Business leaders have welcomed the cornerstone of the Government’s “once in a generation” Budget – the unprecedented $50 billion Covid-19 Response and Recovery Fund – rating it at 3.75/5 on an effectiveness scale.
The 52respondents to the Herald’s business leaders post-Budget survey were asked to rate some big spending initiatives – such as the Covid-19 fund, health and education spend-ups, and investments in tourism, environmental and home building programmes on a scale of 1=5 where 1 equalled very poor and 5 equalled very effective.
The $50b fund was set up by Cabinet on April 6 and some $14b of initiatives, including the massive wage subsidy scheme, had already been spent before Finance Minister Grant Robertson unveiled last Thursday’s Budget.
The Budget included a further $16b from the fund to extend the wage subsidy, provide free trades training and boost infrastructure among other initiatives.
A further $20.2 left unallocated drew the ire of the National Opposition, who have called it an election bribe. “My only concern is the $20 billion slush fund,” Simplicity CEO Sam Stubbs said. “Unless this is spent quickly, it should more rightly belong in next year’s Budget and be the subject of better-costed policy announcements going into the election.”
A key part of the Government’s Covid response has been the wage subsidy scheme which provided companies $585.80 weekly for fulltime employees for 12 weeks, and, $350 weekly for part-timers. This was extended in the Budget for a further eight weeks at a cost of $3.2b. But conditions have been tightened so it is only available to businesses who have lost at least 50 per cent of revenue in the month preceding application.
A large fashion retailer boss said the 50 per cent loss threshold is too low, noting: “many businesses will perform better than that, but will still have significantly impaired performance and have to lose staff as a result.”
Spark CEO Jolie Hodson said it was positive to see $1.6 billion earmarked for trades and training and part of this should be directed to digital skills.
“It is important that we are thinking about the future of work in New Zealand and recognizing the need to build the capability of New Zealanders to be able to participate and thrive in an increasingly digital world,” said Hodson. “Covid has highlighted how critical this is, and we already know the productivity benefits it brings.”
Chapman Tripp Nick Wells said all the initiatives were stimulus of one sort or another. “We need to recover in a way that is fit for the future, learning from all of the benefits we have seen from the lockdown such as being more environmentally friendly, increased flexibility and ability to work from home being more digitised and having a much more weightless economy.”
The $400m domestic tourism sector relief package announced in the Budget was panned by many from a sector that directly employs over 229,000 people. Auckland Business Chamber CEO Michael Barnett said tourism was a $40b contributor.
“It deserved more and would have created employment.”
An agriculture boss added, “the investment in tourism needs to be seen for what it is – a start. This is one area where some reimaging would be good for the industry and New Zealand.”
The Government also revealed it would borrow $5b over the next four to five years to build 8000 state and transitional houses in partnership with housing providers. Business leaders scored the initiative 3.4/5.
“As long as (Phil) Twyford stays very far away from the project,” cautioned a wine exporter. A retail chief added: “Unsure on state house builds – there has been no tangible evidence of having good execution with KiwiBuild etc.”
The $1.1b package to create 11,000 jobs in the environment sector – from pest control to wetland restoration – received a score of 3.27/5, with some sceptical of its merits: “It is worthy but unlikely to attract the numbers of unemployed workers to make a difference,” suggested a food producer boss.
The $1b allocated to support education services received a score of 3.83/5 from respondents.
An executive in the transport industry says the package is worthy, but is missing “any mention of digital technology, which seems a missed opportunity following the recent experience of remote learning.”
Perhaps unsurprisingly, the $6.3b investment in health received the highest score from executives of all the Budget areas surveyed with 3.98/5.
“Covid-19 showed that our health system was not up to responding which was one of the reasons for the severe lockdown,” said independent director Cathy Quinn. “The money needs to be spent wisely so that in another pandemic our system is better able to respond.”
