KEY POINTS:
Prime Minister John Key is under pressure to reveal the criteria the Government will use to decide whether to rescue companies in trouble because of the economic downturn.
The Government has sought advice on a potential bailout of Fisher and Paykel Appliances if other options to get the
company out of a profit slump and rising debt fail.
Mr Key was careful yesterday to rule out any wide-scale corporate rescues, saying any Government involvement would be in isolated cases and "the benchmark is pretty high".
But he said the Government was also working on options for other big companies which might be affected.
National has previously mentioned contingency plans to help important companies facing collapse, but F&P Appliances is the first individual firm to be mentioned.
Mr Key said it remained profitable, had other options to explore and had not sought Government help.
"But it's an iconic NZ company that employs 1600 people," he said.
"These are highly unusual times and I'm simply not going to rule out the option that the Government could get involved."
Labour leader Phil Goff said if the Government moved to help one company, it needed to set out clear, consistent and fair reasons for doing so.
"Companies will want to know if one company is getting bailed out, why them and why not us?"
Mr Key has refused to set out precise criteria, saying the matter would be dealt with case by case.
While it was too early to say whether any bailouts would be needed, the Government would be "derelict in its duties" if it did not consider what action it could take.
Finance Minister Bill English downplayed the likelihood of Government bailouts, saying any moves would be a "last resort". He would be "very concerned" if Government help prompted a rush by other companies for help. .
"We certainly want to focus on protecting people from the sharp edges of the recession, but there is still going to be a recession and that will take some businesses." He said Mr Key's indication of "last resort" help for some businesses reflected moves by Governments in other countries to bail out business "and the way the world is at the moment, the unthinkable keeps happening, so you can't rule anything out".
But the Government's banks guarantee was the primary thrust of its support for private business and companies would be expected to exhaust all other options before seeking state assistance.
Asked what circumstances would prompt the Government to intervene in other companies, Mr Key said it could become involved if the failure of the business presented "a systemic risk" to the economy or if it would be in the nation's long-term interest.
He refused to state the specific criteria the Government would use. But he reiterated that Fisher and Paykel was an "iconic" New Zealand company which employed a significant number of people, had a long history in exporting and a strong research and development record.
The previous Labour Government had taken steps to stop companies collapsing - including taking partial ownership of Air NZ. Labour had also introduced guarantees for banks before the election.
Act leader Rodney Hide said he did not believe the Government should mount direct rescue packages for private companies.
Progressive leader Jim Anderton said he would back any moves to help F&P, describing the company as "New Zealand's General Motors".
He said it was a fundamentally sound company and had a downstream effect on the economy.
Engineering, Printing and Manufacturing Union national secretary Andrew Little said any help should carry a guarantee that the company would keep jobs in New Zealand.
F&P Appliances has recently moved a significant part of its manufacturing overseas.
FOR
Andrew Little, National Secretary, New Zealand Engineering, Printing and Manufacturing Union
If the financial crisis tells us anything, it is that we need businesses that make and sell goods and services people need. We need a strong manufacturing base. We need Fisher and Paykel. The Government has a role to support this company, its workers and their families at this time.
We were told in the 80s and 90s that the "business of business is business". But it isn't and never has been. Business has never existed in isolation. It is dependent on communities, to provide its workforce and to buy its goods and services.
AGAINST
John Walley, chief executive of the New Zealand Manufacturers and Exporters Association
I am not opposed to bailout per se, I am opposed to a bailout in terms of where we might use that money better. Fisher & Paykel have top-class financial people who should be able to manage these situations. If they can't, I am struggling to see why a taxpayer should be in the queue.
Where do you stop? Even with strict policy the Government is still picking winners. The feeling is that we shouldn't be picking winners in any policy. I know many companies who could do with a soft loan, or a spare $10 million. Who is going to write the criteria?
