Auckland Chamber of Commerce chief executive and former National Party leader Simon Bridges says Prime Minister Jacinda Ardern will be remembered for being a “decent person with great personal style and excellent in crisis”.
Ardern is stepping down as Prime Minister and Leader of the Labour Party, with her resignation taking effect once a new prime minister is appointed.
Bridges – who was National Party leader during the throes of Covid-19 and rose through the political ranks alongside Ardern – said, “she proved excellent in crisis and did a great job in summing up Kiwis’ feelings and leading at those times.”
Ardern led well during the early stages of Covid-19 and in the wake of the March 15 Christchurch mosque terror attack and the Whakaari White Island eruption, he said.
“She proved excellent in crisis and did a great job in summing up Kiwis’ feelings and leading at those times,” Bridges said.
“I admire her decision [to step down]. It takes real courage to do what she’s done. I’ve got a lot of empathy as someone who was in Parliament – that’s difficult – and much more so when you’re leading a country.”
Bridges said he sent Ardern a message shortly after the announcement wishing her well.
Focus on next leader
He said many in the business community would be disappointed Deputy Prime Minister and Finance Minister Grant Robertson said he wouldn’t put his name forward to be leader.
“He was best placed in the Labour Party to deal with the significant economic challenges we have given his now reasonably long tenure as New Zealand’s Finance Minister,” Bridges said.
“He’s been someone who the business community hasn’t necessarily always agreed with, but who’s always listened and been a reasonable leader to deal with.”
Bridges said Ardern’s resignation “leaves a lost opportunity when it comes to our big long-term economic issue, and that’s productivity”.
“I think the business community has had its confidence knocked by successive policies, and truly global issues.”
Bridges hoped the new prime minister would “inject new impetus and confidence into sectors in our economy”.
Top of his priority list was changing immigration settings to plug labour shortages.
Bridges believed the loosening of settings to date was insufficient.
“Good is not good enough,” he said, noting New Zealand is competing with other countries for talent.
Having announced his resignation from politics in March last year, Bridges said, “I’ve enjoyed the privilege of not having to follow everything, and I suspect Jacinda will too.”
Markets unmoved
Kiwibank chief economist Jarrod Kerr said the currency had dropped a little bit on Prime Minister Jacinda Ardern’s resignation.
“But not dramatically so.”
Kerr said he didn’t expect it to have any impact on the sharemarket.
“There’s a long time between now and the election. New Zealand is considered to be a very stable country politically either side whether Labour is in or National is in. We are not a third-world country here.
”I think financial markets should look through it.”
He said historically markets generally preferred National-led governments but sudden announcements like this and potential changes of government were not what they used to be in the 1980s and 1990s.
“Reasonably steady ship either way and not big news for markets. It’s not like Adrian Orr coming out and saying something.”
Kerr said the focus was more on the inflation data out next Wednesday and the next monetary policy meeting by the Reserve Bank in February.
“There’s obviously some shock value today but not enough to really test any market views.”
He said he had no idea who would take over from Ardern.
“I’m sure we will find out sooner rather than later. They will want to get a name in.”
Policy remains key
Mark Lister, investment director at Craigs Investment Partners, said that political stability was always really important to financial markets so anything that reduces that stability and leads to further uncertainty and potential change is often a small negative.
“Although I wouldn’t think this is a show-stopping sign of instability. There was every chance we would get a change of government this year and Ardern wouldn’t have been prime minister anyway.”
Lister said for all the pressure the Government had come under Ardern had still been a strong communicator and a charismatic leader and was still very popular across parts of the voting base.
“It probably gives National even more of an edge in the upcoming election.”
Lister said there was still a lot of water to go under the bridge before then.
“We still haven’t heard a whole lot from National in terms of the policies they might put in place, so it’s really hard to judge whether they will be good, bad or otherwise for the economy, the business climate until we hear exactly and specifically what the intend to do. And they haven’t told us that.”
Lister said business people and the agricultural sector in particular have felt they have not been heard as much as they would like by the current regime and they would probably be happy with changes within Labour and the prospect of a change in government being more likely.
“You might see a bit of a bounce in optimism amongst the agricultural community and the business sector more generally.
“However, while politics is important there are much bigger things at play like inflation, the global slowdown, the dramatically higher interest rates we are facing and what that means for homeowners and borrowers, and the potential for a recession of some magnitude in many parts of the world such as the US and New Zealand.
