Prime Minister Jacinda Ardern says she is determined to change business’ perception of the Government and is paying close attention to confidence surveys.
By the two main measures – ANZ’s Business Confidence survey and NZIER’s Quarterly Survey of Business Opinion – firms’ optimism has fallen and stayed low since last year’s election.
Speaking to BusinessNZ’s pre-Budget lunch on Thursday, Ardern said she has been known to speak openly about these surveys.
“It’s the elephant in the room and I’m quite happy to point that out.”
In February, speaking at a Westpac breakfast, she used the same phrase.
“I haven’t quite got rid of the elephant in the room yet – so that’s still what it is,” she told media after her speech when asked about the analogy.
In her pre-Budget speech, she suggested the low figures stem from assumptions that Labour-led Government’s aren’t good at managing the books.
“The perceptions you have determine your actions – whether you invest, whether you export, whether you take risks. It can also determine how you feel about all those things.
“Whether or not our perceptions are accurate is another question. Our perceptions are often influenced by our beliefs in general, or our assumptions.”
She says the Helen Clark-led Government faced the exact same issue when it was first elected, “despite producing good economic results.”
And it’s the strength of the economy that Ardern is looking to promote to businesses in an effort to change perceptions, she says.
“I know the perceptions we face, but I will always focus on improving New Zealand’s reality with the goal that perception will then reflect that.”
She cited the IMF’s recent visit to New Zealand, where it gave the economy and the Government top marks, as well as Moody’s and S&P’s positive outlook for the country as examples that New Zealand is on the right path.
She also referenced the Budget Responsibility rules and the forecast surplus as reasons businesses can “be confident in this Government.”
But National’s Economic and Regional Development Spokesman Paul Goldsmith says the Government’s policies are still the issues for many businesses.
“Business confidence is low because businesses are worried about all the uncertainty around what the Government is doing, particularly around industrial relations and the way they’re spending their money and the poor quality of that spending.”
54 Comments
The previous government were cronied right up to big corporate business to the point that they had seduced themselves in believing NZ should be run the same way. Therefore they made friends, lots of them, in high places. Nearly needed to build themselves a bigger lobby. Fat lot of good came out of that if you take Fletchers for instance. Labour will quite rightly try to restore balance but because of that, will obviously not be as “popular.” Now what’s the difference between popularity and confidence? Not much in the kingdom of fat cats if you ask me.
Balance you say. You do realise who owns the Labour party don't you?
Labour are entirely the Union movement's bitches. The unions fund them from member dues and are the biggest contributors to Labour's coffers, the unions decide who leads them due to their overpowering share of the leadership votes - outside of the short pre-election window where the caucus can choose (the only reason life long union man Little was able to be rolled pre election).
The unions are now demanding their big payout from their parliamentary tools. They pay the piper and so will call the tune. Hence all the destructive 70's style labour policies about to be thrust upon a mostly disinterested public (or for anyone who remembers the 70's a strong anti-union feeling). The unions give no shits if this runs the NZ economy into the ground, as long as their membership grows (willingly or not) to grow their income and political power. With the union leaders being pressed from the darkest moulds of ideologically driven marxism, they are not invited into the leadership unless they are ideologically pure, and are generally 'elevated' aristocratic wannabes with misanthropic bugger the hoi polloi attitudes (eg Mat MacCarten, Little's chief of staff, failure to pay $150k tax for his Unite union because he had other spending priorities, and later attempts to employ unpaid foreign labour to campaign for labour. Rules and laws are for little people).
Singapore offered near 0% and in some cases negative company tax rates to several large multinationals, their tax take from personal income tax and gst rose significantly as a consequence. Last I heard their sovereign wealth fund is now worth 360 Billion (https://www.cnbc.com/2015/07/17/the-worlds-biggest-sovereign-wealth-fun…). Whilst we are playing around with high tax rates and debt they took the low tax rate with a huge sovereign wealth fund route.
