Business leaders ought to have come away from the Prime Minister's address to them in Auckland yesterday with more confidence in the economy under new management.

It was not so much that she announced she would be inviting some of them to join a standing advisory group for her Government, though that will help. Nor that the group will be chaired by Air New Zealand's Christopher Luxon who withstood an attack from her regional development minister recently, though that helps too.

Nor will they have been moved by her "business confidence paradox" that Helen Clark's Government was rated much lower than Sir John Key's, "despite Clark and Cullen delivering higher average growth, lower unemployment, lower debt, larger surpluses and stronger wage growth than their successors".

The audience will have been more impressed by her realisation that business confidence is not simply a preference for a political party, it is about certainty.


Predictability is a better word than certainty, since nothing in economic life is really certain. But predictability of government is needed for business owners and investors to have the confidence to expand, take on more debt and hire more people.

While MMP has made it now harder to predict changes of government, it has provided coalition agreements that make a government, once formed, more predictable. But not entirely so. The Government's decision to issue no more oil and gas exploration permits was a blow to business confidence.

Jacinda Ardern did not address that decision in her speech yesterday, or the rest of the Greens' agenda for economic change. But she did offer reassurances on the Labour projects that most concern business — reducing immigration and setting minimum wage levels for industries. She said the Government will be setting up regional skill shortage lists to provide "smarter immigration settings" and more training initiatives like using the dole as an apprenticeship subsidy.

She acknowledged the prospect of "fair pay" agreements for industries is causing a great deal of apprehension and said the Government's intention was not to "fundamentally disrupt the employment relations landscape". To underline that assurance she announced there would be "no more than one or two fair pay agreements concluded during this term". They would be in industries, "that have low pay and in which workers are vulnerable and exploited".

That phraseology might not help business confidence in the Government but the immediate test of every government's economic competence is its Budget. The most stable and sustainable economies are those with low public debt and budget surpluses which the Government has endorsed with its budget responsibility rules.

Yesterday the Prime Minister said, "Some people have called for us to relax our borrowing rules or simply spend more. We won't." Those last two words, succinct and definite, are the most important she uttered. If her Government proves to be as good as her word, business will have reason to be confident.