Confidence, certainty and policy concessions

Every good political speech includes an anecdote about a lesson learned along the way. During her speech yesterday to business leaders in Auckland, seen as a key test of her ability to restore business confidence, Prime Minister Jacinda Ardern told the story of a Wairarapa businessman who was asked why he kept on working when he always looked exhausted.

She could easily have added: when your business is successful enough that you could sell it all and buy your bach, boat and beamer, why do you struggle on?

‘‘Because, he replied, there are so many families that are counting on me.’’

Ardern said she understood, because she too was an employer. In doing so she almost undid her point. ‘‘In some senses I am the largest employer in this room,’’ she said, prompting eyes to roll in the audience.

Even though the audience was much more corporate than small business, they saw the irony of the comparison. Ardern has never had to worry about a tax bill. And even though her ministers give her chances to, she apparently struggles to sack even poorly performing staff.

But her story, combined with a mostly wellcrafted speech, does underline that this Government is starting to get the point. It may be in charge, but it does have to listen and learn.

Since it took office, business confidence has plunged, and there are concerns this will become self-fulfilling. There is a degree of political bias among business against the Left, contributing to the fall. But the antagonism, conscious or unconscious, runs both ways. Only a month ago, Ardern came close to suggesting her reason for wanting the economy to grow was for the money this generated for the Crown. (‘‘I need that economic growth to lift the well-being of New Zealanders.’’)

Yesterday she acknowledged that many in business believe that in working hard – often much harder than they need to – they are playing a critical role and that, if they give up or make a mess of it, employees will suffer.

Business can be perilous and so the need for certainty is critical.

A change in government will always lead to a change in tone. But 10 months in, Ardern’s Government has struggled to shake off the narrative of disparate parties that did not expect to be in power and that are struggling to articulate a coherent message.

Without filling in all the blanks, Ardern even acknowledged that the debate around confidence may really be a discussion about certainty.

Her speech gave signs that the Government could be influenced by business. She announced a new business advisory council, marked as a direct line for business into the upper floors of the Beehive.

On one level – as National leader Simon Bridges boomed – this is just another working group, which would only deepen the problem of not knowing what Government policy is.

But such a high-level group will undoubtedly influence policy development, with ‘‘free and frank advice’’ going straight to Ardern.

Already, the pressure from business may be hittinghome. Ardern gave just enough of a concession that it could be a signal to business without upsetting her base.

She admitted the Government’s moves towards fair pay agreements – pan-industry agreements that are set to be the most contentious element of its industrial law reform – had left ‘‘a bit of a vacuum’’. This is simply stating the obvious. The Jim Bolger-led working group was given such a clean slate that Treasury warned the members would be answering fundamental policy questions.

This means the Government won’t know what the policy is until the former prime minister reports back in November, leaving a void in the meantime.

In conceding that there would be ‘‘no more than one or two’’ fair pay agreements, Ardern may not be saying all that much at all. For all of her wishes, there may be zero, or zero in sectors not funded by the Government.

But the comments are a sign that, where policy is met with genuine unrest, it might be changed. This is hardly the same as under National, where protests from business forced changes to immigration and health and safety legislation, but it is a sign that pragmatism may trump ideology in key parts of policy.

The signals of recent months, as businesses warned their activity was drying up, pose a material threat to growth and with it employment and ultimately the Government’s programme.

Ardern’s speech will not solve the problem of confidence, but after her colleagues previously dismissed the issue as ‘‘junk’’, it appears the Government is now ready to listen.

This Government is starting to get the point. It may be in charge, but it does have to listen and learn.