By Jason Walls
Prime Minister Jacinda Ardern was dead right about one thing in her speech to business people in Auckland on Tuesday morning.
“As I travel around the country, the issue of certainty is an underlying theme.”
Ardern put the issue of certainty front and centre of her speech and with good reason – above all else, businesses crave certainty.
But unfortunately for Ardern and her Government, I doubt her speech this morning will do much to abate the concerns of businesses.
At the risk of sounding too much like the Opposition, the Business Advisory Council is just another group.
Its job will be to provide “free and frank advice” to the Prime Minister on economic issues.
“It will bring new ideas to the table on how we can scale up New Zealand businesses and grow our export-led wealth,” Ardern said.
Great – but what about the Treasury? What about the Ministry of Business, Innovation and Employment (MBIE)? The Reserve Bank? BusinessNZ?
Surely they should be doing this type of work already.
On top of that, we have a Minister of Finance who has not one, not two but three Associate Ministers as well as a Minister of Revenue and Small Business.
And already this year, the Government has already established two other business-led groups to help advise the Government – the Tripartite Future Work Forum and the Small Business Council.
The Budget was conservative and international credit ratings agencies continue to sing the Government’s praises about how stable it is and how well the economy is doing.
Despite all this, business confidence – in both the ANZ and the NZIER surveys – is at the lowest level since the GFC.
Having Air NZ’s Christopher Luxon sharing the musings of businesspeople with the PM is hardly going to abate those concerns when the Government has already tried, and failed, to soothe businesses’ woes.
Not all Ardern’s fault
Tuesday morning’s announcement was a fizzer – but Ardern's speech was good.
It is clear she is taking the issues of business confidence seriously and is no longer excusing it by saying “oh, this always happens under Labour-led Governments.”
The biggest problem for Ardern now is something that is largely out of her hands.
New Zealand is coming to the end of a very strong economic cycle. Business leaders know this. Business leaders are looking at what is going on overseas and are taking note.
Think about it – if a 2am Tweet from the President of the United States can force more movement in the kiwi dollar than our Budget or a speech from the Reserve Bank Governor, of course, you would be concerned.
Two of the world’s biggest economies are squaring up in what will surely amount to be the biggest trade war in decades. New Zealand, a small island nation that lives and dies by international trade, will eventually get caught up in that.
There are so many factors at play that are worrying business leaders.
Some, yes, can be attributed to the Government – we have no idea what will come out of the Tax Working Group next month and some changes to the industrial relations laws are worrying many firms.
But by and large, it’s unfair to lay everything that is going on at the feet of Ardern and her Government.
The issue, as she quite rightly pointed out, is about certainty.
No amount of groups, boards and committees will be able to help with that.
46 Comments
There is a certainty about the outcome of the Tax Working Group, they will find that capital gains tax is a jolly good idea, despite it's implication in fostering house price bubbles in Ireland, California, Spain, Britain, etc, etc etc. Once the power mad politicians get their hands on it they will do everything they can to ramp up the gains. Whether they implement it will of course depend on Chairman Winston's approval of his Labour puppet government's plans.
Business investment in NZ? Forget about it mate. Go to Aussie.
If not a capital gains tax, then certainly some form of property tax. Even a complex combination of the two, with a dash of estate tax, is more than likely. Dr Cullen will know. Dr Cullen will decide. What compensation is dished out in terms of direct taxation will surely only be for the low income bracket. This will be another blatant Labour tax grab just like the Clark/Cullen lot ratcheted up income tax after being part of the Lange/Douglas government that introduced and then raised GST. This will need to announced well in advance of the next election. Probably, when the scale of it all is revealed, it will be the beginning of the end for this government. National should simply keep its powder dry.
.. the Tax Working Group, they will find that capital gains tax is a jolly good idea, despite it's implication in fostering house price bubbles in Ireland, California, Spain, Britain, etc, etc etc.
@ Roger Witherspoon, you're making ZERO sense! It just sounds like you're scared you won't be able to leech off working people - perhaps you should look for an actual job?
RW,
"it's implication in fostering house price inflation in Ireland........" There are two aspects of that on which I would comment;firstly the grammar, which is poor. You could have written- despite it being implicated-. The issue in ireland had little or nothing do with CGT and I would refer you to The Ship of Fools,how stupidity and corruption sank the Irish tiger, by Fintan O'Toole.
The government doesn't really get it. It's actions (and inactions) are hurting businesses, not a lack of dialogue. I'd prefer if the government redirects its effort and resources from directly wooing businesses into solving real issues such as skill shortages, infrastructure bottlenecks, monopolistic market conditions etc.
Stop shortchanging businesses for the average Labour-Green voter who cheers you on every catchphrase you come up with
Your list of 'real issues' isn't a list of real issues, or at least, it is but not in the way you mean it.
The planet is up against the Limits to Growth - she can't mention it even if she knows, because the conversation is away back where you are. It's overdrawn and the forward bets can't be honoured.
Business-types may have a place on the other side of the transition, but not with their current mind-set. So we can hope she appoints people with insight. Yes, skills, infrastructure and monopolies come into it, but not as blocks to 'growth'.
This business-led NGO produces some good work;
Different mind-set altogether.
@ Advisor - National were letting in 70,000+ people per year, there should absolutely NOT be a skills shortage with that kind on immigration going on~!! Get on your hands and knees and kiss the ground - thank God the last lot (National's COL) have be tossed out~!!
We as a country are extremely lucky to be free of National, true story BRO~!!
Here is a poser question for Ardern - you are in prison for a crime whose punishment is uncertain, death or life imprisonment would you prefer that to the certainty of the death penalty. From a business point of view Arderns policies are uncertain but certain to be unacceptable.
