out KiwiRail since 2003 is a staggering $5.3 billion — not including the additional $14.1 billion in write-downs. KiwiRail is now valued at minus $1.545 billion (i.e. a liability). Tranz Rail was acquired for $665 million in 2008 as an investment – in anticipation of dividends.

Solid Energy has also put its hand out and receives another $60 million in Budget 2016 with the company now having been completely written off in the Government’s balance sheet.

Worse still, with almost 20 percent of KiwiRail freight being coal from the mines of Solid Energy, there is a co-dependence which means it is possible for the dire finances of KiwiRail to become even worse if Solid Energy fails. The two are effectively co-dependent and being kept afloat by corporate welfare and the generosity of taxpayers.

National Party corporate welfare is going where no Labour Government has gone before The first few budgets of the current Government consisted of half-billion dollar annual bailouts for KiwiRail and a continuation of handouts to the usual suspects in the economic development, film and tourism portfolios. These supplicants were inherited from the last government.

From the 2013 budget onwards, the scope of corporate welfare has widened into many new areas. Science and innovation funding was previously tightly targeted at basic research. Now, $250 million is distributed to co-fund “commercialisations” and start-ups for an increasing number of industries.

This third report for the Taxpayers’ Union on corporate welfare finds that the mendicant business model also returned in force to the agricultural sector.

Under Bill English and Steven Joyce, modern versions of “Think Big” are back with about $100 million per year in irrigation construction subsidies, $77 million per year for a primary industry growth partnership and $192 million a year for ultrafast broadband. Taxpayers fund investments that private investors gave the cold shoulder, because their risks do not make the investment worthwhile.

On a per household basis, the cost of corporate welfare in Budget 2016 equals $803. This is an increase from $723 per household spent by the Government on corporate welfare in the previous financial year.

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1 HOW MUCH THIS TIME? While the dollar amount of business hand-outs in Budget 2016 increased slightly over Budget 2015 from about $1.2 billion to $1.36 billion (see figure 1) the increase is somewhat illusionary. The taxpayer got lucky in the last financial year because about $100 million in farm welfare (earmarked for irrigation projects) was not spent and has been pushed back into the coming budget year.

Figure 1: Corporate welfare in budgets 2008/09 - 2016/17

Source: New Zealand Government Budget Papers, various years.

Table 1 shows that primary industry and science and innovation are the growth areas in corporate welfare. Funding for privately provided fast broadband picksup about $190 million a year. Despite the hype of new broadband technologies, private investors are reliant on government hand-outs and relaxation of price regulation applying to the existing copper network in order for a return to be enticing.

Solid Energy is also back at the public trough with an investment write off of $60 million – see table 1.

4

Table 1: Corporate welfare in New Zealand government budgets since 2008, $million 08/09 09/10

10/11

11/12

12/13

13/14

14/15

15/16

16/17

Total

Arts, Culture & Heritage

3

11

19

10

29

4

5

18

25

124

Commerce and Consumer Affairs

6

6

6

6

7

7

6

7

7

57

Communications (ultrafast broadband)

0

25

39

150

178

205

215

191

192

1,195

Economic Development

372

419

446

379

332

284

280

356

296

3,166

Finance (ex. KiwiRail & Solid Energy)

16

44

3

108

0

30

0

0

0

202

Primary Industries

700

0

14

0

43

65

77

72

183

1,154

Science and Innovation

0

4

0

0

0

112

219

213

250

798

Tourism

76

94

119

113

98

124

124

123

132

1,003

KiwiRail

675

470

376

511

680

119

255

233

214

3,532

Solid Energy

0

0

0

25

15

180

0

0

60

280

Total:

1,848

1,074

1,022

1,303

1,382

1,130

1,179

1,213

1,360

11,508

14/15

15/16

16/17

Total

Source: New Zealand Government Budget Papers, various years.

