An economic plan lets business community know what matters to the Government

By Phil O'Reilly, May 2018

It is easy to see why some might say it is a confusing time for business in light of some of the political events over the past couple of months.

For example, when the Government first suggested it would be actively considering curtailing the exploration of oil and gas, back in March, this sent confusing signals to business. As any cut back on oil and gas exploration in New Zealand will likely have a significant impact on employment in the regions, the business community saw this as contradicting the Government's commitment to investing in the provinces. The Government's follow-through announcement in April reinforced this sentiment.

Adding to the confusion were comments from ministers which seemed to be out of sync with earlier promises from the Government. Take Shane Jones' (Minister for Regional Development) criticism of Air New Zealand a while back. He called for board renewal and the removal of the chair. At the time concerns rippled through business because it was one of the first times that a Cabinet minister had made strong statements of this kind in such a high profile and aggressive fashion.

However, if we extend our view a little and listen to the debate that has followed we can realise there might be alternative perspectives.

The Prime Minister has since pointed out that the Labour Party, while in opposition, had already indicated it was examining the position of New Zealand's petroleum and gas exploration sector with a view to moving to a less carbon-intensive future. And with regard to the Air New Zealand issue and Jones' comments, these might have stemmed from coalition politics playing out, and New Zealand First playing to its voters.

However, the real reason these two stories became centred around business confidence and confusion was because businesses can't yet see any overall framework for economic development from the Government.

Businesses take a view that they are a core part of New Zealand communities and our country's overall success. This means that while traditional measures of business such as GDP per capita growth are crucially important, a modern economic framework needs to include things like biodiversity outcomes, moving to a lower carbon future, lowering child poverty and generating prosperity and opportunity in the regions. Business people want these too.

But, without doubt, they also want to see government policy that is focused on making sure businesses are successful, competitive and thriving so that they can contribute in their own unique way to the success of our communities and our country in general. Successive governments have resolved this to some extent by setting up frameworks whereby business people and others can holistically view economic policy making.

By using these frameworks well, it is much easier for governments to point to the overall progress of policy making. This reduces the risk of business becoming confused or concerned over particular policies or individual statements from the Government that may appear to contradict the bigger economic picture.

The Helen Clark-led Labour Government used what it called The Growth and Innovation Framework (GIF) as a way of ensuring everybody - business people, policy makers, politicians and the public - could understand the direction the Government was taking on the broad economic issues and how that might have an impact on individuals or groups from time to time.

The John Key-led National Government used the Business Growth Agenda (BGA) for a similar purpose.

As one who was deeply engaged in both, I wouldn't necessarily recommend either as a model. But I think the events over recent months have demonstrated that this Government needs something in place, and the sooner the better.

It needs a framework of some sort which addresses economic and competitiveness concerns that businesses might have, but also speaks to their other concerns around regional growth and development, a sustainable environment and improving biodiversity, as well as diversification of our economy and changes to the labour market, including immigration.

Governments that write these things down in some sort of organised fashion engage the business community and others in understanding and moderating them. They also hold themselves accountable for the totality of the achievement that they make.

Furthermore, they are far more likely to gain business confidence over time than if they leave businesses to presume they are putting in place policies that are not thought through or are confusing.

Business people will not want to sweat the small stuff but in the absence of an understood framework it is difficult to see what is big and what is small.

Perhaps it's time for this Government to think about what framework they want to use to engage the business community in understanding what direction they want to take. A conversation and an agreed strategy and set of actions will have the added benefit of holding both Government and business to account.