Bernard Hickey’s analysis of Jacinda Ardern’s long promised big business confidence speech is quite critical.
Newsroom Analysis: Side-stepping the elephant in the room
Jacinda Ardern called it the Government’s “elephant in the room” just before she went on maternity leave. Upon her return, she said would address it directly in a major speech aimed at turning it around.
Tuesday’s speech was supposed to deal with it head-on and convince business leaders that the Government understood the problem, had listened, and was changing its plans to help.
Instead, those business leaders got a pep talk and an explanation of an existing plan, which they already knew. The key problems remain of an infrastructure deficit caused by a population shock, uncertainty over migration settings, the minimum wage surge and the ban on new oil and gas.
Ardern’s announcement of a business advisory group and a limit to the number of fair pay agreements did little to address those concerns.
Ardern failed to distinguish between the wider business confidence figure, which is politically biased and economic irrelevant, and the own activity measures of confidence, which are also down sharply and much more closely aligned with GDP growth. The Government rightly dismissed the slump in headline business confidence as a politically-biased measure of business leaders’ disappointment at the change of Government.
But the slide in own activity confidence through the June quarter could not be as easily dismissed, and Ardern failed in the speech to acknowledge that.
Instead, she chose to frame the own activity fall as a judgment about certainty, rather than confidence.
She didn’t address the business community’s shock over the coalition’s immediate and irrevocable decision to lift the minimum wage by more than a third in three years and its shock over the ban on new oil and gas drilling permits offshore.
Again side-stepping responsibility, Ardern said the economy faced a number of challenges which were global in nature.
Hickey provides quotes from her speech to support his criticism.
He challenges her ‘transformation narrative’.
The changes to taxing capital and wealth are yet to be proposed or agreed to by voters. The modern transport infrastructure she referred is subject to the legislative timetables for the Urban Development Authority, infrastructure bonds and the infrastructure funding whims of the Auckland Council. Much of it remains uncertain and distant.
The addition of the vaguely phrased “contributing to supporting maximum sustainable employment” line in the Reserve Bank’s Policy Targets Agreement has changed nothing.
He says Ardern concluded that New Zealand had a positive future despite the ‘giant flashing sign with fireworks’ of low business confidence.
“We are promoting change because without change our businesses and our economy are at risk. But change does not need to breed uncertainty, not when instead it can breed opportunity,” she said.
“I have confidence that our relationship will thrive, that our agenda will successfully tackle the challenges we face, and that our shared achievements for the country will leave a lasting legacy future generations will thank us for.
“Now let’s get on with it.”
Her concluding comments showed she believed business leaders needed simply to listen more closely to the Government, get more involved and ‘buck their ideas up’ about the positives in the economy.
It was more of a pep talk than a new plan or an acknowledgement that business owners had legitimate concerns.
Ardern is growing a reputation for pep talks and platitudes. She sounded confident in giving her business confidence speech, but I think the people in business will be looking for more substance.
This was a well signalled opportunity for Ardern to win the confidence of business leaders, and business people in general. She will need to do more, and better, to earn confidence in her and her Government’s ability to work well alongside the business community.
Pete George
/ 29th August 2018Blazer
/ 29th August 2018its simple business wants a National Govt…and ferments trouble.
Alan Wilkinson
/ 29th August 2018It’s more simple than that: A Labour Govt is trouble.
Corky
/ 29th August 2018Have large surplus..will spend. Reminds me of the beneficiary refrain: money was made to be spent !
Blazer
/ 29th August 2018Clark Govt straigh tline surplus
Key Govt straight line deficits
perception and reality.
Corky
/ 29th August 2018The reason for that was Cullen starved the country. Key borrowed to pay for the lifestyle you expect, Blazer. And he was meant to be greedy rich prick.
Blazer
/ 29th August 2018destroys your original statement..Corky.
As if you starved when Cullen was fin min.
Corky
/ 29th August 2018There’s circumspect spending..and there’s splashing out on every whim
Alan Wilkinson
/ 29th August 2018Clark Govt surplus paid for with increased tax and private borrowing.
Trevors_elbow
/ 29th August 2018Oh your normal absolute bullshit line AGAIN Bol.
What was the alternative to Englishs strategy?
What services should have been slash to stop deficit spending and borrowing in face of declines in tax revenues and locked in spending left by Cullen?
Well?
