BOARDROOM Friday,September 23, 2022 nzherald.co.nz/business Photo /GettyImages
Navigating through challenging times
Comment& analysis Fran O’Sullivan TimMcCready Duncan Bridgeman Liam Dann Thomas Pippos Tamsyn Parker Anne Gibson Bill Bennett
globalisationrisksundermining decadesofimprovingGDPacross manycountries,”shesays.“Managing apolarisedworkforceofthepandemicandshiftingsocietalvalues.”
China’szero-Covidpolicyandthe riskoffurtherlockdownshasheightenedconcernsaboutsupplychain disruptionsandfurtherinflationary pressures.
Thesurveywasinthemarket fromSeptember3-17.
Unsurprisingly,theCEOsrated geopoliticalvolatilityat7.44/5, tensionsbetweenChinaandtheUS at7.38/5,theRussian-Ukrainewarat 7.23,supplychaindifficultiesat7.13/5, cyberattacks7.11/5andrising nationalismat6.99/5.
Importantly,NewZealandbusinesshaslittlecontrolinthefaceof suchrisks.Mitre10chiefexecutive AndreaScownpointsoutthatgeopoliticalriskisofincreasingconcernfor NewZealand’simporters.
U
AdirectornotedthatNZ’sproductivityhasmateriallyfallen.“The economicchallengesintheUKand Europeareseriousandwillimpact globally.”
Access to FDI 5.67
ShayneCurrie TheMoodoftheBoardroomwill bepresentedonnzherald.co.nz from7.40amthismorning,inan eventhostedbyNZMEManaging EditorShayneCurrie. FranO’Sullivanwillpresentkey findingsfromthisyear’sCEOs surveyandsummarise“themood” amongchiefexecutives. CurriewillthenmoderateFinance MinisterGrantRobertsonand Nationalfinancespokesperson NicolaWillisin adebateonthe surveyfindings. MoodoftheBoardroom ExecutiveEditor: FranO’Sullivan Writers: BillBennett,Duncan Bridgeman,AnneGibson,Tim McCready,TamsynParker,Graham Skellern Subeditor: IsobelMarriner Cover: GuyBody Graphics: GuyBody,Isobel Marriner Proofing: TimMcCready,Graham Skellern Online: TennessyWeir Advertising: TimWilson Marketing: KellyPeteru nzherald.co.nz/business MoodSponsors The2022MoodoftheBoardroom issupportedbysponsorship: BusinessNZ;EMA;Westpac; Deloitte;Barfoot &Thompson; Spark;PortofTauranga;Dentons KensingtonSwan;GenesisEnergy. InsideMoodoftheBoardroom2022 Labourandskillsshortages dominateCEOconfidence —B6-7 Toomanysituationsvacant —B8 LiamDannontheReserve Bank —B10 Acceleratingclimate response:JolieHodson —B11 Robertson’sstarlosesshine —B12 HowNationalandActare stackingup —B14 Tourismmakes acomeback —B16-17 TheracefortheAuckland mayoralty —B20 Taxingtimesforthe country —B22-23 TopconcernsforSMEs— B24 Lessoptimisminthe boardroom this year Widespread globaluncertaintyisreflectedintheCEOssurvey,writes FranO’Sullivan Topinternational risks CEOs rate theimpactof thefollowinginternational risksonbusiness confidenceinNZ: Outof10 Shortageof available talent/skills 8.26 Geopolitical volatility 7.44 TensionsChinaandUS 7.38 Russian-Ukrainewar 7.23 Supplychaindifficulties 7.13 Cyber attacks 7.11 Risingnationalism 6.99 Climate change imperative 6.84 Oil prices 6.71
Food security 5.67
Herald Moodof theBoardroom CEOsSurvey 2022/ Herald graphic No concern—
SaidVectorchairJonathanMason —also adirectorofAirNewZealand andZespri —theNZprimarysector andtourismpositionustooutperformglobalgrowth.”
Thisyear,90chiefexecutives and18seniordirectorsorchairs, tookpart.Theyincludeleaders ofNZ’sbiggestcompanies rangingacrossagribusiness, bankingandfinance, manufacturing,aviationand tourism,education, telecommunications, environmentalservices,energy, insurance,professionalservices, andmore.
ThesurveyalsoasksCEOtorate theimpactofvariousinternational risksonbusinessconfidenceinNew Zealand.Unsurprisingly,accessto globaltalent —andworkers —isin thetoppositionat8.26/10on ascale where 1equalsnoconcernand10 equalsextremelyconcerned.
Naturaldisasters 5.65
Increasinglyrestrictive digitalenvironment 5.50 Further wavesofCovid-19 5.33 Extremelyconcerned
Weappreciateyoureffort. FranO’Sullivan ExecutiveEditor MoodoftheBoardroom
Thiscomparesto2021where— despitetheimpactoftheCovidpandemiconinternationalsupplychains —theweightedaverageratingonthe globaleconomyratingwas3.15/5.In 2020,whenmanyofourmajortradingpartnerswerebeingravagedby thepandemic,CEOsputtheiroptimismintheglobaleconomyat1.13/5.
kraine,supplychain disruptions,narcissisticpersonalitiescontrollingglobal governments,thebursting oftheChinapropertybubble —these arejustsomeofthemajorissues contributingtothisyear’sfallinCEO confidenceintheglobaleconomy.
Finally ahugethankyouto everyonewhohasplayed arole inthisyear’ssurvey— particularlytheparticipants— whodespitetheattractionsof internationaltravel(finally), madethetimetotakepart.
Thecrunchissuesmakefor arich cocktailofinternationalgloom. Russia’sinvasionofUkrainehasresultedinrampantincreasesinthe costofcommoditiesandenergy, supplychaindisruptions,and atighteningoffinancialconditions.
Rising freightcosts 6.26 Energy security 6.21 Unsustainabledebt 6.04 Sharp fallinasset prices 5.77
Inthe Herald’sMoodoftheBoardroom2022survey,optimisminthe globaleconomyregisteredat1.83/5, on ascalewhere 1equalsmuchless optimisticand 5equalsmuchmore optimistic.
NicolaWillisProtectionism 6.64 Majorweather events 6.47
Theclimatechangeimperative hangsoverusall.CEOsassessedthis riskat6.84/5.Butrespondents pointedtosignsofimprovementin globallogisticschallenges.
“Thereareseriousconcernsworldwide(Ukraineforexample)andthe restoftheworldseemsmoreadvancedregardingCovidrecovery— weneedstrongpositiveleadershipin NZtocatchup.”
The Herald’sMoodofthe Boardroom2022CEOsSurvey attractedparticipationfrom108 respondents.
Off-settingthegeneralgloomisthe realitythatNZ’sagribusinessexports —particularlytoChinawherethey haveenjoyedbeneficialpricepoints —hasheldupwell.Foodandfibre exportrevenuereached arecord $53.3billionintheyeartoJune30, 2022,particularlydueto astrong performancefrommeatanddairy.
GrantRobertson
Employers’accesstointernational marketstosourcestaffhasbeena vitalsafetyvalvefortheeconomyin prioryears.Butthetalentcrunchis aglobalphenomenonaffectingmany countries,includingAustralia,which ispoachingstafffromNewZealand.
“Theglobaleconomyoutlook seemstobe aChinaandanemploymentstory,”added amajorfood exporterexecutive.“ItwillbeinterestingtoseeChina’spositioningafter thepartyconferenceandwhether fullerthanexpectedemploymentin keymarketswillstaveoffrecession.”
Questionsremain.Asonerespondentobserved,globaleconomiesare nowhavingtodealwiththereality oflivingbeyondtheirmeansexacerbatedbystimuluspackagesflowing fromthepandemic —likenedto“managingthrough ahangover”.
Thedebatebetweenthe financeministerandtheir opponentis afeatureofthe annuallaunchbreakfast.Ithas featuredFinanceMinisters,the lateSirMichaelCullen,SirBill English,StevenJoyceandGrant Robertson.Theopponentshave includedDonBrash,SirJohn Key,DavidCunliffe,Amy Adams,PaulGoldsmithandnow NicolaWillis.
