Confidence plummets

31/07/2018

Labour, NZ First and the Green Party haven’t even been in government for a year and already business confidence has droppedto the second lowest in the OECD.

New Zealand has tumbled from top to bottom of the OECD business confidence rankings with the most recent data revealing New Zealand has the second lowest level of business confidence in the developed world, National’s Finance Spokesperson Amy Adams says.

“Given the high level of political uncertainty around the world it is a shocking revelation that New Zealand – typically a haven of political and economic stability – has the second lowest level of business confidence in the OECD.

“In 2016 New Zealand was the second highest in the OECD with 33 of the 35 countries beneath us. Now everyone except South Korea is ahead of us. To have fallen so far in such a short space of time is a damning reflection of this Government’s economic management.

“It is clear the Government’s low-growth policies are having a major impact, and are driving New Zealand’s appallingly low business confidence – though the Government is still refusing to acknowledge that.

“Policies such as industrial relations reforms, increased costs on small businesses via minimum wage increases and higher fuel taxes as well as the banning of oil and gas exploration, have all been bad for business sentiment and the economy.

“We want businesses confident so they can invest for growth, hire more people, and increase wages. That is how Kiwi families get ahead.

“With this Government’s dismissive and reckless approach to the economy, it’s no wonder we are again beginning to see more Kiwis heading overseas to greener pastures as opportunities here in New Zealand dry up.”

 

Businesses are generally still reasonably confident about their own outlook, but how long will it be before lack of confidence in the wider economy impacts on their decisions?

Increases in fuel taxes and the minimum wage, the prospect of a return to 1970s industrial relations and the strife that will accompany that, and the unilateral decision to end oil and gas exploration are all taking their toll on confidence.

Deteriorating  relations with Australia, our second business trading partner, add to causes for concern on the domestic front.

Sir John Key warns of clouds on the international horizon too:

. . .”We’re at the end of what I’d say is the economic cycle at the moment. There’s no question that when I look around the world and the things I’m now involved in internationally, you can start to see the pressure in the system,” Key said. 

“I was in China a week ago, it’s clear their economy is really starting to splutter a little bit. While the United States economy is doing well, they’re running massive, massive deficits – 7 per cent of GDP. Europe’s obviously much weaker than it was.

“So I think you are starting to see a slowdown in the economy and I think that, in part, reflects the business confidence numbers in New Zealand, and I think in part New Zealand businesses are looking at what the Government’s doing and they’re uncertain about that.” 

Low business confidence numbers could not be ignored, but Key said he hoped the economy remained strong “because every day, New Zealanders rely on it”.

“If doesn’t, then I think the right political party to lead the country wouldn’t be the one that’s currently there,” Key said. . .

A sluggish economy isn’t just a problem for business it’s a problem for everyone and should it get worse, businesses need confidence that the government will handle it well.

The current one has given plenty of grounds for concern that it won’t.

Running a business is full of risks and uncertainties and business people need confidence in their own outlook and the wider environment if they are to take the risks necessary to grow rather than stand still or retrench.

Business confidence doesn’t matter only for individual operations. It’s important for security of employment and a vibrant and growing economy.

That in turn is necessary to fund the infrastructure and services we don’t just want but need.


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