What business wants from the next government – and what it expects

Given the current state of polling, business groups have realistic expectations of the next Government.

Their biggest hope is that they are listened to and their role in the economic rebuild is acknowledged.

“We’re all in this together,” says Employers and Manufacturers Association chief executive Brett O’Riley.

“But the thing to remember is governments don’t grow economies – businesses do.

“Government can enable it, it can help fund some of it, but ultimately the business community has got to be empowered and engaged to do that, and that is what we’ll be encouraging the Government to do after Saturday.”

There’s going to be a new normal whichever way things play out, says Auckland Chamber of Commerce chief executive Michael Barnett.

“If you were going to give the center-left a fair go, you’d work closely with them to make sure that we can influence what it [the new normal] might look like.”

It’s fair to say that business is not exactly thrilled at the prospect of the next Labour Government increasing the minimum wage and sick leave entitlements.

“We believe businesses can’t afford any new costs,” O’Riley says.

“So we would say to Government of any stripe, there needs to be a clear window where businesses are given some breathing space.”

Any change in rules inevitably involves some cost, he says.

Then there are the fears – widespread in the business community – about the influence the Green Party might have as a sole coalition partner.

Even with the wealth tax firmly ruled out by Labour, there is concern that the Greens could pull the Government towards the left.

“Businesses have got a lot on their plates, so when they start to hear ideologically driven regulatory change, that alarms them,” says O’Riley.

“You might say, look, it will alarm them anytime, but right now a lot of small businesses are just hanging on by their fingernails.”

But the relationship is not all bad.

Finance Minister Grant Robertson has impressed business groups in the past few years when he has been focused on investing in skills, infrastructure and boosting productivity.

Labour has come around to the idea of scrapping the Resource Management Act and is starting to talk about plans to encourage more foreign direct investment.

These are the areas where business groups believe they have had an influence on policy and where they hope that influence will continue.

This week Business New Zealand published the results of its Major Companies Group CEO Forum.

The report, which collects the views of about 60 bosses of New Zealand’s largest companies, highlights four key themes: jobs, the border, infrastructure and the economy.

Of those, perhaps the most specific, and certainly the most urgent, was a call to reassess border policy, with a view to progressively reopening in stages as risk levels change.

Business groups – and Opposition political parties – have had little traction with this kind of call in the past few months.

But there is now a sense of optimism about the prospects for progressing border policy after the election.

“They [Labour] have a very secure voter base that are comfortable with the borders being closed and the threat being at a minimum,” says Barnett.

“But they also appreciate that at some point you’re going to have to test the strength of your border.”

Barnett and the chamber have been vocal on this issue, and on the way the second lockdown was deployed in August.

“I think people expect there will be lockdowns but they are having difficulty believing that they need to shut down the whole of Auckland,” he says.

In discussion with Robertson at a Chamber breakfast event last week, Barnett was heartened by the language the Finance Minister was using around Covid management.

While lockdowns remain on the table as a management technique, there were “lessons to be learned” and any future outbreaks might see things managed differently, Robertson said.

“We all understand it’s a balancing act and over the last few weeks we’ve started to see a slightly more responsive environment,” says O’Riley.

“I think it has been a hard issue to debate during an election campaign and so I would hope that would be a day one priority to get the right people around the table.”

He wants to see privately run quarantine and isolation facilities in the mix and a progressive approach to bring in more skilled migrant workers and valuable investor migrants.

“There’s a lot of money out there for retraining and upskilling workers and I think that’s positive. I’m not decrying the investment: I think it’s fantastic. We just need to make sure it’s well co-ordinated.

“You’ve got digital upskilling of businesses, really important. You’ve got re-training, that’s going well.

“But inevitably, we’re still going to need to acquire some skills through immigration.”

Now – while it is on hold – is the time for a serious look at our immigration policy, he argues.

“The number that has been quoted to me, from the immigration agencies, is there is about a billion dollars of investor migrant money sitting in the system and waiting to come into New Zealand.

“So these are people that have either been approved or are close to being approved. But they just can’t get into the country.”

With an eye on attracting more capital into New Zealand, O’Riley would also like to see Overseas Investment Office rules reviewed.

Meanwhile, New Zealand has the opportunity to keep the economy spinning with record levels of infrastructure investment.

That is one of the areas where business is most hopeful of strong progress in the next few years.

“Both parties are on the same page with infrastructure,” says Barnett.

But the conversation needs to move past the intentions and on to more practical matters – like the pace at which infrastructure development happens, he says.

“It’s too easy to say we’ve made the commitment. It’s about what you do and how quickly you convert that into jobs and action.”

O’Riley hopes the next Government will grasp the opportunity to go much further than existing plans suggest.

“I think potentially we could see the greatest transformation of New Zealand’s infrastructure since Julius Vogel – things like second harbour bridges, tunnels under the Kaimai [ranges].

“We’ve now got an infrastructure commission in place, we’ve got the Crown Infrastructure Partners, but it will require a Government to be really determined to drive it.”

Great progress has been made in the last three years on RMA reform, he says.

“It is the cheapest time in our lifetime for securing debt and it would appear the two major parties are committed to investing in infrastructure, so let’s just get on and do it.”

Then there is climate change, which is also going to require new infrastructure investment, he says.

“The good news is that there’s a private sector which are really happy to partner around infrastructure.”

Barnett agrees that business is broadly supportive of environmental and sustainable initiatives.

He’d like to see some pragmatic and pro-active solutions from the next Government.

“It would be good for Labour to redefine themselves and claim some of that space,” he says.

He sees plenty of opportunity to expand the climate economy, using new technology and getting into new areas such as transforming waste to energy.

“To me there are some things they could do that would share that platform. And probably make it more palatable.”

Barnett says he still hopes a Labour Government might offset the costs of employment law – the higher minimum wage and increased sick leave entitlements – with some pro-business policies.

He would like to see changes to tax policy such as accelerated depreciation (currently an NZ First policy) and more allowance for expensing assets.

“You’re easing the tax burden but you’re also encouraging firms to invest and grow.”

And more could be done to ease the debt burden. “There have been businesses that can [borrow[, businesses that can’t … but they might be able to ring-fence debt,” he said.

For O’Riley, the big issue is business feeling that it has a voice and some input into relevant policy decisions.

The decision to ban new offshore oil and gas exploration still rankles with business groups.

“If you look at the Taranaki announcement, that was dropped on business with no consultation and not a lot of thought about the impact,” he says.

“How many more ideologically driven policies are we going to get like that?”

Business is up for dealing with climate change, he says. “But they expect to be consulted and not handed a solution that hasn’t been well thought through.”

He cites the Future of Work Tripartite Forum (which brought together government, unions and business groups) as the kind of thing that could be applied more broadly.

“That kind of framework can work well, but we never had a tripartite forum around the future of energy,” he says.

Business wants to see “clear markers” that set out the conditions under which changes are likely. “So under what set of conditions would we be willing to expand border capacity, under what sort of conditions might a transtasman bubble be open?”

Then businesses can factor that into their planning and start to assess risks and opportunities for themselves.

“People understand that it is uncertain,” he says. “But any ways that you can find something to give people a bit of certainty is a really important part of the process.”

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