Grant says all is OK

But it isn’t.

This article is from?Sharechat, which is an investor’s website, and as such is completely apolitical. It doesn’t care who the government is. It is only interested in how investments perform, to enable them to look after their clients, and bring in healthy commissions at the same time. Quote:

Storm clouds may be gathering for the upcoming corporate earnings season as business confidence hits a seven-year low and almost a third of companies said?profits shrank in the June quarter.

The latest quarterly survey of business opinion – released yesterday [3rd July] – showed a? net 16 percent?of respondents reported lower earnings in the three months ended June 30, down from a net 7 percent?in the prior quarter. Importantly, a net 12 percent expect to report lower earnings in the September quarter, signalling a shift in perceived earnings momentum.

“The net measure does suggest some?weakness?in corporate earnings for the upcoming reporting season,” said New Zealand Institute of Economic Research principal economist Christina Leung.

The survey’s sector break-down?showed around 30 percent of firms across the board said their profitability was “down” on the three months to the end of June.

Rising costs have crimped earnings with?building sector firms reporting intense margin pressures and retail firms struggling to pass on higher wage bills to consumers.?The QSBO was in line with the latest ANZ Business Outlook survey for June with expected profitability deteriorating to a net 17 percent, suggesting firms have little ability to pass on higher costs in the face of strong competition.

Not only is profitability getting squeezed but firms expect?to hire fewer people and invest less money than three months ago, adding to the view?underlying economic growth is slowing, which will only fuel greater losses for corporates. End quote.

I listened to Grant Robertson again yesterday morning, telling Guyon Espiner how the only problem was one of perception; that businesses always view Labour governments as unfriendly to business, when this is not the case at all.

Guyon did remind him that pulling the rug from under the oil and gas industry might have something to do with that, as any business sector might be afraid that they will be next. But Grant batted that away cheerfully, saying that when things slow down in the Taranaki region “in 30 years” there will be all these shiny new industries for them to choose from.

I’m not exactly sure who he is kidding, but mainly, I think it is himself. Hasn’t he noticed how investment is being pulled out of the country already on the back of this decision? Or do we just ignore that, and pretend it doesn’t exist?

There was something far more sinister in the same interview, though. Guyon Espiner was asking Grant about the proposed employment law changes and, in particular, the plans to increase the minimum wage to $20 by 2021. Grant assured him that the government would consult with business on the employment law changes, and make sure they were onside and happy with all the proposals. But, when Guyon pushed him, asking if that meant that the $20 minimum wage was still open for discussion with business leaders, Grant basically admitted that it was a fait a compli; that they would be pushing ahead with it, whether the?business sector likes it or not.

So, in other words, the government wants to bring business along with it, wants to have lots of discussions about what they can do to help business, but in the end, if business leaders don’t want what the government proposes… well, tough. Most business leaders will see through that approach fairly fast, and confidence will sink even further.

Now Winston is off around the country on what he calls a “fact offensive”?? a road trip to go and talk to business and reassure them that they are just being pessimistic for no reason.

However, with his threatening and ominous tone, it is unlikely that anyone is going to be reassured. He told Politik that the Clark government lost its nerve when faced with the 2000 winter of discontent, but that this administration “wouldn’t blink” in pursuit of its own economic restructure. Nothing like a collaborative approach to business in this country.

And they wonder why business confidence is through the floor.