The big news from Jacinda Ardern’s Westpac speech on business confidence this morning to is Ardern announces Prime Minister’s Business Advisory Council, but there are other things of interest in her speech.
Working together to build a new economy
In fact it wasn’t too long ago that I stood amongst you and spoke about our economic agenda.
I also spoke about the issue of business confidence. I called it the elephant in the room. Well I am here this morning to tell you that I have changed my mind.
Not on our economic agenda – I remain more convinced than ever that it is required, but on the issue of business confidence.
It is not the elephant in the room, 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.
That is why this speech was the first thing I announced the day I returned to work.
Because we have an economic agenda which responds to so many of the issues that have been raised time and time again, and because if there are concerns, or issues, both within our control and outside of our control – then lets tackle them head on, and lets do that together.
The business confidence paradox
When you line up business confidence with key economic performance measures over the last two governments there appears to be an inverse relationship between business confidence and the actual performance of the economy.
For instance, average business confidence scores under the Clark/Cullen Government were much lower than the Key/English Government, despite Clark and Cullen delivering higher average growth, lower unemployment, lower debt, larger surpluses and stronger wage growth than their successors.
We appear to have inherited a similar conundrum, we’ve run a strong surplus, have the best net international investment position ever recorded, stable and low interest rates forecast for some time which ought to spur investment and the lowest unemployment rate in a decade.
That then begs the question, if it’s not the overall economic indicators that is driving these figures, then what is? I have discussed this question with both business leaders and representatives, colleagues and officials. The answers I have had back are almost as diverse as the groups I have asked.
Certainty
As I travel around the country, the issue of certainty is an underlying theme. Whether you are a social service, a health organisation, or a business, knowing what a new government has planned is critical to your eco system. I utterly understand that. In fact, I have considerable empathy for that desire too.
As a politician with quite a diverse government and the scrutiny of a three yearly very public performance appraisal, I will take certainty when I can get it.
From a business perspective, I understand the desire for certainty in order to make decisions big and small, ranging from the risk of taking on an extra hire through to multi-million dollar investment decisions, and you need to understand that the climate you operate in today will be broadly the same tomorrow.
But certainty shouldn’t be confused for stasis and complacency, which are the enemy of progress, and for that matter the enemy of innovation.
The reality is that our economy faces a number of challenges, global in their nature, that by working together we must confront to protect our long term prosperity.
Skills shortages, lack of investment in the productive economy, a shallow national pool of capital, an infrastructure deficit, low productivity, building sustainable business practices in the wake of environmental degradation, and the challenges of what can broadly be called the future of work.
The jarring way in which we came out from under the cloak of protectionism in the early 80s saw over a hundred thousand workers lose their jobs and the genesis of many of the social challenges we are now working to fix decades later. This must not be repeated.
And for that, we need a plan.
It is time to retool our economy to make it work within the limits of our environment, shape it to deliver on the hopes and aspirations of all our people, and for our economic purpose to be bigger than just profit.
From reform of the Reserve Bank where we are including maximum sustainable employment as an objective, to getting active in the housing market, building modern transport infrastructure and setting ambitious emission reduction targets – we are renovating the existing legislative and policy architecture to bring it up to the new code our economy needs.
Government decision making
We are an MMP government at its best and our structure ensures that on every decision a range of views are heard. The outcome reflects the breadth of input and leads to better decisions.
Hardly a model for fast and unexpected change – in fact all change is negotiated, but a model that I believe serves us well.
Business Partnership Agenda
Today we are launching a publication that outlines this agenda and brings together the strands of this Government’s economic strategy.
Our overall objective is to build a productive, sustainable and inclusive economy.
On each score we have some way to go. When it comes to productivity, the OECD has said we are “well below leading OECD countries, restraining living standards and well-being”.
We need to transition from growth dominated by population increase and housing speculation, to build an economy, that as I said, is genuinely productive, sustainable and inclusive.
That’s the why. Now what about the how. For that, I want to share with you the top lines of our economic strategy so everyone is clear about our key priorities that you can engage with us, but also so you can hold us to account against some key measurables.
First we want to grow and share more fairly New Zealand’s prosperity.
That means the gap between the highest and lowest income and wealth deciles reduces, real per capita income increases; the value and diversity of our exports grows and home ownership increases.
Second we want to support thriving and sustainable regions that benefit from an equitable share of sustainable economic growth. We want to see key regions show improvement in employment and income distribution figures and the number of businesses in key regions growing.
Third we want to deliver responsible governance with a broader measure of success. The Finance Minister is already working on the Government’s measures of success to ensure they better reflect New Zealanders’ lives.
Next year we will be the first country in the world to deliver a Wellbeing Budget. This process is underway and will see an overhaul of how the Budget is written and the objectives that it sets.
Finally this Government is committed to transitioning to a clean, green carbon neutral New Zealand. We plan to put New Zealand on a clear path to a net-zero emission future and a healthy environment.
My message to you all is this – now is the time to be involved and help shape this work for a better economy.
Industrial relations and immigration settings
In amongst this new agenda is also the work that we are undertaking on industrial relations and immigration settings – two areas that do come up from time to time.
I understand the tension that addressing these issues can bring. The reality of making payroll, investing back into the business for future growth and keeping the lights on.
The underlying fundamentals of our industrial laws are working well, but we do need to address some of the imbalances that have been generated over recent years.
A lot of waffle on this.
Then Ardern announces Prime Minister’s Business Advisory Council.
Conclusion
I am confident that by working together we can overcome the challenges facing our economy and society.
We will not be an idle Government, and I won’t be an idle Prime Minister.
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.
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.
Apart from announcing the Business Advisory Council there doesn’t seem to be much new here, it is largely a promotion of the Government agenda – she used the work agenda 12 times – and trying to promote confidence in the changes they want to make to “successfully tackle the challenges we face”.
I don’t know what business people will take from her speech. There doesn’t seem to be much in specifics.
Full speech notes at Scoop.