It's Friday morning, downtown Auckland, and a large crowd of New Zealand's business elite has gathered at Westpac's flash Britomart head office.

For wide-eyed socialists, student politicians and anti-globalisation activists, this is the heart of Babylon, a centre of capitalist power.

Prime Minister Jacinda Ardern – who may at various stages of her life been all of the above - is clearly here on a mission to win the room. The first thing she does is confront the elephant in it.

That elephant, she says, "is the business confidence surveys".


"Oh, I've seen them. They feel akin to being in high school and suddenly discovering the notes that people have been passing around the classroom about you."

The quip draws a nervous laugh from the audience, which no doubt played its part in the sharp post-election dive in both the ANZ's Business Outlook and the NZIER Quarterly Survey of Business Opinion (QSBO).

Business doesn't like Labour governments. It's a cliché, but one that is backed by empirical evidence.

The NZIER's QSBO – which dates back to 1968 – shows an average dip of 18 points every time Labour wins an election, versus a four-point bump when National triumphs.

"Even heading into an election it's typical we see an easing of business confidence just because of general uncertainty," says NZIER principal economist Christina Leung. "Then in the wake of Labour taking office we saw a further decline in confidence, to the extent that pessimists outnumber optimists."

The big concerns were in the traditional battleground: minimum wages and employment law, says Leung.

"Retailers and manufacturers were particularly downbeat in the December quarter and that reflects that a greater proportion of those businesses will be affected."

The perception, Ardern, tells her breakfast crowd, is probably worse than the reality.


She notes that the surveys show individual businesspeople rated their own prospects more optimistically than the general outlook.

"I am in good company," she says of the slump. "The same thing happened under the last Labour Government."

Poor business confidence dogged Helen Clark's Government right through a strong period of economic growth.

"We can either just accept that's what happens to Labour or we can find a way to challenge it," Ardern says.

Ultimately, she says, business confidence is a measure of certainty that businesspeople feel.

Ardern acknowledges that the past year has been marked by a great deal of political uncertainty - including her own sudden rise to power.

She pledges to run an open, collaborative Government. As a teaser, she unveils tentative plans to create new industry working groups which would bring business into the tent on Government policy.

At this point – just five minutes into her speech – it's clear that the new Government is actively trying to get business on board with its programme of social and economic reform.

Ardern and Finance Minister Grant Robertson seem acutely aware of the so-called "winter of discontent" that the Clark Government faced in 2000 and the kind of business backlash that Deputy PM Winston Peters alluded to in his kingmaker speech last October.

Robertson, for his part, has been tireless in his attendance of business events – talking up his commitment to fiscal responsibility.

Peters, out of campaign mode, has reverted to his more conservative self. This week he penned an op-ed trumpeting the virtues of the new CTTP trade deal – a far cry from his anti-globalisation rhetoric this time last year.

And now here is Ardern explicitly laying out the invite to business.

Will it work?

"It's too early to tell," says Matt Goodson, managing director at Salt Funds Management.

"To date there's been a lot of studies launched. The timing of any major decisions are unknown. We've seen a weakness in business confidence ... whether that's a knee-jerk response or something more real remains to be seen."

Business confidence is something to be mindful of, says Goodson, whose keen political analysis is influenced by the $1.5 billion of investment funds his firm manages.

"Particularly when fiscal projections are based on GDP growth assumptions which the market regards as optimistic. That said, we do have lot more fiscal headroom than most countries so it's not a constraint that's binding."

In other words, with the budget in surplus, the new Government has some breathing space.

If economic confidence turns down, then it will diminish the tax take and the Government's ability to make social change.

Business sentiment is a powerful force in economics, but in politics, so is charisma. It's the latter that seems to be holding sway at the Westpac breakfast.

But when the executives are back in the office, staring at numbers and making hard choices about costs and investment, charisma won't be enough.

It's also worth noting that a large segment of the corporate community is culturally quite liberal.

Executives at large firms are actively engaged with issues such as cultural and gender diversity, environmental sustainability and addressing social inequality.

That kind of crowd is well represented in downtown Auckland.

But the New Zealand economy is dominated by small and medium-sized businesses, and gatherings of manufacturers in Hamilton, or farmers in Timaru, would be tougher crowds.

"There's still a lot of uncertainty," says Business New Zealand chief executive Kirk Hope. "Particularly among small to medium-sized business. They don't know much about this Government and they don't know many of the ministers."

Small and medium-sized businesses feel most concerned about employment, he says.

"There was some quite heavy rhetoric leading into the election about what Labour proposed to do in that space."

But since the election there have been promising signs, Hope says.

"What I think business has seen – in a whole range of areas – has been a thread of pragmatism," he says. "And the reason for that is that it's three parties and they've all got to agree and that's got to give business some comfort."

Hope lists examples of that pragmatism such as the retention of the 90-day trial laws for businesses with fewer than 20 employees and the agreement on the CTPP trade deal.

After confronting the business confidence issue, the rest of Ardern's speech runs through the new Government's plans for economic growth.

There is a whole other speech she could give about social policy, she says.

"Our goal to is to grow and share prosperity," she says. "Probably there is an assumption that we [Labour] don't put enough emphasis on the 'generate' part."

She reiterates the Government's commitment to fiscal responsibility – staying in surplus, paying down debt.

She declares Labour is a "pro-trade party" (so enthusiastically that you'd hardly notice she didn't actually say: "free-trade").

She talks about plans to boost R&D funding, foster business innovation and boost productivity - the same boxes you'd have heard John Key or Bill English tick at similar breakfasts over the years

She is reassuring on labour law, promising a "collaborative, tripartite" approach with government as a "bridge" between unions and businesses.

Talk of tax reform is equally reassuring, alluding to Kirk Hope's inclusion in the working group and uncontroversial plans to help out domestic retailers by applying GST to online offshore purchases.

Perhaps because it is still a work in progress, she avoids mention of immigration changes.

Later, talking to media, she repeats a commitment not to cut numbers in a way that causes skills shortages in specific industries or regions.

Business NZ's Hope cites pre-election signals on immigration and foreign investment rules as further reasons for business nervousness.

"Those signals were picked up by investors in foreign markets – we do need to care about them," says Hope. "The immigration rhetoric was fairly hot running into the election."

Hope says he takes assurances about not exacerbating skills shortages at face value.

"They just need to get that message out a bit more to the business community," he says.

"Every town you go to, every business that you talk to – that skills challenge is a really big one."

He says business is looking for evidence the Government "is listening, that they are pragmatic and they are not ideological, if something is not going to work as they thought or isn't quite right, that they'll have a good look at that."

That kind of pragmatism makes life for the Opposition more challenging, he says.

"The economy is still going pretty well," he says. "I'd expect that as people see more of the Government and they demonstrate their willingness to adjust policy ... then I think confidence will start to shift again."

Salt Funds' Goodson offers a dose of hard financial market realism.

The Government will get fair winds on confidence as long as global markets hold up, he says.

"Inflation and the market transition to higher rates – those are two things that matter from here and obviously the New Zealand Government, whether it's National or Labour, is largely powerless against that backdrop."

Will Jacindamania make a difference?

"On the economy? No," he says. "Once you get a few sticky issues, and we see how some of those stronger policy desires are actually implemented ... that will be the making or breaking of them I expect."

Still, as Ardern makes her slow progress to the Prime Ministerial car – stopped every second step of the way by well-wishers and selfie snappers - it is clear she has powerful personal capital to work with.

For businesspeople, the fact she is choosing to direct a healthy dose of it their way, must offer some comfort – for the time being at least.