Winston’s winter of disarray

The country has survived six weeks of Winston Peters as acting Prime Minister, but it has left a number of issues in limbo, And it has not been without some controversies.

Peters isn’t wholly responsible for ongoing disarray in Government that he largely inherited from Jacinda Ardern, but he hasn’t helped it either.

Peters’ disdain for parliamentary processes was on show yesterday – see Bridges versus Peters – a surprise conclusion. One notable feature of the last few weeks has been deteriorating business confidence, and Peters tried to laugh it off.

Hamish Rutherford (Stuff):  Peters may have prolonged the uncertainty surrounding the Government

History is likely to remember the winter of 2018 fondly, whatever discontent is being shown by business now.

For Peters, the spell as acting prime minister appears to fulfil something of a career-long dream, and the NZ First leader appears to be winning plaudits for his performance. At the least, it seems it could have gone worse.

The end of his time in the chair appears designed to be dramatic. As he departs for an international trip as foreign minister – a relatively rare thing compared to the travel schedules of his predecessors – Ardern will resume duties at midnight tonight.

In reality though, there is less to his stepping down than meets the eye. With a new Government already struggling to explain to the business community what it is about, the past six weeks have simply prolonged the uncertainty.

Ardern is certainly returning to some significant challenges.

Peters hasn’t messed things up, but he has left a number of messy and unresolved issues that really need leadership – business confidence for one, also the cannabis issue, Kiwibuild and others.

But nor has this winter helped build familiarity in the new administration at a time when the economy is facing a tricky transition, with the boom in the construction sector behind us and the growth in tourism slowing.

In many ways, for business, uncertainty is worse than bad news, as there is almost nothing which can be done to adapt to it or plan for it.

Jacinda Ardern has made restoring business confidence one of the Government’s priorities.

Whether or not she can convince employers to share her vision, her return will at least give better direction on what it is her Government stands for.

We are yet to see what Ardern’s return will mean. So far her Government has suffered from a distinct lack of direction and leadership from when she took over last November.

She has had some time out from politics. perhaps that has given her an opportunity to look at the bigger Government picture and see how she needs to step up.

Leave a comment

30 Comments

    • Alan Wilkinson

       /  August 1, 2018

      First, business confidence in their own future has also fallen sharply. Second, correlating with the current quarter is not very relevant to expectations for the future which are more likely to be about 12 month projections when hiring staff and planning expansions.

      Reply
      • Blazer

         /  August 1, 2018

        in a nutshell…’. Basically business leaders are likely National Party supporters and this view biases them against the new Government more than any actual concrete business risk.’

        Eberts Construction in receivership….been around a long time…the efficiency of private enterprise found wanting…again.

        Building boom=receiverships and losses…go figure.

        Reply
        • Alan Wilkinson

           /  August 1, 2018

          Going bust is what makes private enterprise efficient and the lack of it is what makes government organisations inefficient.

          Reply
          • Blazer

             /  August 1, 2018

            I notice Govt owned TVNZ makes money…private run TV3 struggles.
            Air NZ bust private…profitable when Govt owned…plenty more examples.

            Reply
            • Alan Wilkinson

               /  August 1, 2018

              TVNZ after tax profit of $1.4M on revenue $316M would qualify as struggling in my book, B. But they need not fear being sold under the present govt.

            • If it was $1M profit on $300M (for ease of calculation) that’s …well, it’s too small a % to calculate.

              1/300 = .33% ???

              I suppose that it’s better than a loss.

  1. David

     /  August 1, 2018

    I think it may be optimistic hoping she has used the 6 weeks to think about where the country is heading.
    The country should may be get used to drift while she gets on with mothering or perhaps her talented cabinet will step.up.

    Reply
  2. Griff.

     /  August 1, 2018

    https://tradingeconomics.com/new-zealand/stock-market
    Confidence as measured by the share market is not down.

    Reply
    • Alan Wilkinson

       /  August 1, 2018

      Good point, but probably reflects overseas conditions more than internal. And a lack of alternative options for investment.

      Reply
    • Gerrit

       /  August 1, 2018

      99% of businesses are not able to participate on the stock exchange for funding.

      Stock exchange to a certain extend is propped up by Kiwi Saver and Super Fund monetary input. Not to mention institution (eg Tower) and independent fund managers (eg Milford) putting their investor savings into the market.

      Problem for productivity is that 99% of businesses don’t have access to growth funding except for banks at high interest rates and high demand for collateral (property) safeguards..

      Be good if there was a vehicle where investors could place money into the 99% in need of it most. Stock exchange does not provide that.

      If suspect that the lack of business confidence comes from the 99%, not able to participate in the financial sector for funding.

      Reply
      • Blazer

         /  August 1, 2018

        ‘ suspect that the lack of business confidence comes from the 99%, not able to participate in the financial sector for funding’

        patent nonsense Gerrit…the same conditions existed before the coalition came to power.

        Business confidence is an irrelevant political posture promoted by the usual venal,suspects.

        Reply
        • Gerrit

           /  August 1, 2018

          My point was in reply to Griff.

          Stock market trading levels and monetary performance is to a large extend protected from business confidence as it is a place for vendors to park money for higher returns than the banks offer.

          The NZL share market is thus more focused on dividend to profit ratio than share price valuation. As opposed to price fluctuation on Wall Street which is much more focused on share value rises and falls to make vendors their ROI.

          Not nonsense at all if one understands business conditions and factors…something some find rambunctiously difficult to comprehend.

