Is Luxon the right person to restore business confidence?
By Richard Harman (author)
The Government yesterday found two powerful allies in its counter-attack against the loss of business confidence.
Westpac CEO, David Mclean and Air NZ CEO Christopher Luxon both refused to join the chorus of criticism of the Government.
But Luxon’s decision to chair the Government's new Business Advisory body has drawn criticism from business lobby groups, and POLITIK has learned NZ First is also not impressed with the decision.
Apparently their caucus was not consulted even though MP Shane Jones had been sharply critical of Luxon and Air New Zealand over its withdrawal from some provincial air routes.
And while he was acting Prime Minister, Winston Peters, attacked the airline's decision to serve artificial meat burgers rather than use New Zealand beef.
He reminded the airline that it "was there because of the taxpayer."
But the wider criticism of Luxon is that he is the CEO of a part Crown-owned company and therefore indirectly accountable to the Government anyway.
Air NZ Is not an SOE; it is a publicly listed company in which the Crown owns 53% of the shares.
And it currently has a number of directors who would be regarded as more sympathetic to National than Labour, particularly, of course, Sir John Key.
However Luxon has been assiduous in cultivating links with the Labour Party even when it was in opposition.
"I've known the Prime Minister for several years and many Ministers in the Government and I've had good open access all the way through," he said yesterday
The 2016 Labour Party “Future of Work” report highlighted an AirNZ initiative with the E Tu union called a High-Performance Model which was used for workplace organising.
And Luxon has recently appointed the party’s general secretary Andrew Kirton to join Duncan Small, the husband of National MP, Nicola Willis, in the airline’s Wellington-based Government relations team.
Kirton was at yesterday’s business breakfast addressed by Ardern at which the Luxon appointment was announced.
McLean set the agenda for the morning with his introduction of Ardern.
He aid it was time for business to get over the election result and get on with business.
“Getting on with business means taking up the offer from the Government to constructively engage,” he said.
“It means not talking ourselves into a self-fulfilling spiral of doom and gloom which could have adverse economic consequences for all New Zealanders.
“Successful businesses are resilient and cope with change including changes of government.”
McLean was addressing the issue that had provoked Ardertn’s appearance at the breakfast and the decision to establish the Business Advisory Council; the loss of business confidence reported in a number of polls.
At first, the Government tried to dismiss the polls with David Parker telling A Select Committee they were junk.
Then acting Prime Minister Winston Peters talked of a campaign to tell people what the Government was doing; a reprise of the campaign run by the Clark Government in 2000 when it too faced a slump in business confidence.
“Our position is that business confidence is important,” McLean said.
“It has real economic consequences.”
Speaking after his comments, Ardern seemed to be conceding that business confidence was a problem.
She said she had heard what the confidence surveys had told the Government.
“We do need to provide certainty,” she said.
“We want to provide an opportunity for us to work collaboratively with the business community.
“Whether or not that changes business confidence numbers is yet to be seen.”
That collaboration will now be centred on the Business Advisory Council, which Luxon will chair, and which will have up to 15 members who are yet to be appointed.
Luxon himself was not convinced by the business confidence figures.
“I think it has been overblown if I am really honest," he said.
“I sit running a business that has a lot of leading indicators around economic activity in this country, and I can tell you the outlook for Air New Zealand is incredibly strong.
“And I see that in other businesses as well.
“This is really an opportunity for us to take a step back as business leaders and as a new generation we actually want the country to succeed economically, socially and environmentally.”
But Air New Zealand is a controversial business within New Zealand, particularly in provincial areas.
Auckland Employers’ and Manufacturers’ Association CEO, Kim Campbell, said that his organisation's provincial members were not happy with what he called the airline’s extortionate provincial pricing and its use of predatory pricing to suppress competition.
For that reason alone they would be wary of Luxon’s chairmanship of the Advisory Council.
He said that what business, particularly employers, wanted to hear from the Government was some specific moves to moderate the current industrial relations legislation before Parliament.
Obviously, the Government is becoming sensitive to this mood within the business community, and Ardern said yesterday that there would be only one or two fair pay agreements negotiated before the next election.
The agreements, though they prohibit strikes, are seen by some critics as a foot in the door to a return to industry-wide pay agreements and a boost to union membership recruitment.
However, Campbell said his members were pleased with what they had been hearing from Ministers Phil Twyford and Shane Jones about
But it was clear he believed that many would find it difficult to identify with an advisory body headed by the CEO of one of the country’s largest companies.
There will also be suspicions in some business quarters of the relationship that Luxon has developed with Ardern personally and Labour more generally.
“I don’t think it is about politics,” he said.
“The reality is that as business leaders we want liberty to run businesses as we see fit, but equally there has to be a responsibility to strengthen civil society.
“There are things that business can uniquely do that Government or community leaders can’t do.
“So I think this is a realisation that as a business leader I have a responsibility to use my company and business community to strengthen civil society.
“So that is what good contemporary modern local businesses should be thinking about.”
Ardern seemed to embrace the bigger, broader aims of the Council that Luxon talked about.
I want the council to report to me on the issues and opportunities they see and identify emerging challenges like skills, training and migration and the challenge of scaling New Zealand businesses up and growing our export-led wealth.
She said that in addition to its day to day work she wanted to work closely with and be advised by senior business leaders who took a helicopter view of the economy.
“People who are long-term strategic thinkers and who have the time and energy to lead key aspects of our economic transformation agenda.”
But Campbell pointed out, most New Zealand businesses have less than 50 employees and things like a concerted attempt to deregulate and cut red tape would mean as much, if not more to them, than long-term policy goals.