Labour's stark warning to business
By Richard Harman (author)
Deal with inequality or face a Brexit style populist revolt.
That was the stark warning from a senior New Zealand Minister to the Australia – New Zealand Leadership Forum in Sydney on Friday.
The Forum’s meetings are conducted under Chatham House rules which means specific speakers cannot be identified but what they say can be reported.
Over the course of the day the Forum heard from Ministers Winston Peters, David Parker, Grant Robertson, Megan Woods, Damien O’Connor, Stuart Nash, Chris Faafoi and Meka Whaitiri.
And the day was capped off with a surprise visit from the Prime Minister, Jacinda Ardern.
Even a Labour Party conference would be struggling to match that many senior MPs on the one day so it was a unique and revealing insight into the DNA of the Ardern Government.
The Australians had arrived clearly worried that the Ardern Government marked a lurch to the left by New Zealand away from the pro-business policies of the Key-English Governments s which had been much admired at previous Forums.
After one Minister had spoken, the chair of the session, a leading Australian business person said: “It’s good for all to see that you are not as mad as some people said you were all going to be.”
But in a way, Labour’s time has come.
The Forum had commissioned a report from one of the world’s leading international business consultancy firms on what the impact of the digital revolution on our two countries might be.
The study found that looking out to 2030 the impact would be largely positive as productivity was concerned but that there would be serious transition issues around jobs.
“There will be some very serious transition issues, for your businesses, our public institutions and arguably most importantly for how we keep society together; how we maintain the very precious social cohesion we have had as nations,” the consultancy partner said.
But though the revolution was likely to create more jobs, the study found that it could increase inequality.
“On inequality, the story is not that positive.
“When you look at which jobs will be created and which jobs will be destroyed, it will end up shifting the mix.
“It will most importantly shift the mix around incomes.”
“However the underlying trends will play well for both of our nations, but we can't just expect that it will magically happen.”
The consultant presented a worst case scenario for the New Zealand economy which showed that if no action was taken to counter the loss of jobs, then the current unemployment numbers of 130,000 might be expected to reach 600,000 by 2030 and the Work and Income benefit bill would rise from $1.7 billion now to $3.3 billion.
And the impact on jobs of digitalisation would be strongest on the middle class.
“We have seen an erosion of middle-class income over the past ten years, and it is not going to get better.
The new jobs would be high income or low-income jobs --- but there would be few middle-income jobs created.
It was against this background that the Labour Ministers made their pitches.
It is territory that is very familiar to Ministers like David Parker who has repeatedly warned of the dangers of a society where wealth is concentrated within the top one percent.
And Grant Robertson’s Commission on the Future of Work was designed to address precisely the issues that the consultant raised.
But up until now, Labour has pitched its inequality and job loss arguments largely to its own base.
In Sydney, the challenge was to convince business.
Trade Minister David Parker has already made the argument, when defending the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) that trade gets wrongly blamed for many of the job losses which are, in fact, due to technological change.
“Tp maintain support for trade and investment flows the Government needs the support of businesses in this room," the Forum was told.
And there was a call for support on issues like multinational tax evasion, environmentally sustainable business practices and support for jobs growth in regions and among indigenous peoples in both countries.
But the most powerful arguments came when the all the Ministers – including Parker – presented themselves as a team to the conference.
And one of the senior Ministers, endorsing Parker's arguments, said that the Government wanted its trade agreements to be genuinely progressive and it wanted to "rebuild the social licence for trade."
He said what the Government wanted was "inclusive" growth; that it was important that every New Zealander shared in the benefits of growth, both in the regions and among Maori.
He repeated Parker’s concerns about the wealth of the top ten per cent.
“That’s a lot to do with assets and we’ve got a Tax Working Group looking at how we can structure our tax system to get a better balance.
“We’re looking at the Reserve Bank Act to see whether monetary policy is contributing overall to that sustainable, productive and inclusive growth.
“We’ve got to see more investment into the productive economy.
“But all of that only means something if it lifts the living standards and well being of all New Zealanders.
“And I think it is a political project for every person in this room.
“I believe in the things that you do, but we will lose the political battle if people don't see a place for themselves in our economy.
“And that’s what gave rise to some of what we saw with Brexit and in the US.
“We have to rebuild a progressive political project around making sure that everybody gets a stake in the economy; that they see a lace for themselves.
“That’s our goal.”
It was clear in presentation after presentation by the New Zealand Ministers that the challenge of finding jobs in a rapidly changing economy is a major priority for the new Government.
Among the business leaders who spoke there was support – and also, perhaps surprisingly, support, for the Government's emphasis on environmental sustainability as well.
And there was a sub-theme that ran through the Forum that had begun with a dinner which was addressed by New South Wales Premier, Gladys Berejiklian.
The talk there was about how much the two countries should continue to learn off each other as they faced these big challenges.
And in a practical sense, a whole series of workshops addressed issues like Health technology, Agribusiness, Innovation, Indigenous Business and Tourism.
At the centre of much of that was Customs Minister Meka Whaitiri.
She later told POLITIK that one of her big issues was balancing the need to ease the passage of tourists against security issues.
Items on her agenda include the movement to a “two countries, one visa” system and the development of “trusted travellers” lanes at airports.
“We are working with our Australian counterparts into how we make access between The two countries seamless," she said.
And that summed up much of what was said; that the two countries had to work as one because the external challenges they faced were so substantial and the risks, if they get it wrong, were too high.