“Health needs much more than money, without a complete review and overhaul how much of the $6.3b will be wasted?,” asked a banking boss.
https://www.timmccready.nz/wp-content/uploads/2020/05/postbudget-tim-mccready.jpg601641tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2020-05-18 09:55:592020-05-18 09:55:59Budget 2020: Business leaders say which way the Government got it right (NZ Herald)
Phil Goff speaks with Tim McCready about the impact of Covid-19 on Auckland’s infrastructure plans.
In February this year, Auckland Council was focused on the challenges ahead of a city enjoying relentless growth: building transport infrastructure to relieve traffic congestion, coping with the highest ever level of building consents, and dealing with environmental issues including water quality and climate change.
Just two months on, those issues haven’t gone away, but Auckland Council is now facing additional challenges in the wake of Covid-19.
Financially, there will be an unprecedented loss of revenue in the coming financial year of between $250m and $450m. Much of the lost revenue is not through rates, but from the loss of its dividend from Auckland International Airport, reduced fare revenue from Auckland Transport, lower regional fuel tax and less development contributions.
Auckland Mayor Phil Goff says the depression in the 1930s saw the Government pull spending back so much that while it balanced its books, “the cure killed the patient”. He is determined to keep Auckland’s infrastructure projects going as much as possible:
“There will likely be a reduction of infrastructure projects in the coming year, maybe $300m worth, but we will still be spending a whole lot more than we have on average over the last five years on an annual basis,” he says.
“We want to make sure that we’re still creating that infrastructure that the city has been waiting so long for, that it so desperately needs, and which is going to be a core part of actually stimulating the economy, getting jobs going, getting income going and helping to secure recovery.”
Here’s what Goff had to say on a few big issues facing New Zealand’s biggest city:
Work has started back on the City Rail Link now, but we’ve heard that the cost is likely to blow out – do you know what the scale of that will be?
The month-long closure of the CRL is likely to cost probably around, or something in excess of $30m. That’s never welcome, but we had no choice in the matter.
We have a new challenge now – getting some of the specialist staff that we need to do the work internationally, at a time when our borders are closed. I’ll be making submissions to Ministers – obviously we’d need to follow a quarantine process, but we really need that international staff in to not further delay the project.
There is an opportunity here to potentially speed up the CRL project by starting work at multiple sites. We are already doing that to a certain extent now – working on Aotea Centre, working on Karangahape Road, Mt Eden and continuing with the tunnel. If the Government is able to bring some of its capital from its shovel-ready project into CRL, then rather than this being a setback, it could be a chance to advance our programmes.
Auckland Council has submitted 73 priority ‘shovel-ready’ infrastructure projects to the Government’s Infrastructure Industry Reference Group. What do you hope they will achieve for Auckland?
It enables us to create the infrastructure that we desperately need as a city, so that’s something that’s worthwhile in its own right. But we have premised these projects around projects that are ready to go, we’ve consented them, we’ve often done the procurement for them, and we can get them up and going as quickly as possible to create jobs, generate income and help stimulate the recovery that our city and our country desperately needs.
Auckland is uniquely well-placed to assist the recovery of New Zealand in that regard. We’ve been professional in the way that we’ve put the projects up, there are 73 projects, we’ve said 30 are priorities. We know that we can expect a fair share of the money, we are ready to go and we can assist the Government with its recovery objective.
There has been some criticism that the projects put forward haven’t been transformational enough and don’t represent the once-in-a-generation opportunity that this situation has provided. What would you say to that?
We followed the Government criteria – the Government provides the money, they set the criteria. But I reject the criticism anyway – there is a whole lot in our submission which is about mode shift. It’s about bringing forward projects that will assist public transport, that will assist walking and cycling, that will get busways underway. Those are projects that meet our environmental and our transport objectives – reducing traffic congestion, reducing carbon emissions. These are the sort of things that we need to do for the long-term future, as well as needing to deal with the immediate ramifications of Covid-19 and the recession it’s causing.
Will Council be looking at ways to speed up projects – expediting things like resource consent?
