Simon Wilson: What's making Auckland business so grumpy?

COMMENT: Auckland business doesn't care much about the Government's Budget Responsibility Rules (BRR), according to Michael Barnett, chief executive of the Auckland Chamber of Commerce.

The BRR commit the Government to reducing core Crown debt to 20 per cent of GDP and holding core Crown spending at 30 per cent of GDP. It's a rainy-day policy: putting money in the bank against the next major earthquake, biosecurity shock, international trading catastrophe. And it has a political purpose: to build business confidence by demonstrating fiscal prudence.

But as any number of surveys show, business is not confident. And meanwhile the Government has been much criticised by the political left for not doing enough to address very real problems across all social areas.

Barnett told me this week he agrees with that criticism and he believes Auckland businesses generally do too.

I imagine there are a large number of business people asking why," he said.

"They look at the problems we face, things like health and congestion, and they wonder why we need a big surplus in the bank when there are much higher priorities for spending."

So, I asked, it's not just the left saying those things? Auckland business feels much the same?

"I would say so. It's about social responsibility."

It shouldn't be a surprise that business cares about social responsibility. But it is a surprise that the cornerstone of Government strategy to woo business might not even be relevant.

So why is confidence low among Auckland businesspeople?

The first answer reveals everything and nothing. When a centre-left government takes power business confidence always falls. Helen Clark faced a "winter of discontent" in 2000, her first year as prime minister, and so it is with the Ardern government today.

Partly, it's tribal: if you see the world from an established centre-right perspective, it can be difficult to grasp the idea that a Labour-led government might be good for you or the economy. But the sky doesn't fall and maybe after a while you start to appreciate that it isn't going to.

Partly, though, it's stirred up by the tribal leaders. The National Party needs business to stay anxious about Labour's ability to manage the economy, because if that anxiety disappears so does National's principal purpose.

National will never stop trying to undermine business confidence under a Labour-led government. Just as, for the same reason, Labour will always discredit any progress a National-led government makes on social policy. Core perceptions of the parties' value and identity are at stake.

Still, Finance Minister Grant Robertson is entitled to feel miffed that his efforts on behalf of business have been so casually scorned. And let's not forget that undermining business confidence hurts the economy, whoever's doing it.

The Government has other reasons for hoping Auckland business might look more kindly on it.

Top of the list, there's the Auckland Transport Alignment Plan (ATAP), a 10-year $28 billion agreement with the Auckland Council designed to "unlock" the city. ATAP targets congestion on the roads with a wide-ranging plan that includes expanded rail freight capacity. It should be great news for any business reliant on freight.

But does Barnett think ATAP will help with confidence? "No, not at all," he said. "It will be six years before they start the first project."

Hang on. In six years' time the City Rail Link will be open, or very close to it. And, probably, parts of the light rail lines. We'll also have new bus and ferry terminals, new bus services and many roading upgrades.

"Ah yes," Barnett said. "Business does accept the need to upgrade public transport. No doubt about that. But there's going to be a problem with the pipeline, the construction projects. It hurts the big companies and goes all the way down to the tradies."

He was talking about roads.

"Yes, the roads. Mill Rd, Penlink, those projects. Companies with deliveries to Mitre 10 or Countdown or whatever, they just won't visit some parts of the city at certain times of the day now."

Those projects are in ATAP, but work isn't scheduled until the second half of the 10-year programme.

Barnett was also critical of the light rail line that will run down Dominion Rd. "Retailers are worried about how it will work."

And he mentioned immigration. "Business still has difficulties getting talent. We have a national list of jobs with shortages, but maybe we should have regional lists. That would make it easier for companies to find the people they need." Is that a fair point?

Auckland problems. None of those things, said Barnett, is as important to business as industrial relations. He called rises to the minimum wage "the first part of the journey" – he meant a bad journey – and also mentioned the proposed end to the 90-day employment trial and introduction of "fair wages" by 2021.

You can break those things down. No credible political party is against our having a minimum wage, so the debate is only about its level. The removal of 90-day trials for new workers applies only to companies with more than 20 workers. The vast majority of retailers and other small businesses will still be able to use it. As for fair wages, the debate is surely over how, not whether it should happen at all.

Should any of this really be spooking Auckland business? They'll benefit from the transport plans, both directly and indirectly, by virtue of the city becoming more functional. It will be the same with the housing build, pay rises for nurses (and, presumably, teachers) and everything else that makes it possible for more people to thrive in the city.

It's been widely noted that surveys reveal business owners feel bad about the economy but good about their own prospects. That suggests there is more politics in the pessimism than economics.

But there are two key truths about confidence. One is that it's extremely important. With confidence, people take risks, they spend more, try new things, make plans. This is true for businesses, for families and for individuals, and that's all great for business. John Key's great contribution to New Zealand was that he instilled confidence.

The other truth about confidence is that it's subjective. Was it rational that people felt so positive about Key? It simply doesn't matter. Is it rational that Auckland businesses lack confidence today? That doesn't matter either.

It's not easy to talk people out of their fears, but that's what the Government has to do. Confirmation came just yesterday that the surplus is above budget and the debt level a little below: Robertson's commitment to "budget responsibility" remains clear. But Barnett suggests other narratives are more important now.

Here's one: we have the first government since the 1950s, when they built the harbour bridge, to tackle Auckland's transport problems with bold forward-looking ideas and game-changing levels of spending. Here's another: our Super Fund wants to invest seriously in Auckland's infrastructure growth. What's that, if not a vote of confidence from one of the top-performing financial institutions in the world?