Fran O'Sullivan: Generation change under way

Labour's new breed of business-friendly Cabinet ministers are starting to make a hit with New Zealand business.

They are making inroads where their more obviously ideologically inclined senior colleagues can't.

One is Commerce Minister Lianne Dalziel, a former unionist lawyer who said she deliberately asked Helen Clark for the crunchy portfolio when she was rehabilitated to Cabinet after a minor fall from grace in Labour's second term.

Then there's Communications Minister David Cunliffe, who has already responded to pressure from smaller businesses and Telecom's competitors to break the telco giant's stranglehold over broadband development in this country.

The power-suited Dalziel is already cutting a confident figure in behind-the-scenes talks with senior business people over the many commercial roadblocks she has pledged to do something about.

Cunliffe isn't (yet) obviously heralding a return to the Armani-style suits that befitted his earlier career in a major consulting firm, but he's got over the speed bumps his colleagues laid in his path when he was considered to be "too hungry" in his first parliamentary term.

Finance Minister Michael Cullen's standard riposte to uppity business folk: "We won, you lost, eat that" - is not the order of the day when it comes to Labour's new generation of ministers, who now lose little opportunity to promote themselves as "on business's side".

That catch-phrase has been pushed from the top by Clark as necessary if Labour is to win a fourth term in Government.

On Monday, Dalziel will announce a multi-tier review of the country's regulatory frameworks. It was initially expected to be included in the Budget. But Dalziel - who is intent on building her own credibility with business - successfully lobbied Cullen to ensure the details were kept aside for her to front.

She has privately warned senior businesspeople not to "expect any silver bullets". There will not be an immediate response that will wipe all the impediments they complain about in one "big hit".

What is refreshing is that she is prepared to jettison some of the ideological cant which Labour has used to burden business, to the point that this country is slipping down the international competitiveness indices.

Where Dalziel also differs from her predecessors is that she is adopting a much bigger picture viewpoint than, say, Margaret Wilson, who was seen as a disaster (perhaps unfairly) by business, who believed she was too ready to implement a trade union agenda at their expense.

Dalziel is known to be impressed by the recent report, Rethinking Regulation, by an Australian taskforce headed by Gary Banks, with the job of reducing the regulatory burden on business.

The Banks report, which has been enthusiastically received by Australian Prime Minister John Howard, emphasises that successful nations can't rest on their laurels: "The relentless forces of globalisation mean that Australia needs to continue to drive reforms aimed at removing any impediments to efficiency and innovation.

"At the heart of international competitiveness is the effectiveness of its regulatory structures."

The report covered a huge ambit:

* Social and environmental legislation - everything from private health insurance to aged-care rules.

* Labour-market regulation, covering issues such as occupational health and safety, skills mobility, childcare and workers' compensation.

* Economic and financial regulation, covering things such as financial and tax regulation, compliance costs and superannuation rules.

* Reducing burdens across government, which covered areas such as accessing information and exploiting information technology.

* Addressing the underlying causes of over-regulation - from improving regulation performance to ensuring it delivers over time.

The taskforce canvassed a huge range of Australian businesses and isolated some priority areas, such as: regulatory creep, which could have a pervasive effect on many businesses; inconsistent and overlapping frameworks; redundant regulation; excessive reporting burdens; and variation in reporting requirements.

The Banks report is a monster.

But when Australian businesses are reporting some 25 per cent of their time is taken up with compliance issues, the competitive dividend from doing something about it is obvious.

New Zealand businesses wanting to ensure the Dalziel review does produce a local dividend should use it as a marker to make sure this country goes one step better than Australia and gets back the competitive advantage we used to enjoy in this area.

It does seem ironic that Labour is finally starting to review its approach given the Banks report comment: "Regulation has come to be seen as a panacea for many of society's ills and as a means of protecting people from the inherent risks of daily life" - a statement which many (including this correspondent) believe could be writ large as a Clark motto.

Certainly, Telecom and its business supporters will see a conflict between Dalziel's approach to over-regulation and the Government's move to re-regulate the telco.

Cunliffe lost his big day in the sun when a Cabinet paper detailing his plans was leaked to Telecom's Wellington HQ.

Telecom boss Theresa Gattung and her key executives had been in discussions with Cunliffe the previous day over his planned changes. Gattung had tried to head them off, to no avail.

But irrespective of later claims that the Budget leak wiped nearly $2 billion off Telecom's share price, it would inevitably have been hammered when tomorrow's announcement was made.

The big difference is that Telecom would have had a chance to prepare itself and make a managed release to accompany the jawboning by Cullen and Cunliffe.

Neither Dalziel nor Cunliffe features in the betting stakes as Cullen's ultimate replacement in the finance portfolio - which is likely to happen when Clark refreshes her Cabinet team before the next election.

Trade Negotiations Minister Phil Goff and Economic Development Minister Trevor Mallard are still seen as having the requisite seniority. But Clark may not want to give Goff a substantial locally based portfolio that will enable him to build his domestic base as a potential runner for her job, and Mallard has done little to rehabilitate his unfortunate image as Cabinet's bovver boy.

Mallard's absurd repetition of claims that National leader Don Brash had his strings pulled by a US bagman at last year's election undid the new image he had been building since acquiring the business-related portfolio.

Clark's other runner, Energy Minister David Parker, will take a long time to re-establish his Cabinet credentials, as will David Benson-Pope.

The Clark Government's motif, "Investing for the future", will be the prime takeout from tomorrow's Budget as far as business is concerned.

Borrowing to fund Auckland's infrastructure, roading, electricity infrastructure and telecommunications will finally figure after years of barracking from the commercial sector.

If the Government is feeling courageous it will do a one-off bailout of the country's hospital waiting lists and make a big investment in standardising tertiary education.

But these are minor moves for ensuring a skilled workforce is retained here.

Cullen maintains his sixth Budget still has a couple of shallow secrets left.

He's ruled out personal tax cuts, but has indicated that his intention to raise tax thresholds in 2008, which will deliver between 67c and $10 a week, is still on track.

If Cullen wants to hold on to his job, he should rework those bracket adjustments now to stop the inevitable drain of yet more people to Australia, attracted by Australian Treasurer Peter Costello's wide-ranging adjustments to tax threshold rates.

Reducing regulations won't matter a damn to companies if their key assets - people - don't want to stay here.