The party of business is in power, but the creases are yet to be ironed out of its dress shirt
The business community craves certainty, perhaps even more than it craves National. However, with a by-election still to come and the potential for lengthy negotiations, the shape of the next government isn't clear-cut.
Nevertheless, the business community has its guy in Christopher Luxon, and most of its business-friendly policies seem like they’ll get through negotiations unscathed.
If needed, a government consisting of National, Act and New Zealand First would be likely to shorten the brightline test, restore interest deductibility for property investors and wind back changes to lending requirements accused of stifling availability to credit.
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New Zealand First leader Winston Peters was a vocal opponent of fair pay agreements during its previous term in government alongside Labour and Green in 2017, and both National and Act are keen to see fair pay agreements go.
The parties are also largely aligned on agricultural policies and cutting red tape imposed during the last two terms of government and their lists represent it.
Notable rural entrants include former Federated Farmers president Andrew Hoggard, who is a shoo-in at number six on the Act party list, and National’s Mike Butterick, a former spokesperson for the anti-forestry conversion group 50 Shades of Green, has unseated Labour’s Kieran McAnulty in Wairarapa.
However, other policies could potentially be sticky in negotiations.
If brought into government, New Zealand First could complicate some other pro-business policies held by National and Act.
Winston Peters is opposed to doing away with or loosening the foreign buyer ban brought in when he was last in government.
His party is also keen to examine lifting the minimum wage to $25 through a tax concession, up from $22.70 at present.
Though National has been hazy about its plan for minimum wage increases, other than taking a business-friendly approach, Act has indicated it would look to pause minimum wage increases in response to a series of hikes under Labour.
Approaches to immigration and foreign investment are other areas that could be difficult between the three.
So the business community has got its guy Christopher Luxon in on the ninth floor, but does an election with so many asterisks and variables provide certainty?
“Yes and no,” says ANZ chief economist Sharon Zollner. “We know more than we did before.”
She said the preference for a National Government would likely see a sharp uptick in headline business confidence, which isn’t really correlated to economic outcomes.
“On average, businesses prefer a blue lead to government but whether that actually manifests itself in different business decisions is much more questionable.”
Talking to Newsroom last night, Business NZ chief executive Kirk Hope said it may take a month or more to get a clear understanding of whether the government will be two or three parties – but the reality from a business perspective is that this will be a more business-oriented and business-focused government.
“Key change areas will be infrastructure, immigration, investment – particularly foreign direct investment – but it is also clear that education and training will be important and outcomes will be the focus.
“This may require big shifts in the public sector and a remaining question is whether the new Government is able to ensure the bureaucracy can deliver.”
Zollner said the biggest differences would be residential property investment, leaning in on changes to the brightline test and interest deductibility during a period of such strong migration.
She said you should never say never with the Auckland housing market, but prices would likely be moderated by other factors, including the possibility of a debt-to-income being implemented by the Reserve Bank.
“In a macro sense, National and Labour's net fiscal stimulus to the economy isn't that different on paper, so it's not a game changer for the Reserve Bank and therefore for interest rates.”
Employers and Manufacturers Association chief executive Brett O’Reilly said you had to accept the fact that there can be a difference in what you say you’re going to do in the lead up to an election and the reality of government, but some changes were fairly clear-cut.
“In the first instance we would expect to see some very early changes in the employment relations environment,” O’Reilly said, referencing fair pay agreements and the possible reintroduction of 90-day trials.
“For businesses, that would be welcomed because there has been a lot of new legislation passed in the last six years without regulatory impact assessments, so when it comes time to implement, it’s been pretty patchy and we’ve seen it writ large through our advice line.”
He also expected a common interest between the parties in restructuring the public sector, which O’Reilly theorises is one of the drivers behind New Zealand’s low productivity, as well as an alignment around giving more responsibility to local government.
“I guess the devil will be in the detail and how you effect some of that change.”
