Wake-up call in banking should be heeded by the regulatory agencies, too

“PM:  If  banks won’t  act lift game, we’ll  act”.  So read the headline in  Tuesday’s  NZ  Herald.

Sounds  as  if the government is  on the job, although the   underline was a  bit  more cautious:  “Ardern’s  stern  words stop short of saying customers  ripped  off”.

So  what  was  the headmistress  on  about?   Surely she wasn’t   saying the  Reserve  Bank   (a  key regulatory agent in the banking sector)  needs a rev  up?

Or is it that KiwiBank  needs to  lift its game?

Possibly.  KiwiBank hasn’t been the  raging success  its founder, the  late Jim Anderton,    thought or hoped it would be.  

A French lesson: those film industry subsidies could become an instrument of gender-balancing policy

Announcing the Government’s backdown on capping film subsidies, Economic Development Minister David Parker said without the subsidies, the film industry wouldn’t exist.  

We suppose he meant it wouldn’t exist in New Zealand.

The subsidies are reckoned to result in  studios getting cash payments of up to 25% of their local spending on productions, amounting to $575 million since 2010.

The Government had considered cutting them after questions were raised about what taxpayers are getting for this money, according to Radio New Zealand.  But it was persuaded by officials and the film industry that the subsidies needed to stay.

Without targets it’s hard to measure what the Ardern Govt has – and hasn’t – achieved

The PM’s speech on Sunday was  billed as a  “re-set” for the government – a chance  for  the coalition to  put its  unity on show and,  at the same time,  inject fresh vigour  into  its priorities.  All three party leaders  put on their best  smiles for the occasion.

Was it  enough  to sink the memory  of what some said had been  the government’s worst  week since it took office?

Simon Wilson, at the  NZ Herald, was clearly onside:  Jacinda Ardern’s plan  spells  out far-reaching, specific and measurable  goals, he gushed.  Besides “Our Plan”  is  also a vision  document,  Wilson  insisted.

The  NZ Herald’s editorial put it more succinctly:  “Govt needs to stop spinning, start winning”.

It’s hard to find the policy beneath the platitudes in PM’s business speech

Fonterra last week cut its farmgate milk price forecast to $6.75 per kilogram of milk solids.  This probably wasn’t the kind of answer the government was looking for when the PM sought to pull NZ business out of its current funk.

The PM certainly got some favourable headlines in a media still obsessed both with her charm, motherhood, and gift for communication.

But it will take more than a Business Advisory Council to restore equanimity to the boardrooms where confidence has been eroded by the uncertainties induced by global trends, trade wars and unsettled commodity markets — but not least by the government itself with its so-called “reviews” and calls for “transformatory change”.

Change in taxes? Yes, these are being reviewed by Sir Michael Cullen (no great friend of business) and his panel.

Change in employment law? This is being reviewed by Jim Bolger (who was once a firm believer in the reforms of the 1980’s and 1990’s, but now thinks the “neoliberal experiment” has been a failure).

Climate change? Plenty of action there: the government’s consultative document modelling points to the prospect of the competitiveness of core parts of the tradables sector could be undermined and GDP cut by perhaps as much as 10 – 22%.

Adding to business uncertainty has been the government’s sudden ban on new offshore oil and gas exploration. As Point of Order noted in an earlier post, it blindsided the energy sector, which was not mollified at the time by Ardern’s glib insistence that the transition to a zero-carbon economy “must start somewhere” or her promise that no jobs would be lost.

Then there’s government’s negative attitude to mining, with Conservation Minister Eugenie Sage adamant there will be no more mining on conservation land.

So when the PM argues that NZ’s needs to transition from growth dominated by population increase and housing speculation, to build an economy genuinely productive, sustainable and inclusive, did she have anything concrete to offer beyond the platitude “we want to grow and share more fairly New Zealand’s prosperity” (and a Business Advisory Council)?

Commentator Michael Reddell found nothing in the speech about what the government proposes to do and how it believes the modest measures it does propose will deliver better outcomes.

Reddell went on:

“But by far the bigger issue, if the Prime Minister and the government are at all serious about the lines they ran, is ‘what do chief executives of businesses know about overall economic management, and the challenges of New Zealand’s longstanding productivity under-performance?’. In Paul Krugman’s words, a country is not a company”.

Former Finance Minister Ruth Richardson has a similar view: The primary responsibility for business success properly sits in the court of businesses.

And she makes a startling confession:  “I never thought I would say three cheers for Winston Peters!”

In a recent speech on Being Globally Great from a Canterbury Base (reproduced in Kiwiblog), she said:

“This is an accidental government formed on the fly and governing on the fly.  In the absence of coherently thought through policies, every significant initiative is parked with a working group or the hundreds of other names conjured up for the contracting out of government.  Eventually the working groups eagle will have to land – do we really want to revert to the failed industrial regime of old, do we really want to tax the hell out of the very thing we so patently lack, capital, do we want to choke agricultural production with a rigid ‘ all gases are the same’ regime for tackling climate change?”

Richardson believes business is right to be very afraid. She speculates on what might be the rescue remedies.

“The primary government may come to their senses – or the coalition partners may start jerking them around. Think the curtailment of the 90 day rule repeal, no water taxes, capital taxes apparently off the table and the three strikes repeal on hold.

“I never thought I would say three cheers for Winston Peters! The welter of working group reports may be DOA. The adults in the room may be successful in urging course correction”.

A smaller Parliament was a big vote winner in 1999 – but ACT was more popular then, too

ACT Party leader David Seymour asked some electorally attractive questions when he told his party’s annual conference he plans to introduce legislation to reduce the size of Parliament from 120 MPs to 100 and cut the number of ministers from 31 to 20.

It’s an idea with popular appeal, like inviting voters to decide if we should have more public holidays.

Seymour said two decades of growth in the size of government had not delivered better outcomes for New Zealand and the country needed smaller, smarter government.

Whether economic or welfare outcomes are geared to the size of our Parliament needs deeper examination.

Finance Minister is gushing but some economists are less bullish

Finance Minister Grant Robertson went on the offensive this week to counter the gloom engendered by political opponents and business  leaders about the state  of the  New Zealand economy.

He  cantered  through a  field of  positive  statistics  to  show   everything is  hunky-dory—- well, almost everything.

Yes, there  are  some problems  over low levels of productivity,  the challenges of   digital  change, and mixed signals over  future tax and  workplace legislation.

But Robertson  in  his  speech in Auckland   accents  the positive :

An economist reflects on Bill English and the rockstar economy

If I only had time, I might still be PM…

Mr John Edward Rowles, OBE, was in splendid company on the Queen’s Birthday Honours list.  His name, “for services to entertainment”, came immediately after the name of the Right Honourable Simon William English,  “for services to the State” among those who become  Knight Companions of the New Zealand Order of Merit.

Rowles has belted out a few hits over the years, most notably “If I Only had Time”, while Bill English is the bloke widely credited with giving us “the rockstar economy”.

According to the official citation:

As Finance Minister from 2008 until 2016, Mr English oversaw one of the fastest-growing economies in the developed world, steering New Zealand through the Global Financial Crisis and the Christchurch earthquakes and ensuring the Crown accounts were in a strong financial position.

Stuff political reporter Stacey Kirk was more laudatory: