Winning back business confidence
By Richard Harman (author)
Obviously stung by continuing low business confidence ratings the Government has had Finance Minister Grant Robertson hit the road on a tour of provincial North Island business organised by the business lobby group, the EMA.
On Tuesday and Wednesday, in the company of EMA CEO, Robertson met with a range of businesses in Whangarei and Rotorua.
And then yesterday at the NZ Herald’s “Mood of the Boardroom” breakfast he confronted the country’s big business CEOs who had returned dramatically lower confidence scores for the coalition government in the annual Herald survey.
But the CEOs’ criticism wasn’t all one way; they also had a go at National complaining about its constant negativity and lack of constructive policies.
Perhaps mindful of this, Nationals Finance Spokesperson, Amy Adams, pledged that the Opposition was willing to work on bipartisan policy on tax and the construction of the wellbeing budget.
But the big elephant in the room at the breakfast was business confidence; on a five-point scale, it was down from 3.07 last year to 2.2.
And respondents said this was because of concern about government policies; skills and labour shortages; regulation; employment law changes and transport infrastructure.
But Robertson’s trip won admirers.
Auckland EMA CEO Kim Campbell said Bill English had done something similar but not on the scale that Robertson did.
The Minister attended a lunch for what Campbell called the “big end of town” in Whangarei and then a forum which over 50 local businesses were represented at.
The same thing happened in Rotorua.
“It was really good,” Campbell said.
Campbell said he was open about where he didn’t agree with Robertson – principally over the employment relations legislation, but that openness was part of the mutual respect that the Minister and the EMA members had for each other.
And Campbell said that the Government announcement yesterday on research and development tax credits was what his members had asked for.
Business NZ Chief Executive Kirk Hope said that for many smaller businesses, the problem with a tax credit scheme was that without sufficient expenditure on R&D there would be no way to claim back a tax credit.
"The Government has listened, and halved the amount of R&D investment required from $100,000 to $50,000,” he said.
“This will place the incentive in the reach of many more smaller businesses.
"Raising the credit itself from 12.5 per cent to 15 per cent also makes the policy more attractive to more businesses.
“Along with a broader definition of research and development, these improvements should increase New Zealand’s rate of investment in innovation.”
Campbell said that some of his members had a meeting with Robertson.
“We said the original proposal was not going to work and we sat down with him and went through the arithmetic.
“And he’s done exactly what we suggested.
“And he’s made it so it actually makes some sense.”
As far as the broader issue of business confidence was concerned, Robertson told the breakfast that it was important to remember that New Zealanders at the last election had voted for change.
“They were asking us to address those big issues around housing; around child poverty; around making sure that we were protecting our environment better; around supporting our regions and that is what the Government has been focussed on since coming in and delivering on the changes that we promised to do,” he said.
But the respondents to the survey were also critical of National.
68 per cent said National had not begun to carve out a credible economic alternative to the Government.
Amy Adams said she took that criticism on board.
“I think it’s fair to say that the last Mood of the Boardroom, before the election, you were starting to see things that National wasn’t getting right,” she said.
She said being in Opposition now gave her party time to reflect on what it didn’t get right and then developing new policies.
She singled climate change and environment out as areas where National had slipped behind.
But perhaps what was surprising was her agreement (or at least lack of opposition) with much of what Robertson was doing.
She said that while she didn't agree with a capital gains tax, there was a lot that could come out of the Tax Working Group that could be supported.
"There is good work in things like the Reserve Bank review which I think is timely though we may differ on some of the aspects,” she said.
“But where we can find points in common I think it is incumbent on us to support the Government.
She said that National had begun the work on the living Standards Framework which will form the basis of the well-being budget proposed for next year.
“I think if we are going to change the reporting structures through the Public Finance Act and the like it is important that these are developed with a bi-partisan buy-in.
“So my challenge to the Minister is that he ensures that the work is done so that it is genuinely about the political ideology of the government of the day so that it becomes something that is set in place and doesn’t change with a whim.”
She said that National for a long time had been very focused on holding Government accountable for its spending and the outcomes that were achieved.
“If the Living Standards’ Framework can give us real accountability for what the spending delivers I think that its a really important thing.”
Robertson said that what the Government was focussing on was the plan for the foundations of the 21st-century economy.
“Our first Budget was about keeping to those Budget Responsibility Rules and made big and significant investments in the areas that the public wanted us to do so.
“But the future focus is how do we lift the living standards and well being of New Zealanders.
“That means getting the institutions right; that is why we are doing the Tax Working Group; that is why we are doing the Reserve Bank review; it is why we are cerating a new infrastructure entity that New Zealand needs.
The second thing is investment, making sure we are getting investment going to the right parts of the economy.”
And he said the plan had to also deal with infrastructure and innovation.
“’We acknowledge that there is a lot more to do and we look forward to working with you in the coming years to make that happen.”
And so the test will be next year’s survey; will what Robertson is both talking about and doing be enough to persuade business that the Government does have a plan.
A big part of the Government’s re-election chances may depend on his ability to maintain the momentum that he has created this week.