Having scrapped the previous National government’s Business Growth Agenda, which outlined many detailed policies to build a more competitive and productive economy, I have been waiting impatiently this past year to see what would replace it.
What would the Labour/NZ First/ Greens government’s economic plan look like?
We got a glimpse in September when the Prime Minister released her Government’s Business Partnership Agenda.
Growth goes out
So, growth has been taken out of the Business Growth Agenda.
The Prime Minister listed various goals and objectives – inclusivity, sustainability, fairer distribution of wealth and productivity gains – but sadly there was virtually no detail.
Focusing on the economic growth strategy, just saying you want higher productivity is not sufficient. The question, is how?
There was not a single detail, proposal or policy in the Prime Minister’s speech that pointed to increasing our productivity or growing our per-person income.
Interestingly, we have heard nothing of the Business Partnership Agenda since.
It is not what you say that matters, it is what you do.
One way to increase productivity is to increase investment.
What has been done?
This government has made it much more difficult for foreign investment to come into the country. Meantime, would-be investors do not know if they are going to pay a Capital Gains Tax on their investment. That is very important.
Another way to improve productivity is to deliver a skilled and willing workforce. What has the government done there? It’s spent $2.8 billion on tertiary students, producing no increase in students and no improvement in the quality of the institutions.
National Standards gone
It has done away with national standards in the schools and is going to reduce or jettison sanctions designed to encourage jobseeker beneficiaries to be drug free and available to work.
How is that going to help?
Most other countries in the world use their natural resources to make a living – look at the US, the most sophisticated economy in the world and also the biggest producer of oil, and Australia one of the best performing economies in the past 15 years and its biggest export is coal.
Oil & Gas exploration
This government thinks we are the only country in the world, aside from France, that is so rich that we do not need to open up new areas of exploration for oil and gas.
It also wants to block off one third of New Zealand – one third – from any mining whatsoever. How is that going to help lift our incomes?
The Prime Minister says that she wants to increase our exports.
But they are adding massive costs on to business, not the least of which is a 27% increase in the minimum wage in the next three years.
Minimum wage fantasy
When I asked the Minister of Finance how increasing the minimum wage 27% in three years would increase our international competitiveness, he burbled that it would lead to more productive businesses and workers.
That is fantasy. A more productive business may be able to generate higher earnings to that it can afford to pay a 27% increase in wages, but the reverse does not automatically hold true. If our Finance Minister does not understand that, it is no wonder business confidence is so low.
Businesses are rightly worried about the uncertainty that is evident everywhere we look, partly because of the 100-plus reviews currently underway.
They are spooked by a government that is willing to chop a major sector off at the knees, as they have with oil and gas, without any analysis or proper decision-making, and wonder if their industry is going to be next.
They see the Prime Minister act as the judge and jury on petrol prices, saying Kiwis are being fleeced, then asking the Commerce Commission to do an inquiry?
What hope has any industry got of a fair hearing if the Prime Minister has made up her mind before the Commerce Commission has even started its work?
Such dealings compound a sense of unpredictability in government decision-making, leading to few investments and ultimately fewer opportunities for New Zealanders.
Vague objectives not backed up by policies, instead contradicted by actual policies, does not make for a coherent economic strategy. The country deserves better.
Paul Goldsmith is a Member of Parliament on National Party List and its Economic and Regional Development and Transport.