“Foreignpolicytowardsde-
The Herald surveyis conductedinassociationwith BusinessNZ.BusinessNZalsoput 15questionsfromthesurveyto itsmembershipwhichincludes SMEs.ThoseresultsareonB24 ofthisreport.
TheCEOssurveylaunchedin 2002withina Herald Stateofthe Nationreport.
Abankingchairisconcernedthat “thecombinationof apotentially majorslowdowninChinarelatedto thepoppingoftheirpropertybubble, thepressurescausedforEuropeby theUkraineconflict,andincreasingly aggressivemonetarytighteningin almostallmajormarketspointstoa majorslowdowninglobalgrowth”.
1 10
Opinions fromthetop NZCEOs
Unfavourable currency alignments 5.56
MOODOFTHEBOARDROOM B2 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 Moodofthe Boardroom presentation
AchairnotedwhileNewZealand hastakenonmoredebtduringCovid, therearemanyothercountriesthat haveturned abadsituationintoa verybadsituation.
Thereis acohortofbusiness leaderswhoarelessconcernedwith theamountbeingspent,butrather overwhatitisbeingspenton.
JolieHodson
“ShouldbelargelyderivedbyreducingGovernmentspending,” added aCEOinlogistics.
The2022MoodoftheBoardroom CEOssurveywastakeninassociation withBusinessNZ.Therewere108 respondents —90CEOsand18directors —tothefull Herald survey.
“Ibelievethefiscalpolicywillbe expansionaryin2023…whichwillbe aheadwindformonetarypolicy,” saysStobo.
WhenaskedabouttheGovernment’splantoreturntosurplusand stabiliseandreducenetcoreCrown debt,58percentsaythisshouldbe ahigherpriorityfortheGovernment.
GettingtheGovernment’sbooksback intotheblackshouldbe ahigher priority,accordingto aclearmajority ofchiefexecutives.
Butthereisconcernthattheextent towhichspendingisreinedinwillbe limited,giventheimminentgeneral electionnextyear.
SaidDeloittechairThomasPippos: “Deliveringimpactfulandpositive changeismuchharderthanaspiring todoso.”
Spark Weknowthewindowtotake meaningfulactiontoavoidtheworst impactsofclimatechangeisclosingfast, andeveryonehas aroletoplay.Wehave united asignificantproportionof Aotearoa’sbusinesscommunitybehind aclearsetofclimatechangeactions throughtheClimateLeadersCoalition —whatweneedtodonowisestablish aneffectivewayforthepublicand privatesectorstoworktogetherto implementouremissionsreductions plans.Wemustensuretransitiondoes notentrenchorwidenexistingsocial inequalities.
Concernovertheefficacyofspend CEOsalsohaveheightenedconcernsabouttheefficacyofGovernmentspending.
From adesignfirmboss:“Huge amountofcash,hugeamountofno KPIs.”
Moodofthe Boardroom Tim McCready “Weseemtohavelostour ambitionas acountryastowhat westandforandourplaceinthe world.Thismoodisleadingto negativemigrationasmanyseek betteropportunitiesand alower costoflivingelsewhere. “Weneedourpoliticalleadersto setanambitiousplanforNZthat inspirespeopletowanttoliveand workhere.” —CommercialpropertyCEO
ThePM’sscorecardshowsCEOs
Thehighlevelofglobaleconomic volatilityisputtingsignificantpressure onsupplychains.Weareholdingmore stockonshorethanhasbeentypicalin thepast,diversifyingoursupplierbase whereitmakessensetodoso,and adheringtomuchlongerleadtimes.
Butbeyondtheissuesaffecting businessconfidence —skillsand labourshortages,inflationandgeopolitics,whichNewZealandshares withmanynations —isaslumpin thenationalmood.
RockstarPMwanes Ardernisheroedas arockstarprime ministerontheglobalstage.
