20 September 2005

POST ELECTION OPINION PIECE

Business Organisations Will Need To Raise Their Game
to be Effective in the Emerging MMP Era

The voting public is making a better job of understanding and making MMP work than either media commentators or business organizations have given them credit for, says Peter Neilson Chief Executive of the New Zealand Business Council for Sustainable Development (the Business Council).

Usually the editorial cliché after the election is to say the electorate has spoken but in this case what did the public actually say?

Faced with competing bribes and the politics of division New Zealanders have declined to give any one party a broad mandate for the next three years. Instead they are telling the parties to sort out the issues between themselves and then persuade us that their chosen combination is best for the country.

The public clearly understood the issues facing the country and the limits of Government. We might like tax cuts but can we really afford them? With the brilliance of hindsight monetary policy has probably been too loose for the past two years. A government spending blow out is the last thing we need in such a situation.

The public declined to give an easy majority to the parties offering the biggest bribes
They also understood how to strategically use the two votes they have under MMP
Every party represented in the last parliament has survived to be represented in the new parliament and no one party is in a position to form a government without at least two other parties co-operating.

Some parties have still not learned that politics under MMP is a team sport not an individual event. The major party that emerges with majority support in the Parliament is likely to be the party most able to work with a number of other parties. Multiparty coalitions look like remaining the norm so business organizations can no longer usefully rely on one or two parties to look after their interests. Business has to learn to work with all parties likely to be represented as supporters of a future coalition government.

This will be a challenge. It is always easier to spend time with parties who already agree with your own business policy agenda. It is much harder to persuade parties more dubious of the role of business that they have a common interest in having successful businesses. Business cannot succeed in societies that fail. Likewise society will not succeed without business also succeeding.

Over the past six years higher economic growth combined with flexible labour market conditions have seen lower unemployment as many more people were priced into jobs. More recently there have also been some increases in real incomes. On the campaign trail the issue of how we lift productivity long term hardly had any coverage or impact. Instead we heard about tax cuts, student loan interest deductibility and the abolition of the Maori seats. The debates seemed driven by the recycling of focus group opinions on short term issues. The underlying concern of New Zealanders, about where the country is going was not addressed. Until petrol hit $1.50 a litre the question about how we will meet our future energy needs hardly rated a mention outside of Green Party statements.

If there is a political will we can do much more right now to encourage the greening of the New Zealand car fleet by moving to more fuel efficient and lower emission vehicles.

Even when the very long term issue of climate change came into discussion no major party told us how they planned to address the problem. Opposing or supporting the Kyoto Treaty is the smallest issue regarding climate change. What we should do about our own and the world’s emissions remains a long term issue for New Zealand that needs resolution, to allow producers using fossil fuels some policy stability when investing long term in New Zealand.

The US President Lyndon Johnson used to love quoting Isaiah when, as Speaker of the Senate, he was trying to reconcile the differing interests of his colleagues to pass ground breaking legislation. The quote was “come let us reason together’. It had a very positive ring to it but he also knew well the passage a few lines on which reads “or we will die by the sword”. The public want the newly elected politicians to reason together and find some longer term solutions for New Zealand. If they don’t, the long term issues will remain in the “too hard” basket and the public will keep hedging their bets by backing several parties or splitting their votes. To quote another part of the Old Testament “Where there is no vision the people perish”.

In such a situation business organizations will need to work with a much wider grouping of parties, provide practical solutions that can receive wide public support and explain to a skeptical public why they make sense for New Zealand not just for business. Simply saying we want higher profits, lower taxes and less regulation is not sufficient. Unless business organisations can start explaining well the mutual policy interests of business and New Zealanders, politicians are unlikely to take business issues seriously. If we don’t meet that challenge neither New Zealand nor business can succeed long term.

Peter Neilson, Chief Executive of the New Zealand Business Council for Sustainable Development

For Information

Peter Neilson is a former cabinet minister of revenue, customs and works, and was associate minister for state-owned enterprises and finance under the Lange Labour government between 1984 and 1990.

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