Coun­try in wait­ing — ah, feel the peace

Herald on Sunday - - BUSINESS - Liam Dann u@Her­ald busi­ness ed­i­tor-at-large

The longer this po­lit­i­cal in­ter­reg­num goes on the less I can re­mem­ber what all the pre­elec­tion fuss was about. I re­call there was ex­cite­ment. There were de­bates where the words and body lan­guage of the Na­tional and Labour lead­ers seemed to carry much weight.

But it has all faded so quickly, like the dra­matic ten­sion in a TV show when they split the fi­nal episode into two parts.

You know you ought to care but it’s hard enough to re­mem­ber the main char­ac­ters, let alone all the in­tri­cate plot twists that seemed so im­por­tant at the time.

The only thing I can re­mem­ber is that the lit­tle guy with the big hair and charm­ing smile makes com­i­cal re­marks to keep the whole thing en­ter­tain­ing.

But New Zealand pol­i­tics is no Game of Thrones and Win­ston Peters isn’t es­pe­cially short.

Mean­while, the New Zealand dol­lar is hold­ing up well, the stock mar­ket is hit­ting record highs, in­ter­est rates are steady and Auck­land house prices seem to be slowly re­solv­ing them­selves.

And af­ter the ini­tial rush of spec­u­la­tive fer­vour and out­rage at the de­gree of con­trol the elec­torate has once again thrown to Peters, a kind quiet res­ig­na­tion seems to have set­tled on the coun­try.

The vac­uum ap­peals to the hard­core lib­er­tar­ian in me. (Or an­ar­chist, if left-wing read­ers pre­fer.)

It would be an in­ter­est­ing ex­per­i­ment to see how long it would take be­fore the lack of an elected Gov­ern­ment im­pacted on the econ­omy.

In Ger­many, as peo­ple kept re­mind­ing me when I was hav­ing a panic at­tack the Mon­day af­ter our elec­tion, they may take months to form their new Gov­ern­ment.

In the Nether­lands, coali­tion talks are still go­ing on. And their gen­eral elec­tion was held on March 15.

Ap­par­ently they are close to a deal but it is ex­pected that they’ll go past Oc­to­ber 9 and break their 1977 record of 208 days with­out a Gov­ern­ment.

That will still be a long way short of the epic Bel­gian coali­tion talks of 2010-11, which saw the coun­try go 540 days from a gen­eral elec­tion on June 13, 2010, to the an­nounce­ment of a Gov­ern­ment on De­cem­ber 5, 2011.

It looks like we’ll only get about three weeks respite.

That’s not enough time to test the econ­omy but long enough for some sort of short fes­ti­val — with cheery light shows and spe­cial cakes.

Given it would only be tri­en­nial we should also con­sider get­ting a long week­end out of it.

The point is we need to en­joy it while it lasts be­cause the crazi­ness will be back with a vengeance.

The Ger­mans, Dutch and Bel­gians may take months but at the end of the process they can be sure of get­ting a par­lia­ment com­prised of earnest Ger­mans, Dutch and Bel­gians.

We can be sure of only one man. And as much as I’d like another few weeks of po­lit­i­cal dead air I have my doubts about how long New Zealan­ders could cope.

We’re a small coun­try, vul­ner­a­ble to ex­ter­nal shocks. Also, the dif­fer­ence be­tween a good New Zealand econ­omy and a bad one is of­ten some­thing of a con­fi­dence trick.

The trick is: if we think we’re do­ing well, we spend and in­vest like we are do­ing well and that is why we are do­ing well.

That’s why the Re­serve Bank takes busi­ness and con­sumer con­fi­dence sur­veys se­ri­ously.

Right now con­sumer con­fi­dence is hold­ing up at three-year highs — de­spite a slow­down in the hous­ing mar­ket.

ANZ’s Con­sumer Con­fi­dence sur­vey showed Ki­wis are feel­ing pretty good about the prospects for tak­ing an over­seas hol­i­day or buy­ing a new TV. Op­ti­mism about the econ­omy a year from now was on the rise.

This is data that prob­a­bly helps ex­plain Na­tional’s strong show­ing on elec­tion night.

But ANZ economists sound a note of cau­tion. His­tory sug­gests the softer hous­ing mar­ket should have caused more tur­bu­lence to con­fi­dence, they say.

Per­haps the wealth ef­fect from the long hous­ing boom has cre­ated more of a buf­fer than in the past.

But busi­ness con­fi­dence has been a bit shakier and that’s where po­lit­i­cal un­cer­tainty would even­tu­ally take its toll.

If busi­ness loses con­fi­dence in the eco­nomic out­look it stops in­vest­ing. Jobs are cut, wage rises di­min­ished, work for con­trac­tors and free­lancers starts to dry up and this quickly flows through the econ­omy.

Over­all busi­ness con­fi­dence is still rel­a­tively solid in the ANZ Septem­ber sur­vey.

But the num­ber of firms look­ing to lift in­vest­ment has fallen, em­ploy­ment in­ten­tions dropped and profit ex­pec­ta­tions fell. In the build­ing sec­tor, res­i­den­tial and com­mer­cial con­struc­tion in­ten­tions both fell.

ANZ economists put some of that fall to tra­di­tional pre-elec­tion jit­ters. On that ba­sis it would be pretty hair-rais­ing to see New Zealand’s elec­tion un­cer­tainty roll on for hun­dreds of days.

Whether the new Gov­ern­ment is to the left or the right, ex­pec­ta­tions are high it will de­liver added stim­u­lus to the econ­omy.

Busi­ness will also be look­ing for cer­tainty around tax, im­mi­gra­tion and hous­ing.

But most im­por­tantly the new Gov­ern­ment will need ar­rive with a credible story to en­sure busi­ness and con­sumer con­fi­dence stay strong.

In the short term at least, it is a re­as­sur­ing nar­ra­tive New Zealan­ders will be look­ing for to keep the econ­omy rolling.

Mean­while, the New Zealand dol­lar is hold­ing up well, the stock mar­ket is hit­ting record highs, in­ter­est rates are steady and Auck­land house prices seem to be slowly re­solv­ing.

De­spite keep­ing us on a knife edge, the elec­tion was no Game of Thrones, and Win­ston Peters is no Tyrion Lan­nis­ter.

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