Between the lines: Brian Fallow

Partners but will they pull together?

By BRIAN FALLOW

"The era of hands-off is over," proclaimed Jim Anderton yesterday.

"The era of partnership has begun."

A new dimension of developmental economic policy is to be added to all aspects of Government action, thinking and planning.

But fine words, as Granny used to say, butter no parsnips.

It would be hard to characterise the new Government's policies so far as friendly to business or encouraging to investment.

Restoring ACC's monopoly of workplace accident insurance, the Government says, will not increase employers' costs. Judging by the majority of submissions to the select committee, most businesses would rather not trust it on that.

The Government proposes to repeal the Employment Contracts Act at a time when the labour market is tight and inflation is heading towards the upper bound of the 0 to 3 per cent zone.

The top personal tax rate goes up 6c in the dollar at the end of this month, which does not help if, for example, you are trying to recruit skilled people from overseas.

Whatever the motives and values driving those policies - and they may be worthy ones - they are not calculated to make businesses' lives easier. Thus, there is some dissonance at least between those policies and the Government's talk of being enterprise-friendly.

There is also anecdotal and survey evidence of wariness on the part of businesses about undertaking the kind of investment needed to sustain the economic recovery, create jobs and expand exports.

Admittedly, the evidence is mixed. The Institute of Economic Research's most recent quarterly survey of business found investment intentions subdued, with only 2 per cent of firms expecting to lift spending on plant and machinery over the next year.

But the National Bank's monthly survey, which had been showing investment intentions flat-lining at a modest level since the middle of last year, showed a rebound in February.

And the Employers and Manufacturers Association's survey of Auckland members has shown for the past few months a healthy majority planning to invest in both equipment and, crucially, training.

Lifting New Zealand's economic game will require vastly more investment than the $100 million a year Industry New Zealand, the Government's new agency, will (eventually) have at its disposal. Mr Anderton acknowledged that yesterday.

But it is better than nothing - $100 million better - and shrewdly dispensed it could amply repay the taxpayer.

What are the chances it will be shrewdly dispensed? We will have a better idea when we know who will run Industry New Zealand, what their riding instructions will be, and what will count as "value for money."