          Reply
          • Blazer

             /  August 1, 2018

            you said it….comprehend the average P.E on the NZX at the moment…try a few like MCY,MEL,ATM, and tell me they are value.

            Reply
            • Gerrit

               /  August 1, 2018

              Why? They are in the 1%. Not the 99%.

            • Blazer

               /  August 1, 2018

              Why..this is WHY!…

              ‘The NZL share market is thus more focused on dividend to profit ratio than share price valuation. As opposed to price fluctuation on Wall Street which is much more focused on share value rises ‘

              You do know P.E is I hope!

          • Griff.

             /  August 1, 2018

            There is no difference between capital gains and dividend besides how they are treated for tax.
            Both represent a return on investment.
            If investor confidence was low the market would factor in either less growth or less dividends in the market price for shares and they would fall.
            I think investor confidence is a better over all indicator of how our economy is viewed than just looking at what business leaders think. Investor confidence looks at the economy from a wider perspective and includes how external investors view our economy.

            Reply
            • Gerrit

               /  August 1, 2018

              My point is that the investor market is not indicative of business confidence as the investors have to place their customers money somewhere.

              Even in a falling market, the money stream from vendors continues unabated or slightly restricted (eg KiwiSaver) so they have to find vehicles like A2Milk to hope for ROI’s simply based on another broker paying a higher price for their shares.

              Basically the investors have limited scope within their current financial ponzi scheme to invest in the 99% of companies not on the stock exchange (leaving aside the issue of stocks and bonds from local or state governments).

              Now if there was a vehicle to invest more aggressively in non listed entities, confidence to finance expansion and seek new markets, for the 99% might lift business confidence.

              With inflation sure to rise, who is going to invest in the 99%? Owners ability to borrow against a falling property market value limit their borrowing capacity…limiting growth…stifling confidence.

            • Blazer

               /  August 1, 2018

              @Gerrit…listed coys on the NZX main board and secondary xchange have pitiful governance oversight.
              Most of the IPO’s in recent memory have been over ramped destroyers of s/holders investments.
              No more pie in the sky listings are required.

            • Gerrit

               /  August 1, 2018

              No argument here with your statement. NZX needs to lift their governance performance.

              It is a sort of self inflicted problem that the exchange is so small, new listing so infrequent and the volume of money looking for investment quite large, that any new listing is swamped with the ponzi scheme that is the market place for the 1%.

              Maybe NZX could look at how to get more of the 99% on a third tier board to supplement the existing two boards.

              Possibly make listing on the third tier board for companies to have independent professional director oversight on their affairs?

              I just see a large gap between the stock market listing of 1% with access to investor funds and the 99% without financial access and independent directorial leadership.

              NZX could become like a business mentor for third tier listings?

              Just musings but the demand for sound business advice by the 99% is large as witnessed by the growth of business mentor-ship companies. Some of those mentor-ship companies one has to judge as not that good.

            • Blazer

               /  August 1, 2018

              shareholders are just cheap finance for alot of IPO’s.
              Private Equity rinses small s/holders -Tegel a recent example.
              Veritas Investments was floated with a plus 40 mil valuation…performed like a dog and the major initial shareholder just bought it back for…$8 mil.

              As for Wynyard,Sea Dragon.PEB….!!

  3. Gerrit

     /  August 1, 2018

    Best value of those stocks you listed is Mercury Energy with a PE of 22% and a dividend of 8.2%. 5% better than a term deposit. Typical NZL stock exchange return

    Worst is A2Milk with a PE of 52% and zero dividend. Typical a speculative Wall Street type return. You need to trade the shares to get a ROI. Which is encouraged by the brokers to shore up their income stream.

    Meridian is between the two with a PE 44% but only 4.48% dividend. Speculative but some return.

    Once the share values off the 1% head south business confidence will take a further dive.

    Reply
    • Blazer

       /  August 1, 2018

      NZX is treading water at around 9000…retraction imminent imo….tax is liable on trading shares …naturellement.

      Reply
  4. Zedd

     /  August 1, 2018

    Business confidence slump is driven by a bunch of Tory supporters who just dont like this Lab/NZF/Grn govt.. no tax-cuts & actually caring about all kiwis well being not just the top 40% who usually vote Natl !

    “LOSERS !!”

    Reply
    • High Flying Duck

       /  August 1, 2018

      Employers…who needs them!

      Reply
      • Zedd

         /  August 1, 2018

        ‘Mind the Gap’.. does business confidence really equal; the rich getting richer & the rest fighting over the scraps.. being thrown to them ? 😦

        Reply
        • Zedd

           /  August 1, 2018

          a narrow view….

          Reply
          • High Flying Duck

             /  August 1, 2018

            Many business owners sacrifice a hell of a lot to ensure their employees are paid each week. They struggle to juggle cashflows and finance and to bring in work.
            97% of businesses in NZ employ less than 20 staff.
            We’re hardly a nation of fat cats living off the toil of downtrodden serfs.

            Reply
            • Blazer

               /  August 1, 2018

              small business owners are the backbone of NZ.
              Its the big corporations that have political muscle and undue influence.

            • My stepfather employed over 100 people directly and more indirectly. He began with nothing but his brain and ambition, arrived in NZ with a few pounds in his pocket and the goal of having 100 men working for him. His own early working days were spent as a linesman, and the story went that his first sight of my mother was when one of the maids was taking her out in the pram and they went past where he was working on a power line. How romantic

              In the early days, the workers (nothing like that number then, of course) were paid first and he was paid second (if that)

              At the end of his life, he was rich and the workers were still on workers’ wages, but he took the chance and they didn’t.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s