A lot of NZ businesses are way behind the times and employers are often quite repulsive to employees. It would be wonderful if a lot of these companies and sole traders shut-up-shop.
I understand the government sets the landscape for business, but let's not blame the COL too much, after all they've been in power less than a year. Perhaps Micheal Jackson said it best, "the man in the mirror" - business owners just aren't adapting to the times.
I say, "let them eat bankruptcy". I think it disgraceful the only way half of these businesses can stay in business is via exploitation! PUT THEM DOWN - give them the 'Blue Juice'!
"Certainty" is key and, yes, some of that is the international situation. However, a good amount of the uncertainty is coming from this government and this PM. Take the offshore oil and gas exploration ban. That came from nowhere with no consultation with even government officials saying that the environmental effects will actually be worse. However, ow was that handled by the PM; denial, blame, and minimisation from the government. Shane Jones attacks Air NZ and also has $1b a year slush fund - who knows what he is going to do.
There is enough proven oil and gas and coal, to take us hell-and-gone past 2 degrees. I don't want to go there. And arguing between two bads (worse) misses the point - it should be neither.
Nobody - including Air NZ - is mitigating their CO2 physically, so on Climate alone I suggest she's making the wrong choice. But Climate is only one of the feed-back loops in the great scheme of things. I wonder whether all these committees will eventually have to address what has to be addressed. Maybe that's what this process is really about.
You missed the point. It's not really whether this is a good policy or not (I think and the officials think it isn't). The point is about how this policy came about. No discussion, no consultation, and even no Cabinet decision. That does not create a certain environment. Then the way they handled the fallout - blame anyone who disagreed with them.
Agreed.
The PM single-handedly sent business confidence into a tail spin with her brainless oil and gas policy.
No listening to officials' advice, no analysis of how it would affect GHG emissions, and no consultation with industry.
Appointing a Business Council is shutting the stable door after the horse has bolted.
And it just looks fake.
It was her second 'captain's call' strike as well, the first being tax announcements pre election, which she later back tracked on.
Urban dictionary hash tags on Captains calls are fitting #bad decision#stupid decision#dumb bosses#bad call#poor choice#poor decision#incompetent supervisors#arbitrary mandates#useless instruction
Oil extraction industry in NZ is now being run-down - will be no further significant investment or development. We will have to replace those lost $2-3billions in production with imports. How do you propose we do that when we are already running a $5Billion a year trade deficit and everyone on left seems opposed to any further agricultural intensification?
Before you say tourism remember that it is the antithesis of 'Green' it is a bigger oil-user than all other industries combined with each of the 3.2million tourists coming here using on average ~1000L of jet fuel + however many road miles they clock up. That is not far below the ~5billion litres used on everything else in NZ.
Mipc - I think you are correct, history will probably confirm that the Oil and Gas Ban was the turning point !
Let us review what NZ leads [Gold Mentalist] in OECD statistics after National's 9 years ..
OECD Gold Medal: Homelessness
OECD Gold Medal: Child Poverty
OECD Gold Medal: Domestic Abuse
OECD Gold Medal: Workplace Bullying
OECD Gold Medal: Suicide
OECD Gold/Silver/Bronze Medal: Growing Inequality
OECD Gold/Silver/Bronze Medall: Housing unaffordability
Not to mention rampant immigration which didn't even address the skills shortage. Enviromental degradation, failing companies, public sector strikes, etc, etc - you have the audacity to say "Oil and Gas Ban" (which isn't even a ban) "was the turning point !"
Perhaps there should be some sort of basic facts/general knowledge test people are required to pass before they're allowed to vote. Don't get me wrong, I'm not a Labour Party shill, I voted TOP and ALCP - but I know basic facts!
There is no plan.
Politicians are just not business people they are spenders.
Disappointed in Westpac driving a CEO big business presentation. We are an 80% SME economy and agri. Joyce knew that.
The irony astounds me Government is taking advice from Luxon a John Key Man. Maybe it's a if your moaning Big biz you solve it. There is no plan never had been.
“It will bring new ideas to the table on how we can scale up New Zealand businesses and grow our export-led wealth,” Ardern said. Great – but what about the Treasury? What about the Ministry of Business, Innovation and Employment (MBIE)? The Reserve Bank? BusinessNZ? Surely they should be doing this type of work already.
Govt and all these agencies are at the centre of the problem, and to be fair, National contributed to this and Labour are simply ramping it up more. So, if govt is the problem in general, then how will they be a part of the solution? Answer: they're highly unlikely to be. Some of the key concerns that small and medium sized businesses have in NZ are:
1) More and more regulations and bureaucracy which add unnecessary costs and achieve absolutely nothing. MBIE, Worksafe, Councils, etc, all add to this burden and are simply empire builders (and we all know what happens to those eventually);
2) Rising costs (rates, insurance, labour costs, future tax increases virtually guaranteed, etc), which are placing an added burden and stress on businesses that are already struggling;
3) With a combination of the above two factors and rising inflation, the average Kiwi wage earner and small business owner has less and less disposable income, if any at all. They are tapped out.
So, my advice to Jacinda is to not waste time on another consultancy talkfest and do the following:
Set out to significantly cut govt expenditure and unnecessary bureaucracy, right across the board. Kiwis need cuts in their rates and taxes, not increases. By doing the opposite of this, the govt is setting us up for one almighty recession down the track and it will spiral down very quickly once confidence collapses.
Why, it's almost as thought the Ruling Class have read this: 7 things I'd do if I wanted to keep poor people poor...
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