Why Good Business Reporting Matters

Originally I was going to call this piece "Why business matters?," but that is axiomatic for any reader of this section of the news. Why good reporting of business matters is that business and our attendant underlying standard of living are threatened when large sections of the population are uninformed, disinterested and ignorant of how closely their everyday well being is linked to the performance of our economy.
Anecdotal evidence from various readers employed in the legal profession who stated that they found The Business in the Herald sufficiently interesting for them to forgo their normal habit of never reading any business reporting is frightening when one considers that this profession is as near to business as many citizens get.
Continual clamouring for the government to pay more for more services to more sectors of the population suggests that most people don’t connect the government’s money to that of the taxpayer. The alarming calls for more expenditure by government from some National party MPs is even more worrying, given that their economically literate Finance spokesperson, John Key is advancing good arguments for less tax gathering.
Belatedly the government has made calls for a better savings and investment record from citizens but little muscle is given to this call. Words such as productivity are now on the lips of government ministers and not before time. These follow a slowly growing awareness that the end of the golden economic weather is upon us. These messages should have gone out earlier, but we have a media not well schooled in basic economics and indeed not obviously capable of simple arithmetic division, coupled with a parliament woefully short of experienced business people (and that goes for most parties with the possible exception surprisingly of the Maori Party).
How did we get to this state?
Parliament is over represented by members of the legal and teaching professions coupled with an abundance of union officials in the current government. These groups are largely insulated from economic surges up and down, as are politicians themselves.
The traditional professions have generally done well over the years just by charging fees, mostly in the absence of a real market so many of these influential well placed advisors simply don’t know how hard it is to make a buck by investing. Ridiculous legal charges have been propped up by legal aid, a misnomer for lawyer aid, so the bottom of that sector has a false floor. Those professions more closely linked to the rise and fall of market confidence such as architects and engineers know full well the meaning of "make hay while the sun shines" and any of them who haven’t been salting away the results of a few good years deserve little sympathy later.
The traditional response of any politician to a problem is to pass a law and with so many lawyers in the house there is obviously lots of support for this approach. The handful of experienced business people, who call for the removal of a law as a solution are not treated seriously. Productivity needs to rise, so pass more laws to prove better government! A visit to any lawyer’s office will show a wall of statutes that govern our behaviour. How we are supposed to know that we are not breaking any of these is anyone’s guess. It is certainly ironic that one of the government’s few experienced commercial lawyers has been caught by this legal avalanche, himself.
But you can’t just put the blame on Parliament. Business has not made itself sufficiently interesting to the young and the public at large. Hopefully the Trademe sale has made a start to the idea that business is not just the core of any society, but it is fun, it can be cool and it is a story about people, not just numbers.
We are a country of small traders. We do have low barriers to entry and many Kiwis have prospered without ever having worked for anyone other than themselves. These are the voices that need to be heard. They know just how much of a pain some of our legislation is.
Why don’t we hear more of their storeys? Is it a problem with the training of our journalists. As a regular interviewee by health reporters, I am often dismayed by the lack of any connection from them that health is big business. ADHB turns over around $1.25 billion, has over 8000 staff and thousands of products, yet few reporters bother to divide turnover by staff, or the cost of a new service or drug by the number of people receiving it. Information is just given out in meaningless numbers of millions, rather than trying to get it down to individually digestible lumps so it can have a meaning and relevance to the man in the street.
Our number one big bad problem is our current account deficit, which is reported in billions in a manner that is so disengaging of the average taxpayer, that he just hopes it goes away and trusts that the politicians have it under control. I doubt it, especially looking ahead to next year’s repayments or debt renewals on the horizon.
The fiscally informed will have mapped out a way around the problem for them, and those on government salaries can quietly reflect on the happy state of their own independence from the problem, but lots of people need advice to avoid getting hurt. We are spending millions to warn them of chicken flu, but what about Uridashi flu?
Business reporters, especially sound bite ones on TV and radio, seldom point out that for every winner there is a loser. High interest rates are bad for mortgage holders but good for lenders. Unfortunately a lot of them are off shore. A high dollar is sold as bad, and it is for exporters, but it does keep the cost of petrol down and keeps the shops full of affordable foreign made goods.
The rapid loss of value of our dollar is probably the precursor of even more rapid change. Are the public being warned of the consequences? Maybe, but I hope we don’t squander the next few months’ warning.
Core business values such as depreciation are seldom explained or reported on in a way that makes them seen or understood. I have taken over hospital boards only to find that depreciation, while reported in the financials, has just been spent on running costs and no thought to its original intention of putting aside something to replace and refresh assets has ever occurred to those who went before. How could this have been allowed to happen?
Ignorance, lack of interest or understanding of business is a root cause of this and of our continuing economic under performance. We can’t afford to let this go on. We need good business reporting so the subject becomes as interesting as it should be and when Kiwis all avidly read about business, not only the human stories but also the signs of what lies ahead, then we will be better placed to handle what comes.
Interestingly, for a leading economist such as Gareth Morgan to want to just give his windfall away, it shows a lack of will to create the big capital blocks the country needs. If he is giving it way, why not use it as an angel fund for the high risk, high growth companies that we need for the future. There will be some failures but no damage if he is able to give it, as there will be successes that will more than replenish the fund.
WAYNE BROWN