We welcome the Government’s winding down of its international film subsidies – see table 2. As a result corporate welfare in the Economic Development Vote is to fall because $100 million less is to be spent on subsidies for international films as compared to previous years – see table 2. This budget, the taxpayer is expected to fork out $35 million to the international film industry as compared to over $150 million lost to that global subsidy market in the previous budget (refer to section 5.2 of the Taxpayers’ Union report on corporate welfare published in 2015, Monopoly Money).

Table 2: Film industry subsidies, Budgets 2008/09 to 2016/17, $million

New Zealand Screen Production Incentive Fund

08/09 09/10

10/11

11/12

12/13

13/14

3

19

10

29

4

11

New Zealand Screen Production Grant

76 4

42

Attracting International Screen Productions

46 1

1

New Zealand Screen Production Grant International

48

52

127

92

51

41

67

112

34

622

Total

51

63

146

102

80

44

71

154

35

746

Source: New Zealand Government Budget Papers, various years.

Appendix 1 to this report sets out in a table the full calculations of corporate welfare by portfolio vote.

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2 THE CHANGING FACE OF CORPORATE WELFARE Corporate welfare has changed in a major way since the National-led government was first elected. As shown in table 1 in the previous chapter and figure 2 below, corporate welfare in Bill English’s first few budgets largely picked up the pieces National inherited. There were large bailouts for KiwiRail for instance. The balance of the hand-outs were mostly in the economic development and tourism portfolios. These items are represented by the three main colours on the first few National-led Government budgets in figure 2 (2009/2010 to 2011/2012 budgets).

Figure

2:

Composition

of

corporate

welfare

since

2008.

$million

Source: New Zealand Government Budget, various years; Note: the very small sums in Vote Arts, Culture and Heritage and Vote Commerce were excluded to avoid clutter.

From the 2011 and 2012 budgets onwards, the National-led Government spread the largess to ultrafast broadband and the commercialisation of new technologies. KiwiRail has declined as the dominant share of corporate welfare recipients.

After inheriting a science and innovation portfolio tightly targeted at basic research that the private sector would not fund because they were public goods, hundreds of millions of dollars are now handed out to a gathering throng of supplicants under the guise of science and innovation policy.

There are now large subsidies for irrigation projects that should be built and funded on a commercial basis. When the National-led government was first elected, there was next to no farm welfare; it is now a nice little earner for the primary sector – see figure 2 and table 1.

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3 STATE-OWNED ENTERPRISES Because the previous Labour-led Government renationalized KiwiRail, the National-led Government inherited a business in desperate need of bailouts when it was elected in 2008. It developed a “Turnaround Plan” which has since been abandoned. Instead of following the advice of KiwiRail’s own board and dramatically reducing the size of the business, the current Government has kept ploughing taxpayers’ money in.

KiwiRail and Solid Energy were once the crown jewels of the State Owned Enterprise portfolio, the large majority of its commercial value as figure 3 shows.

Taxpayers now cannot even give them away. KiwiRail and Solid Energy are not worth change on a dollar.

Figure 3: Commercial valuation of KiwiRail, Solid Energy and the state owned enterprise portfolio

Source: New Zealand Treasury – information released under the Official Information Act, January 2016.

As table 3 shows, the taxpayer has bailed-out KiwiRail under various guises to the tune of $3.53 billion since 2008. The Government seems to have lost interest in its failed “Turnaround Plan”. There is no end in sight. The most recent annual bailouts represent about a quarter of the annual revenue of KiwiRail.

