The Government’s “prudent” and fiscally conservative Budget has not helped declining business confidence levels, with firms’ optimism now back down to Coalition agreement negotiation levels.
ANZ’s Business Confidence Index shows a net 39% of businesses are pessimistic about the year ahead – up 12 points from last month.
The survey, taken between May 31 and June 22, covers the weeks after the May 17 Budget – a Budget ANZ said was “prudent” – as well as the Government’s handling of the oil and gas ban decision.
Finance Minister Grant Robertson says the figures are not unexpected given recent commentary.
“We also know with Governments with Labour Parties at the core, we have traditionally seen a level of pessimism that doesn’t reflect GDP growth.”
ANZ’s measure of firm’s expectations of their own activity, which it says is a better gauge of future GDP growth, was also down from +14, to +9.
Although this measure remains expansionary, ANZ Chief Economist Sharon Zollner says the figures suggest the economy may continue gently losing steam over the coming months, despite the support coming from fiscal stimulus and high commodity prices.
Opposition Finance Spokeswoman Amy Adams says a drop like this says that businesses have had a look at Grant Robertson and they don’t like what they see.
“The Government needs to get its head out of the sand a realise it cannot take economic growth for granted.”
The most pressing issue for businesses, according to the survey, is lack of skilled employment – with almost 30% of businesses saying this was the most prevalent problem.
Robertson says the Government is addressing this issue through its fees-free tertiary education policy and its investment in apprentices’ programme.
Regulation most problematic since 2012
Some 17% of firms say regulation was their most pressing issue – the highest reading for this problem since this data started being collected in March 2012.
Adams says anyone who wants to suggest business confidence figures are not a direct commentary on this Government needs to look “very closely” at these numbers.
Robertson says this is “always a concern for businesses,” but says the Government is involving firms in the conversation around regulations, for example with its industrial relations policy.
Looking ahead, Zollner says the tailwinds for increased Government spending, and the strong terms of trade will see the economy continuing to grow “above par.”
Business Confidence fell sharply after last year’s election, falling to almost 40% of businesses being pessimistic during the Coalition arrangements in October.
That figure recovered in the following months but has since fallen back down October’s level.
On two separate occasions, Prime Minister Jacinda Ardern has referred to the figures as the “elephant in the room” for her Government.
Both she and Robertson have talked about changing businesses perception to match reality.
30 Comments
In an attempt to dismiss the pessimistic business survey , Robertson lamely trots out the tired and irrelevant observation that there is a disconnect with the survey results actual GDP growth.
Even someone like him from a non business background would be well aware that current GDP is a reflection of decisions made long ago before Peters foisted the CoL upon us and is also heavily influenced by factors external to NZ.
The obvious reality is that the NZ business community is justifiably very concerned about the future impact upon it of government inexperienced and adhoc policy making and is especially alarmed at which sector might next become the victim of a Taranaki moral posturing uppercut. Robertson needs to front business on these critical concerns rather than dismissing them as 'not unexpected'.
Garbage. The biggest concerns that business have right now is that they can see the property boom is over and we are now switching to the other side of the cycle, and interest rates are rising internationally. The credit boom is dying. This may mean materially reduced consumer spending and tighter credit. Whatever changes this govt has made or may make in relation to matters such as employment law are small beer compared to changes that are coming in consumer spending and terms of credit.
So Government has no material impact on the economy? How convenient. The political reality is that "Failure has no friends" John F. Kennedy.
As I write this, we are 0.4 cents off the 52 week low for the USD/NZD exchange rate. Exporters will be happy, consumers will be less so. A good recession does no harm, if you are prepared.
You clearly aren't at the same business meeting as me. The common refrain is 'what stunt will these socialist dreamers pull next'. They are a very real and widespread concern.
As I write this I'm heading out the door to a few beers with a mate who says he has a new business proposition I might be interested in. Top of the discussion will be trying to anticipate the future impact of decisions from the uneasy alliance running NZ inc.
