Paul Goldsmith - Economic and Regional Development

28 August 2018

Speech notes for address to Newmarket Rotary

Earlier this week I criticised the government for failing to release an economic development strategy in the ten months it’s been in power.

Having scrapped the previous National government’s Business Growth Agenda, which outlined many well-considered policies to build a more competitive and productive economy, they had come up with no replacement.

Well this morning the Prime Minister delivered one, in a speech designed to turn around the lowest levels of business confidence since the Global Financial Crisis.

The summary is, they have taken growth out of the Business Growth Agenda. We now have the Business Partnership Agenda.

It is a genuine shift – growth has been demoted.

What we have seen from the Prime Minister is a list of goals and objectives – inclusivity, sustainability, fairer distribution of wealth and productivity gains – but virtually no detail.

Focusing on the economic growth strategy, just saying you want higher productivity is not enough.

Saying, as the Prime Minister did, that she has empathy for businesses’ desire for certainty isn’t enough. Saying you want to grow real per capita incomes is not enough.

The question is how?

There is deafening silence.

There is not a single detail, proposal or policy in the Prime Minister’s speech that points to increasing our productivity or growing our per-person income.

It’s not what you say that matters, it’s what you do.

One way to increase productivity is to increase investment. This government has made it much more difficult for foreign investment to come into the country. How’s that going to help?

Would-be investors don’t know if they’re going to pay a capital gains tax on their investment. Pretty important. How is that helping? There was nothing to counter that in the speech from the Prime Minister.

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.

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 and Australia.

This government thinks we are the only country in the world, aside from France, that is so rich that we don’t 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?

The Prime Minister says she wants to increase our exports. But they are adding massive costs on to business, not the least of which is a 27 per cent increase in the minimum wage in the next three years.

Everyone wants Kiwis to earn more, but an export business only survives if it is internationally competitive.

Putting up labour costs with that speed is not going to help increase our exports – some will manage, others simply won’t. Nor will reduced foreign investment and attacks on oil and gas, dairy, export education – some of our biggest export earners – help those sectors grow.

It worries me to see arrogance emerging from this government already. Businesses are rightly worried about the uncertainty that is evident everywhere we look, partly because of the 100 plus reviews currently underway.

Her response is to say, people should just read the Speech from the Throne and the coalition documents. It’s all there. Ha! That’s what people are worried about.

She can’t understand why business confidence is down, because unemployment is low and the economy is quite strong. But it’s not what a government has inherited that determines confidence, it’s what it’s done and what it’s signalled that counts.

This government has sown uncertainty, pushed costs on to business and brought in specific anti-growth policies.

Finally, it is particularly galling for the Prime Minister to say she understands the weight of responsibility being an employer, since, she says, ‘In some senses I am the largest employer in this room’.

Like any business, she says, the Government has to balance competing interests.

I’m sorry, the government is not like any business. It can take money from whomever it likes, and it can throw you in jail if you don’t pay. It’s not the same as business.

Businesses only survive if they give their customers, who are free to go to anyone else, what they want at the right price.

This government has no concept of how difficult it is to survive in business. When it thinks of business it thinks of fat cats, cigars and corporate jets.

Most businesses in New Zealand are small and they struggle to survive, against relentless competition here and overseas.

They worry about a government coming along at putting the minimum wage up 27 per cent in three years. They worry about tax uncertainty. They worry about finding staff and keeping them.

Ten months into government we deserve better than a list of good intentions from the Prime Minister.

ends

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