NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Companies

Brian Fallow: Jacinda Ardern is right - this gloom is misplaced

Brian Fallow
By Brian Fallow
Columnist·NZ Herald·
30 Aug, 2018 08:25 AM6 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

The Government won't relax its self-imposed budget responsibility rules, says Jacinda Ardern. Photo / Dean Purcell

The Government won't relax its self-imposed budget responsibility rules, says Jacinda Ardern. Photo / Dean Purcell

COMMENT:

Whether or not it works as outreach to a grumpy business community, the Prime Minister's speech on Tuesday deserves to be read.

She makes some fair points.

The first is that the despondent state of business sentiment is really not warranted by the economic indicators.

Jacinda Ardern did not labour the point in a get-a-grip sort of way. So let me.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

The cycle is getting long in the tooth and the best of it is behind us but the economy is hardly falling off a cliff.

Skill shortages and other capacity constraints are biting in some sectors. Profit margins are under pressure, the labour market is tightening and the migration cycle peaked a year ago.

But the population and workforce gain from that source is still very high by historical standards and the Government is working on plans for regional skill shortage lists, recognising the shortcomings of national ones.

Advertisement
Advertise with NZME.

For consumer-facing businesses, the unhealthy combination of a wealth effect from runaway house price inflation and a negative household saving rate is being replaced, at least partly, by some actual cash income growth.

Read more:
•Why the long faces from business?
•What about the workers' share?
•How ready is NZ to face the next crisis?

And not just from the families package which kicked in two months ago. The number of people employed grew 3.7 per cent in the year ended June and their collective weekly gross earnings were up 5.5 per cent.

Some export commodity prices may be wobbling, but the overall terms of trade — the ratio of export to import prices — is at the most favourable level on record, boosting national income. And the exchange rate has moved in an exporter-friendly direction.

Discover more

Opinion

Brian Fallow: IRD study finds mega-rich don't pay fair share of tax

02 Aug 06:30 AM
Business

Brian Fallow: Employment hits the target

09 Aug 05:00 PM
Business

How ready is NZ to face the next crisis?

16 Aug 05:00 PM
Employment

Migration torrent slows - but only just

23 Aug 05:00 PM

The official cash rate remains at an all-time low and the Reserve Bank indicates that it is in no hurry to change it, and that the next move is as likely to be down as up. Bank lending to businesses grew 5.7 per cent in the year ended July, a seven-month high.

It has never been cheaper for the Government to borrow, with 10-year bonds trading at a yield of just 2.6 per cent, prompting calls for it to relax its self-imposed budget responsibility rules on spending and borrowing.

"We won't," Ardern said.

So if it is not the state of the economy that explains the gloomy and potentially self-fulfilling level of business sentiment, what else might it be?

Policy uncertainty.

"I understand the desire for certainty in order to make decisions big and small," Ardern said.

Advertisement
Advertise with NZME.

"But certainty shouldn't be confused with stasis and complacency, which are the enemy of progress and for that matter the enemy of innovation."

So her second main point is that the Government has changed. It has an agenda, to tackle pervasive structural challenges which she lists as: skill shortages; lack of investment in the productive sector; a shallow national pool of capital; an infrastructure deficit; low productivity; environmental degradation; "and challenges which can broadly be defined as the future of work".

These are gnarly issues and the process of deciding how to address them is complicated by the fact that there are three parties in this Government, each with its own constituency and perspective. Policy changes have to be negotiated among them. Ardern admits it is hardly a model for fast and unexpected change, but the breadth of input, she contends, leads to better decisions.

We fundamentally believe we need to progressively keep lifting the wages of New Zealanders and make sure we are not a low-wage economy. That might be something that some businesses just disagree with.

Jacinda Ardern

The Government gets criticised for the number of reviews and working groups it has set up and which have yet to deliver their advice.

That is the price for consultative processes intended to mitigate the risk of unintended consequences.

Would heedless haste be better? Would business prefer not to be at the table?

Advertisement
Advertise with NZME.

"Sometimes we might just disagree," Ardern told Radio NZ's Kathryn Ryan later in the morning. For example, on raising the minimum wage.

"We fundamentally believe we need to progressively keep lifting the wages of New Zealanders and make sure we are not a low-wage economy. That might be something that some businesses just disagree with."

One policy employers regard with some foreboding is the plan for fair pay agreements. The working group charged with developing a framework for them — chaired by Jim Bolger, who is no-one's idea of a Bolshevik — is due to report in November.

Systems of bargaining to set minimum terms and conditions of employment across industries or occupation are commonplace in other countries, including Australia.

The idea is to create a level playing field in industries most at risk of a race to the bottom.

But they are not intended to fundamentally disrupt the employment relations landscape, Ardern said. They will not be accompanied by the right to take strike action.

Advertisement
Advertise with NZME.

And there will be no more than two concluded in this parliamentary term, she said. They will be in industries which have low pay and in which workers are vulnerable and regularly exploited.

Pressed by Ryan to identify the industries in the gun, Ardern declined to do so, but said the employers involved knew who they were.

A notable omission from the speech was tax. The first fruits of that working group are expected next month.

The economy suffers from a tax system which for nigh on 30 years now has told us that if you want to provide for your old age, don't save money — instead, borrow money, as much as you can, and use it to bid up the price of housing.

It entrenches inequality and starves the productive economy of capital.

The Government has pledged that any changes flowing from the Cullen tax review will be put to the electorate in 2020 before becoming law.

Advertisement
Advertise with NZME.

It is typical of a cautious, consultative approach to policy making which is frustrating for people impatient for change or at least for a decision.

But it is preferable to the bull-at-a-gate, we-know-best approach of the Rogernomics era. The social scar tissue of that period disfigures the country to this day.

Sign up to the NZ Herald Business page on Facebook for latest news, commentary, data and analysis​

Save

    Share this article

Latest from Companies

Premium
Retail

'Give it a second chance': Ruby's recycled clothing venture takes off

06 Jul 03:00 AM
Business|companies

Entrepreneur Bowen Pan on why he returned to NZ

Premium
Business|companies

Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

05 Jul 12:00 AM

There’s more to Hawai‘i than beaches and buffets – here’s how to see it differently

sponsored
Advertisement
Advertise with NZME.

Latest from Companies

Premium
'Give it a second chance': Ruby's recycled clothing venture takes off

'Give it a second chance': Ruby's recycled clothing venture takes off

06 Jul 03:00 AM

Miller-Sharma aiming for 25% of revenue from non-new clothing by 2030.

Entrepreneur Bowen Pan on why he returned to NZ

Entrepreneur Bowen Pan on why he returned to NZ

Premium
Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

05 Jul 12:00 AM
Premium
Surge in new vehicle sales: Industry insiders explain three factors behind spike

Surge in new vehicle sales: Industry insiders explain three factors behind spike

04 Jul 05:00 AM
From early mornings to easy living
sponsored

From early mornings to easy living

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP