$30m handout to boost trade

By PAULA OLIVER and KEVIN TAYLOR

The Government has opened its bulging wallet to spend $30 million on promoting foreign investment and trade, and helping local companies foot it overseas.

In the first major pre-Budget spending announcement, Trade Negotiations Minister Jim Sutton and Economic Development Minister Jim Anderton yesterday revealed that New Zealand Trade and Enterprise would be a major beneficiary of the cash.

The news came on the same day that NZTE staff learned of a restructuring that would cost 20 jobs in the short term - and ultimately up to 60.

The spending includes:

* Up to $10 million extra each year for three years to "strengthen" NZTE's global network.

* $4 million a year to NZTE's "strategic investment fund" to allow more feasibility studies, guarantees of Government funding and possible cash grants to encourage firms to invest in New Zealand.

* $7.5 million each year for three years to create a new "market development assistance scheme" under the control of NZTE.

* $2.5 million over two years to hire extra staff to handle trade negotiations with China, Thailand, Chile and Singapore.

* $6.8 million each year for four years to Investment New Zealand to open new offices overseas promoting NZ as an investment destination.

The ministers said the extra money would help New Zealand businesses overcome the difficulties presented by distance.

NZTE was formed in July last year by merging the Government agencies Trade New Zealand and Industry New Zealand.

Its job is to help businesses lift New Zealand's economic performance.

Its offshoot, Investment New Zealand, hit the headlines this year for spending taxpayer money on hosting a wealthy American investor.

The man, Brunswick Corporation chief executive George Buckley, later said the trip caused him to invest in two local companies and do business with three more.

Anderton said yesterday that the fund used to host that type of visitor, the strategic investment fund, was being doubled in size.

Other money would be used to pay for representatives in Hong Kong, Tokyo and central Europe, probably Germany.

He did not mention a review by NZTE of its overseas representation which is understood to be likely to lead to some offices closing and others opening in different locations.

The extra money for NZTE will be used to upgrade its international communications network give staff more skills and foreign language capability, and help its local and international arms work together.

But Act MP Rodney Hide, a staunch critic of the Government's practice of handing out grants and hosting visitors, suggested a better way of increasing foreign interest.

"Instead of keeping taxes high and forking out money to the favoured few, the Government would be far better off giving tax relief to every business and every worker in the country," he said.

Cutting the top personal and company tax rates to 20 per cent would be more effective.

New Zealand's promotion agencies battle against better-funded ones in other countries for every dollar of foreign investment.