Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Jobs for our young - bosses must pitch in

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Key is full of confidence but he needs to confront the elephant in the room

John Key says New Zealand has to be a magnet for investment. Photo / Brett Phibbs
John Key says New Zealand has to be a magnet for investment. Photo / Brett Phibbs

Prime Minister John Key wants New Zealand to be a "magnet for investment" but his Government faces a big sales job to persuade New Zealanders that "foreign" investors and "big business" should be embraced.

Key's state of the nation speech was notable for one thing: his strong self-confidence that his Government was on the right track and that an expected investment boost would provide more jobs for Kiwis.

He believed the Government's Business Growth Agenda with its six work streams would provide the necessary conditions for the additional investment; made it clear that the controversial SkyCity-bankrolled National Convention Centre was necessary to attract more high-spending tourists; plugged the current tax regime, the major roading projects, the free trade agenda - especially with the United States - and much more.

Trouble was, apart from beefing up the apprenticeship numbers by removing age barriers and dishing out new cash incentives to those enrolling in programmes in specified industrial sectors, it basically ignored the elephant in the room - youth unemployment.

The basic focus is "get the investment in and jobs will follow".

This is a rational argument that business will get. But does the public understand this? And will Opposition politicians play ball?

Hardly.

Key was on the button in pointing out that Australia's economy had thrived through heavy investment, particularly in Western Australia, which had the country's lowest unemployment rate and highest population growth courtesy of the resources boom. Many Kiwis have gone there to find work.

It is notable also that China is the source of much of the external investment in Australia's oil and gas sector.

The PM cited Taranaki, which had attracted significant oil and gas investment, the upshot of which was a low unemployment rate and incomes that are growing faster than anywhere else in the country. But he skirted the fact that two big oil companies have already turned their backs on this country.

Said Key: "The key factor is investment and not just in oil and gas. So here in New Zealand we have to be a magnet for investment."

Trouble is that while the Government has freed up oil and gas permits, it lost its nerve at the first hurdle when proposals to open up mining, for instance, were pushed. Maybe that was a good thing given the pathetic safety regulation monitoring that was exposed by the Pike River coal mine disaster.

This episode showed the Government is easily spooked.

And given that much of the big-ticket investment will also come from China - either through investment in resources, the agriculture sector or through increased tourism numbers - the Government could face more challenges.

What was heartening was Key's decision to confront head-on the politically whipped-up bogey over easier visa conditions for Chinese tourists.

But Opposition politicians know they can count on the media running with their hares without even challenging their basic assumptions.

I've spent the last fortnight in China researching for the Herald's annual China Business Report. Most of the Chinese investment (so far) has been in injecting capital into stressed New Zealand companies such as PGG Wrightson, Fisher & Paykel Appliances or Synlait which couldn't get expansion funds.

The interesting point is that without Chinese investment these companies would not be thriving and more jobs would have been lost. Huawei has invested in greenfields opportunities.

But some investors are gun shy because of the Crafar farms sale saga.

This was the most contentious foreign investment play during this Government's first term.

Anti-Chinese sentiment was whipped up by Sir Michael Fay and the high-paid spinners for the Fay-led consortium opposing the bid threw petrol where they knew it would spark fire.

These PR people went on the warpath. PR operators launched polls where the questions were obviously designed to promote an anti-Chinese response. Wider Maori opposition was stirred up: Maori would invade the land if the sale went ahead; cows would be rustled and worse.

The upshot was the PM even got into the act by saying he said feared New Zealanders were becoming "tenants in their own land" - something he countered when investigations showed less than 1 per cent of New Zealand farmland was foreign-owned and Overseas Investment Office regulations were working well.

The point of this example is to show that he also is easily spooked.

I wrote recently that if I had one New Year's wish it was that Key returned from his Hawaiian summer holiday brimming with enough determination to challenge the nation's employers - and himself - to tackle youth unemployment.

Yesterday's speech hinted that his Government is indeed looking at ways to give workers incentives to relocate to Christchurch for the rebuilding of the quake-stricken city. But the details were tantalisingly lacking.

Also lacking was a moral message to employers that they have a duty to train the workforce of the future.

I wanted giant steps - not baby steps. I'm still waiting.

- NZ Herald

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