Motorola asked for cash and favours to shift

By DANIEL RIORDAN

Motorola wanted preferential treatment in bidding for Government contracts as well as cash inducements to set up a research and development facility in Christchurch.

But what the Government and Christchurch City were prepared to offer couldn't match Australian states, according to papers released under the Official Information Act.

Motorola decided to site its new software development plant in Brisbane - and create 200 new jobs there - despite acknowledging Christchurch's cost advantages and its ability to deliver skilled labour.

The amount offered has been deleted from the official papers, but they suggest the money was to offset Motorola's estimated $A3 million ($NZ4 million) start-up costs.

Motorola, the world's second-largest wireless phone maker, reported sales of $US9.5 billion ($24 billion) in the September quarter.

Other proposals the Government was asked to consider, but didn't pursue, included preferential treatment for Motorola on Government contracts, and "leveraging" the auction of spectrum frequencies in its favour.

In a letter to Motorola on June 15, Science and Technology Minister Pete Hodgson offered it money over three years to help pay for technology development, training and "to offset the costs of recruiting and relocating staff."

"This support is offered to offset establishment costs in the build-up phase of the project, expected to take three years, should it be located in Christchurch."

Investment New Zealand, an arm of Tradenz, suggested that to compete with the Australian states, New Zealand would have had to offer the equivalent of two years' tax revenue from its 200 staff.

Elsewhere in the papers, it appears that 90 per cent of Motorola's staff would have earned more than $60,000, putting tax earnings over two years at roughly $8 million.

Funding offered by the Government to Motorola was understood to be nowhere near that amount.

Among options proposed by Tradenz, a Government-appointed body which aims to attract overseas business to New Zealand, was a "New Zealand economic development requirement" for the radio spectrum auction, which it was thought might favour Motorola.

Motorola had suggested it would be more likely to choose New Zealand for its new facility if its spectrum bid were successful.

But officials rejected the proposal on the grounds that companies like Telecom could argue similar benefits for economic development.

The Deputy Secretary of the Ministry for Economic Development, Graeme Davis, said he did not favour financial inducements.

"We will not win bidding wars," he said in a paper to his minister, Jim Anderton.

He further cautioned against giving Motorola favourable consideration with Government contracts.

Tradenz had suggested Motorola's winning major Government contracts might clinch the deal.

But Mr Davis questioned the proposal in a letter to Economic Development Minister Jim Anderton.

"Why would we want to give Motorola preference for overseas manufactured product over domestic manufacturers?"

Another proposal of Trade NZ not pursued by the Government was a scheme, to be managed by Motorola, to recruit IT migrants and encourage expatriate IT workers to return.

The papers confirm Christchurch had trumped other local bidders in Auckland and Wellington from an early stage.