The new winning face of the Government

Yesterday’s NZME “Mood of the Boardroom” survey should be a wake-up call for the Government.

This annual survey polls a wide range of private and public sector business leaders.

Respondents to the survey rated their confidence in the New Zealand economy at 3.23 out of five, the highest score for optimism in the New Zealand economy since 2016,

This contrasts with the New Zealand Institute of Economic Research quarterly survey of business opinion released on Wednesday, which found that a net two per cent of firms were expecting weaker activity in the next quarter.

Those surveyed by NZME were generally supportive of the direction that the Government has travelled in, but there were some niggles and perhaps some early warnings of where things could go wrong.

There was support for the Prime Minister, his moulding of his Caucus, the management of the coalition, and his pro-business “New Zealand was open again for business” campaign overseas.

But there are concerns. Some of his Ministers are clearly seen to be underperforming, and there are some concerns about his own political style.

His recent dismissal of ANZ Bank CEO Antonia Watson when she called for a discussion on a capital gains tax may have provoked concerns that he was still stuck in Opposition mode.

“His leadership style was diminishing of others. It does not inspire confidence and a positive dynamic,” the “Mood of the Boardroom” quoted one CEO as saying.

There were other grumbles about a focus on box-ticking KPIs and not enough on the big picture.

“The Government needs to maintain a focus on the policies that will drive NZ’s long-term success and not get dragged into small-minded and divisive issues,” said a finance sector boss. “Luxon was better than that.”

Respondents to the survey ranked him 5^th on a list of Cabinet Ministers, the same position he had last year when he was just Leader of the Opposition.

Otherwise, the standout rating was for Education Minister Erica Stanford.

Stanford was one of only a small number of National Ministers who came to the first Cabinet with a fully developed programme for her portfolio.

Her “back to basics” approach and, thorough research and willingness to consult has won her wide support not only from parents from many teachers as well.

A social liberal, She has also become a constant favourite at party conferences, although some more conservative caucus members remain suspicious of her.

The survey also showed that she may have been boosted by the widespread belief that education was an area in which the previous Labour Government had conspicuously failed.

Respondents voted the Ministry of Education as one of the Government agencies performing least well, and the former Minister of Education, Jan Tinetti, was given the lowest rating of any politician ranked in the survey, a meagre 1.86 out of 5.

After Stanford, Transport Minister Simeon Brown was the next highest-rated Minister.

His quickfire repeal of many of Labour’s “woke” traffic policies and his restoration of the Roads of National Significance have obviously won him support among Auckland businesspeople whose businesses are often throttled by traffic congestion in the city.

But just as Stanford may be too liberal for some in the Caucus, as a member of the so-called social right-wing “Taliban”, he is probably too conservative for some.

The two middle-ground Ministers, Nicola Willis and Chris Bishop, must remain the favourites to replace Luxon when he goes.

The only question is now which one might eventually prevail.

Both get high ratings in the survey.

Bishop’s moves to reform the Resource Management Act so it becomes easier to “do things” and his attempts to bring some structure and continuity to the infrastructure sector have won widespread praise from survey participants.

Mainfreight managing director Don Braid is a supporter but wants National to rethink political cycles to provide a more long-term faremwork for infrastructure planning and provision.

“The three-year political cycle has a major influence on our infrastructure planning and delivery. A longer political cycle of four or, even better, five years would allow the Government to plan and deliver rather than worrying about political consensus.”

Finance Minister Nicola Willis was on the same rating as Bishop, and she scored a double hit albeit with some reservations.

There was approval for both her role as Minister of State Services and as Minister of Finance.

In both jobs, she has been trying to cut back on expenditure.

The survey quoted Deloitte CEO Mike Horne’s view of her performance: “Tentative at this point.

“She has faced into some of the fiscal issues that she inherited but as yet, we haven’t seen a clear direction on how to move forward to a more sustainable, longer-term solution.”

Chris Quin, CEO of Foodstuffs North Island: “It would be good to hear more from the Government about their economic growth story. New Zealand doesn’t feel like an easy place to do business right now.”

An agribusiness leader said: “Cutting costs in wasted areas is one thing, but we need to grow the economy. Be clear on those spend areas and how they will contribute to growth.”

That call was echoed by a major law firm CEO, who believed Willis needed to have a greater focus on growth areas, not just cuts in Government spending.

Willis, speaking at the survey launch, had little new to offer to address those questions.

“This is a country with peace, stability, security, an outward orientation, a map of trade relationships, the ability to grow many more strong institutions, abundant natural resources, smart people,” she said.

“And here’s the thing I’m most excited about immense, untapped potential.

“And so our Government is driving to release that potential. We want to see more investment and more innovation.

“And we recognise our role in setting the framework in which that can occur. “

She then ticked off National’s achievements in education, free trade agreements, housing, removing red tape and infrastructure development, as well as citing the Commerce Commission’s work to encourage competition.

She also mentioned, but didn’t develop and discuss the lack of capital of many New Zealand firms.

Any discussion on the allocation of capital in New Zealand tends to inevitably end up with a debate about Capital Gains Tax and whether it could help trim what many consider to be the disproportionate misallocation of capital to the housing market.

NZME’s Head of Business, Fran O’Sullivan, said that more than half of those who responded to the survey proposed a capital gains tax.

But Willis was opposed, saying that as soon as you got down to the details, were you doing this in a revenue-neutral way or as an additive tax, therefore making us a more highly taxed nation?”

However, taxation will be a critical issue over the next few years as the country faces the prospect of long-term structural deficits.

Treasury Deputy Secretary Dominick Stephens made exactly that point last week in a landmark speech on the longer-term fiscal outlook and the impact of burgeoning demographic pressures on health and superannuation costs.

But she argued that the Government was already addressing the issue.

“It comes down to government being smarter about how we drive value from the investments that we make and how we deliver better services with more innovation.”

Addressing the issues raised by Stephens will require boldness and courage from National. It will mean addressing the eligibility criteria for superannuation, the whole structure of the health service, and taxation. And to make it stick, it will have to be bipartisan.

As Stephens said, there will be no single bullet.

At first, during the presentation, it seemed that Labour’s Finance spokesperson, Barbara Edmonds, might be up for a discussion about the superannuation criteria, but that was quickly dashed later in the day when she told Stuff this was not a discussion she was having.

For Luxon, apart from the hope that he might start to look ahead rather than backwards, there might also have been a hint as to what his first Cabinet reshuffle might need to address.

Three National Ministers, Nicola Grigg, Penny Simmonds, and Melissa Lee, were ranked in the lowest five, and two front bench Ministers, Louise Upston and Paul Goldsmith, were ranked 17th and 18th, respectively.

Lee is probably safe as National’s only Asian Minister and Grigg has been on maternity leave, leaving Upston, Simmonds and Goldsmith.

Upston and Goldsmith both have strong party bases, but neither have made much of a mark as Ministers. Simmonds has already had one portfolio stripped off her. It would not be surprising to see her lose her remaining portfolios.

There might also be questions about the low rating for Tourism Minister Matt Doocey

This survey shows National still enjoys the confidence of the business sector but there niggles and the challenge now will be to prevent them becoming something bigger.