Newsroom Pro's 8 things:

Winston Peters greeted by Jacinda Ardern at the swearing in of the new Government. Photo by Lynn Grieveson

In today's email we delivered the new Government's first report card.

1. A one month report card

New Zealand First Leader Winston Peters surprised the nation and the Labour Party a month ago by choosing to form a coalition Government with Labour and agreeing to the Green Party in a supporting them with a supply and confidence agreement.

So how's it gone so far?

Good marks for...

  • Ardern has surprised a few people with her broadly assured and decisive performance in that first month in charge, while Peters has appeared a happy, disciplined and compliant partner.

  • The coalition and support agreements gave few major concessions to the two smaller parties that were broadly unpopular and softened the least popular ones in the Labour manifesto (no water tax or capital gains tax in a first term). The tail did not wag the dog in the Government-building process.

  • The major policy changes agreed of a foreign buyers' ban, a Carbon Act for carbon neutrality by 2050, cutting migration by 20,000 to 30,000, building 100,000 houses, a big minimum wage increase and pivoting to urban and regional rail from motorways were essentially a triangulation of all three parties' manifestos, which collectively were supported by more than half of voters.

  • The only exception was including agriculture in the emissions scheme (albeit with an initial 95 percent exemption for farmers), which New Zealand First opposed. However, NZ First did manage to get Labour to give up its water tax idea and increase the exemption from 90 to 95 percent in exchange for agreeing to that.

  • The least popular policies of New Zealand First's much bigger migration cuts and its fiscally dangerous changes to GST and company taxes did not make it through the coalition building process. New Zealand First's major achievement, its $1 billion a year regional development fund, was an extension of a Labour policy that neatly tied up with and appealed to a common desire with the Greens to plant a billion trees and invest in urban and regional rail. New Zealand First's other major concession was an extra 800 Police officers.

  • The Government has begun achieving its 100 day plan with a flurry of parliamentary and executive activity that has so far shown they meant what they said. Few show-stopping unintended consequences or political land mines have been set off so far in the plan for those 100 days ending in February.

  • Its biggest achievements so far have been its foreign buyers ban proposal, which neatly killed two birds with one stone, and its hurdling of local and global opposition to the Trans Pacific Partnership. The use of the 'sensitive land' provision in the Overseas Investment Act sidestepped the risk of having to rewrite multiple trade agreements (with the exception of one with Singapore) and allowed the TPP to progress.

  • Jacinda Ardern and David Parker have managed to re-create a type of cross-party consensus on free trade, albeit with plenty of grumpiness about (but ultimate acceptance of) the unpopular Investor State Dispute Settlement (ISDS) provisions. For a couple of years, Labour and National had parted company on their previous broad support for free trade agreements, largely under Andrew Little. Ardern and Parker have pulled Labour back to the nearer the centre in the last four weeks.

  • The Greens still oppose the TPP, and New Zealand First may yet also vote against it, but the support of National in Parliament means it is likely to be approved here -- assuming Canada in particular can also agree. Ardern's rhetoric and assurances about some slight tweaks to the ISDS clauses and the inclusion of the foreign buyers ban may soothe some of the political pain on the left of agreeing to the TPP, which was angrily opposed by tens of thousands of Labour and Green voters last year.

  • Labour has begun implementing its 100 day plan by a mix of executive orders and legislative change. The first substantial moves in Parliament are the rebirth of Sue Moroney's twice blocked Paid Parental Leave extension bill and the revival of Andrew Little's Healthy Homes Bill - both of which were private members' bills in the last Parliament.

  • Ardern performed strongly on her first major foray into international summitry, deftly handling the dramas around the TPP, pushing harder against a weak Malcolm Turnbull over the Manus Island issue and delivering a sneaky sick burn to Donald Trump when he teased her in a line-up before a dinner. The images of a confident, smiling and occasionally steely Prime Minister footing it on the global stage with the likes of Justin Trudeau, Shinzo Abe and Trump have extended her electoral honeymoon.

  • In purely political terms, Ardern's ability to shine at key moments on the tele-visual stage is a massive positive for the Government. Her decision to walk up the steps of Parliament after being sworn in with her partner Clarke Gayford and their two young nieces was a masterstroke of political symbolism. Last night's images of Ardern handing over an award to Lorde at the Vodafone Music Awards was a similar moment of tele-visual political gold. Here's a link to the numerous gifs and videos now flooding the internet in New Zealand.

  • We have no fresh public polling since the election, but it wouldn't surprise me to see Labour's support rise into the mid to low 40 percent range from its final election result of 36.9 percent. That would bring it into line with National and allow for some slippage by New Zealand First in particular.

  • The Government is now frantically working with the Parliamentary Counsel Office over the next week's Parliamentary recess to draft legislation to be introduced or passed via urgency in the final four weeks of Parliament of the year, which ends on December 21.

  • Meanwhile, new Ministers have been just as frantically employing their advisors, reading their Briefings to Incoming Ministers, and asking for formal advice on the policies agreed in the coalition and support agreements.

Poor marks for...

  • Labour and its support partners began poorly in Parliament. It was forced on its first day to back down on a plan to significantly reduce the size of select committees after appearing to miscalculate whether it had the numbers to get its choice of speaker (Trevor Mallard) elected. This picture told the story.

  • The new Government was also put on the back foot when National pushed for a more flexible form of Paid Parental Leave that would have allowed both parents to stay at home at the same time in exchange for shorter leave for the mother. Labour blocked it and was accused of a 'nanny state' type approach. Both episodes showed an early wobble in the new Government's management of the Parliamentary agenda and some creaky political skills around legislation.

  • Kelvin Davis was distinctly uncomfortable as Acting Prime Minister answering questions in the house while Ardern was away. Meanwhile, Police and Revenue Minister Stuart Nash was corrected by his respective colleagues Nanaia Mahuta and Grant Robertson after calling for more police recruits from overseas and saying GST would be applied "absolutely" to lower value goods bought from overseas websites.

  • Some ministers look overloaded with collections of big spending portfolios with massive reform plans. They include Stuart Nash with Police and Revenue and Chris Hipkins with Education, Tertiary Education and being the Leader of the House. The pressure will be particularly intense on Hipkins, who has early and politically dangerous changes to make around national standards, education's creaky property portfolio, a year's free fees for tertiary students from January 1 and an intense Parliamentary workload. He has already come down with a heavy cold.

  • Businesses remain wary and nervous about the new Government, particularly in the wake of the extended uncertainty around the negotiations to find a new Government. As it turned out, the chances of a National-New Zealand First Government appeared negligible anyway and much of the back-and-forth and brinksmanship could have been avoided. Winston Peters actually signed legal documents the day before the election to investigate his belief that Bill English and Steven Joyce personally breached his privacy over the release of details about his pension over-payments. In retrospect, it is clear Peters was never going to choose National and the relatively small concessions he achieved in the negotiations proved that.

  • Business confidence about the wider economy has dropped sharply in the last three months, although confidence by businesses in their own outlooks has fallen to a much lesser extent. Consumer confidence also remains elevated, although the sharp slowdown in house price inflation has dampened spending appetites and could prove a headwind over the next year. ANZ reported yesterday that its Roy Morgan survey of consumer confidence found its index eased from 126.3 to 123.7 in November from October. See more on business confidence lower.

  • There is a risk of businesses having another 'winter of discontent' through mid-2018 if the Government alienates them and business confidence continues to fall. However, the personnel and the political context on both sides are different to the winter of Labour's first year in power in 1999/2000. There are few signs yet of a massive backlash from business leaders or farmers, although a tough rewrite of labour rules, harsh new migration restrictions and any disruption in the handover to a new Reserve Bank Governor could upset the applecart.

The jury is still out on...

  • The biggest tests of the Government's first 100 days have yet to be sat. It is in the midst of a massive rewrite of the Budget outlook to be presented in the second or third weeks of December. It will include the latest economic forecasts and update the Government's spending and revenue projections to include its 100 day plan changes to family incomes, paid parental leave, extra police and adjust for whatever spending landmines were left over in health and education from the previous Government.

  • The Government will also have to update its capital spending plans and has already warned it has found a couple of dead rats in big infrastructure projects started by the previous Government, along with heavy new spending forecasts in the likes of Corrections and infrastructure.

  • Finance Minister Grant Robertson has said the Government can still meet its fiscal targets of running surpluses and getting net debt down to 20 percent of GDP by 2022, even with the forecasts of slightly slower growth and big new infrastructure spending.

  • The mid-December 'Mini-Budget' of fresh fiscal forecasts, updated infrastructure plans and a Parliamentary plan to implement the 100 day programme will be the Government's biggest 'show me the money' moment yet.

2. Jacinda's sick burn goes global

Yesterday we included Sam Sachdeva's interview with Jacinda Ardern in the email, where she detailed an incident in a line-up before an East Asian summit dinner where she held her own in some friendly banter with Donald Trump.

That story has now gone global, being picked up in the Washington Examiner and now republished in NZ Herald and Stuff.

Comedian Jemaine Clement of Flight of the Concords also tweeted about the incident overnight to his 250,000 followers.

3. Not so friendly fire from Australia

The Australian Government appeared to leak a diplomatic cable overnight to Fairfax Media claiming that a group of Manus Island asylum seekers had gone into the community to have sex with girls as young as 10.

Stuff and the Australian Financial Review reported on the leaked cable overnight and the Government has since confirmed the accuracy of the cable.

