Prime Minister Jacinda Ardern. Photo / Mark Mitchell
OPINION:
Jacinda Ardern knows her Government has work to do to build a better understanding and broader relationship with business. And she knows that requires much more than another Business Advisory Council sending her reports from chief executives of large, regulated companies.
It is no coincidence that Ardern's first major speech since the election was to ordinary BusinessNZ members in Auckland, and that it was largely indistinguishable from one John Key or Bill English might have given.
The Government, the Prime Minister intoned, has a plan around five themes: Investing in our people; job creation; preparing for the future; supporting small business; and backing our exporters.
Grant Robertson spent the election campaign telling us National is no longer the party of Key and English. He and Ardern seem determined that Labour will be.
Ardern's initial signal that her Government would take its relationship with business more seriously was her humiliation of outgoing Economic Development and Transport Minister Phil Twyford, also of KiwiBuild fame.
It makes her the rightful heir to Key's title of "the Smiling Assassin".
Ardern did not just sack Twyford from her Cabinet, but rubbed salt into his wounds by giving him the non-jobs outside Cabinet of Disarmament and Associate Trade Minister, and the finicky and time-consuming role of Associate Minister for Immigration, responsible for making decisions on individual cases.
No one in business, the bureaucracy or Cabinet should miss the message that this is what Ardern now considers a just penalty for non-performance.
Twyford's replacement as Economic Development tsar is Napier MP Stuart Nash, who takes the jobs of Minister of Economic and Regional Development and Minister of Tourism, usually New Zealand's largest export earner but the most damaged by Covid-19. He retains his jobs as Minister of Forestry and of Small Business, the main topic of Ardern's BusinessNZ speech.
A complete outsider from Ardern's circle three years ago, he won her respect as a safe pair of hands as Minister of Police, Small Business and Revenue, including over Labour's dangerous pre-election tax-rise promise.
Expect to see Nash in boardrooms and on factory floors, farms and tourism operations, rather than huddled with bureaucrats from the Ministry of Business, Innovation and Employment (MBIE).
MBIE can expect to be reviewed, to see whether Steven Joyce's experiment is fit for purpose. Nash wants the business-facing arms of government to be nimble, innovative and most of all accessible. If he applies those criteria, MBIE in its current form is toast.
At the risk of being highfalutin, Nash has told officials he wants to understand New Zealand's long-term global and domestic value proposition and set a 10-15-year vision to achieve it, complete with necessary microeconomic reform.
Applying that objective to tourism, Covid-19 gives Nash an opportunity to lead the industry in resetting away from New Zealand's increasingly over-priced and low-quality mass offering to a higher-value industry, based on fewer visitors spending much more per day.
Ardern's big speech announced more handouts to small business, including to retain and hire staff, some of which seem inspired by National's JobStart policy.
But her more important message was that the health risks and economic effects of Covid-19 may be with us for longer than implied during the election campaign and that New Zealand should prepare accordingly.
She is promising to announce within two weeks additional infrastructure projects to go through the Covid-19 fast-track process, after last week's approval of Northland's Matawii Water Storage Reservoir.
As recommended here last week, she has wisely put her most competent and powerful minister, Robertson, in charge of infrastructure. Robertson's potential successor, David Parker, has been put in charge of repealing and replacing the Resource Management Act, with Ardern saying it will be a priority for the first half of 2021.
On climate change, Ardern's emphasis is less on business than on what more the public sector needs to do.
This includes "work on the business case to shift to 100 per cent renewable electricity, work on our hydrogen road map with a focus on domestic freight use and exploring the potential opportunities created by biofuels". The Prime Minister did not specifically mention approval for the $4 billion Lake Onslow hydro scheme, but she may as well have.
The elephants in the room remain tax, fiscal and monetary policy, with the words not even in her speech.
On one hand, this is good news since it confirms Labour's election promise of no new taxes except for the 39 per cent income tax rate on income above $180,000. On the other, it suggests the Government is not yet focused on the need to chart a medium-term path to fiscal surplus, address the utterly out of control housing market and find a way to meet its redistributive objectives.
It is very nice that Ardern wants the taxpayer to borrow more money for loans and handouts to save jobs in small businesses, but if borders are to be shut for as long as now seems likely, then reality soon needs to be confronted.
Unemployment is lower than feared but ultimately Ardern needs to ask if that is a good thing if the jobs depend on subsidies and if Covid demands an economic adjustment as radical as seems likely.
On tax, Parker has replaced Nash as Revenue Minister. An admirer of Thomas Piketty, he can be expected to push for some kind of rebalancing of the tax system. Ardern may have ruled out further tax rate rises, as well as wealth taxes, but that doesn't mean Parker couldn't look at ideas like a digital services tax or a carbon border adjustment tax.
Without committing to spending cuts, revenue enhancements or higher unemployment, monetary policy will continue to have too much work to do, fuelling the house-price crisis that helped propel Ardern into office in 2017.
Business will expect to hear what Ardern, Robertson, Nash, Parker and Housing Minister Megan Woods have to say about Act's idea of including asset prices within the remit of the Reserve Bank's monetary policy committee.
Yesterday's reach out to the business community was welcome. But silence on these fundamental issues won't be politically sustainable for long.
- Matthew Hooton is an Auckland-based PR consultant, whose clients have included the National and Act parties. These views are his own.
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