By Jason Walls
It is clear Prime Minister Jacinda Ardern is not happy that business is not happy.
Twice now, she has referred to the low business confidence figures as the “elephant in the room.” In fact, in her pre-election speech to BusinessNZ, this was a key part of her message.
To her credit, there would have been many chief executives, market watchers and small business owners breathing a sigh of relief after last month’s Budget.
There were no spending surprises, no cost blowouts and it was – as ANZ economists said – a “prudent Budget.”
But most importantly, it didn’t provide any uncertainty – a winning tactic if the Prime Minister was looking to win business over.
If I learned one thing during my four years in business school, then subsequent years as a business reporter, it’s that businesses want certainty.
But the goodwill the Government earned with its business-friendly Budget has already been undermined by its disastrous handling of the ban on oil and gas exploration.
On Tuesday, a tranche of information relating to the Government’s decision was made public.
Notably, what was not in the release was a Cabinet paper and Energy Minister Megan Woods admitted the decision did not come before Cabinet.
There was also minimal discussions with officials.
To make matters worse, BusinessDesk reports the exclusively circulated global oil industry newsletter, Upstream, quoting International Association of GeoChemistry President Nikki Martin saying the decision had undermined the sector's confidence in New Zealand as an investment destination.
“An arbitrary end to exploration disrupts business certainty, as major investments in New Zealand have already been made by companies with a reasonable expectation of future activities.”
A bad look
The document dump and the wave of bad press that followed appropriately bookends this disastrous three-month process.
The policy was effectively launched when the Prime Minister told protesters on the steps of Parliament the Government was “actively considering” an exploration ban.
Hours later, she attempted to walk back the comments, saying “every Government, at around this time of year, actively considers how it will manage block offers.”
But a month later, the policy was officially launched.
The Petroleum Exploration and Production Association of New Zealand said the industry had not been consulted and the policy was not in Labour’s election manifesto. It wasn’t in the Coalition or Supply and Confidence Documents with NZ First and the Greens either.
The whole saga was the polar opposite of the Budget and was riddled with uncertainty for those involved.
Yes, oil and gas is just one sector of the economy and yes, Government policy is just one part of a bigger picture when it comes to business confidence.
But it’s not hard to envisage the events of this week putting even more of a dampener on confidence levels; things are already looking a bit bleaker.
The Auckland Chamber of Commerce revealed on Friday almost half of the businesses they surveyed believe the economy is going to deteriorate over the next six months – up from 8% this time last year.
At the end of the month, ANZ will release an updated Business Confidence figure which will incorporate both the prudent Budget and the effects of the bungled oil and gas announcement.
Will it show the elephant quietly back out of the room, or loudly trumpeting? Only 21 sleeps to find out.