Confidence impacts on economic growth

-Leeann Watson, Chief Executive, Canterbury Employers’ Chamber of Commerce

There’s been a lot of comment lately on business confidence, which has hit seven-year lows in recent months. While it’s easy to dismiss confidence as an irrelevant measure of sentiment only, the fact is, it does have an impact on economic growth through investment and employment decisions that businesses make.

We can debate the various drivers of the numbers, but the biggest factor in my opinion is uncertainty. Business needs certainty to invest. Right now, in a number of key areas, they don’t have that certainty.

Whether it is around immigration changes and the impact this has on the ability to find skilled workers, clarity around proposed changes to employment legislation, or the changing nature of overseas investment and ownership rules impacting our reputation as an investment destination, the signals from policy-makers are unclear.

Couple all that with the sudden decision around the oil and gas sector, and we begin to see a picture that I believe results in the lack confidence.

There is a real risk to the pipeline of projects coming to market across many sectors, including the commercial and residential building sector, and the much-needed infrastructure investment to support our growing population and tourism numbers.

This uncertainly takes a toll on business who require stability and certainty. While businesses understand the need for change and are incredibly resilient in the way in which they constantly adapt, sound policy that enables and supports business growth is essential.

It’s particularly important in an environment where manufacturers face constant change, from changing workplace dynamics and drivers to digital disruption and emerging trends like AI.

Instead of being able to focus on these important issues, the constant uncertainty means we are distracted from the big issues that will affect the industry over the next decade.

Everyone supports the Government’s goal of developing a modern, nimble, productive and high-growth economy.

But we need more than a goal. We need a clearly defined strategy that will deliver on these aspirations and sound policy to create the certainty and stability to enable the innovation, growth and investment we need to create a stronger New Zealand.

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