Ruapehu corporate welfare backfired

A very good article at the Herald about the woes of Ruapehu. They trace much of it back to the decision by RAL to spend $25 million the the Sky Waka. They couldn’t find it themselves, so persuaded the Government through the PGF to lend them the money. And then they went back for $5 million more and their debt grew and then as they went bust the Government has put in a further $28 million.

If the Government had never done corporate welfare in the first place with the loan for the Sky Waka, it is inevitable RAL wouldn’t have proceeded with it, and would not have built up so much debt.

The article concludes:

I’m from the Government and I’m here to help’ – those have been called the nine most terrifying words in the English language. That was in a different time, and a different place, but New Zealand seems determined to give the old adage fresh resonance.

Corporate welfare is bad for companies as it encourages them to make uneconomic decisions.