The state of Nevada offered Elon Musk a very attractive tax package to build the giga factory there and I recently heard that the governor said he would definitely do it again.
Isn’t that one of the 2 sovereign wealth companies that Singapore operates? In the words of Elon Musk “ I wouldn’t mind a smaller piece of a bigger pie “. If we increase the total amount of money in NZ we could lower the tax rate and still make more money ( almost said we could lower the tax rate for everyone, then I recalled that 50% of working kiwis pay 0 net tax ).
It is indeed, how much wealth is owned by the state of Singapore under those umbrellas? I'm pretty sure there would be uproar from the right should anyone suggest state run enterprises as an idea.
Another question for you, what's the federal govt's debt, after the new tax cuts were implemented in the US?
I am all for building sovereign wealth the way Singapore has. I have been there a few times and when you think about how they were just a collection of fishing villages 60 ish years ago it astounds. Singapore is proof that you don’t need high taxes to build a massive amount of sovereign wealth!
I am too, however, what your suggesting is something a little akin to this -
Socialism - a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.
Which I'm not sure would make you particularly popular amongst the right leaning crowd.
I think it would be an excellent idea to (re)nationalize a whole load of things, keep the free-market open and encourage competition. However, instead of shareholders, individual customers would receive a refund, like we do with power in certain parts of Auckland, I get a nice surprise cheque worth about a month's worth of power every year.
Keep the tax bands the same, but at the end of the year, a percentage of the profit made by those nationalized companies would be returned to their customers, tax free, which would in effect give people a tax break.
You misunderstand entirely. I am saying lower taxes and unnecessary spending and with the resulting surpluses invest in a sovereign wealth fund. The Singaporean sovereign wealth funds mostly invest in foreign assets.
There is no dole or sickness benefit in Singapore. Medical services are user pays via Medisafe. Sovereign wealth profits mean they can further lower taxes every few years. If that is socialism then I am all for socialism.
Yeah, no I don't, I understood you completely, I was just reframing it from a left-wing as opposed to right-wing perspective. Different angles, same (ish) result, except you want poor people to die and stuff....
It's entirely irrelevant that a sovereign fund invests overseas, in Singapore that came later after establishing their own base in their own country - fact of the matter is Temasek owns or majority owns - Singtel (who own Optus in AU), Singapore Airlines, Industrial, Media companies, consultancy businesses - here's their portfolio FYI. https://www.temasek.com.sg/en/what-we-do/ourportfolio.html
I would expect an NZ sovereign fund to do exactly the same.
Singapore's wealth disparity is a discussion point, pretty much like NZ, where the country was designed to be an egalitarian, meritocracy but has changed to a generational have and have not. http://statestimesreview.com/2017/02/16/statistics-singapores-income-in…
It really rather does I'm afraid, wealth disparity helps to fuel lack of opportunity, lack of opportunity leads to worse outcomes for the poorest and so on we go, round and round in ever decreasing wealth circles.
Here's another bit on Singapore's wealth inequality - you'll also see in that article that Singapore has made efforts to raise taxes on the top whilst legislating more in favor of the poorest. https://www.straitstimes.com/singapore/income-wealth-inequality-more-tr…
Sounds more like the author’s opinion than government policy to me. I just looked up what singapore’s Marginal tax rate for someone making $70,000 is. Someone earning $70,000 in Singapore has a marginal tax rate of 7% over here it is 33% !!! If a 7% marginal tax rate counts as redistributive, let’s do that here! 60 years ago Singapore was a collection of fishing villages, yet somehow all Singaporeans are substantially wealthier now than they were back then despite those Singaporean fishermen having a huge wealth divide between themselves and the developed world!
I'm no Obama fan for what it's worth, he's an erudite, charming chap, but more of the same, however, he did spend a bit on the people of the US - based on run rates, Trumpy is way ahead, 1 yr and 3mths to stack up $1TN vs 8 years to stack up $6TN, according to the committee for responsible budgets, it could reach $2.1TN a year, so he'll do in 3 years what Obama did in 8. #Winning.
