Ice-cream saga: should govt get its money back?
The Golden North Ice Cream/Zoos SA stand-off highlights the failure of government grants to industry, a leading economist says.
Both organisations have been recent recipients of State Government assistance aimed at boosting the local economy.
The Laura-based Golden North was given $200,000 under the Regional Development Fund and the State Government loaned (and partly wrote off) $3.5 million to the financially struggling Zoos SA operation.
The head of the SA Centre for Economic Studies, Michael O’Neil, said it was a classic case of giving with one hand and taking away with the other.
“Golden North company received funding for investment in new plant and equipment, which it has done,” he said.
“Minister [Geoff] Brock recently opened the new plant and equipment.
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“The Government’s Industry Participation Advocate said all future government tenders should give weight to local content and local job creation, and here we have the government-subsidised Zoos SA favouring an international company in the supply of ice-cream to the Zoo cafeteria.
“At the same time we have an Industry Minister, a Regional Development Minister and an Investment Minister all arguing the need to increase exports when a local company is losing domestic market share.
“What we have here is utter policy confusion in design and application, somewhat like the Rossi Boots case.”
Rossi also received government funding, but then lost a supply contract with Defence.
O’Neil said the two cases pointed to a major failure in the system of government grants.
“The policy arms of government are not co-ordinated; they are resulting in a waste of taxpayer funds with these classic cases where giving with one hand is offset by market-based decisions on the other.
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“Governments shape the market; they don’t have to directly intervene or subsidise, but they shape the market by consistent, far-sighted policy that signals to companies and investors a consistency in government policy.
“Not one policy objective of government has been achieved in this set of decisions. In fact, quite the opposite.”
The State Government’s Regional Minister, Geoff Brock, whose seat includes Golden North’s head office and plant, told InDaily that Zoos SA’s decision was disappointing.
“As the Member for Frome, I’ve been in regular contact with Golden North during the past five years,” Minister Brock said.
“The company is an important part of the local community, and has always remained true to the tradition of making country ice-cream from local ingredients.
“The $200,000 Regional Development Fund grant to Golden North was made in 2013, before I became the Minister.
“It allowed the company to progress refrigeration and plant upgrades that not only provided production efficiencies but also helped make Golden North ice-cream even cleaner and greener.
“Zoos SA’s decision is therefore very disappointing. While this is obviously a commercial decision made by Zoos SA, I believe South Australian businesses should be promoting South Australian products.”
Opposition to the Zoos SA decision to dump a local supplier continues, with a petition by Independent Senator Nick Xenophon collecting signatures to activate a special general meeting of the Royal Zoological Society of SA.
“The decision of Zoos SA to sell Streets ice-creams (which contain palm oil) at their sites, in place of local South Australian company Golden North ice-creams (‘the decision’), should be condemned,” the petition states.
“The society should take all reasonable steps to reverse the decision.”
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