I am not against it per se, and given they are saying that in the first year they will have a working group to determine the details there isn’t too much I can dig my teeth into here. As a matter of principle I am:
- Against industrial subsides
- For policies that help to improve matching and adjustment to changing economic reality
This policy is doing a bit of both, so I would need details before I can say much. But the money quote for me from the policy document is this:
The Green Investment Bank (the Bank) will primarily act as an independent and expert facilitator of green capital. It will match funders to projects that produce financial and environmental dividends providing additional capital, where needed, and cleantech investment expertise.
This is as close as we get to potential details. Essentially, government will take on half the capital of firms that are approved as “Green firms” – this type of public-private partnership will ensure that the taxpayer takes on some of the risk, and get some of the reward, for a bet on New Zealand green technology. This incentivises the entry of firms into this industry by both reducing capital requirements and, through the nature of the partnership, giving firms an implied subsidy (by passing downside risk to government) – in a political environment where this is a flagship policy, there will be an incentive for government to keep sending money after bad firms, in order to avoid failure.
Now these political economy issues are ones we can work past, by having transparency and specific types of contracting in the “investment bank”. But, I’m still unsure why we need public ownership here – why should government be holding these “Green assets”. This isn’t just a way of incentivising a specific type of investment (which in itself is something I am uncomfortable with – unless it is based on an explicit externality or market failure) but also a way to increase the net asset holdings of government.
This is not just a criticism of the Greens though. By aiming to run constant surpluses and build up assets, National, Labour, and even ACT (to some degree) are looking at expanding the government’s claim on national wealth. Perhaps this is something we should have a bit more of a public chat about 😉
Note: The “source” of funding is a separate issue. I don’t disagree with the Greens about higher taxes for resource extraction, which is merely the negotiation for the surplus of an already publicly owned natural resource/asset. But remember, this “tax” could just as easily go into the general fund and fund completely different things – the “goodness” of the two policies aren’t conditional on each other.