Let’s hear it genius….
Blazer
/ 29th August 2018hindsight is no good to anyone.
Trevors_elbow
/ 29th August 2018Hindsight is no good to anyone
I’ll rephrase that for you….
I’m BOL and I am a little shill for Labour who likes to criticize others who successfully navigated the GFC while protecting the most vulnerable
Blazer
/ 30th August 2018same old ,same old,Nats borrowed billions and Key,Brownlee and co put on carpenters aprons and went and rebuilt…Christchurch.
Corky
/ 29th August 2018”Ardern is growing a reputation for pep talks and platitudes.”
I noticed this yesterday. She has become ( or been coached) very adept at answering any question with a mixture of direct replies; vagaries and platitudes.
Yesterday, in an interview she was asked that given businesses will have to make changes to their practices under her government, that maybe she could reciprocate by dropping the business tax rate to around 25%. Jacinda laughed.
This govmint, this band of merry socialists, has to go.
Blazer
/ 29th August 2018how has your life cganged?
Corky
/ 29th August 2018My life hasn’t changed yet. The country changes first, then the trickle down starts. Closer to election time is when individuals will feel the heat. They will beg National to come back. Unfortunately if National Don’t get rid of Bridges NOW, they may not be back.
Looking at Bridges follow Jacinda on the news latest night, I couldn’t help noticing how Jacinda presented as a fairy princess while Simon looked like Billy Bunter who was whining about someone stealing the crumbs from his recently eaten pie.
Kitty Catkin
/ 29th August 2018Everyone else noticed that about Jacinda Ardern a long time ago.
Corky
/ 29th August 2018I haven’t. I’m not a genius like everyone else on this blog. Maybe it shows how much I take notice of Jacinda.
Kitty Catkin
/ 29th August 2018You are certainly no genius.
Perhaps if you took more notice, you would know what you’re talking about.
robertguyton
/ 29th August 2018A genius wouldn’t comment here.
Corky
/ 29th August 2018”Perhaps if you took more notice, you would know what you’re talking about.”
When it comes to observations I have had to point things out to you that you would never have perceived.
That is proven by your inability to predict anything. But, I don’t hold that against you. You do well with the limited resources you have.
Kitty Catkin
/ 29th August 2018Not a genius – that’s an understatement.
Maybe you should take notice, so that you can talk about politics with some knowledge of what you’re talking about.
Pete George
/ 29th August 2018Toby Manhire at The Spinoff:
But…
https://thespinoff.co.nz/politics/28-08-2018/jacinda-ardern-takes-on-the-elephants-and-albatrosses-in-the-business-zoo/
Alan Wilkinson
/ 29th August 2018No questions suggest the audience had given up on expecting anything useful from their wasted hour.
Kitty Catkin
/ 29th August 2018The friendly questioner had probably been planted in case there was an awkward silence,
If they had ‘just run out of time’, why ask for questions ?
I am very tired of the elephant cliche.
sorethumb
/ 29th August 2018[19:00]
https://www.radionz.co.nz/audio/player?audio_id=2018660009
Is this an important admission? Why am I the only one who thinks so? Why aren’t the media on to it?
Gezza
/ 29th August 2018😳
They are. They broadcast it on RNZ. 😐
sorethumb
/ 29th August 2018There is a difference between broadcasting it and highlighting it.
Gezza
/ 29th August 2018I listened from a little bit before 19:00 to the end. It didn’t seem to me to be an important admission of anything. It just seemed to be mostly wiff-waffle. I’m not even sure what you think was an important admission. I couldn’t hear anything worth reporting.
sorethumb
/ 29th August 2018For years we have been told that immigration was a net benefit. labour backed off a bit last election but National is still full speed ahead.
The media have pushed immigration
We have been undergoing massive demographic change based on the lie that we select on merit and immigration is good for the economy (net benefit)
Alan Wilkinson
/ 29th August 2018When does immigration stop being a net benefit? Are you trying to argue it never is/was? You’ll be on the losing side if you are.
Alan Wilkinson
/ 29th August 2018Because of course it is crap. The economy relies on producing goods and services which is what almost everyone outside the bureaucracy is busy doing.
sorethumb
/ 29th August 2018What about resource constraints and the effect on the marginal product of each additional worker?
