The winter of business discontent

Things used to be easier for cub reporters looking for "business" opinion on an issue. A quick call to the Business Roundtable's energetic chief executive Roger Kerr, a soundbite about the need for more deregulation, and that was commerce and industry listened to for another day.

But Kerr was seen as emblematic of the economic reforms of the 1980s and 1990s whose image, if not substance, Clark wanted to move away from. He was also seen as a chief agitator in the "winter of discontent" that followed the election of Helen Clark's Labour government in 1999. In this period, business interests threatened to rebel against the social democratic-styled programme of the government, including its employment law reform, and confidence plummeted.

The pragmatic Clark knew that a three-year stand-off with business would make for a rough ride in government. But despite the protestations of some of Clark's natural constituency, government always trumps business in displays of naked power, and so an uneasy consensus was forged through the work of Clark's business contacts like Warehouse founder Stephen Tindall.

The roundtable became a pariah to the government of the day (although it continued to provide high level policy advice for the National party). Since then the centre of gravity for business representation to government has shifted to Business New Zealand, which has been working on the ground on issues like productivity, and the newer Business Council for Sustainable Development (we'll call it the Business Council), a lobby and policy group founded by Tindall, and employing former 1980s Labour cabinet minister Peter Nielson as chief executive.

Membership has rocketed since its inception, and it has gone from 43 to 77 companies in the past two years. That's because businesses want input into the policy process, and the Business Council has proved itself as the business group with access to, and the ear of, the Labour government.

The chairman is Deloitte head Nick Main. Along with Tindall, and PricewaterhouseCoopers partner Brian Roche, he forms part of the core of Labour's preferred business advisers. There's nothing sinister about this, any more than other politicians seeking the advice and the sway of Kerr or Business New Zealand's Phil O'Reilly.

And while the organisation doesn't purport to directly represent its affiliated businesses, but provide "policy leadership," it doesn't hesitate to promote itself as having a membership accounting for up to 34% of the country's GDP.

It also is clear it has the government's ear - receiving $30,000 in government funding since 2005 from the Ministry for the Environment. (That's less than Business NZ, which provides education and funding, but is significant for a pure policy body.)

What then should cub reporters make of this week's all-in brawl between lobby groups and industry players as each fought to be heard about the needs of business on the government's emissions trading system? How to describe and synthesise the competing views, the vicious in-fighting, the bloodthirsty competition between those presuming to speak for the commercial and industrial sectors?

Business reaction, it must be admitted, was mixed.

The trouble started, at least openly, when the Business Council chief executive Peter Nielson said on Monday he would be presenting a report on the positive business consequences of the government's climate change legislation. It also warned ominously of the dangers of any delay to the scheme.

The next day, reporters were caught unawares by a report from the Sustainability Council (no relation; the two organisations are as different as Monty Python's (Life of Brian) Judaean People's Front, and the People's Front of Judaea.) It lambasted what it saw as corporate welfarism in the current draft of the trading scheme of about $1.2 billion, it reckoned, of big emitters' carbon costs being shoveled on to taxpayers.

The Business Council's report later that day proclaimed an even bigger headline figure - delaying the emissions trading bill would cost the country over $12 billion.

The report was not the Business Council's best work. The economic opportunities presented by investment due to climate change, for example, were potentially misleading.

(If you replaced the phrase "emissions trading scheme" with "import licences," for instance, there would be plenty of new opportunities too: we might get more car assembly plants in the country. Does that mean our economy is better or even bigger?)

The second part - the dire costs of delay - was even more tenuous: a crude arithmetic exercise based on the arbitrary assumption a hypothetical boycott overseas could cost 5% of exports. That figure isn't explained, or the likelihood of it actually coming to pass.

Moreover, it doesn't factor in the length of any proposed delay - a month, a year, a decade.

The report admitted to being hurried: completed in seven days, apparently at the behest of the Business Council's executive board - and the key players there are Main and Tindall - which met on World Earth Day. This was a head scratcher in itself: The Business Council has developed a reputation for extremely precise and thoughtful policy development and research.

No sooner had the report been rushed out than members of the Business Council - including major carbon emitters - complained they had not been consulted on the report. Many members, including those most affected by the emissions trading scheme, did not receive a copy until Tuesday afternoon.

Some members were so furious they considered publicly rebuking the executive. Some settled for strong condemnation of the report's findings.

There has also been speculation among the membership that the Beehive had advance warning of the scheme, and individual company members are busy penning letters calling for a pause on the legislation.

The next day, an array of business interests, including Business New Zealand, the Roundtable, and a comprehensive selection of sector groups, issued an open letter calling for the bill to be referred back to select committee.

This blew open the developing fissues that first became apparent behind the scenes in April. Business NZ supremo Phil O'Reilly publicly disagreed with the Climate Change Leadership Forum, a government advisory body he sits on, when it had issued a list of 10 "key points" about emissions trading legislation in April, purportedly authorised by its members.

This is not a trivial matter, since the leadership forum was set up by government as its chief advisory body on the matter; its wisdom is often referred to in the select committee report on the bill, and it remains in existence to help consult on regulations to fill in the detail of the legislation. Privately, members fumed that they had never agreed to the points - which supported the government's position.

The chair, who authored that release? Stephen Tindall. Main is also a prominent figure, and the contentious press release came out with Nielson's name as the media contact.

The consensus bargained around the last winter of discontent - including those who can mediate business's message for government - is breaking apart. The government's key business contacts are publicly being challenged.

The splits are more than a headache for the government. The ETS is Clark's flagship policy in Labour's "sustainability" branding. But the sight of business breaking the consensus and attacking its policy-making openly should give it pause of thought.

One insider said "There is no way, if the polls were not going the way they are, that companies would have risked criticising the research and the council." In the past, as recently as April, most large businesses were prepared to wear the problems with representation, rather than risk losing access to the Beehive.

That they are now prepared, not just as associations but individually, speak out with such vehemence means the balance of power may have tipped. That means another winter of discontent for the government. And, if the electoral groundhogs in the business community are correct, the cold snap may not be over by November.


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