"The timing of the leak, and several others in Australian publications, suggests rising levels of frustration within the Australian Government that Prime Minister Jacinda Ardern was putting undue pressure on a domestic Australian policy issue," Luke Malpass and Stacey Kirk wrote this morning.

"In addition to broader allegations of drug taking and dealing (cannabis), there were overarching community concerns regarding allegations that some residents were engaged in sexual activities with underage girls," the report stated.

It said male camp residents had travelled into the community to procure sex with underage girls.

4. Adrian Orr very positive for 2018

I attended an Institute of Directors dinner in Welllington last night where New Zealand Super Fund CEO Adrian Orr gave a typically insightful and hilarious speech on the global economy and financial markets.

He was upbeat about the state of the world economy and rubbished suggestions in a question from the audience about the prospects mentioned by Winston Peters last month of a sharp slowdown in the global or local economies next year.

"Bollocks," he said when asked of his view of Peters' prediction of a looming global slowdown.

He described the global economy as in a "Goldilocks zone" of strengthening economic growth with low inflation and low interest rates.

"We are in a very, very positive situation," he said, pointing to real per capita GDP growth of 2.5 percent in Japan, for example.

He said global stock markets were neither wildly over-valued or under-valued, with Europe and Japan about 10-15 percent under-valued relative to long term valuations, while the United States was around 5-10 percent over-valued.

"Should there be a large downturn in 2018 that would be fantastic," Orr said of the likely effects on asset prices, given the NZ Super Fund was a long term investor keen to buy assets during downturns in the knowledge they would bounce back over the long run.

Orr talked extensively about the long term effects of demographic change (with ageing populations in the developed world and the urbanisation of younger emerging markets) and the effects of climate change. The one caveat was China, which "got old before they got rich."

He said the NZ Super Fund had reduced its carbon emissions exposure by 20 percent and aimed to further reduce its exposure to carbon reserves from the 20 percent reduction already achieved to 40 percent.

Politicians and voters in some countries were in denial about climate change.

"It's the tragedy of the horizons," he said.

But regulators and consumers were already reacting, and climate change itself was already having dramatic effects on economies. Investors and companies should move to get ahead of the likely impacts, he said.

"It's on its way. You don't have to buy into the science. You just need to understand that the regulatory response and the consumer response is here already."

Elsewhere, he said one of the biggest challenge for investors and Governments was connecting up a wall of capital with the huge need for infrastructure investment as the emerging world urbanised and the developed world dealt with ageing and climate change.

Orr called on New Zealanders to retain their outwardly focused nature, but to be more disciplined

He said the world's most powerful governments and politicians were mayors and councils who were able to green light or block infrastructure developments in cities, which was proving the biggest obstacle to matching the wall of capital waiting to be invested with the infrastructure projects.

"The two just can't seem to plug and play," he said.

Orr also downplayed the risks around central banks having to withdraw stimulus from the global economy as the recovery took hold.

"The world is awash with liquidity and thank God for that. That's what central banks are supposed to do and it has worked," he said.

He expected central banks would be able to carefully and slowly.

Orr's final parting shot for the Peters view of the world came in answer to a question about whether he was concerned about the risks of a nuclear conflagration in North Asia caused by Donald Trump.

"We might be able to solve two of those things because Winston is going to North Korea..." he said, referring to speculation Peters might be called on to act as independent intermediary in talks between America and North Korea.

Here's the prepared remarks for the speech
, but Orr went well (and entertainingly) off piste in the speech itself.

5. Rod Oram's weekly column: Fonterra's fudge

Rod Oram looks in his column this week at Fonterra's apparently ground-shifting announcement about reducing its net carbon emissions to zero by 2050.

He writes Fonterra's caveats mean the plan is not as impressive as it looks and will mean New Zealand fails to meet its Paris commitments.

"Fonterra is forecasting no reduction in on-farm emissions by 2030. Instead, any reductions in emissions per litre of milk will be nullified by increases in milk production. It’s only commitment is to offset any emissions above current levels by the likes of forestry plantings," Rod writes.

"If that’s all Fonterra achieves, and the rest of dairy, sheep and beef farmers match it, then New Zealand has absolutely no hope of meeting its 2030 Paris commitment by emissions reduction. The only way would be by very expensive purchases of credits at home and abroad, mostly funded by taxpayers. But there’s doubt among climate change negotiators internationally whether such credible foreign credits will be readily available."

It is another brilliant column that goes behind the assumptions and challenges our largest exporter to do much, much more. It will be closely read by the new Government as it strives to write legislation to go carbon neutral by 2050. Fonterra will have to do much, much more if the Government has any hope of achieving that.

In particular, Fonterra's carbon footprint is almost as large as the country of oil-producing Norway, and its plan announced this week would still still Fonterra's factories burning coal in 2070.

