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New Zealand’s reset of the bureaucracy will see hundreds of job cuts this year, as the new government gets to grip with a “fragile” economy assailed by multiple problems.
Prime Minister Christopher Luxon has blamed most of the problems on the previous Labour government’s policies, which the new coalition government is trying to undo in its first 100 days.
While many voters will be pleased with the government’s immediate list of actions, businesses will be looking for clear signs of what comes next and how we will pay for it, e.g., water and roading infrastructure, health and education reforms, resource management reform and climate resilience.
Without this, there’s a risk of economic (and political) inertia as businesses defer key investment decisions.
In many ways, business confidence is a matter of sentiment based on various data, including policy announcements and regulatory settings and investment by government.
Less red tape, more public-private partnerships, foreign direct investment, and potential asset sales will be well received by businesses. The public also want momentum in frontline services and devolution of services to improve our quality of life in areas like health and education. But a lack of progress in such areas will be politically and economically costly – something the Ardern and Hipkins administrations found out. Political scientists will also point to the importance of maintaining momentum and controlling the political agenda.
As Mr Luxon knows, pilots don’t have a rear window – they can only look forward when flying the plane. We need the Government to be looking forward and charting a course back to an economy with momentum.