Fran O'Sullivan: Five critical issues weakening the appeal of Brand Key

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John Key still has wide appeal - but the PM's ratings are slipping. Photo / Greg Bowker
John Key still has wide appeal - but the PM's ratings are slipping. Photo / Greg Bowker

Hillary Clinton has finally won the Democratic nomination for President; Donald Trump has been endorsed by North Korea (and the Republicans); Brexit has happened; here in New Zealand captains of industry are needling the Key Government to show a social conscience on housing. They are also speaking openly about the environmental downside of the dairy industry.

These are not the predictions I made in late 2014 when I wrote it was "business as usual" for the business sector following the re-election of the Key Government, which has now passed the mid-way point of its third term.

But is it still "business as usual" ?

Not judging from the business leaders who are openly voicing their disquiet on the major inequalities which have emerged amid the New Zealand economy's immigration-fuelled growth spurt.

Mainfreight executive chairman Bruce Plested is the latest to put his head up over the parapet by advocating a capital gains tax to take the steam out of an overheated housing market. He's also urged government to treat teachers as "true professionals", paid on performance.

Plested was at the forefront of a Mainfreight group which attended rich lister Stephen Jennings' recent lecture to a dinner hosted by the NZ Initiative. Jennings suggested that voter unrest - as displayed by the Brexit vote - could spill over to New Zealand if social ills are not addressed.

Plested reckons taxing capital gains on the sale of assets will help to remove distortions, alter buyers' and sellers' behaviour and go some way to help solve NZ's housing problems.

Business was buoyed by the Key Government's return to the Beehive in late 2014. They get the business agenda.

But where's the plan?

In the 2014 election campaign, Key repeatedly promised the country was "on the cusp of something special" - but couldn't say what it was.

That something special has turned out to be the "Switzerland of the South Pacific". A nation which is attractive to high-net-worthers and others who are immigrating here in droves.

Trouble is, while the immigration has made ordinary Aucklanders millionaires, much of this is paper wealth.

Plenty of baby boomers have cashed in. But the social fabric is being undermined as younger Aucklanders cannot afford to gain a foothold in the housing market without huge mortgages which are out of whack with their pay rates.

Key could still invite some of the best strategic business brains into the Beehive for some advanced level brainstorming to spark new thinking on housing. But he appears to have taken the punt that enough New Zealanders have been advantaged through the seismic shift in house prices to ensure a voting base for next year's election.

Which brings us back to another three years - for what?

Don't get me wrong: this is a highly successful Government.

But there are signs of complacency.

The Productivity Commission has produced copious recommendations. But not enough of these are being turned into action and policies that will lead to an increase in business productivity and get NZ on a path where 4 per cent growth is the new normal.

Inter-generational issues remain a concern. The Government will not push the superannuation qualifying age up beyond 65 years. This leads to an unequal burden on succeeding generations - generations which are already penalised by the mounting cost of housing.

There will be massive construction in Auckland once the Unitary Plan goes into effect and the city expands up and out. But is that enough?

Brand Key

Key remains the Government's best asset but his brand has lost some of its potency. He no longer rates quite as highly in the preferred Prime Minister polls.

He has applied a tight rein on more junior members of his Cabinet. Todd McClay was publicly humiliated on the Chinese steel issue. Judith Collins is back in play. But Paula Bennett was given more leeway than most when she made some absurd stuff-ups in housing.

A succession strategy does not seem obvious at this point.

Brand Key plays well offshore. But with protectionist sentiment rising worldwide - and the TPP looking increasingly difficult to get through the upcoming lame duck session in the US - Key will need to take a much more aggressive line internationally to ensure our businesses thrive.

The international environment is becoming increasingly polarised. Key must play a very deft hand indeed in a world where even Trump stands a good chance of winning the US presidency.

The issues

Child poverty and inequality were issues in the 2014 campaign. Now it's immigration and housing.

Businesses would like to see some more leadership from the Government. A Prime Minister's taskforce to tackle some challenging issues could entice leaders to assist the Government to reinvigorate itself and find new solutions.

The danger is that complacency wins out.

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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