Power shift Deloitte BusinessNZ Election Survey
Our perspective August 2017 It is a time for the political parties to listen closely to the views of their constituents and make their case for governing Deloitte BusinessNZ Election Survey
Election 2017 in perspective
Consistent with past surveys, the 2017 While political outcomes are generally What’s changed? Deloitte BusinessNZ Election Survey binary – someone wins or loses – what Given what has been happening around highlights the likely approaches that the is often overlooked is how close the the world, it is perhaps unsurprising different political parties would take in electoral outcomes actually are, the that the BusinessNZ members surveyed relation to policy issues for business if level of voter turnout and the resulting are open to change in certain areas – elected, overlaid by what the business mandate a government has to lead. particularly if it leads to greater social community would like to see from any This was particularly pronounced in the cohesion here. future government. 2016 US Presidential election which had a participation rate of eligible voters When asked what the indicators of In an election year, voters are asked in estimated to be in the mid-50s, with the higher economic performance are, 69% a broad sense to take stock of how the popular vote supporting the President of respondents said “socio-economic country is doing. And it is a time for the being in the 20s, on a percentage basis. wellbeing”, second only behind “GDP political parties, whether in power or in growth”. This is an increase of 11%, and opposition, to listen closely to the views Internationally therefore the political a jump from fourth to second (out of six of their constituents and make their case pendulum has generally swung from indicators) since the 2011 election survey. for governing. At its heart, this process “status quo” to “change”, with a large requires both politicians and voters to number of eligible voters sometimes While the proportion of business evaluate what’s changed and what’s not participating. This global theme of respondents against raising the highest stayed the same since the last election, change can be seen as a response to the marginal personal tax rate remains steady and set their course or make their perceived growth in inequality coupled with in 2017 at 76% (compared to 74% in 2014), decisions accordingly. a growing populist approach to politics. the numbers supporting an increase in the Enough voters are increasingly feeling rate rose from 18% to 35% if the additional A global climate of change disenfranchised, left behind or just looking revenue raised were earmarked to fund The backdrop for the upcoming election for something new, to form a new majority social investment. is unquestionably different to what it was (sometimes by the slimmest of margins) in 2014. that is voting for “something else”, even And more (44%) respondents are now when it’s not clear what that “something supportive of the living wage than are The last year has seen an avalanche of else” really is other than it’s not what is against (43%). This is a change from 2014 surprising political change in some of our already there. when the largest number of respondents closest and long-standing allies and trading (48%) didn’t support a living wage. partners. The UK Brexit referendum last So how will this global political climate June saw a slim majority vote to leave the affect us in New Zealand? When asked As for the political parties in 2017, there EU. The 2016 Australian federal election if the economic and social conditions is plenty of change happening in terms in July was so closely contested that the that have led to Brexit, Trump and the of party leadership and makeup, and to outcome was unclear, with fears of a hung rise of populism in Europe are becoming a lesser extent policy. National has a new parliament, for a week after polls closed. an increasing issue in New Zealand, Leader and Deputy Leader in 2017 after the Donald Trump rode a wave of populism to 53% of business respondents to the surprise announcement in December last surprise all the pundits and become the Deloitte BusinessNZ Election Survey year that saw Prime Minister Key step down. 45th President of the United States. And said “yes”, 21% thought “no” and a in the UK, Theresa May’s call for a snap quarter of the respondents were on election backfired, albeit her Conservative the fence. This despite the fact that Party still edged out Labour in the closest New Zealand’s economy is a positive result in over 40 years. outlier in terms of global performance. 1 Deloitte BusinessNZ Election Survey
And their election year Budget saw a The majority of respondents (55% this Perception vs policy continued shift toward the centre with year and in 2014) continue to think the tax Controlling perception and appealing to policies focused on social cohesion through system should be reasonably flat with few voter emotion are equally (if not more in an increase in funding for social investment exemptions or tax breaks and 59% (63% 2017) as important as substantive policy and increases to Working for Families. in 2014) are against the introduction of a discussion in a hard fought election capital gains tax. campaign. In the heat of the battle it’s easy At the time we described Budget 2017 to lose sight of the fact that, from a policy as providing a cash dividend to middle Fifty-eight percent responded that more perspective, one can expect only a small and lower income New Zealand with the resource should be put to providing degree of change from any outcome under remainder offered a “social cohesion “better connections between science and our MMP system backed by a neutral dividend” – the ability to continue to benefit business” in an effort to lift R&D (this was public service; recognising that from a from the current economic settings. also 58% in 2014 and 57% in 2011). fiscal perspective the overall decisions of the differing political parties can have Not to be outdone, and in many respects Half of all business respondents remain materially different outcomes over time. as a reaction to lacklustre polling, the unsure of whether or not the Government’s The former point is illustrated by the Labour Party has elevated Jacinda Ardern current infrastructure spending plans will relatively small number of specific policy to Leader with less than two months to deliver the best economic outcomes (52% changes proposed by political parties in the general election. Normally this would in 2014). And business supports private responding to the survey, recognising also be considered to be electoral suicide, but investment in infrastructure, with 64% that the voting public’s appetite for policy so far it has paid dividends, causing an (62% in 2014) saying they think public debate is limited. immediate and material rise for Labour private partnerships provide shorter in the polls. The Green Party has seen timeframes and value for money in The 2017 Deloitte BusinessNZ Election Metiria Turei resign as Co-Leader amidst infrastructure projects. Survey is useful in highlighting the likely controversy. And recently NZ First shook policy approaches the different parties things up with the addition of Shane Jones Finally, businesses overwhelmingly would take on a case by case basis, as their candidate for Whangerei. (77% in 2017 and 79% in 2014) continue whether populous or principled, the extent to believe that the Government should to which they would intervene or moderate One cannot escape a creeping sense of have an overarching regional economic natural market forces, and the levers that topsy-turvy from these changes – that the development strategy to balance economic they would pull that affect business. relative stability that has characterised activity as far as possible throughout New Zealand’s politics in recent years New Zealand. We will leave the personality politics, the could – exacerbated by our MMP playing on emotions and the attempts to environment – be subject to change. For In these areas where business opinion control public perception in the capable some it’s just because they feel that it’s has remained steady since previous hands of the politicians with the survey time for something different, which is elections, one has to ask if this is because simply a marker of business sentiment. human nature following a settled period. the perception is that there hasn’t been much change in recent years or it’s just the What’s stayed the same? predicable business response. Perhaps in 2017 what’s more interesting is what hasn’t changed. In either case, the Opposition parties have an opportunity to shift the dial in The majority of business respondents some of these categories to draw on a (60%) to the survey think that the consistent sentiment. This is certainly Government has a coordinated plan of the case with infrastructure, where all action focused on raising New Zealand’s parties are suggesting increased spending Thomas Pippos economic performance. This compares to over a variety of projects, and regional Chief Executive 63% in 2014. development where the Māori Party, for example, have a strong focus.
2 Deloitte BusinessNZ Election Survey
Business is open to policy change, especially when it supports greater social cohesion