I agree that we should drop company tax rates. Research suggests that 75% of company tax is ultimately borne by the employees in the form of lower wages anyway.
We should be reducing our too-great penalising of working plebs too, and split tax between land wealth and working folk. Only in a spectacularly self-absorbed world would a person expect to pay no tax on increased land wealth they receive through the infrastructure built up around them (funded by workers' taxes) yet expect compensation should their land value be diminished by the same sorts of acts.
This mix we've had where we've been making working plebs bear the brunt of taxation while unearned income gets off free and we further subsidise investors who receive this, is just nuts.
@sad , Drastic move is a good term mate , so is King Hit , so is left reeling.
The drastic move to ban oil and gas exploration with no consultation whatsoever was enough to give business a big fright and cause a huge breach of trust .
It was a King Hit , that no one saw coming
Business never saw this coming, and thats why the reaction was so muted at first , it was left reeling , gobsmacked
Now , simply , we cannot trust this Government .
What the hell are they going to do next ?
Policies that are perceived as costing money (such as free tertiary education?) tend to lower business confidence. Wailing about the fiscal imprudence of those who are generally perceived as being fiscally prudent causes you to be perceived as fiscally naive/ imprudent... You need to first build up sufficient confidence within the populace that you are more fiscally prudent than the opposition before denouncing them as being fiscally imprudent.
Imagine the school trouble maker complaining to a teacher that the teacher’s pet is the one who caused the fight. That is roughly how it feels whenever labour claim National was fiscally imprudent through the term with the GFC and Canterbury earthquakes.
Ok as said, and as you admit yourself, you have not had any experience of EQC malpractice. For example your family is not living in a house that has been repaired by EQC to the point that it is now uninsurable and unsaleable. Your initial post was nothing to do with any insurer outcomes, was it.
Hypocrisy, dishonesty or stupidity? Difficult to decide.
New Zealand's strong economic position is entirely due to the management of the last Government, not to anything her Government's so far done. As for the actions so far taken by her Government, not a single one will actually improve conditions for business.
@Ms De Meanour , add to that untrusworthy , left reeling , unilateral , biting the hand or just plain dumb .
As for the self - propelled wrecking -ball Energy minister , she should direct her energy to her brain, by thinking thing through first, instead of this chaotic racing from one crisis to the next
business confidence is usually about two things - Surety that the operating environment they work in will remain at worst stable and consistent for the future - and then a belief that any changes - legislative requirements / taxation / wages / supply /inflation rates / money supply will be neutral or slightly in their favour
currently - we have the following
the oil and gas debacle with no consultation
multiple strikes / industrial action - with clear indication the government wants pay rises - but with no
increases in productivity for these
a 11 cent fuel rise around the country - and nearly 25 cents after GST in Auckland
Increased requirements and red tape for the housing and building industry - which is seeing many developments stall and be postponed
reversals in employment legislation all of which disadvantage businesses - ( revoking 90 day for example - strengthening collective bargaining)
multiple working groups - including the tax - which clearly has signaled taking money for business and wealthy individuals to pay for ....... colalition goodies
Its not an elephant thats in the room - its clear and obvious factual occurrences - all of which are sending an extremely clear signal to business that the next 2 1/2 years will see tougher operating conditions and no stability - cause and effect !
You don't improve business confidence by implementing a whole raft of policies that directly damage business:
-Increase minimum wages.
-Implement quasi-compulsory unionism and quasi mandate uniion wage negotiation
-Destroy oil and gas industry for no good reason.
-Increase taxes (Paye being the biggest) reducing consumer incomes
-Waste money on student bribes
-Leave threat of uncertainty over tax regime hanging in air.
-Kill off useful infrastructure improvement (roads) for useless fantasies (trains/trams/cycleways)
-Have most people with any economic training predicting lowered growth and increased govt borrowing.
Talking doesn't fix such damage, and business owners aren't Left-voting idiots to be swayed by a few mealy-mouthed platitudes.
We have had a cheap orgy of lending for so long many will have forgotten what life is like without that.
Many small and medium business operate of the back of the owners residential mortgages because its easier for banks to say "how much is your house worth" than it is for them to understand the businesses. As the winter chill sets in and overdraft potentially get shortened and or are declined to be extended that chill will spreads into the business sector accordingly.
Shes got a lot of work in front of her here is a list employment changes destroying business confidence.
https://www.kiwiblog.co.nz/2018/05/labours_ir_policy_summarised.html
We have around 800 Business clients in our practice, we have seen about 1/3 rd of them this year at meetings or interactions , and while we dont always discuss politics, not one of the business owners where politics has cropped up has been happy with the new dispensation.
Many are adopting a wait - and- see attitude to new investment or staffing -up , and a good few are really not happy about the raft of new taxes, levies, duties. fuel charges and hidden taxes planned by the Government
From current experience as a stakeholder in a number of businesses (one which would be regarded as a 'large' business in toy town NZ), it is uncertainty about what the coalition will do next, that drives sentiment and investment decisions.
Cinders can blather on about overseas rating agency views of NZ's economic performance but they are lag indicators of past performance. Lead indicators are where we are looking and significantly empowering unions, the disproportionate influence the minority greens have on very important regional issues in areas like Taranaki, where unpredictable Shane Jones will decide to shower taxpayer cash, etc, have adversely altered the future risk landscape.
The lady is good at spin but business is looking at the other actors behind her.
@middleman , precisely , uncertainty is certainly not something you require before making an investment decision .
The banning of a whole industry ( directly linked to one of the biggest industries on earth ) within days of coming into office , with no consultation, left everyone gobsmacked .......... in absolute disbelief
Adern needs to quickly realize that is the Productive Sector that pays her wages , almost ALL the taxes, and keeps her Government afloat .
She has done incredible damage to our ability to trust her
OMG is she stupid or naive or both. Surely she cannot believe all that claptrap coming out of that mouth of hers.
She doesn't understand Why businesses expand.
She doesn't understand What business risks are.
She doesn't understand that stripping the tax base generators of their income is bad for an economy.
She doesn't understand the effects of her CoL on business.
She doesn't understand the costs of bureaucracy and red tape.
She doesn't understand that regulation stops others from entering the market.
She doesn't understand the words stable econonmy and stable government.
She thinks she is going to grow some great big evolutionary business platform that is going to save the world. This woman has significant issues and grandiose ideas about her capabilities.
Business is in serious trouble in NZ
The biggest problem with this coalition government is that they are so disconnected from businesses. They are like kids who think meat just appears in neat little packets from the supermarket. No understanding of the farming and business processes involved in getting it there.They have no idea how the economy works, and think anyone in business is a rapacious capitalist ripe for more taxation and regulation. None of them could set up a business from scratch and deal with all its risks and challenges. They will find that when business confidence withers, tax take reduces and unemployment rises. This government will blow a big hole in the economy with its knee jerk decisions and overly ambitious green policies. Then they will be struggling to fulfill their ambitious spending promises.
her naivety is worrisome. To even raise this issue shows her complete lack of experience. The chasm between Jacinda and Key is frankly enormous. These statements confirm this more than ever.
Those that voted for Jacinda because of her "freshness" and that "feel good" factor must surely now see her for what the CoL is. A hapless bunch of individuals that have been asleep at the wheel for the past 9 years.
well today they have yet again addressed the elephant in the room -- this time David Parker telling us we have too many cows - so after they get rid of Taranaki's oil and Gas - dairy farming is next -
No longer matters what business you are running -- you are running scared of the next announcement - could be banning coffee next - absurd as its sounds - hardly more out there than getting rid of Oil and Gas and attacking our largest national industry and Export business!
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