There are things we have changed already. For example, noise controls have been lifted – maybe to the detriment of people who live in hearing distance of some of these construction projects, but it means they can work a slightly longer day and a longer working week. We will all have to give up something in order to achieve the wider objective. That is an example of how we have already changed the resource consent requirement to try to facilitate the construction industry getting back on its feet more quickly. The noise might go on a bit longer, but it means the project will be done more quickly, and that disruption will end more quickly, so there is a benefit there as well.
Compulsory water restrictions for Auckland are almost certain with the region’s storage dams dropping below 50 per cent. Around $2.3 billion is due to be spent over two decades on capital works to accommodate Auckland’s growing water consumption – should Council be doing more now to future-proof Auckland’s water supply?
The potential necessity for water restrictions in Auckland is due to the significant lack of rainfall we have experienced since summer. Rainfall levels in January and February have been the lowest on record. Coupled with the very long hot summer and higher demand, the water supply lakes have fallen below 50 per cent full compared with an historical average of around 75 per cent. In addition to this, the long-range weather forecasts do not predict any significant rainfall. Watercare is running a public media campaign to encourage people to reduce usage and are maximising the take from the Waikato River.
In terms of infrastructure, Watercare is continuing to upgrade the Waikato water treatment plant so it can process an additional 25 million litres per day —this work is deemed an essential activity and is due to be complete in around three months. Watercare has also submitted a project through the “shovel-ready” process which proposes the construction of a second water treatment plant and new boost pump station that will increase water treatment capacity by 75 million cubic metres a day and increase pipeline conveyance capacity from 150 to 225 million cubic metres per day.
This project is worth around $300 million to $350 million and will be critical in addressing long-term water resilience in Auckland.
2021 was shaping up to be a banner year for Auckland – with the America’s Cup, Apec, and many other international events. What impact will Covid-19 have on this?
I’m not sure yet what impact this will have on Auckland 2021 – we don’t know yet when our borders will be opened up. We’re hopeful that with the success of New Zealand and Australia, maybe we can open a trans-Tasman border, maybe we can get those tourists back in at least from Australia and maybe the Pacific.
But you take something like the America’s Cup, it’s due to start with the Christmas race in December of this year – will we be ready to have an influx of tourists from around the world? I don’t know the answer to that.
We are keen to see the race and we do want those superyachts here – they bring a lot of money to the country. But we’re also keen to get the economic benefit that covers the cost of the infrastructure that we’ve built to enable to race to take place. We want the tourists to come and enjoy the race and enjoy New Zealand. At the same time, there will still be the benefit that we will be projecting our city and country to the world if the race takes place. That is important as well.
I’m not pushing the Government to do anything that is against health advice. The health and wellbeing of us as New Zealanders comes first. But when we can reopen those borders, having those events in our city, and in New Zealand will give the boost that the tourism and the accommodation sectors need to recover from what has been a bruising period for them.
It feels a little like Apec has been doomed from the start – with the convention centre fire and now Covid-19. What do you think the appetite will be for people to travel – particularly for the Leaders’ Week in November next year? Will we see a mass delegation of world leaders emerge in Auckland?
The leaders won’t want to put themselves at risk. Covid-19 makes no exceptions – we’ve seen prime ministers – Russian and British – come down with the disease. We don’t want people coming to the country to put us at risk if Covid-19 has not been properly dealt with by that time.
Apec in Chile was put off last year, I suspect it’s in real doubt for this year in Malaysia. I think the leaders, if it’s safe to do so – for them and for us – will be ready to come together and have that interaction face-to-face which has been an important aspect of Apec.
Is there anything you’ve seen from the alert level four restrictions that you might like to retain? Personally, I have enjoyed the fact that Cornwall Park has closed its gates to traffic – there has been plenty of space to spread out.
Can we learn things from it? Of course. In every crisis, there is a threat and there’s an opportunity. I think we will see opportunities out of this, things that we can do better.
One of the things we saw was that when you get cars off the road, the air quality is probably the best that Auckland has seen in a generation. And the quietness of the city – we won’t get back to that, but people are saying, gosh, I can hear the birdsong again.
