The PM, Jacinda Ardern, received what her handlers would have perceived as unexpected criticism from the media after she gave a pre-budget speech to an Auckland business audience. One of those in the audience was said to have described it as an “ideological fairytale”; others apparently were disappointed it had “nothing for business”.
Given she did list as two of the five priorities in the budget as being “creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy; and supporting a thriving nation in the digital age through innovation, social and economic opportunities”, the criticism itself could be regarded as a bit “ideological”.
Surely business doesn’t expect government hand-outs, even if it is labeled a “well-being” budget?
But there seems little doubt that the mood of business is downhearted these days.
Or is it really?
A report this week says:
“Negative opinions about the state of NZ’s economic wellbeing have become further entrenched. In 2018, 48% of business leaders thought the government was performing poorly at managing the economy. This has risen to 63% in the current survey. Only 13% of business leaders believe the economy will grow at the same rate as in the previous year, down from 18% in 2018”.
The accounting and business advisory firm Baker Tilly Staples Rodway’s survey of more than 500 business leaders asked participants to rate how well the government is managing the economy and predict the performance of a range of economic factors.
Asked whether respondents’ own businesses performed better in the last year, most said they had either stayed the same (43%) or improved (27%). However, more than half the respondents (51%) believe the Budget will negatively impact their businesses.
Job security is also expected to worsen by more than half (51%) of respondents.
Business representatives were asked whether they believed national wellbeing would improve as a result of the Budget. Expectations are low.
The majority is sceptical there will be any improvement. Only slightly more than a quarter is forecasting any positive results, with more than a third of respondents believing things will stay the same. Another third think wellbeing will actually decline.
After all that negativity, Point of Order found some relief in the results of two of the leading listed companies on the NZX.
Fisher & Paykel Healthcare reported a record full-year net profit up 10% to $209 million from revenue which surpassed the $1bn mark for the first time, and projects profit to rise even faster in the current year to the range of $240m-$250m. Recent changes around research and development tax credits and a significant reduction in patent litigation costs and forecast currency benefits have been factored into the earnings guidance for 2020.
CEO Lewis Gradon said the record results were driven by innovative products, the dedication of teams around the world, a culture of continuous improvement and the value offered for clinicians and patients.
Last week retirement village operator Ryman Healthcare reported its full-year underlying profit rose 11.5% to a record $227m. Ryman invested $552m in new and existing villages during the year, up from $478m last year. Net assets are now at $2.2bn, up from $1.9bn a year ago.
The growth in underlying profit was driven by strong development margins, particularly from Ryman’s second village in Melbourne.
Chairman Dr David Kerr said demand for Ryman’s unique villages and high-quality care remained strong.
Ryman’s NZ village teams achieved the best clinical audit results in the company’s history, with 81% of care centres achieving ‘gold standard’ four-year Ministry of Health certification.
Ryman was named the Most Trusted Brand in the aged care and retirement village sector in NZ for the fifth time,
“We are pleased to report it has been a solid year given the current trading environment which has included challenging market conditions.These have not put a dent in our plans to invest for the long term in our villages and in improving life for residents and staff,’’ Dr Kerr said.
So, as Point of Order sees things, it’s not all gloom in the business sector.