Business executives have been urged not to hunker down in the post-Covid world. Photo / Michael Craig
COMMENT:
What on Earth is going on with big business in this Covid crisis? At a function last week the consultancy firms Deloitte and Chapman Tripp released a survey of business attitudes – all size businesses were included, but the focus of those two firms is on corporates. There were 1193 respondents and the results did not make pretty reading.
It's a survey they do before each election. Back in 2017, over 60 per cent of respondents had said the National-led Government had a "co-ordinated plan to raise New Zealand's economic performance". This time, the positive response was just 19 per cent.
What changed? We now have the Covid crisis, obviously, and we'll come to that. But what also changed was the Government itself.
Although not, to any radical degree, the policies. Both Labour and National say it's critical that we increase productivity. Both offer education, infrastructure and new technologies, especially in our traditionally strong industries like agriculture, as the key to doing that. Both have been saying this every election this century.
But productivity has not increased, and growth has also stubbornly refused to move. Pre-Covid, it's been stuck around 2.8 per cent a year.
Ah, says Labour, but we're going to be smarter about it. No, says National, we are.
You could say, in light of this, that the corporate bosses have a point: we have not yet been presented with an amazing new co-ordinated plan to raise New Zealand's economic performance.
But, leaving Covid out of it for a moment, that's no more true for Labour than it ever was for National. I know, it's not a surprise four out of five corporate leaders are so tribal, so unwilling to think more clearly about this. But it is disappointing.
However, that's not the worst of it, because we can't leave Covid out of it. Covid defines everything now. And the corporate view that in this crisis the Government does not have a co-ordinated plan to lift economic performance – to rescue us from what we now know is a genuine recession – is just nonsense.
The 2020 survey asked the question about a plan specifically in relation to Covid. It was conducted in July, after the level 4 lockdown, when we were at level 2. Well after the Budget.
Remember the Budget, presented on May 14? That's the document that actually spelled out the plan.
It included a staggering $50 billion Covid-19 Response and Recovery Fund, with wage subsidies, RMA fast-tracking, free trades training in critical industries, a $1.1b "green jobs" package, $15.9b for infrastructure and other projects to "rejuvenate the economy".
And it left $20b unallocated, which in itself was a very good aspect of the plan, because only a fool would think we know yet about all the things we need to spend money on, or how.
The Budget also outlined a plan to borrow $142b, net, over the next few years, using Quantitative Easing, which puts more money into circulation without blowing out inflation.
No plan? No co-ordinated response? I'm sorry, but don't business leaders read the papers? New Zealand currently has the most "co-ordinated" plan of any we've seen in our lifetimes.
It's legit to say it's the wrong plan. That's probably what this election is shaping up to be about. And fair enough to say the plan isn't working as well as it could or should. We all think that – I imagine even the Government thinks that, privately. Nobody said it would be easy.
But to suggest there is no plan, frankly, seems to me like a pretty good way of ruling yourself irrelevant to the conversation.
Oddly, most respondents to that survey agreed the Government has done a good job handling Covid. But despite the entire strategy being based on the idea that prioritising health is the best way to serve the economy as well, they didn't see that as inherently part of an economic plan. Why not?
The survey contains clues. One is that 60 per cent of respondents said the Government is borrowing too much and quite a solid 26 per cent also thought it was spending too much on the Covid response. Translate: austerity works better. They want a different plan.
You may be thinking, are these the same corporates that benefited hugely from the $13b spent on wage subsidies? Answer: yes they are.
The survey also revealed that 79 per cent of our captains of industry and commerce thought a post-lockdown plan should include fewer regulations.
Translate: now is not the time to get all worried about health and safety in the workplace, closing tax loopholes, ensuring housing is warm and dry and energy efficient, paying reasonable wages, offering secure employment, requiring companies to meet environmental standards and cultural responsibilities...
When people complain about red tape, these are the things they're usually talking about.
In the survey, two-thirds said they didn't want to pay any more tax and 39 per cent wanted lower corporate tax rates too.
Really? During the Covid crisis, big business has enjoyed better than expected sharemarket performance, better corporate returns and more new growth opportunities too. Most people with significant assets, especially in property, have had a boom pandemic.
Money – the moving around of big money to make more money – has not only remained safe, it has, on the whole, flourished.
It's true there are many decisions still to be made, but it would be absurd to expect any different. The issues we confront now will be with us for years. They may always be with us.
What's in store for the tourism and hospitality industries? What's the depth of our commitment to ensuring everyone has a warm, dry and safe home to live in, and the strength of our welfare support in times of uncertain employment? How will we continue to integrate economic and environmental planning in the face of climate change and ongoing struggles over water?
Underlining it all, what should we do about debt: the amounts we borrow and how and when we pay it back?
National leader Judith Collins addressed the BusinessNZ event that launched the survey and said the priority was to "preserve jobs". Her party, she said, "supports borrowing, yes, but to build".
Both sides say that, but there is a difference. Labour says it will borrow to avoid harsh austerity measures. It wants to "build back better", which means, it says, addressing issues of poverty and climate in the process.
Labour leader and PM Jacinda Ardern also told that business event she would be "as relentless in pursuit of people's economic wellbeing" as she had in trying to eliminate the virus.
Collins said Covid-related spending has been an "economic line of morphine in our bloodstream that needs to finish".
That sounds like austerity. The party officially releases its economic plan later today.
Does it matter what corporate executives think? It should. They're powerful, and power is supposed to carry responsibility.
Chapman Tripp CE Nick Wells understands this. He made an optimistic, forward-looking speech at that event, as he often does.
"Please do not hunker down," he said. "There will be a new normal."
But will it be a better normal? How about this. Most survey respondents thought consumer demand would drive their approach to sustainability, but only 21 per cent said it was happening now. And the survey asked them to say whether economic, environmental, social or cultural goals were the priority.
Nearly all chose the economy, but the real problem with that question is why even ask it? What happened to integrated goal-setting?
Wells had read the survey. He urged business leaders not merely to understand and embrace the new normal, but to provide constructive leadership to help create it. Good call.
The Rotorua law student who authored it says the support was 'overwhelming but inspiring'.