One of the things we can keep is the flexibility around working. If it is possible for people to work effectively from home, why not give them the chance to do that, maybe several days a week? People want to have the social interaction, but they can spend time at home, as well. They can work more flexibly, and that more flexible working I think will be great for things like traffic congestion, efficiency, and people being able to enjoy their working week more.
A bit more amorphous but nonetheless important – He waka eke noa – we are all in this together, and being kind to people, being considerate. We probably haven’t seen this since the war, when people said: “hey, we’re in the same battle together and we are looking after each other.” I hope that we can retain that sort of sentiment going forward.
https://www.timmccready.nz/wp-content/uploads/2020/05/Phil_Goff-Tim_McCready-1.jpg5761024tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2020-05-04 18:35:592020-05-04 18:35:59Auckland’s infrastructure projects must go on: Phil Goff Q&A (NZ INC.)
Infrastructure NZ’s Paul Blair tells Tim McCready that infrastructure investment and construction will play a major role in New Zealand’s economic recovery programme – but central and local government collaboration is required to make it happen.
Infrastructure NZ – New Zealand’s peak infrastructure body representing 140 public and private sector industry members – says the Government’s response for the infrastructure and construction sector has been quick, clear and commendable, but says now is the time for regional and central government to collaborate and tackle projects that will improve outcomes for the bulk of New Zealanders who live in major centres.
In a letter sent to infrastructure minister Shane Jones earlier this month, Infrastructure NZ chief executive Paul Blair recommends the Government establishes a $20b ‘national recovery programme’ of funding, over and above identified projects able to be accelerated by the Infrastructure Industry Reference Group.
It suggests that this programme of work – as yet undefined – could be rapidly co-designed and funded using rapid deployment techniques used post the Christchurch and Kaikoura earthquakes. The North Canterbury Transport Infrastructure Recovery (NCTIR) alliance and the Stronger Christchurch Infrastructure Rebuild Team’s (SCIRT) were award-winning, speedy and well-regarded programmes. It would allow the Government to have flexibility and co-design for the ‘new normal’, as opposed to only accelerating existing shovel-ready projects.
Blair says the priority for the national recovery programme long-term is to establish a “North Star” against which immediate and intermediate options can be assessed to ensure they align with a longer-term strategic direction. The letter outlines five components that will be critical to the strategy:
A vision for where the Government sees New Zealand’s future, especially with the significant Covid-19 changes
Long-term strategic planning to achieve the vision
Funding and finance
Regulations and incentives
Delivery capability and capacity.
Partnering with councils
Blair says one of the ways this strategy could assist, is by partnering with councils which have a significant need for infrastructure investment but face substantial funding issues.
Rates provide an average of only 60 per cent of council revenues – which some councils are already choosing to freeze or cut. The rest comes from more commercial sources like developer contributions, fees for public services, or dividends from airports, ports, or stadiums. These too are being severely hit by Covid-19.
“Hard-hit councils require financial support from central government that is tied to shared priorities through urban growth partnerships,” says Blair.
To put the challenge they face into context, he explains that individually, New Zealanders pay roughly $1125 per year to council, but $15,250 to government.
“It’s easy to see that is not equitable when local government owns roughly 40 per cent of the country’s infrastructure – the same as central government – but only has about a tenth as much money to maintain and upgrade it.”
He says the growth councils – Auckland, Wellington, Tauranga, Queenstown, Hamilton – make up a majority of our population, and should be expanding their operations at this time.
“Under an all-of-government approach, councils should be the very definition of shovel-ready. But instead their revenues are going down, and unlike central government they can’t go and borrow more.”
He points to Tauranga City Council as an example, which recently announced that its revenue would be reduced by between 15-25 per cent.
The looming funding issue for Tauranga could see some $300m of housing-related infrastructure stopped. It cannot fund long-term planned capex due to cost increases, population growth and leaky building claims that would mean it would breach its debt cap without politically unachievable rates rises.
An NZIER report shows the 10-year impact of Tauranga City Council’s failure to invest in local pipes and roads could be:
a housing shortfall of 8,436 units
cumulative GDP foregone of $2,547 million
1,580 – 2,320 construction jobs lost, worth an additional $118-$174 million of GDP foregone
house price rises of $702,082.