Hi Bobster, the Col government impacted my business heavily. I have Landscaping business in Auckland with garden maintenance division. Last year I had 3 garden maintenance teams this year just one. I lost great amount of clients from Remuera, Mission Bay and Saint Helliers, 6 houses(weekly contracts) just in last 4 months. The owners were well off kiwis 50-60 years old who sold their properties and moved out of the country, with the explanation that they cannot waste 3 and more years of their life under Labor govt again. Their houses were bought mostly by chinese, who have their own cheap workers to do the jobs and I lost revenue of 70k pa. All up since election I lost revenue of 110k pa so 4 kiwis I was employing had to go. Three of them are on Benefit now.
I expect they were seachange types with the government change as a venting mechanism. I can understand the sentiment though. I will watch Twatford on the AM show if I know Judith is going to be there, but I have done my absolute best to avoid watching Taxinda on TV as her mannerisms drive me nuts. She has caught me out twice since the election, but I leave the room if my wife won’t change the channel. It’s good being in Noosa this week as NZ doesn’t exist on local TV and I don’t have to filter.
"Even someone like him from a non business background..."
Like Bill English you mean? A Treasury boffin who rose up through the ranks. Corporate NZ has been right-wing for 30 years, going right back to the Business Roundtable, run by that other non-businessman Roger Kerr (a masters in literature if I remember rightly) What is characterised as "ad-hoc" policy is the start of the roll-back of neoliberalism that has impoverished middle class New Zealanders for 30 years.
Bring it on.
The elephant in the room is growing fast and coming of age....not exactly a good sign huh? .. wonder why?
We haven't had Unions industry wages negotiations yet and CGT and other Taxes as still simmering but not yet cooked properly ... wonder what will happen when all that hits the fan?
Garbage. Businesses can see that we are running out of credit growth and house price growth. Credit is going to shrink and there’s a good chance prices will go backwards. This phony growth is at an end, the drugs don’t work anymore. There is a risk that consumer wallets may well slam shut. Whether there are changes to employment laws or fuel taxes or whatever pales in significance next to the risks posed by the credit boom which is slowly grinding to a halt. This is the inevitable consequence of the policies of the last government.
Otherwise, as per usual, the business confidence surveys are a sounding board for moaning by business on matters that they don’t like but which, when compared to the issues noted above, are significantly less material. I really don’t know why govt purports to take such notice of all this self interested whinging from business about issues which are small beer in the bigger economic picture of rising international interest rates, unsustainable household debt and an Aussie banking system that looks set for a big shock? Fuel tax, minimum wage increases....whoopy doo, these changes are far from seismic and business has the wherewithal to deal with this.
Your response is garbage bobster. Half the battle with government is getting the message out, and inspiring confidence. They are a motley crew of misfits. No business acumen. No worldly experience. Left hand doesn’t know what the right hand is doing. It’s embarrassing. I have not seen such a shambles of a government in my lifetime.
I know it probably seems important to some, but can please we have a bit less of the Left vs Right stuff?
Neither this government, nor the last, are addressing what is ahead. Nor for that matter, are the Greens, and the media are avoiding it like the plague.
So business folk are going to be well informed. Not.
But what I am hearing is a lot more individual people realising that there is a reason things are not going to grow (which is what careless language interchanges with 'get better') either indefinitely, or for very long.
How about you party-hack (or is that ideologically-stuck?) types ask whether something is sustainable before hitting the keyboard? I'll give you the tip - growth isn't sustainable, and it could just be that awareness is growing. That would have everything to do with the penny dropping, and nothing at all to do with who is in power....
The decision to ban exploration means oil and gas will need to be imported to NZ on big diesel burning ships so not sure how her decision will help the climate?
We need to move away from oil but it should be a managed transition not a blanket ban on exploration which doesn’t actually do anything except maybe guarantee her a job in the UN once she’s finished playing PM.
I agree entirely, we will transition to alternatives when they become practical for the majority. The first big problem is the cost of energy storage, once lithium ion batteries (or an alternative) become cheap then the move will become attractive, and make financial sense.
She’s got this quirky way of speaking, it’s hard to describe but it’s almost like she’s talking to someone half deaf...... loud and slow. Every word spoken and she’s taking a big bite at the air. Maybe it’s those enormous “Nigel Thornberry” teeth getting in the way.
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