Is low confidence junk or real jeopardy?
The Economic Development Minister recently dismissed surveys showing business confidence at its lowest level in a decade as “junk”.
In doing so, he revealed the deep-seated anti-business sentiment that pervades the Labour-led government, along with an alarming ignorance over what makes a country prosper.
The problem is that bloated bureaucracies are the antithesis of freedom and liberty. This is evident not only at central government level, but in local government as well, as the recent fiasco surrounding a non-compliant Dunedin tree house demonstrated.
It’s fair to say that most Kiwis see this debacle as regulation gone mad, believing the Dunedin City Council went too far by not restricting its investigation to the privacy complaint it had received. The reality is that busy-body bureaucracies like councils have now become too powerful, and are using those powers unreasonably, as anyone involved in projects requiring council consents can vouch. Even simple projects these days involve months of delay and thousands of dollars in compliance costs. For businesses, this growth in local government regulation and red tape has become a nightmare — and is no doubt contributing to falling business confidence.
Since employers are responsible for major investment decisions, pessimism about the economic outlook and their own prospects can lead to less investment, which can impact negatively on growth and living standards.
Apart from just after the Christchurch earthquakes, business confidence has not been this low since the global financial crisis. Retailers are especially downbeat, as they will be forced to pay their most inexperienced and unproductive workers the new minimum wage of $20 an hour by 2020. Not only that, but under the government’s proposed changes to labour laws, the 90-day trial period for new workers will be removed for those businesses with more than 20 employees. The biggest losers, of course, will be the most vulnerable unemployed — those high-risk marginalised beneficiaries, who will no longer be given the opportunity to prove themselves in the workplace during a trial period.
Other changes will take away the flexible workday arrangements that many employees have negotiated with their employers, such as leaving work early to pick up the children from school. And even though only 10 per cent of workers now belong to a trade union, the planned changes will give trade union affiliates of the Labour Party extraordinary new powers — including preventing employees who are not in a union from negotiating better employment conditions than union members.
As it’s drafted, the new Employment Relations Amendment Bill will allow union officials to enter a workplace without asking, force negotiating employers to accept their demands, and dictate industry-wide agreements. Business owners fear such changes will re-create the conditions that led to the industrial relations strife of the 1970s.
Consumer confidence is now also falling, on the back of easing real estate prices and rising fuel costs eating into household budgets. Overseas student enrolments have dropped to their lowest level in 40 years, used car imports have declined for five straight months, dairy product prices have fallen for the eighth time in 10 auctions, and apprehension about a global trade war is mounting.
For farmers, falling prices and downward predictions for payouts comes on the back of industry-wide concerns over the Mycoplasma bovis outbreak, and the proposed inclusion of farming in the Emissions Trading Scheme. In addition, the looming threat of the radical Zero Carbon Bill, that will seriously penalise all businesses, but especially farmers, is also a major concern, particularly as it’s not based on facts and evidence, but on the unproven theory of man-made global warming.
Former judge and law lecturer Anthony Willy says: “Thus far individual freedom and the free market economy and democracy have proved to be resilient enough to withstand the best efforts of the socialists, which one suspects causes them great angst and surprise. Their problem has been that in Western democracies they are never in office long enough to cause irreparable damage, but that has all changed. By allying with the cave-dwelling Greens and the global warmers they have unearthed a cause that, with willing compliance of the media and the dishonest connivance of parts of the scientific community and some large corporations, they can present as the evils of the market economy posing an existential threat to life on the planet.”
With most other countries unwilling to sacrifice their economies, we should expect that over the years little more than lip service will be paid to their commitments under the Paris Agreement on Climate Change. But not so New Zealand. Unfortunately, Prime Minister Jacinda Ardern has made carbon-zero her ‘nuclearfree moment.’
The NZIER predicts the cost of that ‘moment’ will equate to a massive $16 billion a year drop in real GDP, compared to a ‘do nothing’ baseline, even though New Zealand produces only 0.16 per cent of global man-made greenhouse gas emissions, most of which come from the natural cycle of farm animals digesting their food. The extremism that’s being demonstrated by the Prime Minister shows the economy and the good of the country are not her primary concerns.
If Jacinda Ardern is genuine about wanting to improve New Zealand’s prospects, she really needs to reconsider her plans, especially her disastrous Zero Carbon Bill, which will heavily penalise farmers and act as a brake on the whole economy. More than that, she would do well to reflect on what’s happening in the US, where lowering company tax from 35 to 21 per cent has resulted in an unprecedented boost in employment, especially amongst minority groups and women. Small businesses are also thriving, with some of the most notable economic gains in the country’s history.