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Home / New Zealand

John Roughan: Business confidence might rise if the Government wasn't so nice

John Roughan
By John Roughan
Opinion Writer·NZ Herald·
31 Aug, 2018 05:00 PM5 mins to read

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Prime Minister Jacinda Ardern addresses the business community and announced a new advisory group chaired by Air NZ boss Christopher Luxon.
John Roughan
Opinion by John Roughan
Former editorial writer and columnist, NZ Herald
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COMMENT: Take these words, print them large and put a frame around them.

"Some people have called for us to relax our borrowing rules or simply spend more. We won't."

- Jacinda Ardern to the Westpac business breakfast, Auckland, August 28, 2018.

Hang those words on a wall. Build a little shrine below them. Light a candle there and keep it burning. Low public debt and budget surpluses are the essence of good government, one of the "fundamentals" that have kept our currency strong and living standards high. New Zealand's continuing economic vitality depends upon her Government being as good as her word.

Keeping the promise will not be as easy as it might sound. Sir Bill English used to say, "The Labour Party believes in fiscal responsibility, they just don't know how it's done."

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How it's done, fairly obviously, is by being prepared to say "no" to a many of the nice things a government is asked to do, or at least politely ignore them. We have not heard this Government say no to anything yet. The pitch for public money by the All Blacks' coach last weekend hardly counts. You'd be completely ignorant of economics to support that one.

But it was an illustration of the range of expensive appeals a government hears. They do not all come from poverty scholars, cancer screeners and cyclists. A surprising number of business executives appear to think government is a business with a balance sheet like any other and has the same ability to invest in economic opportunities.

Those who come to government from business take some time to realise the difference. Before he was Prime Minister, Sir John Key believed he could "leverage" low government debt to produce a "step change" in the economy. By the time he'd got through the financial crisis and the earthquakes he'd acquired a higher regard for neutral public policy.

Jacinda Ardern, Grant Robertson, David Parker and most other Labour ministers have been in Parliament long enough to know low debt and budget surpluses are vital to the country's economic health. Labour governments in fact, have been better than National's at living within their means. Business should take confidence from that.

Labour's difficulty is that it is more susceptible than National to social claims of dubious necessity. Sometimes they are not even claims. Two months ago I received a nice letter from Jacinda with her photo on it, telling me the Government was giving me a winter heating grant on top of the pension I don't need.

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I don't recall superannuitants asking for it, certainly not for all of them. In fact quite a few of them wrote to the Herald in the first weeks of July discussing worthy causes they could support with the grant. We had the option to decline it but I didn't go to the trouble, hardly anyone did.

Labour has an ideological attachment to "universal" welfare, meaning payments to entire social groups regardless of individuals' income or circumstances. Besides the winter heating grant for everyone over 65, every baby born since the change of government has been given $60 a week. And every first-year university student had this year's fees waived.

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Along with universal hand-outs, we are being lumbered with a number of expenses the previous Government sensibly ducked. Such as an inquiry into mistreatment of children in state orphanages that don't exist anymore. They were abolished 30 or 40 years ago and compensation has been paid to those still suffering in adulthood. What is the point of an inquiry now?

That was the view National took in response to a campaign by the Human Rights Commission that never satisfactorily answered National's question. But Labour in opposition supported an inquiry and once in power set up a royal commission under former judge Sir Anand Satyanand who probably doesn't come cheap. It can only be a hand-wringing exercise.

Then there is Pike River. National's interest in re-entering the mine ceased after it received a plan that would have involved building chambers along the drift and cost $10 million. Now we're told it is going to cost three times as much and involve drilling a second shaft into the mine. All to disturb whatever remains of those killed in the blast and probably find nothing that wasn't deduced by the royal commission.

Governments have to be tough sometimes, they shouldn't sacrifice sound judgment and public money to emotional blackmail.

And they cannot afford to waste money on excessive infrastructure. A bikeway over the Auckland Harbour Bridge was the brainchild of entrepreneurs who thought it would be so popular it would pay for itself. They've disappeared, having done their market research no doubt. Now the taxpayer is to provide it.

Until the Government says no to some needless expenses, business confidence could be elusive.

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