There is absolutely nothing wrong with this so long as the borrowing was not produced by inflationary policies, as happened in the 1980s and for which the market was wrongly blamed. Like nineteenth-century America s capital imports, our IT imports should pay for themselves while adding to the country's welfare. No IT trade deficit will burden the economy and hence there no reason for politicians and bureaucrats to interfere in these transactions. Not surprising, his suggestions have found much favour, not only among those companies who expect to be the beneficiaries but also among those vote-grubbing politicians who cannot resist a pork barrel when they smell one. It is quite clear that the job destruction that his IT subsidies would impose on other parts of the economy has completely eluded him.
Industrial subsidies have the effect of encouraging the recipients to over-expand production.
This drains capital and other factors of production away from more efficient lines of production which in turn lowers economic welfare. In any case, it should be obvious that if these companies cannot survive without subsidies they have no business being in Australia. It is not the role of Australian taxpayers to fund corporate welfare schemes. However, Goldsworthy is absolutely right to point out the economic damage our punishing capital gains taxes are imposing on the economy. But this was duly predicted when the Labour government introduced them.