“If you give $1 of new income to a council, they can go and borrow $2.50. But if they lose a dollar, they also lose the ability to fund $2.50,” explains Blair.
In addition, the loss of this infrastructure would see significant lost opportunity for Crown revenues, impose further costs on the Crown (assuming accommodation supplement and other housing-related costs rise) and would lead to spiralling wellbeing losses.
Blair says the counterfactual is that if Crown gave $100m of new income to TCC, it could borrow an additional $250m, creating enough headroom for the capex to continue. The cumulative GST on $2,547m of GDP is $382m – significantly exceeding the Crown’s initial $100m investment.
He says that while central government funding is urgently required, this shouldn’t be seen as a ‘free lunch’ for councils. As with all good partnerships, both the government and councils will need to show partnership behaviours, and rapidly align on win-win national, regional and local objectives and outcomes.
“We all share a common goal to re-inflate the economy and adapt to the new normal. Urban growth partnerships are a core part of the Government’s urban growth agenda, we now call for these to be funded and delivered at pace.”
Infrastructure NZ says if the Government can replace, or even enhance, lost council revenue, then local works in local communities can restart at great speed.
“Local government is where some of the greatest need is and where the greatest leverage can be exerted,” says Blair.
“In these times partnership will be essential. Central and local government need to be working together, not at cross-purposes – he waka eke noa.”
Auckland Mayor Phil Goff says although you can mitigate against disruption, you cannot “do” construction without it being in some sense disruptive.
“Of course it is going to be disruptive if you’re ripping out the intersection between Wellesley St to Albert St. Of course it’s going to be disruptive if you’re ripping up Quay St,” he says. “But disruption is also progress.”
Goff admits there is a part of the community that will complain, saying the only way to get around is by car and any construction is too disruptive. But he says that attitude is not going to work as Auckland’s population rises by 40,000 a year and roads can’t get any wider.
He says the city does have to upgrade roads for cars — and disagrees with people who complain about the upgrade programme the Government recently announced as part of its infrastructure package.
“But actually, the big changes are things like the third main trunk rail line so we can increase the capacity further on heavy rail, and SkyPath and SeaPath. They will produce massive transformational change for Auckland — and for the better.”
Goff reckons the average person understands you can’t rip up a road to put a tunnel underneath it, or create a cycleway or widen the pedestrian footpath without having an impact.
“It is a signature of a city that is going places and we should be pleased about that,” he says.
And it is clear he is pleased. He talks animatedly about cycleways, the developments to pedestrianise areas, and public transport that will make the central city more environmentally friendly and accessible.
“It’s a way of giving people the choice and alternative ways of getting around the city in a way that doesn’t add to congestion, is low on carbon emissions, and is a fun way of getting around.”
Goff says there has been a long period where “bugger all infrastructure was being created” and we are paying the price for that now.
“The trouble with the City Rail Link (CRL) is that we shouldn’t be doing the sod-turning at Mount Eden now — we should be opening it.”
Goff says the CRL will double rail capacity and bring more people into the CBD by public transport.
“That was needed five years ago, and the reluctance of the government of the day to participate in that and then putting half the cost on Auckland … almost everybody can now see it was a bad mistake.”
The number of pedestrians on Queen St has roughly doubled in the past five years, the imminent opening of Commercial Bay is going to bring around 10,000 workers into one block, and we are seeing increasing numbers of cruise ships arriving into the city.
Goff asks: “How do you have all of that and have access by people to actually enjoy the city if it is still going to be a place that you drive through, rather than come into?”
A city under the spotlight
Adding to Auckland’s disruption is the preparation for 2021. It is shaping up to be one of Auckland’s busiest and most visible years ever — with the America’s Cup and Apec headlining the year, and other large major events including kapa haka festival Te Matatini, the women’s cricket world cup and the men’s world softball championship.
There is a lot of preening to be done in our largest city before the spotlight comes on.
