Let’s not shoot the bearer of bad moods
It’s an understatement to say there’s been a lot of talk about business confidence recently. Despite survey after survey showing confidence has dropped since the election, there’s a reluctance in some quarters to accept this, as I mentioned a few weeks ago.
Some say the surveys are junk, without saying how or why. Others say they don’t believe confidence is low because they can’t see why it should be, and instead blame ‘‘business lobby groups’’ and the media for the pessimism.
One of those was prominent businessman Rob Campbell, in a speech to the Manawatu¯ Chamber of Commerce. I agree with a lot of what he said about business, including that New Zealand is an easy place to open a business thanks to our current business-friendly structures.
But I don’t agree that business groups promote low confidence or stoke its fires because it might suit an agenda of ‘‘trying to leverage an advantage against the rest of us in search of economic rent or a sustained return on investment beyond that which would be attained in the absence of whatever they are seeking’’.
The fact is we exist to represent the views of members, and when the Wellington Chamber of Commerce says business confidence is low, it’s because that’s what our members are telling us. As the adage goes – don’t shoot the messenger.
We’ve always been clear when releasing our quarterly surveys that businesses’ confidence in their own expectations is where you need to look.
If they’re telling us they’re less confident about their business earnings improving, expecting less investment in their business or business equipment, it’s because they’re not happy with what they’re seeing.
And while some commentators may not see a reason for the sector’s low confidence, others clearly can, and I’m afraid there’s more news on that front.
The Wellington Chamber of Commerce has today released the results of its June-quarter survey. It’s not all doom and gloom, and we certainly don’t seek to be initiating or pushing any negativity.
Confidence in the national economy has fallen from a net positive 7 per cent in March to a net negative 4 per cent – just the second time since 2009 that confidence has been negative.
A net positive 18 per cent expect the Wellington economy to improve over the next 12 months, down from 21 per cent in March, and down from 55 per cent in June last year.
A net 20 per cent expect to invest more in plant and equipment over the next year, down from
23 per cent – the third decline in a row.
On the positive side, confidence in businesses’ own situation has dropped only slightly over the quarter, from a net 46 per cent to net 44 per cent.
A net 41 per cent expect earnings to increase, compared with 44 per cent in March and 61 per cent a year ago.
These results are due to a variety of factors, but the survey tells us the top three barriers for businesses are staffing challenges, central government policies and increasing compliance.
It’s the impact of a number of things adding to a climate of uncertainty, and that’s what’s at the heart of the lack of confidence.
When I wrote here recently about the Government’s proposals to remove 90-day trial periods from companies with more than 20 employees, to allow union representatives to enter a workplace without permission, to force businesses to settle collective agreements, and to force them to join a multi-employer collective agreement, I did so because our members believe these moves will make doing business harder.
I know they would be saying the same if it was any other Government making those moves, because reducing flexibility and harming growth prospects has the same outcome, no matter who’s doing it.