Company tax cut best option

The daffodils are dancing in Hagley Park, the buds, blooms and blossoms splashing the Garden City in seasonal colour a welcome mood-enhancer. Nature’s raw theatrics have the capacity to uplift us as much as they can crush us – as we were brutally reminded eight years ago, today.

But as spring announces her showy arrival, the late winter drumbeats of discontent grow louder, a prevailing soundtrack of gloom the Government is grappling to drown out.

Nearly a year since the last election, business confidence continues to nose-dive. Last week, the Prime Minister seemed to have got the hint, calling the business community’s plummeting confidence a ‘‘flashing great neon sign with giant lights and fireworks.’’

A great line, but set-piece rhetoric won’t lift the fog. Nor will the establishment of yet another working group, the Business Advisory Council, with Christopher Luxon in the cockpit.

The timing might have been unfair, but barely 48 hours after Jacinda Ardern’s reset speech, the latest ANZ Business Outlook Survey rained down hard on her parade, with business confidence tanking to its lowest level in over a decade.

Surveyed firms are anticipating cutting back investment, hiring fewer staff and delivering lower profits. As ANZ Chief Economist Sharon Zollner remarked, ‘‘It seems increasingly inevitable that wariness amongst firms will have real impacts ... as investment and employment decisions are deferred.’’

Whenever I talk to Canterbury business owners, small business owners in particular, their confidence has been hit: costs, compliance and a climate of uncertainty. For central city businesses, the long tail of incomplete quake recovery compounds the challenges. But across the business community, the all-pervasive uncertainty has undeniably been fuelled by the avalanche of working groups established by this Government.

I asked Ardern on radio last week to name one government portfolio not subject to a working group. She couldn’t. During her Westpac breakfast address, she tried to hose down concerns about fair pay agreements, promising there will be no more than one or two sector-wide agreements struck in her first term. But she won’t specify what sectors will be affected. They clearly put the fear of God into employers, a national awards-type regime, reminiscent of the dark days of the 1970s.

For what it’s worth, I support this Government’s commitment to increase the minimum wage to $20 by 2021. Suppressing wage growth has been aided and abetted by flooding the country with far too many low-skilled migrants and foreign students in recent years.

I believe in reinforcing the value and dignity of an honest day’s work. A minimum hourly rate of $20 strikes me as the benchmark for basic decency. But many business owners see that as a threat to their livelihoods, let alone the spectre of having a fair pay agreement, with above minimum wage rates, imposed across entire sectors.

If the Government is genuinely concerned about cauterising the freefall in business confidence, the best thing Ardern could do is signal a cut to company tax. Enter the spirit of a quid pro quo and allay concerns about rising wage bills, by offering the reassurance of trimming company tax.

The establishment of a tax working group may have tied Labour’s hands to take swift and decisive action. And Dr Cullen won’t be reporting back any time soon. But as I suggested to Ardern, she could at least signal the intention to calm businesses’ nerves. She wouldn’t have a bar of it, but flagging the prospect of lowering company tax, to help firms pay their growing wage bills, would transform business confidence and future growth.