Posted: 10:32 am on 6th May 2013

If in a few years a glass of Australian wine tastes better than it does now, you will know who to thank: the Australian taxpayer.

The government has announced $2.4 million to establish a ‘Training Centre for Innovative Wine Production’ at the University of Adelaide to help wine producers ‘tap into new markets like Asia’s growing middle class‘.

If the benefits of China’s growing middle class and its appetite for wine are so profitable for Australia’s wine industry, it would be reasonable to think that the industry could pay for this sort of stuff itself.

As part of the CIS’ TARGET30 campaign, we recommended the abolition of all corporate welfare in order to save taxpayers billions and make the economy more efficient.

This is just one example of the billions government spends on doing things for the private sector that they are more than capable of doing themselves.

Steve says:

Actually there is a market failure because the benefits of conducting research to develop the market accrue to many, but the costs (and risks) accrue to few. There could be something done by an industry group, but the benefits would still accrue to some entrants, even though the costs are borne by incumbents. Therefore there is a role for government to correct the market failure such as subsidising this type of R&D (and education) to get the socially desirable level of investment – It’s not waste at all! and such support actually achieves efficiency!

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