Peters sets out on facts offensive
By Richard Harman (author)
With business confidence falling again in another survey Acting Prime Minister, Winston Peters, is hitting the road with what he calls a “fact offensive”.
And he says the coalition Government will not “blink” like the Clark Government did when it was faced with the “Winter of Discontent” loss of business confidence in 2000.
“I believe that some people lost their nerve in that administration and that sadly affected the shape of their future economic direction,” he told POLITIK.
“That was disappointing because they had a chance to do much more in terms of structural change to the economy and they didn’t do it.
“Well, we’re not going to blink here or lose our nerve.”
The “fact offensive” is already booked into Invercargill and Nelson and will include the other economic Ministers as well as Peters himself.
It may just be needed.
The latest New Zealand Institute of Economic Research Quarterly Survey of Business Opinion published yesterday showed a further decline in business confidence.
A net 19 per cent of businesses expect a deterioration in economic conditions – more pessimistic than the 10 per cent in the previous quarter.
Continuing the recent trend, firms' views on their own trading activity – a good indicator of economic growth – remained more positive. Domestic trading activity in the June quarter still softened, however, with the proportion of businesses reporting higher demand decreasing from 15 to 7 per cent.
Firms’ expectations of future demand also eased, with fewer businesses expecting improved demand over the next quarter. These developments point to softer economic growth in the second half of 2018.
The retail sector was particularly downbeat, with business confidence falling to its lowest level since March 2009.
The NZIER says profitability in the sector fell sharply, as retailers struggled to pass on substantial cost increases fully through raising prices.
“The lift in the minimum wage is likely to have played a key part in the sharp increase in costs, given the relatively greater proportion of the retail workforce that is low-waged,” it said.
Peters, however, sees a political element in the business confidence surveys.
Speaking to a Dunedin Chamber of Commerce lunch last Friday he told the members they could be making more money if they were more confident.
“There is no correlations between business confidence and GDP growth," he said.
“Between 2000 and 2008 business confidence was pessimistic for 82 of 99 months.
"But GDP growth averaged 3.2% per anum.
“And then we had the period 2009 to 2017.
"Business confidence was very positive but 87 of the 95 months, while this was happening GDP growth, was less than two per cent.
“I didn’t make this up but what is common about this is that in the high growth period the Labour party was in or sharing the Government.
“And in the low growth but high confidence period the National Party was leading the Government.
“Those facts suggest an inherent political bias is pervasive in the business sector and that perceptions of stagnation do not have any basis in reality.”
However, he had to address one possible reason for a drop in business confidence which was his own prediction when he announced he would go into a coalition with Labour and said there were "dark days ahead" both on the international horizon and here.
"Things aren't as good as you think," he said.
“We said on the night of going into coalition with Labour that there was going to be a possible blip on the horizon because we had all those years of slow growth, but it was getting better.
“It’s almost inevitable.
“You can see it in the Bible for goodness sake.
“You just don’t go on and on in any economy in any period in history always going up.
"There is going to be a correction, but the correction may well be small.
“We may have already had it.”
And for a bit of encouragement, he treated his audience to an account of his own experience in business as a lawyer.
He said strong stock market performance and good export returns meant there had never been a better time to do business.
“Why do I say that,” he said.
“I used to have my own law practice, and I know what it is like to make a whole lot more money than I am making now.
"In fact, I made more in a month than my annual Parliamentary salary.
“That is how it was in the good old days in law.
"It was a licence to print money, and some of us virtually did.
“But here is my point; if you look around this country at what business people are saying, how is it that at a time when there is more money in the economy than ever before in our history, you can’t make some of it.
“And maybe in an environment where there is more money than ever before, and you can’t make some of it, maybe you should have a good hard look in the mirror first because that’s where the problem might be.”
Finance Minister Grant Robertson also quoted the differing rates of business confidence from when Labour was in power compared with National in Parliament yesterday.
But otherwise, his response to the NZIER survey was rather more measured than Peters.
“I take seriously the concerns of business and business sentiment,” he said.
“But we have to look at the economy as a whole.
“We've got a strong surplus, unemployment's low; there's going to be a sustained period of growth, employee confidence is up, consumer confidence is steady.
“There's a lot more to the economy than one survey.”
What is clear is that the Government needs the kind of on-the-road campaign that Peters excels at.
Perhaps it is time to bring his bus back.