PM compares NZ businesses to whiny kids

PM Christopher Luxon told struggling small business leaders in Rotorua on Friday to take responsibility for their own businesses, saying it wasn’t his or the Government’s role to stimulate the economy. The comments comparing business leaders to whiny kids wanting handouts from the ‘adults’ in Government haven’t gone down well, prompting the Editor of The Post-$, Matthew Hooton, to describe Luxon’s comments as “corporate gibberish” and “inauthentic”, suggesting there was still time for National MPs change their leader. (See more analysis, charts and detail below, and in the video above.)Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* New Zealand First has proposed the introduction of a ‘Kiwi Kids Grant’ of $5,000 per child per year for the first three years up to three children, in order to raise the birth rate above the replacement rate. It would cost $400 million in the first three years and be tax-free and not means-tested. Labour, ACT and National said such policies hadn’t worked overseas.* ACT has proposed giving teachers the legal power to remove ‘seriously or persistently disruptive students’ from the classroom. ACT candidate Paul Henry said when announcing the policy: “Let’s be honest, there are a lot of little s***s in classrooms, and we need to address that if we’re going to lift education standards. He added that New Zealand couldn’t invest extra in education as other rich countries such as Finland had, because “obviously, we are not a rich country. We’re a poor country at the moment, and so we need to address that.”Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.PM tells ‘children’ to stop asking for Govt helpIt was an innocuous enough and fair enough question to Christopher Luxon at a business breakfast event in Rotorua on Friday that has unleashed another round of accusations that the former CEO is out of touch for voters, and businesses in particular.Rotorua Business Chamber CEO Melanie Short told Luxon about the results of a survey of 82 business leaders in Rotorua in April and May that found a sharp fall in confidence since October linked to rising costs and a lack of demand. The survey also showed businesses wanted more public investment in infrastructure and business development.Short then asked: “We do not want to pass them on because we’re also getting less customers through the door. So, it’s a matter of time - how long can we hang on?”Luxon responded with these comments (bolding mine):“I think that’s a negative view, to be honest. Like we’re entrepreneurs and business people, and I get it. You know, if you’re not retooling and radically disrupting your business, you ain’t doing the job.“You know, you have to disrupt yourself aggressively before you get disrupted by global events, and if you keep thinking you want the same business model, the same customer mix, the same margin structure, you know you’ve got to be retooling and refinancing and rehoming, and that’s just the reality of business people all around the world.“So, my job is to make sure I’m setting up the conditions for you to be able to go create that growth. And I think some of the subtext and assumption in your question is that...I think in New Zealand I’ll be honest with you as a business person who was... I sat in Illinois for six years in Chicago, and the last person I wanted to ever talk to as a CEO was the government. I didn’t sit there in Chicago saying I wonder what the government thinks and I wonder what they’re doing to help me for my business? Can I get some grant money to do something? No, no, I’m a business person.“I’m building a kick-ass company that actually has commercially superior returns, great customer experience, and awesome internal culture. That is the job of what makes a great company, not a good one, a great one. And so that was my mentality.“Come home to New Zealand, and there’s a parent-child mentality. I have literally sat in boardrooms across New Zealand, and the conversation goes: ‘I wonder what the government’s going to do? I wonder what the government’s going to think?’“Who cares what the government thinks or does? Our job is to be adult, adult, adult. The business leaders, the political leaders, and the community leaders working together, doing things differently. I set up the operating system. You go out there and smack it and go create the road, and the community leaders see the pain, the hurt, the need, and the frustration, and the three actors do different things but complementary things to deal with the challenges and the opportunities.“So I still think there’s a little bit of.... okay, so in this chamber, how many of you are actually using Claude or Claude code? Okay great. How many sessions has the chamber run to help you understand that? Is that your number one focus right here, right now? Because that is going to disrupt your businesses, and it’s a huge opportunity for you to do exceptionally well off the back of it.“So how do we collectively lift our SME literacy on something like AI as a result? So I’m just pushing back to say my job is to set the conditions up. We’re getting spending under control. We’re getting inflation back into the band. We’re at 2.9 percent, strip out the fuel pieces. We’ve got growth coming in. And that creates opportunity.” Christopher Luxon talking to the Rotorua Business Chamber.