Hickey critical of Ardern’s economy confidence elephant

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.

 

57 Comments

  1. Blazer

     /  August 29, 2018

    its simple business wants a National Govt…and ferments trouble.

    • Alan Wilkinson

       /  August 29, 2018

      It’s more simple than that: A Labour Govt is trouble.

      • Corky

         /  August 29, 2018

        Have large surplus..will spend. Reminds me of the beneficiary refrain: money was made to be spent !

        • Blazer

           /  August 29, 2018

          Clark Govt straigh tline surplus
          Key Govt straight line deficits

          perception and reality.

          • Corky

             /  August 29, 2018

            The 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

               /  August 29, 2018

              destroys your original statement..Corky.
              As if you starved when Cullen was fin min.

            • Corky

               /  August 29, 2018

              There’s circumspect spending..and there’s splashing out on every whim

          • Alan Wilkinson

             /  August 29, 2018

            Clark Govt surplus paid for with increased tax and private borrowing.

          • Trevors_elbow

             /  August 29, 2018

            Oh 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….

          • Trevors_elbow

             /  August 29, 2018

            Hindsight 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

               /  August 30, 2018

              same old ,same old,Nats borrowed billions and Key,Brownlee and co put on carpenters aprons and went and rebuilt…Christchurch.

  2. Corky

     /  August 29, 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

       /  August 29, 2018

      how has your life cganged?

      • Corky

         /  August 29, 2018

        My 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

           /  August 29, 2018

          Everyone else noticed that about Jacinda Ardern a long time ago.

          • Corky

             /  August 29, 2018

            I 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

               /  August 29, 2018

              You are certainly no genius.

              Perhaps if you took more notice, you would know what you’re talking about.

            • robertguyton

               /  August 29, 2018

              A genius wouldn’t comment here.

            • Corky

               /  August 29, 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

               /  August 29, 2018

              Not 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.

  3. Toby Manhire at The Spinoff:

    “It is not the elephant in the room,” she said shortly after eight this morning to a crowd of 120-odd business types. “It’s a flashing great neon sign with giant lights and fireworks going off behind it. We are all talking about it, and there is nothing wrong with that.”

    A less glittering, but more apt description might have been to call the dismal business confidence metric an albatross around the government’s neck. Labour led governments have routinely been bashed by business on the confidence question, and even if it’s about as useful as a horoscope, it still carries symbolic weight.

    The fiscal straitjacket that Labour and the Greens zipped themselves into before the last election was all about symbolising that they weren’t about to kneecap the status quo. The “fiscal hole” chalked out by Steven Joyce during the campaign was an attempt to press the nerve around perceptions of Labour’s “economic integrity” – that’s how Jacinda Ardern put it when she raised the issue during a leaders’ debate. That night she called it “the elephant in the room”.

    How did the message go down? The audience was strangely muted, with only one, friendly question coming from the audience, something unimaginable for a John Key appearance among the same crowd. “I think it’s just that we ran out of time,” reckoned Ardern afterwards. “I don’t take it as indicative.”

    But…

    Beyond the business confidence number, there are more substantial challenges this government and New Zealand businesses face, reflected in much more reliable bellwethers. Ardern refused to predict whether the announcement will shift the confidence number, but she’s probably done enough to shake something of that albatross. The PM signed off her speech this morning with a twist on a familiar mantra – Let’s Do This reorganised by an internal working group, perhaps. “Now,” she told the business elite, “let’s get on with it.”

    https://thespinoff.co.nz/politics/28-08-2018/jacinda-ardern-takes-on-the-elephants-and-albatrosses-in-the-business-zoo/

    • Alan Wilkinson

       /  August 29, 2018

      No questions suggest the audience had given up on expecting anything useful from their wasted hour.

      • Kitty Catkin

         /  August 29, 2018

        The 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.

  4. sorethumb

     /  August 29, 2018

    [19:00]

    But at the same time, continuing on with an economy built on selling houses to each other and migration. It might have given up growth rates of about 3% but it was not a sustainable economic plan and it wasn’t delivering for New Zealanders, so I’m willing to progress this modernisation of our economy and …

    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

       /  August 29, 2018

      😳

      They are. They broadcast it on RNZ. 😐

      • sorethumb

         /  August 29, 2018

        There is a difference between broadcasting it and highlighting it.

        • Gezza

           /  August 29, 2018

          I 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

             /  August 29, 2018

            For 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

               /  August 29, 2018

              When 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

       /  August 29, 2018

      Because 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

         /  August 29, 2018

        What about resource constraints and the effect on the marginal product of each additional worker?

        • Alan Wilkinson

           /  August 29, 2018

          If 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

             /  August 29, 2018

            While 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

               /  August 29, 2018

              Singapore, 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

               /  August 29, 2018

              The are big differences in proximity to markets.

            • Alan Wilkinson

               /  August 29, 2018

              They outperform bigger countries with far more resources that are at least equally close to markets.

          • Blazer

             /  August 29, 2018

            we import cheap labour so business can make more…profits.

            • sorethumb

               /  August 29, 2018

              We import cheap labour so low value businesses are profitable (they should just fail)?

            • Blazer

               /  August 29, 2018

              its not black and white…they wouldn’t fail…just profits would be…less.

            • Alan Wilkinson

               /  August 29, 2018

              And you wonder why business confidence is down.

  5. Blazer

     /  August 29, 2018

    Zollner on morning report pointed out immigration was responsible for 2.3rds of NZ’s growth %.
    Businessmen are afraid of paying decent wages.

    • artcroft

       /  August 29, 2018

      Labour could show some leadership then and give nurses, teachers and cops big pay rises.

    • Alan Wilkinson

       /  August 29, 2018

      … that they can’t afford.

  6. Blazer

     /  August 29, 2018

    the flashing neon sign of business confidence…

  7. duperez

     /  August 29, 2018

    I 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.

  8. NOEL

     /  August 29, 2018

    Business confidence is about perceptions.
    No wonder she resorted to.
    https://www.newsroom.co.nz/2018/01/16/75455/beneath-the-slump-in-business-confidence#

  9. Ray

     /  August 29, 2018

    Interesting 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

       /  August 29, 2018

      It can’thelpthe coalition that Valerie Morse is co-leader of the greens and shane jones is Minister of Masturbation?

      • Gezza

         /  August 29, 2018

        Stay with me lad – you’re slipping into delerium. Stay in the real world.

    • Blazer

       /  August 29, 2018

      why should Govt be held hostage to big business Ray?

      • High Flying Duck

         /  August 29, 2018

        Because they are the ones who pay the enormous bills the government is racking up.

        • Blazer

           /  August 29, 2018

          sure they do….exporting profits is the biggest business.

  1. Hickey critical of Ardern’s economy confidence elephant — Your NZ – NZ Conservative Coalition