The Labour Government is starting to win over business leaders, a prominent economist says, pointing to this week's improving business confidence figures.
ASB's Business Outlook report on Monday found confidence improving to a net -6.9, meaning while it's still negative - perhaps unsurprising considering the economic shock the world's been through this year - it's up from -15.7 in October.
"Outright levels remain low, but the rate of improvement over recent months has been impressive, testament to the resilience of the NZ economy," ASB said, much of it driven by improved sentiment in the manufacturing and construction sectors.
New Zealand has weathered the COVID-19 economic storm well compared to other countries, with community transmission of the virus only a distant concern for most.
The only reason it's still negative could be that we have a Labour Government, economist Cameron Bagrie reckons - regardless of their handling of the economy.
"Business confidence does tend to have a political bias - if we go back to the previous [Helen] Clark Government, business confidence averaged -20 over the entire term and the New Zealand economy rocked along at about 3 percent real GDP growth," he told The AM Show on Tuesday.
"At the moment it's minus seven, it's still negative but it's averaged -35 over the past two to three years. We're on that less negative side of the ledger."
He said even moves the business community doesn't generally support - such as increasing sick leave for their employees - are being done slowly and carefully. The sick leave extension from five to 10 days won't happen until late next year, possibly after the pandemic is tamed thanks to vaccines, and there won't be any increase to the maximum number of sick days an employee can stockpile. The Greens had pushed for the changes to be in place by Christmas this year.
"The business sector is still not going to like this - it looks like it's going to be a billion-dollar cost and that billion-dollar cost is going to come out of somewhere," said Bagrie. "Businesses are going to end up making less money. But the Government seems to be a little bit more pragmatic in regard to how they're bringing things in."
Bagrie said the Government was perhaps mindful the economy would likely be in a much better state next year than it is right now.
ASB's report had firms' expectations of their own activity in the positive - 9.1, up from 4.7 in October. Bagrie said this was a better indicator of how the economy's trending than the confidence figure, with bosses likely knowing more about how their own business is doing than others.
"That's the rubber-hits-the-road metric... that's at plus nine. It's positive, it's up and it's moving in the right direction. It's still well down below the historical average of around 25, but at least it's on the right side of the ledger and once again moving in the right direction."
As for the overall handling of the unprecedented year we've just been through, Bagrie said he'd give the Government eight or nine out of 10.
"The border control has still been a bit loose - we've had a couple of incursions and personally I think we've been actually pretty lucky. But compared to what we've seen around the globe, we're in a hellishly good state."
