Businessmen uneasy about National’s economic management

Rich-lister Stephen Jennings’ warning that “we are facing an iceberg” deserves to shatter business complacency on housing.

It should also shatter the complacency of the Prime Minister – if he allows himself to hear it.

Jennings has confronted the business elite with some unpalatable truths: rising house prices and immigration-fuelled economic growth are masking an underlying “iceberg that lies ahead”.

“We are sleepwalking into an economically ugly place,” he warns.

Jennings’ confronting address was a breath of fresh air. One of the questions posed to him was, “Are you standing for Prime Minister?”

Jennings let that go. But it is notable that in his earlier career as a Treasury official and investment banker in Wellington, he was sounded out to become a National Party politician. Ruth Richardson has the story on that one.

The question is whether Jennings’ messages will percolate through to the Prime Minister. John Key prefers to remain in a state of denial on the full impact of the housing crisis and the role the immigration surge has played in disguising some emerging issues in the economy.

No one from National’s front bench was present to hear him prick the Key Government’s self-satisfaction.

That Government has been widely lauded for grappling with the fallout from the Global Financial Crisis and getting the books back into surplus. It has also been a stable Government.

But it is now dangerously moving into the self-satisfaction zone that tends to creep up on an administration that has held power for a long time.

Two Cabinet ministers that I personally rate were at the Jennings’ address.

Jonathan Coleman and Paul Goldsmith are part of National’s future. They are intelligent. They are incisive. They are in for the long haul.

But it takes bottle to confront Key’s “kitchen Cabinet” – Bill English, Steven Joyce, Gerry Brownlee and Paula Bennett – and tell them that when it comes to the housing crisis, many in business are coming to the view that their emperor has no clothes.

Several guests were disappointed no one from Key’s inner circle was present. “Are they going to take the message back to the big guys?” one asked me.

“Jesus Christ, what are your grandkids going to do?” said another, predicting it would not be long before young New Zealanders head off overseas again because they could not get a toehold here.

The question I have for both ministers is what will they say when the Cabinet convenes on Monday? Both looked slightly ill at ease when I teased them on Thursday evening by suggesting they present a brief.

A one-page brief that slices through the issues, confronts the problems directly and stops the endless spin machine might just do the trick. But they are politicians.

It is certainly true that the Dream Team are now largely disconnected from advice from the rest of Caucus, and independent advice in a larger sense.  Some of this is a natural progression of a government in power for an extended time period, but some of it has to be chalked up to short-term thinking and an emerging siege mentality.

Right now National is focused on bringing in a good result for 2017.  But, if you take a step back, you can see few good strategic decisions being made.  Putting general tax money into Auckland’s rail loop would be one example, especially when it is already half a billion over budget and they have barely started.  Pandering to Phil Goff with taxing roads that have already been paid for would be another.  And that totally ignores the housing market where National are currently are putting sticking plasters on.


– Fran O’Sullivan, NZ Herald

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