Ardern Govt has business guessing

The sudden announcement on oil and gas exploration has not encouraged confidence

The Prime Minister comes back to a country still waiting to get a measure of her Government. It will have been six months in office next week. It has taken a few definitive steps in the direction of setting the economy on a course of adapting to climate change, notably the decision last week to issue no new permits for offshore oil and gas exploration, but on much else it has been content to set up inquiries.

As a coalition that includes parties as divergent as NZ First and the Greens, inquiries probably appeal as a harmless delaying mechanism if nothing else. But when they concern sectors of the economy, they can delay or discourage investment as well. Little has been heard about the inquiry into ports that NZ First secured in the coalition agreement, or the rail review or the inquiry into electricity supply for which a panel has just been set up. All these require ongoing investment by the companies owning them and their major customers. Chances are, their investment plans and schedules are on hold until they can see what is likely to happen, or not.

All business, on which continued economic growth and jobs depend, will be waiting to see how well this Government understands business and is prepared to listen to it. The sudden announcement on oil and gas exploration has not encouraged confidence on that score. While it could have been expected, especially after Jacinda Ardern went out of her way to receive a Greenpeace petition at Parliament a short time earlier, the industry feels it should have been given an opportunity to be heard.

The Green Party sounds suspicious of all industry “lobbying” and probably does not welcome it. But it is the way that governments become aware of the practical implications of their proposals. Labour ministers thought the oil and gas decision would present no immediate risk to the industry and jobs until existing drilling permits expire in 30 years, but following the announcement, sector leaders have explained how the nature of the business means the impact will be felt much sooner.

In his review of the Government’s first six months today, Herald writer Simon Wilson emphasises the importance of carrying public support for every step in a programme of “transformation”, as Ardern has called her Government’s mission. Besides beginning to tackle climate change, perhaps the most ambitious transformation it will attempt is to broaden the measurement of the economy, monitoring not only GDP but changes in the environment, social wellbeing,

The [first Budget] will be the measure of the coalition’s real character.

standards of knowledge, skills and health and the state of infrastructure and physical amenities.

The Treasury has been working on this idea for seven years and the problem is obvious. It is not very hard to measure all these things. In one way or another, government agencies do so all the time. The problem is, how can these be made as important as GDP in economic decisions. It is one thing to publish all these metrics in the Budget, quite another to convince business and investors not to focus on GDP alone when they want to know whether economic activity is holding up and make it worthwhile to expand and employ more people.

The Government’s first Budget is just a month away and that will be the measure of the coalition’s real character. For that we can only wait.