Business confidence tanks


Business confidence has plummeted:

The New Zealand Herald’s  2020 Election Survey has been released with top business leaders saying New Zealand’s Covid-19 recovery is in peril – and they want a decisive role with Government in the country’s future.

The annual boardroom barometer of 165 CEOs and high-profile directors has business confidence at the lowest it’s ever been in the survey’s 19-year history.

When asked to rate their level of optimism in the New Zealand economy the CEOs surveyed collectively scored it a 1.36 out of 5.

These are bigger businesses and predominantly urban.

I doubt if farmers are any more confident given the fear and uncertainty around added costs and complexities that are being imposed on primary production.

Westpac CEO David McLean says the future has never been so uncertain, but that means that the need for crisp and clear policies and plans has never been greater.

“We need to see pathways mapped, not just for how to escape from the current Covid-19 crisis, but to take us toward a better future by addressing some of the big challenges we face beyond Covid-19, such as increasing our productivity and tackling climate change,” said McLean.

Many, like Mainfreight’s Don Braid, question Prime Minister Jacinda Ardern’s heavy reliance on Government bureaucrats for advice and execution and her apparent unwillingness to listen to the private sector for ideas.

“There are many willing to devote time, energy and ideas in areas that allow New Zealand to find the right environment to operate in a post-lockdown economy,” said Braid.

The New Zealand Herald’s Mood of the Boardroom 2020 Election Year survey, taken in association with BusinessNZ, provides an in-depth assessment of CEO opinion at what is the most concerning time in the survey’s long history.

“It’s heartening that a record number of CEOs took part in the 2020 survey against a background of the Covid-19 pandemic. Optimism may be at the lowest levels seen in the survey’s history, but the CEOs’ responses demonstrated their own commitment to turning the economy around,” said says Mood of the Boardroom executive editor and NZ Herald’s Head of Business Content, Fran O’Sullivan.

With the General Election just weeks away business leaders are looking for more from both Labour and National.

Deloitte CEO Thomas Pippos points to tax policy being a key issue.

“Though Labour’s proposal to increase the highest personal tax rate doesn’t impact on the majority, National has upped the ante by helicoptering in temporary tax relief across the board to stimulate economic growth. Tax therefore promises to be a very complicated and emotive topic, that will either be centre stage this election or not far from it,’’ says Pippos.

BusinessNZ CEO Kirk Hope said Labour’s economic policy response to Covid has underpinned the economy in a challenging time.

“However, the long-term plans are less well understood. They will need to do a hard sell. National’s plans are slightly more pro-business. But both parties need to talk about how quantitative easing enables them to maximise a reduction in borrowing costs to help grow the economy.” . . 

You can read more about the Mood From the Boardroom at the NZ Herald here.

Confidence isn’t helped by the fact that Labour hasn’t released its fiscal plan:

The New Zealand Taxpayers’ Union is calling on the Labour Party to immediately release their fiscal plan, so it can be subjected to the same scrutiny as the National Party’s fiscal plan.

Union spokesperson Louis Houlbrooke said: “The National plan was found to have a few holes after analysis by Labour and independent economists. The Nats admitted to one $4 billion mistake but denied another. It is healthy that major spending plans are put under intense investigation before an election.”

“That is why the Taxpayers’ Union is calling on Prime Minister Jacinda Ardern to immediately release Labour’s own fiscal plan. She has told the nation that her numbers ‘stack up’. That clearly means their plan is finished, fact checked, and ready to go. There is no need to wait for a September Treasury data release to unveil the plan – the Pre-Election Economic and Fiscal Update (PREFU) was reported a little over a week ago. All the fiscal data is there.”

“Let people like Paul Goldsmith, David Seymour, Cameron Bagrie, and your humble Taxpayers’ Union check that Labour’s numbers really do stack up. Then, taxpayers can make an informed choice about who should manage our economy in a post-COVID recession.”

It’s not just a fiscal plan that hasn’t been released, Labour keeps telling us it has a plan for recovery but has given scant details.

Uncertainty is one of the bigger drags on business confidence.

That matters because businesses that lack confidence at best don’t invest and don’t hire more staff, at worst they retrench and make staff redundant.

That so much about Covid-19 and how it will impact the country and the world is uncertain, and to a large degree uncontrollable, makes it even more important that politicians are upfront about their plans and what they can control.

Longer would be better


Why can’t we have longer parliamentary terms?

That was the question put by Mainfreight Managing Director Don Braid on Q & A yesterday.

Three years is too long with a government with which you disagree and not long enough for one you support, but a longer term would give us better governance.

Shorter parliamentary terms lead to short term thinking and short term policies.

In the first year in power a government is finding its feet and beginning to implement policy. In the second it starts making progress (or not depending on your point of view) then everything slows down for election year.

This is frustrating for anyone who has to deal with government and the public service.

It’s not just businesses which find the stop-start-stop of the three year cycle frustrating.

The CE of a charitable trust which gets contracts with a ministry said it is very, very difficult to do much in election year, especially in the last few months of the term.

A four-year term would also reduce costs – every 12 years there would be one fewer election to finance.

That would be good for taxpayers and for the volunteers who fund raise for political parties.

It would also help ratepayers because if parliament went to a four-year term then local government would too.

The idea of a four-year term has not in the past found majority support from the public. I think that is at least in part due to a suspicion of politicians.

But it is one of the matters under discussion the constitutional review which is taking place.

If that group of non-politicians recommended it, the idea might gain traction.

Richie McCaw NZer of the Year


Richie McCaw is the Herald’s New Zealander of the Year.

He was born in Oamaru, raised in the Hakataramea Valley and began his education in Kurow which could almost be qualification enough for the title 🙂 but there’s more.

I met him at a wedding last month and in congratulating him on the World Cup win, mentioned the sacrifice I’d made to help with that – my pledge made towards the end of the final game to give up chocolate for the rest of the year if we won.

He had the good manners to say thank you and look as if he meant it.

He’s a talented and dedicated sportsman who led the All Blacks to victory – finally – in the Rugby World cup. But it’s not just what he does, it’s the way he does it. He’s a fine young man of outstanding character.

He has mana.

For that we can credit his family, his country upbringing and the man himself.

The Herald’s business leader of the year is Mainfreight managing director Don Braid.

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