The America’s Cup will be first up, and Goff says projects are on time and within budget for all of the infrastructure for the event.
“The development around Quay St and the new harbour park will be completed,” he says. “Commercial Bay and the Park Hyatt hotel will be up and running — but construction across the city doesn’t stop because we have international guests here.”
He says as well as the excitement and vibrancy the America’s Cup brings to the city, it also leaves some valuable legacy products — including the strengthening of the wharf, the removal of the hazardous substance tanks, installation of breakwaters, and replacement of the Daldy St stormwater outfall.
New Zealand’s hosting of Apec will involve a full year, with clusters of meetings held over 12 months from December 2020, culminating in the Leaders’ Week and CEO Summit in November 2021. For that, around 10,000 attendees will descend on Auckland, with leaders from most of the 21 economies expected to attend.
The CEO Summit was intended to be held in the brand-new New Zealand International Convention Centre (NZICC) — until the fire last October put that in doubt.
From his office, Goff has an unparalleled view of the NZICC construction site. He was one of the first to break the news of last year’s fire and gave regular updates of what he could see live through his Twitter account.
He is disappointed Auckland now won’t be able to show off its glitzy new hosting venue to the world.
“When we watched the fire start and then just run on for day after day, it was pretty clear that this meant the centre wasn’t going to be ready for Apec, notwithstanding the fact it’s still 21 months away.
“But we did have a contingency plan between government and council, and we have alternative options including the Aotea Centre and others. We won’t have the brand new built-for-purpose convention centre, but Apec will be a success and it’s not the end of the world.”
Goff says preparations have delivered a lot of new hotel beds, including the 300-room Horizon Hotel being built alongside the convention centre.
“We’ve been building 1000 hotel rooms a year. That means we’re much better set up to cater for an event the size of Leaders’ Week.”
Beyond 2021
Asked about the future of the city, Goff shares Sir Paul Callaghan’s vision for New Zealand — of Auckland being “the city where talent wants to live”.
He says our natural environment is an important part of what makes the city an attractive place to be.
“The Central Interceptor will be huge progress in stopping the high level of wastewater overflows into the harbour every time it rains,” he says. The $1.2b wastewater tunnel will run 14.7km long and 4.5m wide from Grey Lynn to the Māngere Wastewater Treatment Plant.
It is due to be operating by 2025 and will help make Auckland’s waterways cleaner by cutting overflows by up to 80 per cent.
Goff frequently talks about his desire to increase Auckland’s resilience to climate change in order to “ensure a better world for our children and grandchildren”. It was one of the major platforms he campaigned on during last year’s election, along with clean transport and protecting the environment.
He says climate change is the biggest environmental threat the world faces, though he admits there is a stark difference between Auckland’s contribution to water quality and climate change.
“The difference is that while the steps we take on water quality immediately act to remedy the problems, the steps we take on climate change are simply our contribution to what needs to be an international effort in order to stop global warming and sea-level rise.”
Auckland Council is developing a Climate Action Framework to outline a path to reduce emissions and prepare the region for the impacts of climate change. But Goff says while Auckland wants to be at the cutting edge of making the changes needed, it is important that other countries take it seriously as well.
One example of the changes being made is the recent announcement that all the red CityLink buses will become electric this year.
Goff says the move will help improve air quality by reducing pollution from black carbon and nitrogen oxide emitted by the current diesel vehicles.
“Black carbon is associated with health problems and has been found in Queen St at levels higher than in some major European and US cities, so it’s a priority for us to address this issue.”
In November 2017, Auckland joined 11 other cities in signing the C40 Fossil-Fuel-Free Streets Declaration, committing Auckland to buy only zero-emission buses from 2025.
But Goff says he’d like to bring that commitment forward.
“The capital cost of an electric bus is much higher. But the advantage is that over the lifetime of the bus, the running costs are half and it pays for itself over that time.”
He says the capital constraints of council means he is talking to the Government about the possibility of extending the feebate scheme to buses.
