Cautious thumbs-up for Budget

Huge debt and Govt ability to create jobs worry leading bosses in snapshot survey

Business leaders have given a cautious thumbs-up to the Budget amidst concern the projected $200 billion Government debt can be kept under control and caution that $20.2b unspent from the Covid-19 package is not treated as an election “slush fund.”

Fifty-two predominantly CEOs — together with some prominent company directors and business organisation chiefs — responded to a Herald “snapshot” survey over the weekend.

Some 44 per cent believe the Finance Minister’s third Budget has set up the economy to ultimately recover from the impact of the pandemic. But 42 per cent were unsure.

They were waiting to see detailed plans in sectors like tourism which benefited from a $400 million relief package. The increased investment in health and education was welcomed but there were concerns at Government’s ability to create environment and housing jobs.

“We are moving into uncharted waters in very turbulent seas and globally there is still high uncertainty as to how the Covid-19 pandemic and economies will develop,” said Auckland Transport chair Adrienne Young-Cooper.

“The most immediate issues are well handled, but as time goes on a more fully developed plan for recovery and repositioning of New Zealand’s export dependent economy will be needed.”

The need for Government to form a well-executable plan was repeated in survey responses — with several referencing the inability of the Government to do so prior to the Covid19 pandemic.

“It is just spending and the promise

of more spending with no plan,” said an investment banker. “We have no capability to deliver the infrastructure. The job losses and economic downturn will be in tourism, retail and the wider services sector. Trades training will deliver skills too late.”

Precinct Properties chair Craig Stobo cautioned, “Until the allocation to investment projects becomes very clear, this is a short-term working capital support budget funded by long-term public debt.

“The state of business confidence will determine the speed of transition and economic recovery.”

Many of the companies in the survey — such as

Ray White — have availed themselves of the wage subsidy. Its chief executive Carey Smith said the Budget’s jobs focus is the anchor to economic confidence “giving employers reason to stay connected to getting the economy up and going”.

Spark CEO Jolie Hodson was also pleased to see the focus on jobs and the extension of wage support and appreciated the “need to keep some flexibility in the Budget given the high degree of uncertainty that still exists”.

The $50b Covid19 Recovery Fund was welcomed. But independent director Cathy Quinn said many people are concerned about the unallocated $20b. “So long as it’s used in a targeted way where needed and not diverted for what people might see as ‘electioneering’ then, I think, people will see that as appropriate.” Some 71 per cent were concerned about New Zealand’s ability to get the debt level (projected to peak at $200b) under control by “building a sustainable economy that grows and that adds value” as stated by Grant Robertson.

“It would be foolish to have no concern about Government debt,” said Rob Campbell, chair of SkyCity Entertainment, Tourism Holdings and Summerset Group. “But the situation demands this. It is not simply the gross size of the economy in the future that matters but its financial, social and economic sustainability.”

Mainfreight’s Don Braid questioned, “What other choices are there at this stage of the pandemic. The key is the long game not the short one.”

Cooperative Bank’s David Cunningham noted that current low interest rates make it affordable.