Opinion: Economic progress at risk

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Over recent years we have been governed by a right-leaning coalition that was strongly pro-business and growth, despite the negative impact of the global financial crisis and the major earthquakes.

From a business and economic management perspective, the last government generally listened, worked with and where necessary, drove private sector business to function like a nationwide partnership.

This strong strategic leadership for our export-driven industries created a sense of confidence that helped drive our country’s export growth to new levels.

The South Canterbury farming sector moved from being a wool and hamburger meat producer to be a world class exporter of fruit, vegetable and dairy products.

From the early indications, this new coalition government is likely to create negative changes in direction for many in our local industrial sectors.

I believe our period of strong economic progress may now be at risk!

The new three-party government coalition has opted for a dramatic change in direction by prioritising the least productive end of our economy, while openly threatening the most productive sectors. Crops remains on the vines while the unemployed stay at home and collect benefits and still avoid any form of sanctions.

This sudden change in direction is unsustainable. The business and investment sector will read this approach as Government-sponsored capital value destruction and will vote with their feet by going into a consolidation mode. The Budget extremes highlight the negative consequences of trying to satisfy a diverse three-party coalition’s agenda.

The recent Government approach to our oil and gas sector future here in South Canterbury is frankly scary.

Shareholders will be concerned about their investment values and seeking information with respect to their most cost-effective exit programme. Skills, capital and investment will move to new longer-term, more favourable operating regions of the world.

Successful business strategies need to see a growth path well into the future. Those that go into any form of business expansion without sustainable long-term plans and strategies are likely to be the next business failures.

I cringe when I see our three-party coalition leadership trying to explain away their decision to stop offering any future new oil and gas exploration licences. On behalf of their shareholders, the oil and gas companies must immediately develop new exit plans given acceptance that in New Zealand, oil and gas is now formally a “sunset industry”.

What the politicians are missing is probably one of the most basic premises of successful business planning – certainty of ongoing business investment opportunities.

Business sectors need a close and co-operative relationship with their government especially in the current high technology, rapidly changing, global marketplace. Businesses and governments need certainty not uncharted surprises.

Business is not short-term social welfare and therefore I don’t see the road ahead for business being in any way attractive.

Timaru resident Jim Scott is a former Air New Zealand chief executive officer and a strategic consultant for small-to-medium enterprises.