Infrastructure is a big challenge for the productivity of New Zealand, says BusinessNZ's Kirk Hope.
The Government's plan for infrastructure is one of the most pressing issues that need to be addressed for the business community right now, says BusinessNZ chief executive Kirk Hope.
There is no doubt infrastructure is a big challenge for the productivity of New Zealand, so having a very clear, long-term plan around infrastructure is crucial, he says.
"We have $40 billion allocated for infrastructure over 10 years but it's still not very clear what that money is going on. When you make very big decisions around infrastructure and switch from roads to light rail, there are consequences."
The Government has done well in getting on to the review of the Resource Management Act, but there's still a lot to do around legislation which would enable New Zealand to build quality infrastructure quickly, says Hope. He warns that though the new Infrastructure Commission will be very helpful, it will have a strategic purpose only.
The Government is fiscally well positioned to put money into infrastructure projects if there is a downturn, but would the country be able to attract the builders and engineers they would need to do the work and how quickly, asks Hope.
Housing is included in the infrastructure issue, he says.
The Labour-led Coalition Government has been on a roll with social housing but there is less to be certain about with the general housing market.
An issue which is really starting to crunch business is skills shortages, and these are across the spectrum, says Hope.
There is relatively high unemployment for 18-to-24 year olds, but It's about getting these young people "workforce-ready", he says.
There were some strong policy reasons for putting country's polytechnics recently to go into a single entity but the Government must make sure that it doesn't lose the pipeline of people currently in the system, he says.
Free trade agreements
As the US and China have a very public trade stoush and the UK's relationship with the European Union gets frostier by the minute, New Zealand exporters will have to be alert for challenges and opportunities.
"When you look at the landscape and where the demand is coming from, we're doing okay. Asia is still going fairly well for New Zealand," says Hope.
The Business NZ chief executive is thankful for the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) signed last year, which he thinks will lead to more free trade agreements.
The CPTPP broadens zones and markets for New Zealand, he says. Meanwhile a European Union free trade agreement would break down a lot of barriers for New Zealand export business, he says.
"The more free trade access, the better insulated we are against regional and global headwinds," says Hope.
A laundry list of worries
Looking at business confidence locally, New Zealand businesses have had to think about a raft of new government policies, says Hope.
The increase in the minimum wage was significant for SMEs, he says.
"In reality, it does not just hit the minimum wage workers, it goes right through the pay scale," says Hope.
Other issues on the business community's list of worries include the ongoing immigration policy, says Hope, which makes immigrants on three-year visas, leave New Zealand for a year.
"The process by which we enable people to come into New Zealand remains challenging," says the Business NZ chief executive.
At the same time, businesses are still trying to understand the implications of the Coalition Government's climate policy.
They are currently digesting the new regulatory framework for drinking water safety and improving outcomes for wastewater and stormwater.
If you are a SME business owner who wants to look at the next step of growth or development and are questioning if the time is right to commit to more expansion, it's a lot to think about, says Hope.
Another concern keeping business owners up at night are the consequences of the Reserve Bank's increased capital requirements on the big banks which Hope is sure will restrict businesses' access to capital.
Kirk Hope's top three issues
• A need for a clear, long-term plan for infrastructure
• Skills shortages
• The (too) long list of policy changes