“Whether it is National or Labour those things are far and away the biggest drivers of what’s happening for sharemarkets, commodity prices, economic growth and the NZ dollar.”
Weak business confidence
Matt Goodson, managing director of Salt Funds Management, said the market focus was on who the next prime minister will be.
“The key for the listed equity market would be if it materially changes the calculus over who is likely to win the next election and there is still an awful lot of water to go under the bridge.”
Goodson said markets tended to favour centre-right governments.
“If anything it possibly increases the chance of the centre-right slightly. But whether that is material in terms of all the events that we are yet to have over the next nine months before the election we will just have to see. And then it will depend on who the next leader is.”
He said obvious choices for the Labour leadership would be Chris Hipkins or Michael Wood.
Earlier this week NZIER released research showing business sentiment had fallen to its lowest level since the survey began, while a Westpac consumer confidence reading was below levels seen after the GFC and below the panic plunge when the country was locked down for Covid.
Goodson said Ardern stepping down could see a slight bounce in business confidence.
“But the reality of what is causing that sentiment is this economy has had a couple of big negative supply side shocks, as have other economies from the Covid response and Ukraine war. And I think exacerbated by some uniquely New Zealand cost pressures, which perhaps left New Zealand in a position that is looking rather weak compared to Australia right at the moment.”
Goodson said while Australian consumer and business confidence readings weren’t great. they were nowhere near as bad as ours.
“To the extent that there could be hopes for future changes in some of those pressures, maybe we might see a slight bounce, but it is those pressures rather than a purely political personality thing that I think are causing businesses and consumers to come out with those sorts of readings.”
‘She wasn’t superior – she was the opposite of that’
Council of Trade Unions president Richard Wagstaff found Ardern to be respectful, thoughtful, positive and supportive of working people.
Wagstaff was pleased the minimum wage went up every year that Ardern was in power, her Government introduced Fair Pay Agreements, updated the Employment Relations Act, as supported workers during the pandemic.
The big piece of work still on the table, which affects the union members Wagstaff represents, is the introduction of an income insurance scheme. Water and health reforms are also programmes Wagstaff hoped would progress with momentum.
“There’s still plenty to do,” he said.
On a personal level, Wagstaff said Ardern was very easy to talk to.
“She wasn’t superior – she was the opposite of that,” he said.
“When you think about the scale of the (Covid-related) decisions that she and her team had to make on a daily basis, and the life and death consequences of making the wrong decision, or not making a decision – as we saw in other countries, it’s remarkable how well they got through that …
“She was a rockstar overseas. She was seen as a beacon internationally in some pretty dark times for democracies around the world.”
Wagstaff worried the Opposition’s policies don’t support progress nor workers as much as the Labour Party’s do.
Opportune time for policy review
BusinessNZ chief executive Kirk Hope understood Ardern’s decision to step down as Prime Minister.
“There’s no doubt that the pandemic has had a tremendous personal toll on anyone’s who’s dealt with it on a day-to-day basis,” Hope said.
“It’s not dissimilar to what we’re seeing in the business community as well. People are struggling and are still pretty tired.
“Ardern described it as not having enough gas in the tank. I think that’s true for a lot of people. So, it’s an understandable decision.”
Hope acknowledged he hasn’t always seen eye-to-eye with the Ardern-led Government.
“At least the door was open for BusinessNZ to be able to talk,” he said, noting discussion was always constructive.
In advocating for businesses, as the Government was creating policy in response to the pandemic, Hope said he tried to provide as much information as possible to assist with decision-making.
“Some of those decisions didn’t always suit business. Locking down an economy was pretty challenging. But I guess some of the pragmatic decisions around business support would be some of things that stand out for me,” Hope said.
“I do think as we got deeper into the pandemic, perhaps the Government could’ve listened a bit more to what was going on in the business community – not just businesses, but employees.”
Hope said the next prime minister would need to have a “very very clear picture of the economy”, given the headwinds the economy is facing. He said it was essential policy supported business growth and development.
Fair Pay Agreements, for example, don’t help anyone, Hope said.
“If ever there was time for a review [of Government policy], it would be now.”
The New Zealand sharemarket has fallen 5% in the first half, while others have gained.