‘Businesses don’t want an insulting lecture’Labour Finance Spokeswoman Barbara Edmonds said Luxon had insulted businesses with a patronising lecture.“Rotorua businesses told Christopher Luxon confidence is free-falling, customers are disappearing, and costs keep rising. They are telling him his Government’s choices aren’t working. His response was to call them negative and tell them to grow up.“Christopher Luxon promised to fix the economy and now he says, ‘who cares what the Government will think or do?’ New Zealand businesses care very much what the government thinks and does, because his government’s choices affect whether they keep their doors open.” Barbara EdmondsThe Post-$, which is edited by former National political staffer and lobbyist Matthew Hooton, also questioned the tone of Luxon’s comments and suggested it was not too late for National MPs to change their leader. The Post-$ also challenged Luxon’s characterisation of his own roles at Unilever and Air NZ.“For many, Mr Luxon’s analysis of New Zealand business culture will read more like the gibberish of corporate bureaucrats than the language of the entrepreneur and businessman he described himself to be.“Few companies are more at risk of being accused of being a child to the government parent than a national airline. Moreover, Mr Luxon did not just talk to the New Zealand government as chief executive, as he should have, but chaired Dame Jacinda Ardern’s Prime Minister’s Business Advisory Council.“Admittedly these are small points, but they suggest an inauthenticity about the Prime Minister that voters perhaps intuitively sense and reject.“A number of credible polls and important economic data are expected in the next fortnight. If, having considered that information, National MPs are certain Mr Luxon is the best of their number to beat Mr Hipkins, then their judgment must be respected. This month is their last chance to assure themselves of that again.” Editorial for The Post-$‘I did not plan to cause offence’Luxon told NewstalkZB’s Mike Hosking and RNZ Morning Report’s John Campbell in interviews this morning that he had not planned to cause offence and was he was disappointed with the reporting from The Rotorua Post-$ from the comments. The PM’s office yesterday issued a full transcript of his comments, saying the initial report mischaracterised his views.Asked by Hosking if his comments had been misreported or if he over-spoke, Luxon said it could have been “either or”, adding that “there was certainly no intent to cause offence”:“We’re trying to work with, enable and empower business. So, you know, that was my simple, you know, message in that room.“I said up front, I’m a great admirer of business people because they’ve led through difficult times, they’ve got a lot of people to lead. I’ve been in that situation as a business leader myself.”In my view, Luxon has again displayed his lack of understanding of how New Zealand’s economy currently works and how Government spending is often a crucial catalyst for household and business spending and investment.In previous recoveries from economic crises, the Government has pulled back on its own spending as a share of GDP, confident that households and businesses would be able and willing to step forward in place of the Government to borrow and invest. But that is not happening this time around because banks have done no net new lending to businesses since Covid, and rental property investors don’t want to invest in a housing market that is falling in value and when rents are falling. Both sources of spending and investment are also in no mood to borrow to spend and invest when their disposable incomes are falling and their main source of wealth is contracting.Charts of the day: How we’ve done it for 30 yearsEditorial of the Day: Time to change PM? My Top Pick n’ Mix Six* Cycling lanes interview with Amsterdam University social scientist Marco te Brömmelstroet by Jack Tame for TVNZ’s Q+A: ‘Kids have a right to wobble’: Dutch expert on NZ’s car-first cities. Amsterdam University social scientist Marco te Brömmelstroet argued the way streets in cities are designed comes down to trade-offs. Full YouTube Video* 1News: Outgoing Children’s Commissioner: ‘I have been a fair and balanced critic’Claire Achmad’s role as the independent children’s advocate ended on Friday — despite her wanting to stay on. Full Interview with Claire Achmad by Jack Tame for Q+A via YouTube* Deep-dive by Marika Hill for LDR/RNZ: Divided, united or undecided? The push to create super councils* Investigation by Tony Wall for Stuff: ‘Sick to my stomach’: Victim’s sensitive claim details sent to abuser’s family home* Op-Ed by Connor Sharp for SST-$: Northern expressway poor use of public money* Susan Botting for NZ Herald: Alarm over plan to truck Auckland housing development’s wastewater northCartoon of the Day: Comprehension testcheers.BernardPS: I update this post online later in the morning for paying subscribers, including more detailed Picks n’ Mixes on housing, climate and poverty, a chart pack and more cartoons below the paywall fold. It is only available to paying subscribers, who are also enabled to comment and use The Kākā’s chat room. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe