Phil O'Reilly: Former Welfare Expert Advisory Group member on the effectiveness of the business start up grant

A welfare expert says one of the Government's grants is a good idea in principle.  

The Taxpayers’ Union has revealed the business start up grant has dished out $38 million with little to show for it.  

Documents retrieved through the Official Information Act show hundreds of the recipients struggled and returned to a benefit within two years.  

Former Welfare Expert Advisory Group member Phil O'Reilly told Mike Hosking the execution was woefully bad.  

He says the problem is MSD spent far too much and there wasn't enough mentoring or measuring of outcomes. 

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Episode Transcript

Speaker 1 (00:00):
The ghost of labor past is back to haunt us
with more spending ways. Almost thirty eight million bucks was
handed out on a flexy wage program for the self employed.
So this was a COVID idea trouble as large numbers
of the businesses have failed and the recipients are back
on the doll Anyway, phill O'Reilly's former Welfare Expert Advisory
Group member and is back. Well this film morning to you, morning,

(00:21):
mikel although it does include the national government. I'll come
to that in just a couple of moments. So the
whole thing was boosted in twenty twenty one. Was this
a waste of money? Why if you want to set
up a business, are we handing out taxpayers money?

Speaker 2 (00:31):
The idea of people being supported to set up a
business is actually a good idea in principle, Mike. You
look at the problem is that the money wasn't monitored
properly and far too much of it was spent. That's
the problem, not the idea that the idea is this.
If you're say a middle aged man or a young
woman living in rural New Zealand, what's your chances of
actually getting a job? You know, and I've always argued, look,

(00:52):
if you can make your own labor market by starting
a business, that's a great idea. And of course Madiven
can start these days, was the interneired and so on.
The successful business is going to be SARTs anywhay. So
I've always argued that there is a role for mist
to think about that, because otherwise we'll just pay money
for people on the doll for years and years and
years maybe forever, and get nowhere. So the idea is
the right idea. The problem is that they spent far

(01:13):
too much and it was far too lax, and there
wasn't enough monitoring and measurement of outcomes. Bear in mind
also that look, when you start a business that often fails.
That's the nature of these things, so you are going
to get high failure rates. But I think the idea
is right. The execution obviously wocully bad.

Speaker 1 (01:28):
So where are we at now? Because this was in
twenty one. By the time we get to twenty four
to twenty five, they've curtailed it to a degree. But
as far as I know, are still going, isn't it.

Speaker 2 (01:37):
Yeah, there will be some of these projects going. But
as I say that, the challenge will be to get
government bureaucrats to actually measure and monitor outcomes that lead
to good places. Bear in mind, they don't give this
very well for people getting jobs. Either might be exactly
what they measure is people moving off the dogle getting
a job. They don't measure, for example, how long they
stay on the job. They don't measure whether it's not
the best monology. They don't measure whether or not the

(01:57):
job actually led to better prospects for this person. So
they don't measure quality outcomes. They measure an outcome which
says I move off the doll into work. So there's
a lot that's wrong with the way and which work
and Income in the Ministry of Social Development do these things.
But I think that the idea of these programs is
the right idea. But we just need to get much
much better and much tighter about the way we spend
the money in the way we want.

Speaker 1 (02:17):
They capable of doing it, even if you got to know,
kick them up the bomb or whip them into shape.
Are they capable of monitoring in a way that would make.

Speaker 2 (02:23):
This work kind of? I think there's never going to
be perfect these things. Of course, there's always going to
be because what's the successful business? You know, how do
you measure and monitor that? And how do you define it?
But you know it's not impossible. Bear in mind all
big bureaucracies, including private sector bureaucracies, struggle to monitor and
measure things properly because it's a big industrial machine. They've

(02:44):
got to measure thousands of these things and monitor thousands
of these things all at once, so it's never going
to be perfect. But over bet to face in the
public service, I think they can so honestly, as long
as they get the program right from the get go.
What's the program, trying to target, what's to trying to do,
do some pilots and then find out what works and
then expand it's will that probably hasn't happened he yet.

Speaker 1 (03:02):
What is the criteria, because is it just like, hey,
look I want to sell sausage rolls and a cappuccino
and they go, that's hospo and there's too much hospo
or they don't care. As long as they think you
can sell scis rolls and cappuccino, they'll back you.

Speaker 2 (03:15):
I suspect it's still I'm not exactly sure of the
detail that might but I'm pretty sure it'll be the latter,
which is to say, if you can come up with
a sensible sort of business plan, you get some mentoring
maybe around that, then a where you go better. In mind,
of course, in the private sector you're allowed to start
a business sits in a crowded marketplace too, of course,
so nothing wrong with that particularly. The challenge is more, that,
you know, is the misty putting in place the training

(03:36):
mechanisms to these people. Are they putting in place any
sort of mentorship or guidance for them or are they
just sort of giving them a bit of money and
hoping it succeeds. Because as you know, you know, if
you want to start a small business then you don't
have a bit of guidance and you don't have a
bit of support, then you're going to fail. So the
question I'd be asking you, misd is not whether these
programs are a good idea. They are, they probably need
to be more limited, But what are you doing about

(03:57):
making sure you learn from them so that more people
can succeed? What the textpos Union has clearly pointed out
that that's not happening, and that's the bad thing.

Speaker 1 (04:03):
Nice stuff film appreciated as always fellow Riley, a former
Welfare Expert Advisory Group member. The reason I ask about
hospital is we get in the area we live. You
get a sort of a local community update and a
big list of the stuff that's happening in the area
in terms of businesses that are on the verge of
opening any day now. And I got the list the
other day, and what was bullish about it or what

(04:25):
was good about it is there's a lot of businesses
that are opening. I'm thinking, right, things are turning, things
are right. People are wanting to take a risk. This
is fantastic. But then I go through the risk at
a list and I can't remember how many people there were.
There's maybe twenty new businesses that were going to open
up over the next six months, about eighteen of them
are hospital. Now I'm so I'm tarn So on one hand,
if you want to open something that's hoss bo, good on,

(04:46):
you go for gold. Couldn't care less. But then I'm thinking, well,
if there's eighteen of twenty businesses that are opening that
a hospital, how many of those are going to last?
And the answer is not many. And then your next thing,
I'm going to do is be interviewing old miss Bidoir
from the restaurant Association, who's telling me how to hospow
is and how difficult is I'm not surprised because every
man and his dog's opening up a cafe and then
they don't last because we're over cafed in this country,

(05:09):
we're over hospoed in this country, and there's not a
mechanism in place whereby they go. Look, have you thought
about the possibility that if you're opening up yet another
bubble tea operation, it isn't going to last very long?
Maybe you want to look at something else. Or are
we a country that says if you want to give
it a go, give it a go.

Speaker 2 (05:26):
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