'Iconic' companies rescue plan abandoned

Thursday 2nd July 2009

The Government has abandoned work to identify and assist "iconic" New Zealand companies because it was never a useful definition for companies deserving help, the acting chief executive of the Ministry for Economic Development, Mark Steel, told the commerce select committee today.

Instead, work was ongoing to try and identify the kinds of companies which, if they were to fail, would have substantial knock-on effects through the economy, he said, in answer to questions from the committee chair, Lianne Dalziel.

The admission came during questions to the Minister of Economic Development, Gerry Brownlee, about progress on the "iconic companies" initiative outlined by Prime Minister John Key in February, when it appeared that Fisher & Paykel's appliance business could founder.

"The public tends to think of well-known companies that are in the public eye," said Steel.

However, the MED was working to identify companies in difficulty that could have "important linkages into various supply chains and markets through the economy. The test has to be more than just 'is the company well-known?'"

Brownlee said that, in attempting to formulate a policy on "iconic" companies, it had become important "to question what contribution they are making in an economic sense as well as a competence sense".

He hinted that behind the scenes, the Government and officials had worked closely with companies that had faced difficulties that had not come to public attention.

"We have been open and receptive, and they have by and large been required to look at commercial solutions first," he said. "That worked out reasonably well in situations where thasn't been the public scrutiny."

"Five months down the track, some things haven't happened that could have," said Brownlee. "By and large, the carnage has not occurred to the extent that people expected."

A stock-take of business assistance policies being undertaken by the Department of Prime Minister and Cabinet was almost ready to go to Cabinet, with announcements from that exercise likely by the end of July, Brownlee said.

He was also critical of the "hugely disparate" balance of spending on "diplomatic niceties" around the world versus the $57 million currently allocated to assisting businesses into export markets.

Businesswire.co.nz

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