Business wants stability, action and to be heard
With support on its side, the new Government will need to take swift steps to make things happen, commentators say. Susan Edmunds reports.
A new Labour Government will not be a surprise to business or the New Zealand economy, commentators say, but the big question is what it will actually do with the winning political hand it has been dealt.
BusinessNZ chief executive Kirk Hope said the key concern on the minds of the country’s businesspeople would be what the new Government’s goals were going to be, and making sure they were able to participate in the implementation of those.
With Covid-19 occupying most of the conversation of the past year, there has been little attention paid to other policies that could affect business fortunes, he said.
Hope said it was important that the Government understood that it was businesses that would drive growth as the country recovered from the pandemic.
It would be vital to see a significant commitment to infrastructure and infrastructure development, and for that work to start to happen quickly.
There had been underinvestment in infrastructure for years, he said, but a strong infrastructure programme could be transformational for New Zealand as well as creating more skills and helping to address climate change, wellbeing and productivity concerns.
A Labour Government would bring more costs to business, he said, in the plan to increase the minimum wage to $20 an hour next week and to increase sick leave entitlements. That could be managed by businesses as long as there was strong economic growth, he said. ‘‘You can pay people more so long as you have a long pipeline of business and you can see that long pipeline and have a very clear picture of any other costs that Government might want to land on you.’’
Stability and consistency would be important, he said.
But Infometrics chief forecaster Gareth Kiernan said he expected the next Government would be ‘‘more of the same, not necessarily doing a great deal’’.
In 2017, Labour came to power with a handful of flagship policies, including the heavily criticised KiwiBuild.
He said there was nothing of that magnitude promised this time around. The only significant announcement had been a new top tax rate for those earning more than $180,000 a year. ‘‘In the scheme of $240 billion of debt, who really cares?’’
He said Labour had so far been able to blame NZ First for acting as a handbrake but the party was clearly targeting the centre vote. Most policies would be ‘‘straight down the middle’’, he said.
The win would be slightly positive for business confidence because some businesspeople would have worried about the prospect of the Green Party having a major role in policy setting.
‘‘The big determining factor on business confidence is Covid-19 and the associated uncertainty. That’s far more of a determinant than the Government.’’ Businesspeople knew what the Labour approach was to Covid and what they could expect, which would help, he said.
His colleague, Brad Olsen, said the polls suggested businesses and households wanted continuity.
‘‘If anything I think this could strengthen business confidence.’’
Without NZ First, policies might start flowing more quickly, he said.
ANZ chief economist Sharon Zollner said the result would have limited impact because it was expected.
‘‘But business confidence can be surprising. I’d have thought the return of Covid into our communities would whack confidence but it didn’t cause a ripple.’’
Economist Cameron Bagrie agreed more action was needed from the new Government. ‘‘For me the big thing is more execution and delivery. There has been a lot of talk. We need to get stuff delivered. They will need to get some runs on the board and pretty quickly. One of the disappointing aspects to me of the whole election debate is there has not been a lot of substance on any key issues. Are we going to see that substance out the other side?’’
Nick Tuffley, ASB’s chief economist, said the result was unlikely to have a major impact on markets.
‘‘At this point it’s more of a case of the Labour Party has been given a stronger hand to be able to implement what it has in the past campaignes on or attempted to do.’’
‘‘There has been a lot of talk. We need to get stuff delivered.’’ Cameron Bagrie Economist