Collaboration key to converting confidence into tangible results

By Phil O’Reilly

First published on the The Post.

Business will warmly welcome the prime minister’s recent announcements about a single-minded focus on growth and the appointment of Nicola Willis as Minister for Economic Growth.

Many businesses will be able to share examples of investments being stalled, reduced or stopped altogether due to rules and policies that are fundamentally anti-growth and anti-investment, despite being dressed up as apparently balanced or precautionary.

New Zealand business confidence has been high over the past few months - not necessarily due to strong economic fundamentals, but rather the hope that the Government is moving in the right direction. These announcements will bolster that confidence. There is also a belief that the future cannot be as challenging as the recent past. Given we have endured the worst recession since before the global financial crisis, any improvement feels promising by comparison.

The question now is how can the Government and businesses collaborate over the next year to transform this hopeful confidence into tangible results - faster business growth, improved infrastructure, more jobs, and increased prosperity?

In my experience, businesses tend to invest because they believe that government has their back. They believe government is executing a plan that will improve things for them and the communities they serve and that government and business can hold each other to account for what each does best.

For government, that looks like creating a regulatory environment conducive to growth. In the case of the business community, it looks like getting on taking risks and investing.

That evident government plan is essential for attracting particularly foreign investors, because New Zealand doesn’t have anything obvious to make them want to invest here - low tax rates, widespread government subsidies, or industry policies that might favour one sector over another.

To be clear, neither the Government nor the domestic business community desires these measures. However, in their absence, the Government must be especially intentional and transparent in demonstrating why businesses should invest here rather than elsewhere.

The coalition Government would argue it is taking significant steps in this area - and in many respects, it is right. Efforts like reforming our resource management laws, introducing fast-track legislation, improving the education system and our regulatory framework, and opening infrastructure assets to new investment are commendable and broadly supported by both New Zealand and global businesses.

But if potential investors don’t understand this, in language they can understand, with a clear line of sight to resolving problems, they may become confused and suspicious about the story and be persuaded to go elsewhere or not to grow at all. Or worse, asking for things that are naïve or impossible to do.

This is not simply a marketing exercise, but executed properly will hopefully attract businesses and investors to come here or stay. It’s about government defining the big issues that hold back investment and growth from a business perspective, then holding itself to account for resolving them at pace.

It's not about creating some sort of Stalinist five-year plan, but a straightforward, business-focused explanation of what the Government aims to achieve, over what timeline, with what investments, and how it plans to engage the business community.

The coalition agreements offer some insights for businesses, but they are primarily political documents, not tools for building investor trust and engagement.

One big thing we can do in the next few months is create a compelling narrative. If we are trying to increase productivity, for example, what are the concrete things we are doing about that? The just-announced changes to our science system is one example. What is happening there and why will it matter to business?

If building skills is a priority, what is the future of Te Pūkenga, and when will changes occur? Businesses need this information to confidently invest, knowing skilled labour will be reliably available in the long term.

What will our immigration settings be, and when will changes take effect? Businesses must know whether they can bring highly skilled workers across the border to help grow their operations.

What are the rules for foreign direct investment, and how will potential investors be informed about upcoming changes and their implications?

If we are doubling exports by value, then what concrete steps are being taken to get us there and how can businesses take the lead?

New Zealand needs a clear narrative - a plain language set of commitments both government and business can understand and work towards. This is about the Government setting a transparent, accountable, growth-enhancing agenda, enabling businesses to respond, positively and swiftly. It will help turn the prime minister’s announcements and cabinet appointments into real growth more quickly.