“Feebate is great for electric cars. I drive an electric car. But these buses are on the road for 18 hours a day — why wouldn’t you want to bring forward that conversion?”
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https://www.timmccready.nz/wp-content/uploads/2020/01/2019rewind.jpg460519tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2019-12-31 10:56:262020-04-20 15:02:032019, in one minute (video)
https://www.timmccready.nz/wp-content/uploads/2019/11/StephenColbert-TimMcCready.jpg7201280tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2019-11-24 11:09:092020-01-02 11:16:09Stephen Colbert’s Late Show: 56 mentions of New Zealand
Business leaders are less optimistic than they were a year ago. A total of 62 per cent of business leaders responding to the Mood of the Boardroom survey say they are less optimistic about the general business situation in their industry.
Just 15 per cent feel more optimistic, 23 per cent say they feel the same level of optimism as last year.
The figures were worse when respondents were asked their perspective on the New Zealand economy.
A full 83 per cent say they are less optimistic than they were one year ago. Only 4 per cent say they are more optimistic, 13 per cent say they feel the same as last year.
This poor outlook aligns with other surveys of business confidence, which have shown consistent pessimism about the economy since the change in government to the Labour-led Coalition in 2017. The most recent ANZ Business Outlook found 52 per cent of businesses surveyed expected economic conditions to deteriorate.
Respondents were also asked how concerned they are about the impact of various domestic factors for business confidence, rated on a scale where 1 = no concern and 10 = extremely concerned.
The top domestic factors influencing business confidence in the NZ economy are congestion in Auckland (7.60/10) and infrastructure constraints (7.39/10).
The announcement last week that the Auckland light rail project will be delayed until at least 2021 exemplifies the lack of action that CEOs expressed frustration on. The infrastructure issue is considered in more detail on D21.
Other major domestic factors impacting business confidence according to CEOs include the availability of skills and labour (6.99/10) and general uncertainty around the impact and direction of current or proposed Government policies (6.87/10).
Foodstuffs North Island chief Chris Quin says: “Talent and Skills shortage and lack of clarity and progress on vocational training, along with an unclear future of vocational training and immigration settings are really harming the possibility of a successful transition to the future of work for NZ. Aligned Government spending that is much more effective in growing productivity is critical.”
Despite the pessimism from business, the International Monetary Fund released its annual review of NZ’s economy in the last week.
It suggests New Zealand’s economic growth is “still solid”. It says despite the loss of momentum in economic activity and a cooling in housing markets, output has remained close to potential. It also praised the falling unemployment rate and the government’s Wellbeing Budget — saying it struck the right balance between fiscal prudence and tackling priorities like mental health, child poverty and Māori and Pasifika aspirations.
Some economists say that business confidence surveys tend to be biased against Labour-led Governments, and have little correlation to actual economic growth. In line with this, Skycity chair Rob Campbell suggested one factor impacting business confidence is “business organisations talking down confidence”.
https://www.timmccready.nz/wp-content/uploads/2019/09/MOTB2019-confidence.jpg999650tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2019-09-24 21:09:212019-09-24 21:15:01Mood of the Boardroom: NZ CEOs becoming more pessimistic about economy (NZ Herald)
Climate Change Minister James Shaw was rated at 3.05/5 by chief executives in the Herald survey — the highest score among Green ministers outside of Cabinet and marginally ahead of Prime Minister Jacinda Ardern on her own ministerial performance.
Asked if Shaw had been an effective leader of carbon emissions reduction policies, 50 per cent of survey respondents said Yes; 30 per cent said No, and 20 per cent were unsure.
“James Shaw has certainly got the subject of carbon emission reduction firmly on the table and has gained business and community backing,” says Beca’s Greg Lowe.
“This will encourage faster action but we need to be mindful of tackling the immediate issues first. Rural emission reductions will need more science but the science to reduce transport and energy emissions is on our doorstep now and we should be acting faster to remove obvious pollution.”
“He has the intellectual ability to understand how to tackle some big problems and the pragmatism to get things done. Not everybody around him has that pragmatism which risks ideology only and no momentum or improvement.”