See Rod's full column here in full on Newsroom Pro, where it was published first this morning. It will not be published more broadly on Newsroom until Sunday.

I recommend the click through. It is well worth it.

6. The political flavour in business confidence

The Institute of Directors released their annual survey of their members on business confidence and other issues this morning, which showed business confidence about the wider economy had slumped, but business leaders remain positive about their own outlooks.

In line with the recent NZIER and ANZ surveys of business sentiment, the opt-in survey of 943 members in October found a drop in wider business confidence and a much smaller drop in confidence about their own activities.

Net confidence about the wider economy over the next 12 months fell to 14 percent from 43 percent last year and was down from a net 29 percent in 2014 just after the last election, which was won by National.

Meanwhile, net confidence about the survey respondents' own outlooks fell by a much lesser extent to 64 percent from 70 percent last year and was in line with confidence about their own activities immediately after the 2014 election.

Elsewhere, the survey found labour quality and capability, along with productivity, were the biggest concerns for businesses and other large organisations covered by the survey. It also found more boards were discussing cyber risk, with 50 percent reporting having discussed it, up from 32 percent in 2016.

The gap between confidence about the wider economy and their own businesses from business leaders typically widens when a Labour-led Government is elected into power.

7. Weekend Reads

It's good to get back on the horse with a few longer reads for the weekend and maybe for the one-week Parliamentary recess while ministers and officials beaver away on the Half Yearly Update, the 'mini-budget' and the Government's Parliamentary programme to implement its 100 day plan in the weeks leading up to the summer recess on December 21.

This week The Atlantic's Julia Ioffe broke the story of Wikileak's collusion with Donald Trump Junior before the US Presidential election last year. The details are extraordinary. She reports Wilileaks asked the president’s son for his cooperation in sharing its work, in contesting the results of the election, and in arranging for Julian Assange to be Australia’s ambassador to the United States. Yes. Seriously.

Luke O'Brien's piece (also in The Atlantic) on how Andrew Anglin went from being an anti-racist vegan to the alt-right's most vicious troll gives some chilling insight into the nature of public debate and US politics at the moment.

The internet is not a reliable place for news at the moment, and the problem is it's seeping into the mainstream. Alex Casey's deeply reported piece on The Spinoff this week about how two bloggers were secretly paid to spruik K-Mart in a TVNZ story is sobering and concerning.

This piece in the Wall Street Journal about how foreign companies are now forced to have Communist Party officials inside their businesses in China is a useful challenge to the impression China is trying to give that it can take up the mantle of globalisation being given up by Trump's America.

Sean Parker was a co-founder of Facebook and was a memorable character played by Justin Timberlake in The Social Network, which I reckon is a seminal movie about business and society and many other things. Now Parker is lamenting how Facebook was designed to be addictive and may be doing all sorts of damage to society and children's brains.

These quotes from Parker in this Guardian piece
are instructive:

“It literally changes your relationship with society, with each other. It probably interferes with productivity in weird ways. God only knows what it’s doing to our children’s brains,” he said.

He explained that when Facebook was being developed the objective was: “How do we consume as much of your time and conscious attention as possible?” It was this mindset that led to the creation of features such as the “like” button that would give users “a little dopamine hit” to encourage them to upload more content.

“It’s a social-validation feedback loop … exactly the kind of thing that a hacker like myself would come up with, because you’re exploiting a vulnerability in human psychology.”

Gareth Vaughan from Interest.co.nz reported this week that New Zealand's big four Australian-owned banks are now making profits of $1,000 per New Zealander per year, which puts them near the top of the global profitability stakes. His three suggestions for Government reform to make them more competitive and slightly less profitable are well worth a read.

This paper released this week by Canterbury Academic Anne Marie Brady is an essential read on the growing debate about the influence of China in New Zealand politics and society.

"The PRC’s political influence activities in New Zealand have now reached a critical level. So, is the current relationship with the PRC an exemplar for how New Zealand would like its relations to be with other states?," she asks.

"This policy brief argues that in an era when influence activities by other great powers are also on the rise globally, it is time to strengthen efforts to withstand foreign interference in the New Zealand political system."

Fair enough, given what we know about the history of Jian Yang, who was a constant (and silent) presence in Parliamentary question time this week.

Interestingly, he was only put on one select committee when the list was released this week. A previous member of the foreign affairs, defence and trade committees, Yang was named as a member of the Governance and Administration committee.

This Lowy Institute paper on the growing problem of self-censorship about China in Australia is also worth a read. Australia is taking this issue much more seriously than New Zealand.

8. One fun thing

After the last couple of years of news, this tweeted cartoon from the Sydney Morning Herald's Cathy Wilcox caught my fancy: "Christmas wish. My business cartoon."