Alan Wilkinson
/ 29th August 2018If we import dumb people and cultures we will be worse off. If we import clever people and good cultures we will be better off. Not rocket science.
sorethumb
/ 29th August 2018While people make a difference this still matters (surely):
The distinctive feature of the New Zealand economy is that land is an important input into the productive process. This is obvious with the agricultural,fishing and forestry sectors but it also applies to international tourism. In a simple model of the New Zealand economy where the supply of land is fixed, and New Zealand’s isolation means it is not a ‘natural’ location for the production of a broad range of internationally traded goods and services, then an increase in the labour supply through large scale immigration will reduce the
marginal product of labour. As a result:
Real wages will fall
Owners of land will benefit
There will be an outflow of ‘native’ labour in search of higher wages in Australia
The economy will be bigger, but average incomes will fall
Resources will flow into low value service production.
http://www.tailrisk.co.nz/documents/TheSuperdiversityMyth.pdf
Alan Wilkinson
/ 29th August 2018Singapore, Hong Kong, Luxemborg …. refute that argument. Physical resources are a minor factor in wealth production as you can see by looking at the biggest global companies.
sorethumb
/ 29th August 2018The are big differences in proximity to markets.
Alan Wilkinson
/ 29th August 2018They outperform bigger countries with far more resources that are at least equally close to markets.
Blazer
/ 29th August 2018we import cheap labour so business can make more…profits.
sorethumb
/ 29th August 2018We import cheap labour so low value businesses are profitable (they should just fail)?
Blazer
/ 29th August 2018its not black and white…they wouldn’t fail…just profits would be…less.
Alan Wilkinson
/ 29th August 2018And you wonder why business confidence is down.
Blazer
/ 29th August 2018Zollner on morning report pointed out immigration was responsible for 2.3rds of NZ’s growth %.
Businessmen are afraid of paying decent wages.
artcroft
/ 29th August 2018Labour could show some leadership then and give nurses, teachers and cops big pay rises.
Alan Wilkinson
/ 29th August 2018… that they can’t afford.
Blazer
/ 29th August 2018the flashing neon sign of business confidence…
Alan Wilkinson
/ 29th August 2018Send it to Jacinda.
Gezza
/ 29th August 2018On form this morning Sir Alan
Sir Gerald
duperez
/ 29th August 2018I realise the environment is different now than in the ‘good’ old days when the coach sat the team down in the changing rooms before the game and gave pep talk, the team talk to get everyone roused for action.
Is the game itself most important or the analysis and discussion? The coach has done her team spiel, it’s past kick off time and we’re still in the sheds. The prop ponders, “What did she mean by side-stepping the elephant in the room?” The wing asks, “What did she mean by ‘thrive’ ?” Halfback Bernard wants to talk about transforming defence into attack. The loosie just remembered he’d forgotten his mouth guard.
The coach has already gone outside and is being eyed by the one who missed out on the coaching job, standing with his cobbers formulating their attacks for the loss they hope is coming.
NOEL
/ 29th August 2018Business confidence is about perceptions.
No wonder she resorted to.
https://www.newsroom.co.nz/2018/01/16/75455/beneath-the-slump-in-business-confidence#
Ray
/ 29th August 2018Interesting to look back to see what PM Helen Clarke had to do when she was facing the same problem.
When business attacked her government in the winter of discontent, she went to great trouble to reassure it that her government was mainstream and orthodox, not frightening and radical.
She basically dropped the far left ideas there and then and the rest is history.
Miss Ardern has showered Business with platitudes and chucked in another focus group thingy, will it be enough, probably not.
It really depends on what sort of headwinds business has to face in the short term.
Had to laugh at Grant Robinson blathering attempts on RNZ this morning to explain away his earlier claim that business confidence was only fractionally lower than the long-run average, with Ms Ardern’s claim of it being up there in blazing lights.
Obviously not a man who can learn from the past!
sorethumb
/ 29th August 2018It can’thelpthe coalition that Valerie Morse is co-leader of the greens and shane jones is Minister of Masturbation?
Gezza
/ 29th August 2018Stay with me lad – you’re slipping into delerium. Stay in the real world.
Blazer
/ 29th August 2018why should Govt be held hostage to big business Ray?
High Flying Duck
/ 29th August 2018Because they are the ones who pay the enormous bills the government is racking up.
Blazer
/ 29th August 2018sure they do….exporting profits is the biggest business.