7

Table 3: Taxpayer hand-outs to KiwiRail since 2008 budget, $ million 08/09 09/10

10/11

11/12

12/13

New Zealand Railways Corporation Loans

55

55

250

108

New Zealand Railways Corporation Operating Support

90

ONTRACK Operating and Maintenance Costs

7

KiwiRail Turnaround Plan

405

14/15

15/16

16/17

11

Total 883 180

20

250

250

KiwiRail Equity Injection Rail Network and Rolling Stock Upgrade

13/14

45

71

250

94

198

210

190

1,462

323

25

46

23

24

440

11

127

New Zealand Railways Corporation Increase in Capital for the Purchase of the Crown Rail

376

376

Crown Rail Operator Loans

140

140

Crown Rail Operator Equity Injection

7

7

Total

675

470

376

511

680

Source: New Zealand Government Budget Papers, various years Note: Rail spending includes all spending for OnTrack and the New Zealand Railways Corporation. The latter was the holding company for KiwiRail and OnTrack in earlier years. They are now folded into KiwiRail with OnTrack now a division of KiwiRail. No spending on urban and commuter rail, including electrification, is included in table 3.

Note: Table 3 includes a correction on previous reports by the Taxpayers’ Union regarding hand-outs to KiwiRail. $90 million in rail operating support contained in Vote Finance in Budget 2008 had not been included in the earlier reports.

A company with revenues of about $700 million a year will take a long time to repay a $3.53 billion in life-support since 2008. Appendix 2 shows that the lifeline from the taxpayer is much larger than this.

A total of $5.3 billion has been spent since the taxpayer got back into the rail business in 2003 with the purchase of the land underneath the railways and then Tranz Rail from Toll Holdings for $690 million. The Minister of Finance now acknowledges that KiwiRail will never be self-sustaining. Taxpayers will never see their money back.

A Transport Blog image, published in response to the Green Party’s new freight policy launched on the eve of the 2016 budget, highlighted how dependent KiwiRail is on the other failing (indeed worthless) entity in the state owned enterprise portfolio, Solid Energy. As table 4 shows, Solid Energy has hoovered up $255 million in subsidies. This now worthless company was valued at $3.2 billion only a few years ago – see figure 3.

8

119

255

233

214

3,532

Table 4: Solid Energy bailouts by budget 12/13

13/14

15

130

145

Solid Energy New Zealand Limited - Redeemable Preference Shares

25

25

Solid Energy New Zealand Limited - Redeemable Preference Shares Impairment

25

25

Solid Energy New Zealand Limited - Loan Facilities

14/15

15/16

Write-Off of Historical Investment in Solid Energy Total

15

180

0

0

16/17

Total

60

60

60

255

Source: New Zealand Government Budget Papers, various years.

The recent proposal by the Green Party to double freight sent by rail drew attention to what was currently freighted by KiwiRail. Almost 20 percent of all freight on KiwiRail is coal. The following image, highlighted recently by Transport Blog shows the track from the West Coast Solid Energy mines is one of the few busy parts of New Zealand’s national rail network. If taxpayers were to wash their hands of Solid Energy, the living dead finances of KiwiRail would be even more dire.

Figure 4: New Zealand rail freight movements by volume

Source: Transport Blog

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This conundrum shows the folly of ill-considered state ownership of businesses.

The reasons why taxpayers own coal mines are lost in the mists of time. The previous government bought back the railways for $665 million but this entire investment was quickly written off. At least the previous Labour-led Government waited until Air New Zealand was on its last legs before buying in cheap.

When privatisation is proposed, the defenders of state ownership complain about the loss of the dividend stream if the asset is sold. Dividends have rarely matched capital injections into state owned enterprises portfolio over the last decade as figure 5 shows. The situation appears likely to continue.

Figure 5: State-owned enterprise dividends and capital injections

Source: New Zealand Treasury – information released under the Official Information Act, January 2016.

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4 THE CAPTURE OF THE SCIENCE AND INNOVATION BUDGET In 2008, science and innovation funding was tightly targeted at public good science research of the type that by its nature cannot attract private backers because it is unlikely to have an immediate commercial application. The major recipients were universities and Crown Research Institutes.

From 2013, the National-led Government extended the science and innovation budget from public-good research to co-funding commercialisations and startups. This now costs taxpayers some $250 million per year – see table 5. These hand-outs go to private entrepreneurs, not to boffins and scientists interested in expanding human knowledge for the sake of society.

Table 5: Corporate welfare, Vote Science and Innovation, Budgets 2008/09 to 2016/17 08/09 09/10

10/11

11/12

12/13

Realising the Benefits of Innovation

13/14

14/15

11

16

Research and Development Services and Facilities for Business and Industry

26

Building Business Innovation Research and Development Facilitation and Promotion Service

15/16

16/17

Total 27

23

20

69

32

33

65

4

4

Repayable Grants for Start-Ups

1

14

11

14

40

Research and Development Growth Grants

65

119

116

144

444

Targeted Business Research and Development Funding

36

44

30

40

149

112

219

213

250

798

Total

0

4

0

0

0

Source: New Zealand Government Budget Papers, various years.

As explained in chapters 5 and 6 of the Taxpayers’ Union 2014 report on corporate welfare, Monopoly Money, central to discovering which competing new technology should survive in the market is that entrepreneurs back their judgement with their own capital. The initial incarnations of new technologies and products are often expensive and bug-infested. Many of the latest technologies are just small upgrades on the previous product. Skill and entrepreneurial endeavour is needed to harvest all of the latest available quality improvement.

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Progress arrives out of market tested betterment as Deirdre McCloskey explains:

... what mattered were two levels of ideas: the ideas for the betterments themselves (the electric motor, the airplane, the stock market), dreamed up in the heads of the new entrepreneurs drawn from the ranks of ordinary people; and the ideas in the society at large about such people and their betterments—in a word, liberalism, in all but the modern American sense. The market-tested betterment, the Great Enrichment, was itself caused by a Scottish Enlightenment version of equality, a new equality of legal rights and social dignity that made every Tom, Dick, and Harriet a potential innovator.

We discover which new technologies and firms are better by testing them in the market against each other and the existing offerings. This testing starts in the capital market where entrepreneurs compete for backers by anticipating winning technologies faster than rivals. This competition weeds out inferior entrepreneurs and allows mavericks to prosper if they are the right mix of contrariness and foresight.

The commercialisation of new technologies is the last place where politicians and bureaucrats risk taxpayers’ money picking winners.

Industry life-cycles start with a burst of new entrants with similar products.

These new products cross fertilise. In time, there is an industry shakeout where a few leapfrog with cost savings and design breakthroughs to sell the mature product. The results of this race is known at its end, not the start.

The decades of delay in new technologies moving from use by 10 percent of an industry to 90 percent use is driven by the complexities of mastering new technologies. Even transformational technologies ranging from electricity to the Internet required many secondary innovations to be invented, adopted and mastered over decades to make the most of them. The quickening of technology diffusion recently makes picking winners even a greater game of chance. The race can be over before it starts for most.

Too many innovators come from the awkward squad that have trouble filling out government forms, much less articulating their vague hunch of a looming breakthrough that is leading them to chance it all.

Venture capitalists and angel investors specialise in marshalling these uncertainties. In this context, subsidies to commercialise technologies ask taxpayers to pick a winner while the deck is still being shuffled, the cards not fully dealt, and the need to call, raise or fold is over a cloudy far horizon.

What is worse, politicians and bureaucrats are going to the track to gamble with other people’s money. If they were any good at picking winners, they would quit to join a hedge fund where their skills would be rewarded with remuneration packages bigger than the entire payroll of the Ministry of Business, Innovation and Employment. Beating the market is a serious business not done on public service salaries, literally.

12

13

6.1

Total

210.0

190.0

1.4

6.7

6.1

7.2

6.7

0.6

25.1

23.1

2.0

2016/17 budget

101.7

25.7

13.3

101.3

27.0

International Business Growth Services

19.8

5.8

15.8

Sectoral Leadership, Firm Capability, and Regional Development Operational Policy Ministerial Servicing and Crown Entity Monitoring

Policy Advice - Sectoral Leadership, Firm Capability, and Regional Development

Policy Advice - Economic Development

1.3

178.4

Policy Advice - Small Business

1.4

149.6

0.2 1.2

39.0

Enhancing Small Business Capability and Performance 1.5

25.4

Total

Vote Economic Development

25.4

Broadband Investment (Crown Fibre Holdings Capital Costs)

104.6

9.6

18.4

1.5

0.2

204.9

111.0

12.8

1.2

0.2

214.5

147.2

13.1

1.2

191.4

152.3

11.8

1.2

192.0

42.0 200.0

4.5

5.8

5.8

0.6

17.6

15.6

2.0

2015/16 budget

Crown Fibre Holdings Capital Costs (UFB2) 165.0

4.9

7.0

5.8

1.2

3.7

3.7

2014/15 budget

150.0 142.5

13.4

6.8

5.8

1.0

29.2

29.2

2013/14 budget

Crown Fibre Holdings Capital Costs

2.4

5.8

5.8

International Connectivity

39.0

5.8

5.8

10.5

4.7

5.8

5.8

18.9

Fibre Drop Costs

1.7

5.8

Retirement Commissioner

Vote Communications

0.4

Administration of Trade Remedies

Vote Commerce and Consumer Affairs

10.9

10.5

2012/13 budget

4.5

3.3

18.9

2011/12 budget

Total

10.9

2010/11 budget

4.5

3.3

2008/09 2009/10 budget budget

New Zealand Screen Production Grant - New Zealand

New Zealand Screen Production Incentive Fund

Vote Arts, Culture & Heritage

Budget (all figures in millions)

APPENDIX 1: CORPORATE WELFARE BY BUDGET AND PORTFOLIO VOTE

14 15.2 0.8 5.9

Film New Zealand

Growth Services Fund

9.3 1.5 2.8 44.9 1.6 2.0 13.8 33.7

Regional Partnerships and Facilitation

Sector Strategies and Facilitation

Enterprise Development Fund

Market Development Assistance Fund

Enterprise, culture and skills fund

New Zealand Trade and Enterprise

Seed Co-investment Fund

Venture Investment Fund

Regional Growth Initiatives

1.0

3.0

0.6

40.8

0.6

1.5

11.8

1.0

10.4

8.0

0.1

1.2

4.6

0.6

13.7

7.6

0.2

1.2

4.6

3.9

0.2

29.3

16.2

0.2

1.2

4.5

1.2

0.8

15.0

7.3

0.2

1.2

4.6

0.8

0.8

10.0

10.7

8.7

1.0

0.4

0.8

8.6

9.9

8.4

0.4

0.8

7.9

2.3

3.0

0.4

11.0

0.8

13.0

1.8

0.5

15.1

112.0

Regional and Industry Development Fund

0.3

13.5

66.8

0.3

8.4

40.6

30.8

Management Development Fund

7.9

50.6

25.1

1.3

4.5

91.7

27.2

1.3

Major Events Development Fund

127.0

15.7

1.3

15.2

2.8

2016/17 budget

33.5

52.5

30.0

1.3

13.2

2.8

2015/16 budget

47.8

25.8

1.1

4.6

13.2

2.3

2014/15 budget

New Zealand Screen Production Grant - International

20.3

1.1

4.0

31.9

13.4

2.3

2013/14 budget

1.3

9.8

International Growth Fund

0.8

11.4

31.4

13.0

13.6

80.4

32.8

13.8

2.3

2012/13 budget

Attracting International Screen Productions

0.7

International Biotechnology Partnerships

0.8

15.2

47.5

47.2

2.3

Standardised Training and Advisory Services

2.6

Investment Fund Management

15.2

Regional and Sector Development Services

16.0

International Investment Facilitation Services

73.6

0.4

68.9

Identification and Coordination of International Market Opportunities

Establishment and operation of the Food Innovation Network New Zealand

19.9

Analysis and Development Services for Firms

31.1

2.3

2011/12 budget

Services to Support the Growth and Development of New Zealand Businesses 20.4

2.3

2010/11 budget 11.7

18.2

2008/09 2009/10 budget budget

Services to Develop Business Capability

Investment Fund Management

Budget (all figures in millions)

