Five issues for business to ponder
Among them are the wilting dairy prices and Christchurch rebuild, plus superannuation and social policy
There’s nothing radical about addressing the qualifying age for super. Key is the Government’s best asset but his brand has been damaged by the Dirty Politics revelations about the involvement of his office in some shabby behaviour.
Five things for business to take on board while John Key relishes his victory and forms his next Government.
It’s business as usual
Business will be buoyed at the Key Government’s return to the Beehive. The business agenda is well understood. Finance Minister Bill English enjoys the confidence of business people. Markets are already factoring in the Key Government’s re-election as a “great victory for stability in New Zealand”. There will be relief that the policy settings will not (yet) be subject to radical change by a Labour/Greens/NZ First government (even though many Opposition policies deal to long-term fiscal issues which National will not tackle because it doesn’t want to rock the boat).
But the Government will face headwinds with one of the nation’s main economic growth engines — the dairy industry — feeling the effects of a serious decline in dairy prices. That will ultimately flow through to impact on farmers’ incomes and provincial economies.
It’s notable that the trade balance with China — which is strongly impacted by dairy prices — slumped back into deficit last month.
The headwinds are also impacting on the Christchurch rebuild which urgently needs new leadership to up the tempo.
Relying on the business as usual mantra should not close the Government’s eyes to the fact that New Zealand cannot continue to place overreliance on the dairy sector to spearhead national wealth. This leads to:
Where’s the plan?
This is the question for John Key who during the election debates repeatedly promised the country was “on the cusp of something special” — but couldn’t say what it was.
Key could invite some of the best strategic business brains into the Beehive for some advanced level brainstorming to spark new thinking among senior Cabinet ministers who have obviously run out of ideas.
Where’s the thinking for instance that will get us on to a path where 4 per cent growth is the new normal?
Air New Zealand’s Christopher Luxon makes the point that Auckland has a longterm plan but the Government doesn’t. Luxon reckons the country is a potential petri dish in which international firms can develop and test innovations.
Vector’s Simon Mackenzie proposes New Zealand should be marketed as the world’s innovation and creative centre with firms invited here to take advantage of our tech pool.
It’s a theme that resonates with Xero’s Rod Drury who wants more local firms to take on the world using technology such as Google Hangouts to link to overseas teams. The plan also has to address the long-term inter-generational equity issues — superannuation uppermost. Which gets us to:
Three more years — of what?
A taskforce on superannuation would be a sign that the Government is not going to rest on its laurels. Most business people know that the Key Government is shirking one of the challenges of our times. Steven Joyce, the National Party’s campaign manager, said yesterday: “We are not going to see radical shifts in policy.”
But there’s nothing radical about addressing the qualifying age for superannuation.
There’s also the pitiful national savings rate which means many people are illprepared for funding lengthy retirement periods and our companies do not enjoy the capital ballast to invest in the global arena.
Other small nations such as Denmark have surged ahead with their savings and overseas investments while New Zealand remains at a relative standstill.
And Asia, which is a focus for the Government (particularly with China). But Mandarin is not even a serious school topic when it comes to language training.
New thinking is also required about:
Brand Key and dirty politics
Key is the Government’s best asset but his brand has been damaged by the Dirty Politics revelations about the involvement of his office in some shabby behaviour. Business people don’t like American-style politics infecting our system. They want to see more discipline and less of the obvious arrogance that has crept in. Judith Collins is the clear example and has been dumped.
But other ministers have veered dangerously down the path to political hubris with Joyce showing in his postelection comments that he has little insight into how business views the revelations. Key can clean up his own ninth-floor ship. But that’s just a first step in re-establishing the high ground he has enjoyed with business.
This takes us on to:
The issues
The long election campaign has exposed issues that people care about such as child poverty and inequality. Business leaders care about these issues as well with Fonterra and Telecom, for instance, fostering policies to help children from disadvantaged homes.
The Key Government could go much further with a Prime Minister’s taskforce that challenges business to assist. Then there are the environmental issues. The resource management reforms will likely be addressed, thus speeding progress on plans to put more housing in Auckland.
Valid questions on the intensification of our dairy industry must be addressed.
Then there is the educated skilled workforce needed to support development of our industries. There’s plenty more to suggest that business as usual is not enough for a sustainable bright future.