Prime Minister Jacinda Ardern is wasting little time defending her Government’s approach to sluggish business confidence, imploring businesses to look at the “real economic indicators.”
Her comments come after Treasury warned of “mixed messages” in the economy that could impact the Government’s books.
“Although we think growth held up in the June quarter, weaker confidence, in conjunction with other data, highlights the risk that growth over the coming fiscal year may be weaker-than-forecast in the Budget,” the Treasury said in a release on Monday.
The Reserve Bank is expected to take a similar stance on Thursday and revise down its economic growth projections.
Speaking at her first Post-Cabinet press conference after six-weeks’ maternity leave, Ardern had a message for businesses.
“The message I want to send to the business community today is that if we want to boost the environment they operate in, it means we have to keep moving, it means we have to make changes.”
She says modernising the economy comes with change, and with change comes uncertainty.
Ardern spoke at length about the “real economic indicators” which she says are much more important than businesses' perceptions of the economy.
“We also have strong forecast growth, some of the lowest unemployment in the OECD, we’re running a surplus and New Zealanders, as of July 1, will have more money in their back pocket as a result of the Families Package.
“I’m interested in the reality of what our economy is doing and how it is performing.”
Asked if the Government had made any mistakes that could have led to lower business confidence she deflected, saying instead that this is a trend often seen when Labour Governments come into power.
But she would like to see firms' optimism come back up.
“Real indicators are what matter to me, but I do take it as a matter of pride I want perception to follow suit.”
PM is in denial, Opposition says
Opposition Leader Simon Bridges tells Interest.co.nz the Prime Minister “is in denial over business confidence and its wider impact on the economy.”
He says Ardern blaming the drop in confidence on businesses historic aversion to a Labour Government is now getting off-base.
“She could have said that for the first two or three months – we’re now 10 months in. There is something more real here and it is based on policy.”
He is calling for the Government to do an “about-face” on its industrial action policies; he says this “could turn the tide” on business confidence.
Meanwhile, Ardern says the Government has no plans to break its budget responsibility rules in response to the prospect of slowing economic growth.
“The rules stay,” she says.
“The business community would say their confidence in us is our ability to deliver a strong economic agenda and that means running a surplus and keeping debt in check.
“That’s equally important.”