15

15.0

332.0

130.0

284.3

Rugby World Cup 2011 - Crown share

Rugby New Zealand 2011 Limited

Payment in respect of Export Credit Office Guarantees and Indemnities

New Zealand Export Credit Office

Write-Off of Historical Investment in Solid Energy

4.0

0.2

25.0

108.1

379.5

5.0

2013/14 budget

Solid Energy New Zealand Limited - Redeemable Preference Shares Impairment 2.9

446.3

3.0

4.9

1.7

2012/13 budget

25.0

2.9

419.5

4.0

27.9

1.0

7.7

1.8

4.9

19.8

2011/12 budget

Solid Energy New Zealand Limited - Redeemable Preference Shares

Solid Energy New Zealand Limited - Loan Facilities

2.2

372.5

Total

Vote Finance (exc. rail)

2.5

40.8

Negotiation and Completion of Stadium Projects

Transformational Initiatives Fund

20.0

3.5

Purchase of Queen’s Wharf, Auckland

Stadium Development

Louis Vuitton Trophy Series

Louis Vuitton Pacific Series

0.8

1.6

Rugby World Cup Free-to-Air Broadcasting Right 1.8

5.8

Rugby World Cup Leverage and Legacy Programmes

Rugby World Cup

8.0

Temporary Rugby World Cup showcase and festival building on Auckland’s Queens Wharf 0.6

2.0

Depreciation on the temporary Rugby World Cup showcase and festival building on Queens Wharf

2.0

10.6 2.0

2.0

3D Digital Graphics Cluster

26.4

2010/11 budget

Promotion of New Zealand Associated with the America’s Cup

9.4

2008/09 2009/10 budget budget

New Zealand’s Participation at Expo 2010 Shanghai, China

Services to Support the Growth and Development of New Zealand Businesses

Budget (all figures in millions)

279.5

13.2

2014/15 budget

356.4

13.2

2015/16 budget

60.0

295.9

15.2

2016/17 budget

16 4.5 1.5 16.2

Industrial Research Limited Equity Injection

Invercargill Airport Suspensory Loan

Total

Tourism Growth Partnership

Marketing of New Zealand as a Visitor Destination

Vote Tourism 75.5

84.0

93.9

83.9

1.6

83.9

6.3

113.4

112.1

Total

0.0

35.6

10.5

64.8

Targeted Business Research and Development Funding 0.0

42.7

9.0

55.8

210.0

2013/14 budget

65.1 0.0

0.0

6.0

36.7

15.0

30.0

2012/13 budget

Research and Development Growth Grants 4.2

13.5

13.5

108.1

2011/12 budget

0.9

4.2

0.3

0.3

3.1

2010/11 budget

Repayable Grants for Start-Ups

Research and Development Facilitation and Promotion Service

Building Business Innovation

Research and Development Services and Facilities for Business and Industry

Realising the Benefits of Innovation

0.0

700.0

Total

Vote Science and Innovation

700.0

New Zealand Fast Forward Fund

Crown Irrigation Investments Limited

Water Storage and Irrigation Investment Proposals

Primary Growth Partnership

Vote Primary Industries

7.4

8.0

Hawke’s Bay Airport Equity Injection

44.3

30.0

2008/09 2009/10 budget budget

Public Trust Capital Injection

New Zealand Aluminium Smelters - Electricity Agreement Incentive Payment

Budget (all figures in millions)

8.0

113.4

218.8

43.6

119.2

14.1

25.8

16.0

76.9

12.0

8.1

56.9

0.0

2014/15 budget

7.6

115.9

212.5

30.0

115.8

11.0

32.4

23.4

72.0

3.0

14.3

54.6

0.0

2015/16 budget

14.5

117.4

250.5

40.0

144.2

14.0

32.8

19.5

183.5

101.6

5.0

76.9

60.0

2016/17 budget

17

0.6 2.2

The National Cycleway Fund

Management Support of the National Cycleway

90.0 7.0

New Zealand Railways Corporation Operating Support

ONTRACK Operating and Maintenance Costs

140.0 6.8 674.8 1,848.4

Crown Rail Operator Loans

Crown Rail Operator Equity Injection

Total

Grand total

Source: New Zealand Government Budget Papers, various years.

376.0

New Zealand Railways Corporation Increase in Capital for the Purchase of the Crown Rail

Rail Network and Rolling Stock Upgrade

KiwiRail Equity Injection

KiwiRail Turnaround Plan

55.0

Rail - New Zealand Railways Corporation Loans

Vote Transport (inc. Vote Finance on rail)

1,074.1

470.0

45.0

20.0

405.0

1,021.8

375.8

71.0

250.0

55.0

1,277.6

511.1

11.0

250.0

250.0

1,381.6

680.0

322.5

250.0

107.5

1,130.0

118.8

25.0

93.8

124.4

4.8

2013/14 budget

0.3

2014/15 budget

1,178.5

254.8

46.0

198.0

10.8

123.7

97.6

12.1

2012/13 budget

Total

113.0

1.1

27.2

0.8

2011/12 budget

2.0 119.5

1.3

4.6

0.1

1.2

18.4

2010/11 budget

Maintaining the Quality of the Great Rides

National Cycleway Fund - Extension 93.7

0.3

Tourism Facilities Development Grants

75.5

1.7

Implementation of the Tourism Strategy

New Zealand Cycle Trail Incorporated Seed Funding

5.0

2008/09 2009/10 budget budget

Marketing New Zealand as a Visitor Destination through Joint Venture Partnerships

Budget (all figures in millions)

1,212.9

232.8

23.0

209.8

123.4

2015/16 budget

1,359.9

213.8

23.6

190.2

131.9

2016/17 budget

18 2 2 5

Track Co Establishment Costs

Track Co - Relocation and Maintenance Costs, Wellington Railway Station

Track Co - Working Capital

131

59

56

7 1,415

Crown Rail Operator Equity 7 Injection

Total

224

140

Crown Rail Operator Loans

7

376

257

13

110

43

New Zealand Railways Corporation Increase in Capital for the Purchase of the Crown Rail

Rail Network and Rolling Stock Upgrade

KiwiRail Equity Injection

472

10

ONTRACK Operating and Maintenance Costs

KiwiRail Turnaround Plan

102

56

ONTRACK Loans 13

11

5

New Zealand Railways Corporation Transaction Costs of Purchasing Toll NZ Limited

ONTRACK Equity Injection

690

123

Purchase of Toll NZ Ltd’s Rail Business and Associated Costs

Upgrade of Rail Network

33

6

Rail Transport Upgrade and Growth Projects

99 6 44

1

3

8

90

55

NZ Railways Corporation Wiri Inland Port Rail Link

12

47

Track Co - Purchase of Rail Network Assets

National Rail Network Improvements

-44

Loan Repayment by Tranz Rail Ltd

New Zealand Railways Corporation - Transfer of Assets 99

10

New Zealand Railways Corporation Equity Injection

New Zealand Railways Corporation Operating Support

75

New Zealand Railways Corporation Loans

475

45

20

5

405

03/04 04/05 05/06 06/07 07/08 08/09 09/10

376

71

250

55

10/11

511

11

250

250

11/12

680

323

250

108

12/13

119

25

94

13/14

255

46

198

11

14/15

233

23

210

15/16

214

24

190

16/17

5,299

7

140

367

127

440

1,462

43

268

53

10

690

358

33

6

105

5

4

5

55

-44

99

90

10

958

Total

APPENDIX 2: TAXPAYER OUTLAYS ON KIWIRAIL (INCLUDING ONTRACK) SINCE BUDGET 2003

19

APPENDIX 3: DISTRIBUTION OF BUDGET 2016 CORPORATE WELAFARE ACROSS VOTES

www.taxpayers.org.nz 20