Rutherford on Robertson

Hamish Rutherford reports:

The problem is, business confidence can be self-fulfilling, as can pessimism. While the new Government has focused on more positive signals from each business about their own expected activity, it knows eventually, if confidence falls far enough, investment and hiring will decline.

Businesses won’t invest in new facilities and take on more staff if they are not confident in the future.

For Robertson, the shoe is now firmly on the other foot compared with barely nine months ago, when he was undermining National’s track record on the economy.

In August and September 2017, Robertson was telling New Zealanders that the economy was in a “productivity recession”, where economic output was growing more slowly than the population was increasing. Kiwis, in effect, were working harder to produce less.

As it would turn out, a few weeks after Labour formed the new Government, Statistics New Zealand announced a major revision to its economic growth figures, which showed that in 2015 and 2016 the economy grew much faster than it had previously thought.

Last Thursday new figures showed that, in the first three months of the year, the economy grew, but at a slightly slower clip than the population.

So actually the economy was growing faster than the population under National, and is no longer doing so.

Initially, Robertson said the slowing was because of a transition from an economy based on speculation in housing to one based on more productive things. By Sunday he was saying the period was too early for the new Government realistically to be held responsible for it.

Robertson has a point with his second defence. I always think that changes in economic indicators in the first year of a Government are more a shared accountability than solely the province of the new Government.

His first defence though is a meaningless soundbite. What is this more productive economy he claims NZ is transitioning to? If it was more productive, then economic growth would be increasing, not decreasing.

On Tuesday he played down the degree to which the abrupt decision to end offering offshore oil permits has dented investment confidence, saying it was hardly ever raised with him.

If that really was the case, that seems likely to be a sign that business has not yet become comfortable being candid with the finance minister.

I’m amazed at this statement. I talk a lot to various business leaders and the way the Government acted to ban future exploration without consultation is almost all they can talk about. It has sent a major shock through the business community. Not so much the decision, but the fact it was done with no analysis or consultation.

Previously he has said he has not been given feedback that the decision to give free fees for a year of tertiary education was poorly targeted.

Grant really needs to get out more. He must be in a very insular bubble if this is the case. Even most of my leftie mates think the free tertiary fees policy is badly targeted.