With even Treasury now reporting a loss of business confidence the Government is setting out to put its economic record straight.
That is presumably why it chose to headline Jacinda Ardern’s first press conference in six weeks with a presentation of its “Trade for All” policy and why Finance Minister Grant Robertson is to make a major speech in Auckland later this week.
The Prime Minister seemed in a reinvigorated frame of mind as she set out the Government’s plans to demonstrate to business that it believes in trade.
Or perhaps more subtly what she was trying to demonstrate was that the Government can convince its own left wing to back international trade agreements.
The “Trade for All”: policy is not new.
It was first discussed by Cabinet in February and at the beginning of July, the Ministry of Foreign Affairs and Trade’s Deputy Secretary for Trade and Economic issues, Vangelis Vitalis, gave a paper about it to the Otago Foreign Policy School.
The idea behind the policy is to avoid the public backlash that built up over the Trans Pacific Partnership negotiations.
Even National Leader, Simon Bridges, seemed to agree last night that the negotiators had not taken the public with them.
Ardern said the programme will include an advisory body tasked with consulting with New Zealanders about what they want trade to achieve.
She said it began as a plan to avoid the backlash against globalisation which we had seen during the TPP negotiations.
There will be an emphasis on engaging with women and Maori — neither of whom are usual participants in the trade debate.
Ardern said businesses which exported were more productive and paid higher wages.
“Trade policy, therefore, is obviously integral to our work to support businesses and exporters as we modernise our economy to be sustainable but also to be inclusive,” she said.
Trade Minister David Parker said that during the TPP negotiations there was a feeling that there wasn’t much outreach to the people of New Zealand to assuage their concerns and their criticisms.
Parker said that when National replaced Tim Groser with Todd McClay as Trade Minister things began to improve.
“We’ve taken that a lot further,” he said.
“We’ve been doing meetings throughout the country, and of course, we are setting up this Trade for All agenda.”
Ironically, Parker has already had to confess to EU Trade Commissioner Cecilia Malmström that he stole the name off a similar EU programme.
“We’ve listened to the debate,” said Malmström when the EU programme was launched two years ago.
“Europeans know that trade can deliver jobs, growth and investment for consumers, workers and small companies.
“And they want more of those results.
“But they don’t want to compromise on core principles like human rights, sustainable development around the world or high-quality regulation and public services at home.
“And they want to know more about the negotiations we carry out in their name.”
National’s leader, Simon Bridges, also seemed to subtly suggest that it was Todd McClay rather than Tim Groser who understood the politics of trade.
He was asked whether he bought into the idea that working groups with people like trade deal critics, Jane Kelsey, on board, the government might get further with trade deals.
“I think there is something in that,” he said.
“If you look at Todd McClay he really started that work with whatever you want to call it, popularising, helping the understanding of trade, democratising it.”
These are difficult times for trade negotiators trying to uphold the international trade rules-based system and that point was made by the chair of the Trade For All Advisory group, former diplomat (and “Sneaky Feelings” guitarist and vocalist), David Pine.
“We’ve got to have faith,” he said.
“The world has gone through rough patches before in the international rule of law.
“We are going through another one now, but we have got to keep our eyes on a long-term future while thinking carefully how we manage our way through a difficult time.”
Pine was referring to the refusal of the Trump administration to appoint any judges to the World Trade Organisation which diplomats fear could bring the organisation’s work on trade disputes to an end before the end of this year because they will be unable to raise a quorum for dispute hearings.
But the Government’s trade agenda also faces some other obstacles.
New Zealand began negotiating an Enhanced Partnership with Singapore that is supposed to significantly boost collaboration in trade and economics, security and defence, people-to-people links and research, technology and innovation.
There have been widespread reports that Singapore stalled the negotiations this year after the Government’s original proposal to ban overseas house sales included Singapore.
But in a statement marking the end of two days’ talks in Singapore, Foreign Minister Winston Peters said on Sunday: “I had wide-ranging discussions with my Singaporean counterpart, and reviewed the strong progress officials were making on the negotiation for an Enhanced Partnership.”
However yesterday Parker was not willing to speculate on when the deal may be concluded.
“We never predict precise dates because we seldom get them right,” said Parker.
“But the negotiations are proceeding well.”
Unfortunately for the Government, it is precisely that sort of uncertainty which seems to be weighing down on business confidence.
While Parker has said business confidence surveys are junk, and Ardern had a point when she said yesterday they tend to be more negative when Labour is in power, even Treasury was quoting them yesterday.
In its monthly economic indicators, it noted that the New Zealand Institute of Economic Research’s Quarterly Survey of Business Opinion showed headline business confidence and own-activity measures fell in the June quarter, “while ANZ’s monthly Business Outlook showed the deteriorating trend continued in July.
“Although we think growth held up in the June quarter, weaker confidence, in conjunction with other data, highlight the risk that growth over the coming fiscal year may be weaker-than-forecast in the Budget Economic and Fiscal Update 2018,” Treasury said in a press statement.
If growth is below the BEFU forecast, then that could impact Labour’s Budget Sustainability rules which define the Government’s target surplus as a percentage of GDP.
The Government is already under pressure, particularly from unions, to relax those rules.
But Ardern was adamant yesterday that she would not.
“The rules stay,” she said.
But if confidence is a factor in any reduction in GDP forecasts then the stakes for the Government in its “Trade for All” programme are high; they need business onside because they need the economy to stay on track.