Many believe Shaw has been particularly effective in getting business on board with Green policies. “The Green Ministers — particularly James Shaw — have surprised many in the business community for their ability to listen,” says a leading banking boss.
Z Energy chief executive Mike Bennetts says “James has been very effective in managing conflicting views to an overall consensus that is acceptable to all stakeholders”. Adds an automotive firm chief executive, “Thank goodness James Shaw is there, otherwise nothing would be happening”.
But others say it isn’t clear what Shaw has achieved, suggesting more evidence of tangible action and change is needed. “The visibility of change is poor but he has the capability!” says one respondent.
The head of an investment firm reckons “Shaw has been a highly effective co-leader for a small party outside of government, and on key issues.”
Adrienne Young-Cooper, chair of Panuku Development Auckland, offers him some advice: “he needs to lose the suit and be really innovative in addressing a lighter more loving footprint on our beautiful so damaged planet”.
Shaw’s colleague Julie Anne Genter who holds the women’s portfolio and is Associate Health and Transport Minister was scored at 2.09/5.
“Having starting to deal with Julie Anne Genter on some issues she seems to have some similar attributes to James Shaw of being intelligent and open to sensible engagement,” says Deloitte’s Thomas Pippos.
Others are more critical — Simplicity’s Sam Stubbs says she seems “hard wired to hate cars and love trains”:
“Her passion, and the Governments need for the Greens, could commit the nation to extremely expensive spending on a transport technology better suited to more population dense countries, and last century, not this one.”
Adds another: “Genter represents the greatest risk to this Government. She has let power go to her head, and her anti-car campaigns and opposition to roads being built will upset most New Zealanders. Twyford lets her do what she likes but she drives officials crazy with her loony policies.”
Eugenie Sage received a fairly middling grade of 2.29/5 for her work as Conservation Minister and Land Information.
She received just a single comment — the partner of a major legal firm says her role in the OIO approval process has been underwhelming. “There is a lot of uncertainty in the business community as now ministerial decisions seem to be going against the Overseas Investment Office’s technical recommendations for political or party reasons rather than following a considerate investment assessment”.
Influencing power
When it comes to their ability to influence policy outcomes, Greens co-leaders James Shaw and Marama Davidson rate well behind that political pro, NZ First leader Winston Peters. Asked to rate the party’s co-leaders on this issue — on a scale where 1 = not impressive and 5 = very impressive, chief executives scored Shaw at 2.87/5, Davidson received just 1.63/5. It’s perhaps not surprising that Peters, whose party is in a formal coalition with Labour, received 3.59/5 from NZ’s business elite for the same question.
Cooper and Company chief executive Matthew Cockram reckons: “I don’t necessarily like it, but there is no doubt that Winston and James have had a significant impact in getting their positions implemented.”
A telecommunications CEO feels that “James Shaw has worked tirelessly and often thanklessly to try to achieve cross-party consensus on difficult and complex issues,” whereas a Māori business leader says: “James Shaw is doing as well as he can with a disparate party. Marama Davidson — no comment.”
There is a perception among some business leaders that the Greens have not been as effective as expected.
“The offshore gas exploration ban is the only policy I think James Shaw and his party has driven, yet that risks making it harder to remove coal and so will result in more emissions,” says an energy sector CEO. “The Zero Carbon bill hasn’t gone anywhere yet and policies to make it real seem a long way off.”
In contrast, a real estate boss says the Greens have made an impact: “if you look carefully, the Greens have had wins on almost every one of their major policy platforms”.
At the recent Green party AGM, Shaw highlighted a string of achievements — including the ban on new fossil fuel exploration, public transport initiatives and the $100m Green Investment Fund.
“This year’s budget alone contained $6 billion in new funding for Green Party initiatives,” he said
https://www.timmccready.nz/wp-content/uploads/2019/09/MOTB2019-Greens.jpg755955tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2019-09-24 21:06:512019-09-24 21:15:09Mood of the Boardroom: CEOs score Greens’ ministers (NZ Herald)
