The Government’s “prudent” and fiscally conservative Budget has not helped declining business confidence levels, with firms’ optimism now back down to Coalition agreement negotiation levels.
ANZ’s Business Confidence Index shows a net 39% of businesses are pessimistic about the year ahead – up 12 points from last month.
The survey, taken between May 31 and June 22, covers the weeks after the May 17 Budget – a Budget ANZ said was “prudent” – as well as the Government’s handling of the oil and gas ban decision.
Finance Minister Grant Robertson says the figures are not unexpected given recent commentary.
“We also know with Governments with Labour Parties at the core, we have traditionally seen a level of pessimism that doesn’t reflect GDP growth.”
ANZ’s measure of firm’s expectations of their own activity, which it says is a better gauge of future GDP growth, was also down from +14, to +9.
Although this measure remains expansionary, ANZ Chief Economist Sharon Zollner says the figures suggest the economy may continue gently losing steam over the coming months, despite the support coming from fiscal stimulus and high commodity prices.
Opposition Finance Spokeswoman Amy Adams says a drop like this says that businesses have had a look at Grant Robertson and they don’t like what they see.
“The Government needs to get its head out of the sand a realise it cannot take economic growth for granted.”
The most pressing issue for businesses, according to the survey, is lack of skilled employment – with almost 30% of businesses saying this was the most prevalent problem.
Robertson says the Government is addressing this issue through its fees-free tertiary education policy and its investment in apprentices’ programme.
Regulation most problematic since 2012
Some 17% of firms say regulation was their most pressing issue – the highest reading for this problem since this data started being collected in March 2012.
Adams says anyone who wants to suggest business confidence figures are not a direct commentary on this Government needs to look “very closely” at these numbers.
Robertson says this is “always a concern for businesses,” but says the Government is involving firms in the conversation around regulations, for example with its industrial relations policy.
Looking ahead, Zollner says the tailwinds for increased Government spending, and the strong terms of trade will see the economy continuing to grow “above par.”
Business Confidence fell sharply after last year’s election, falling to almost 40% of businesses being pessimistic during the Coalition arrangements in October.
That figure recovered in the following months but has since fallen back down October’s level.
On two separate occasions, Prime Minister Jacinda Ardern has referred to the figures as the “elephant in the room” for her Government.
Both she and Robertson have talked about changing businesses perception to match reality.