Ardern, Robertson need to reassure business
Coalition partner who talks economy down not helpful
acinda Ardern and Grant Robertson must move swiftly to stamp their authority on the new Labour- New Zealand First coalition Government and take business with them.
Yesterday, Ardern asserted that she would run a “very productive Government” with an investment approach in areas such as infrastructure, innovation and the regions.
In such an environment, the last thing that Ardern and Robertson need is a coalition partner who talks the New Zealand economy down.
An investment approach will also require backing from business if it is to succeed.
When Winston Peters shorted the prospects for the NZ economy on Thursday evening ( instead of sticking to the real business of Ardern’s coronation) that could be passed off as “just Winston”. But with indications that NZ First may have Cabinet roles in economic and/ or regional development portfolios and also in externally facing portfolios such as Foreign Affairs or Trade, it is important that Peters takes a disciplined approach once he is inside the collective government tent.
The New Zealand First leader believes an economic correction — or slowdown — is on the way, with “dark days ahead” on both the international horizon and here. On Thursday, Peters cited as evidence the housing market slowdown; nervousness at the Reserve Bank and trading banks; the cessation of hot money flowing into the NZ economy; property ownership concerns; receding consumer optimism and ebbing retailer confidence.
Then he indulged himself in a “don’t blame us” rant if his projected correction takes place. It was a disappointing performance from the veteran politician.
But it does underline why Ardern and her Finance Minister- designate should issue comfort statements “to the markets” and invite the senior business community to extend their support as the coalition tackles the country’s social deficit.
English did not focus on this social deficit ( which cost National credibility) in his gracious concession speech on Thursday.
But English did underline the fact that the outgoing National- led Government was handing over an economy in relatively good shape. He hoped Ardern would seize the opportunity to build on its relative health.
Ardern has said the Government would honour Labour’s election commitments which include greater environmental protection; tougher restrictions on foreign ownership in housing and critical infrastructure; an assault on child poverty; and a review of trade negotiations including the Trans- Pacific Partnership. “A country where our environment is protected. Where we look after the most vulnerable. Where we support our families. Where we make sure people have the most basic of needs like a roof over their head,” she stated.
But there is no reason why this policy emphasis should not build on the economic achievements of successive Labour and National governments since 1984.
That New Zealand does have an economy which is the envy of the developed world is not simply the boast of National Party leaders. This has also been acknowledged by Australian prime ministers and those further afield.
In the Herald’s Mood of the Boardroom election survey, chief executives outlined their top five priorities for Robertson: more policy detail and clarity on tax changes; to concentrate on wealth creation; leave corporate and personal tax rates alone; invest in important infrastructure; and balance economic growth and the environment .
Proposed tax changes have been kicked forward for consultation and a second term in government.
There is a surprising consensus at senior business levels. But that sentiment could turn sour if relationships are not fostered.
Labour has been there before, with the “winter of discontent” after Helen Clark became Prime Minister.
Where the new Government must tread carefully is with immigration and the planned clampdown on foreign ownership of NZ’s housing stock, farmland and other “strategic” asset classes. These will need to be carefully thought through and explained.
Industrial relations changes also have the potential to cause friction with the business sector — particularly if they herald a return to widespread collective bargaining.
In a week in which the world’s media are running retrospectives on the 30th anniversary of the 1987 sharemarket crash — and speculating about whether the preconditions exist for more global economic calamity — retaining New Zealand’s reputation as an open economy is a positive.