New Zealand’s financial markets and business leaders were quick to welcome Labor’s resounding victory in Saturday’s general election. The Labor Party took 49.1 percent of the vote, up from 36.9 percent in 2017. The conservative opposition National Party surveyed 27 percent, the second-worst defeat ever.
With 64 seats in 120 parliamentary seats, Labor will form the first majority government since the proportional electoral system came into effect in 1996. Labor’s ally, the Green Party, received 7.6 percent of the vote and 10 seats. NZ First, a right-wing nationalist party and also part of the Labor-led coalition, failed to reach the 5 percent threshold for returning to parliament.
A New Zealand Herald Tuesday’s report, titled “Nothing to disturb the stock market at Labor Landslide,” stated that financial markets had taken the Labor Party victory “with their paces.” The New Zealand dollar was trading at US66.13 cents Monday, up from US66.04 late on Friday, while the stock market S & P / NZX50 index was “down a few points” at 12,418.61. Port Asset Management Manager Shane Solly said the Labor Party was widely expected to win and “nothing is clearly concerned about the capital market”.
Frances Sweetman, a senior analyst at Milford Asset Management writes at Heralds on Wednesday following the formation of a Labor-led coalition with Greens and NZ First in 2017, “business confidence plummeted and the already stalled housing market quickly shook to a halt.” Yet this time, anticipating “a second term of a centric government focused on maintaining the status quo,” he wrote, the stock market “is not turning a blind eye.”
Sweetman drew particular attention to the fact that the gross NZ50 index rose 53 percent over the three years of Labor-led rule, compared to a 36 percent gain for the US S&P 500 index under Trump’s pro-business presidency over the same period. .
Going forward, Sweetman said New Zealand companies were optimistic that Labor would be “too busy protecting the economy from a COVID-driven downturn and trying to keep new National voters from surprising them with something too business-unfriendly.”
A Kiwibank commentary described Labor’s announced policies as “suitable,” and likely to boost business confidence. Chief Executive Officer of the Canterbury Chamber of Commerce Leeann Watson said the election results would “bring certainty and a degree of sustainability to the business community”.
Salt Funds managing director Matt Goodson highlighted the Reserve Bank’s quantitative easing operations in response to the COVID-19 crisis. He stated that what “really matters” is “an extraordinary monetary policy experiment carried out with extremely low interest rates and quantitative easing, and that is unchanged for now.”
The central bank supports the financial system and bank profits by printing up to $ NZ100 billion to buy back government bonds. Reserve Bank Governor Adrian Orr has acknowledged that bank policies increase asset value and wealth inequality, but banks need to maintain business confidence.
The Ardern administration’s primary response to the economic crisis fueled by COVID-19 is the same as any other government internationally: the unprecedented handover of tens of billions of dollars to businesses, which have fired tens of thousands of workers. The government’s “wage” subsidy schemes have so far paid employers more than $ NZ14 billion.
Institute of Economic Research economist Christina Leung told Radio NZ that following the lifting of the COVID-19 restrictions, which were sued by businessmen and corporate media against the advice of health experts, “the business atmosphere, activities and outlook” have all improved. The country back to work means “profitability expectations” are now improving, he added.
It was revealed this week that major global conglomerates including Coca-Cola, McDonald’s, Asahi and Tesla, along with many local NZX-listed companies, have all claimed millions of dollars in COVID-19 subsidies before distributing huge dividends to investors. New Zealand retail giant The Warehouse Group posted an annual after-tax profit of $ 44.5 million after taking out a $ 67.7 million subsidy while cutting 1,080 jobs.
Ardern has already signaled that a formal coalition with the Greens cannot possibly be given the “mandate” of the Labor Party to govern itself and its desire to honor National supporters who vote for the Labor Party. While the special Labor government is claimed to be more “business friendly” than the Green Labor coalition, both parties are using the election campaign to convince the company elite that they will meet their demands. Ardern emphatically rejects claims that the Green Workers’ coalition will impose a simple Green Party “wealth tax,” which the Greens are quick to explain is not a “bottom line” policy.
Auckland real estate millionaire Don Ha said Labor’s absolute victory was “inspiring” and would create more “excitement” in the property market. Ha said the residential property market was already “booming” before the election, and that a “stable” government would create the same because people could invest “with confidence.”
Rising house prices are one of the main drivers of inequality and social hardship. They have increased 7.6 per cent in the past year and 27 per cent during Labor’s tenure. An investor spokesman pointed out that the government’s pledge to build 4,000 public homes and new transitions per year, even if they were fulfilled, is far from certain, “won’t even touch the surface, so there will be a huge demand. for rental properties. “
As housing inequality and affordability worsens, the consequences for workers are dire. Over the past three years, private rental costs have increased by about 15 percent and waiting lists for public housing have increased from about 6,000 individuals or families to nearly 20,000. Researchers estimate that at least 41,000 people, or one in 100, are homeless.
NZ Trade Union Council President Richard Wagstaff stated: “The workers are looking forward to working with this government. Both Labor and the Greens have committed to hearing the voices of the working people. We can make meaningful changes when we work together. “
Workers shouldn’t be fooled. The pro-capitalist unions have fully supported the award of the Labor Party to big business, and assisted in enforcing mass redundancy and salary cuts. They promise a lot more of the same. Their main demand for the new government is to introduce an industry-wide “Fair Payment Agreement” that will be approved by the state, employers and trade unions. This would involve a ban on industrial action while such wage deals are negotiated.