Otherswerecharitable.“Thisisa toughtimetobe asittingsecondterm PM,”said apropertyCEO.“GovernmentsarealwaysgoingtobeunpopularwhenthecostoflivingisskyrocketingandthepressureofpostCovidrealityismounting.
accordedher atopratingof3.56/5for howsheleverageherpersonalbrand forNZbusiness’sadvantageinternationally.
mence aRoyalCommissionofInquiryintoherGovernment’sCovid response,”saidindependentdirector CraigStobo.“Herpoliticisationof healthpolicybyseparatingNewZealanders,incarceratingNewZealandersintheirhousesorinMIQ, lockingupcitiesandregions,and discriminatingagainstworkersand vilifyingNewZealanderswho lawfullyprotestmakes amockeryof kindness.”
“Which Ithinkiswhattheelectorateisstilltellingusinthepreferred primeministersegmentofthepolls.”
Anautomotivefirmchiefblamed apathy.“Wehavelostwhatweare —ournumber 8wire,andsenseof inclusivenessas anation —weneed tostoptherace-basedpropaganda andavoidanceofa properconversationonwhatitmeanstobe aNew Zealandernowandinthefuture.”
“TheTVNZ/RNZmergerseemsa completeindulgenceinthecurrent environment,”saidoneCEO.
Whataboutthatsurplus,Grant?
lemlieswithministerialacuityand leadershipwhentheOfficeofthe Auditor-Generalcriticisesthemethodologyoftourismsupportduring Covid,andtheaccountabilityofthe proposedThreeWatersreforms,and whenTreasuryadviceonthe$350 costoflivingsprayisignored”.
Otherscommentedonhow Ardernhaslostmorecredibilityinthe monthssincethelastsurvey.“Definitelywaning,”said abanker.“Butif youhadaskedaboutcommunication skills Iwouldhaveputheroffthe charts.”
Ashortersurveythatwassentto BusinessNZ’smembershipattracted 102primarilySMErespondents.
Asignificant85percentof respondentssaytheyaremoreconcernednowthantheyhavebeen previouslyinthisregard.
“Theissueislessabouttheneed toreducecoreCrowndebtthanto reducefiscalstimulus,totakepressureoffmonetarypolicy,”saida bankingchair.
“ThePrimeMinistershouldcom-
Thisreflectsthedoorssheopens whileleadingbusinessmissionsoffshore,andthesplashshemakesin internationalmedia.
Biggestissues facingthenation
ister,leadinganddeliveringontransformativechange,andbuildingconfidencewiththebusinesscommunity —shewasdownratedat2.45/5,1.7/5 and1.62/5respectively.Shehas clearlylostgroundwithchiefexecutivesinthepast12months.
acindaArdernandGrant Robertsonhavetaken apummellinginthe2022Moodof theBoardroomCEOssurvey.
Justoveronethird,37percent,say thepriorityonreturningtosurplus andreducingnetcoreCrowndebtis aboutright.
“Thisshouldbedonebystopping badpolicy,sillycentralisationsthat delivernogainsandwastefulspending,”said atopinfrastructureboss.
HeradministrationoftheNational SecurityandIntelligenceportfolio andthewayinwhichshestandsup forNewZealand’svaluesandinterestswithrespecttoChinaare applauded.
Confidenceintheirleadershipis onthewaneastheArdernGovernmentappearsunabletoachieve majorcut-throughwithbusinessand hasdifficultyinexecutingmajor reforms.
MainfreightgroupmanagingdirectorDonBraid:“Thetaxdollarsbeing collectedarebeingwastedonthe
Butonthreecrucialcriteria —her politicalperformanceasprimemin-
Othersconcur:“Mainlythrough controlledandtargetedspending, andlivingwithinourmeans,”saida utilitiesboss.
MOODOFTHEBOARDROOM nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B3 Herald Moodof theBoardroom CEOsSurvey 2022/ Herald graphic CEOs were askedtoratethe PrimeMinisteronascale of 1to5: Not impressive Very impressive PM card 1 5 Leveragesher personal brandfor NZ businesses’ advantageinternationally 3.56 AdministrationofNational SecurityandIntelligence portfolio 3.41 Standsup forNZ’svalues andinterestswith respect to China 2.90 LeadsNZ’sresponse to climate change 2.63 Politicalperformance as primeminister 2.54 Childpoverty reduction 1.73 Leadsand delivers on transformative change 1.70 Builds confidencewith thebusiness community 1.61 HowCEOs rate Jacinda Ardern’s performance Not impressive Veryimpressive 5 1
“At abroadlevel,myfocuswill continuetobeonmakingsureNew Zealandmaintainsresponsibledebt levels,andensuringourpathbackto surplus.”
Therewasconsiderablecommonalitybetweenthe“bigendoftown” andsmallerfirms,withskillsand labourshortagesandimmigration settingstoppingdomesticconcerns.
FinanceMinisterGrantRobertson hassaidthatfrom afiscalperspective, theCovidemergencyisnowover.
Wealreadysharefloodriskdatawith customersandplantoaddcoastal inundationanderosionrisksaswellas otherclimateriskstoourhouse insurancemodelinthecomingyear.
BlairTurnbull Tower Thebiggestchallengewecollectively faceishowwehelpprotectourworld inthefaceofclimatechange.Asan insurer,managing risksiswhatwe do.Ourdata showsthe frequencyof majorweather eventsandthe severityofthe damagethey causeincreasing overtime.Itis goodtoseeGovernment’sprogresson thefirstNationalAdaptationPlan.We arepleasedtoseetheinvestmentin climatechangedataandcommitment tosharingthisdatatransparently.But it’sclearthattheplandoesn’tgofar enough.Weneedtostopdeveloping andinvestinginriskyareas —itjust needstostoprightaway;weneedto investininfrastructuretoprotect communities;andweneedto collaboratewithbusiness,central governmentandcouncilstosharedata andideastogetthismoving.
JacindaArdernandGrantRobertsonhavebothlostpointswithbusinessleadersinthepastyear.
EMACEOBrettO’Rileyobserved thatitwas a“disappointingyearwith littletoshowintermsofprogresswith thematerialchangestheeconomy andcommunityneeds.”
NotesPrecinctPropertychair CraigStobo:“Weknowthattheprob-
Moodofthe Boardroom Fran O’Sullivan
Afurther 5percentthinkitshould be alesserpriority.
Time togetour mojoback
“Wehavebecome abludgeoned compliantpeople, “said aprivate equityboss.“NewZealandneedsthe independentspirittothrive.”
MainfreightgroupmanagingdirectorDonBraidsaid amajorissuefacing thenationwasthecostofbureaucracy.“Thereis alackofdirectionand sure-footedpolicytocombatthe failingsaroundhealth,education, housingandcrime.Stopthepolitical posturingandinterference.Focuson thecorefundamentalsandthenget outoftheway.”
“NewZealandisfallingbehindin thechaseforskilledworkersand needstourgentlyresetitslabourand immigrationsettings,” saidKirkHope, BusinessNZCEO.“Uncertaintyneeds toberemovedfrompolicy.”
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fundingofthebureaucracyandthe consultants”.
Whilethecountry’sbordersare nowopenagainandCovidrestrictionsdiminished,theGovernment’s responserankles.
ManyrespondentstotheMoodof theBoardroomsurveyexpresseddismayatthecurrentlevelofspending andwanttosee amoreprudent approach.
“Governmentseemstobespendinganastronomicalamountof moneytodeliveranappallinglylow levelofoutcome,”said atoplogistics CEO.
Theissueforchiefexecutives isa failuretoappropriatelyexecuteon electoralpromises.
“When Itook atriptotheUSin June,duringwhich Imet agroupof internationalbusinesspeople,they wereunanimousinpreferringArdern toTrump,Biden,JohnsonorMorrison.Andwhenoffered aswap,I realised Iwouldn’ttrade.So,perhaps notperfect;butstilllessworsethan manyotheroptions.
Robertsonhasmadeitclearthat upcoming“toughchoices”willnot includeausteritycutstospending.
Some14percentofrespondents saytheyhave asimilarlevelof concernovertheefficacyofGovernmentspendingastheyhavehadin thepast.Just 1percentsaytheirlevel ofconcernisreducedcomparedto previously.
“Noonecanseemtoarticulatethe problemtheyaretryingtofix.”
“Thereisonlysomuchyoucan sendChrisHipkinsandMeganWoods intofix.HowdoestheGovernment put afreshbenchforwardtomake thecasetheyshouldhaveanother threeyears?”
tiestryingtobeaddressed.”
“Wedoneedtoputthatdownto being aCovidelection,”hesays.
EricaCrawford LoveblockVintners
andpeopleemployed.Hesaysweare at arealcrunchtime —theglobal economyisimpactingNewZealand’s economy,andalongwithinflation andthefallinhouseprices,ismaking peoplenervousandwilllikelysetthe scenefornextyear’selection.
Whatarethepoliticianstalking abouthere?
B26-27:MoreCEOviews
Theheadof adesignfirmsayscogovernanceis“totallyagainstall democraticprinciples —a reversalto darkdays.”
LocalGovernment MinisterNanaia Mahutahasbeen leadingthepushon ThreeWaters, whichhasa significantcogovernance element.
EOsaresplitonwhether increasedco-governance betweenGovernmentand Ma¯oriis“rightforthetimes” or“anti-democratic”.
“Co-governanceis aproductof NewZealand’suniqueplaceinthe worldandouruniquearrangements,” hesays,notingitoffers arealopportunityforsomethingthatisdifferent, moreeffective,trulyNewZealand.
Climatechange: Urgent behaviourchangeisrequired now.Ouragrarianeconomy cannotrelyonthelandwhilst plunderingitforprofit.Onthe otherhand,weneed asensible EnvironmentalDeptandrulesto attaincarbonneutrality.
UnderNational-ledgovernments, co-governancearrangementswere madewithiwioverTeUrewera nationalpark,theWaikatoandWaipa¯ rivers,andtheWhanganuiriver.
“Weneed amuchgreaterlevelof nationalconversation,”says aprofessionaldirector.
Co-governanceshouldn’t be apoliticalfootball
Thewaythatdebatehas playedoutisreflectiveof somethingthat Iam increasinglyconcerned aboutinNewZealand:a developingdivisionin thepoliticaldiscourse thatisartificiallydivided in awaysimilartowhat wehaveseenplayout recentlyoverseas.
“Governmentneedstobeseento bedeliveringonsomeofthosebig ideasandconvertingthemintosomethingthatfeelslike adifferencefor anelectoratethatisquitegrouchy.”
“Iamanxiousaboutthewayconspiracytheoristsareharnessinggenuineconfusionandconcernaround whatthetermreallymeansand turningittotheirownends.
FormerNationalCabinetminister ChristopherFinlaysonhasbeenvocal thatthepresentGovernmentislosing valuablepurchaseonpublictoleranceforMa¯oriadvancement.
Wilson,whochairsDentonsKensingtonSwanandis amemberof Dentons’globalboardofdirectors, saysNewZealand’sgovernment existsas aresultof atreatypartnership,andgovernancemodelsthat
HesaidtheTreatyofWaitangiwas not apartnershipandco-governance arrangementsshouldnotbeviewed as anecessaryextensionofthatand haswarnedco-governancewillend liberaldemocracyinNewZealand.
Butotherssaytheextentof“cogovernance”isalreadydivisiveand anti-democratic.
—TimMcCready
We’reaboutwhereweshouldbe inthepoliticalcycle Recentpoliticalpollshaveshown LabourandNationalroughlyequal. Whenaskedaboutpollinginterms ofthecurrentelectoralcycle,Wilson thinksitis“aboutwhereitshouldbe. Ifthingsweren’tat areasonablyeven balancenow,youwouldbewonderingwhatwasgoingwrong,really.”
“Co-governanceseems asensible solutionforresolvingclaimsinrelationtotaonga/property —especially whereonly a21st-centurysolutionis possible,”saysTheNewZealandInitiativechairRogerPartridge.
councilmembersand50percent fromiwi.Manawhenuawillhave oversightovertheboardscharged withoperationalmanagement,butno operationalauthority.
“HealthoutcomesforMa¯oriare worseinthiscountry,Ma¯oridie youngerinthiscountry,”Ardernhas said.
Achairsaystheyagreewithcogovernanceinprinciple,butitdoes notneedtobeineverydomain. “Ma¯orivalues,andinfactmostthings Ma¯oriareundergoinga renaissance,” theysay.“OurMa¯orihistoryiscommontoallNewZealanders.”
“Have areferendumandlet’ssee whatKiwiswant,”saystheheadof anenergycompany.
“IwantMa¯oriinclusionbutwith democraticprinciples,”saysVector chairJonathanMason.
Companydirector ProductivityLagging: Governmentinvestmentmustbe inareasthatgrowproductivity. GrowingDivisionand Inequality: Wemustactively addressschoolattendancerates, investinthehealthsystem (openingborderssowecanbring inthetalent)andinvestin policing(criminalsknowthat theycangetawaywithsome things ).
Hesays,tosomeextent,ourperceptionofpartypollinghasbeen shiftedbythe2020election,where forthefirsttimesinceMMPwas introducedin1996 apartywon enoughseatstogovernalone,with Labourreceiving50percentofthe partyvote.
eredbyanintelligentconversation.”
“Ithinkweallacknowledgethat thewaywe’vebeenoperatinginour healthsystemhasn’tbeenserving Ma¯oriwell.”
CEOsalsowantmorebalance
Aninvestmentbankersharesa similarsentiment.“Itisnotonlyantidemocratic,itisunnecessaryandan inefficientwaytoaddresstheinequi-
But afurther41percentof respondentsbelieveincreasedcogovernanceis“anti-democratic”.
Ongoingwaterandhealthreforms haveseenco-governancemake headlinesrecently.LocalGovernmentMinisterNanaiaMahutasays thatco-governanceisaboutthe Crownmeetingtreatyobligationsand maintainingrelationshipsbetween councilsandmanawhenua.
ButNationalPartyleaderChristopherLuxonbelievesNewZealanders don’thave agoodideaofwhatit means,andsuggeststheGovernment needstosetoutclearguidelineson whatisandwhatisnotincludedfor constitutionalissuessuchascogovernance.
Wilsonsaysitwillbeessentialfor Governmenttomakeitselflookfresh again,becausethereisanextentto whichthepublicgetstiredofseeing thesamepeopleoverandoveragain.
“However,co-governanceofthe nationalprovisionofservicesisnot consistentwiththeprinciplesofour liberaldemocracy.”
Wilsonrecognisesthepastthree yearshavefeltlongandstressful, particularlyforthosewithresponsibilitiestokeepbusinessesfunctioning
C
“Iwillnotsupporttwovotesfor oneethnicityinanyelectionprocess,” saysPrecinctPropertychairCraig Stobo.
Some22percentofsurvey respondentssaytheyareunsure aboutincreasedco-governance.
“Itwas akindof‘wartime’election, and Ithinkeveryonewhoobserves politicsknewthatitwasgoingto comewithchallengeshavingthat levelofmandate,alongwith alarger caucus.”
LogisticsCEO Lackofleadership and effectivedecision-making. Creationofseparatistsociety throughstealth.Needfor transparentopenconsultation withall. Lackofarobustplanning/ regulatoryframework for nationallyimportant infrastructure.
Thishasalreadysetthescenefor co-governancetobe amajorelection issuein2022withActandNew ZealandFirsthighlycriticalof initiativestakenby amajorityLabour Governmentwhichwerenotputup aspolicyatthe2020election.
Othersareconcernedthesubject hasbecome apoliticaldogwhistle.
“Weneedtoensurethatthedebate arounditismeasuredandinformed,” says apropertyCEO.
CEOsanddirectorsrespondingto the Herald’sMoodoftheBoardroom surveywereaskedspecificallyifthey believedincreasedco-governance betweenGovernmentandMa¯oriwas “rightforthetimes”,“anti-democratic” orwhethertheywere“unsure.
“Thecontroversyiscomingviathe uninformedandisnotbeingcount-
HaydenWilson
seektoreflectthatrelationshipwith Ma¯ori,andprovideformoreinclusive decision-making,canonlybe agood thing.
“HavingdedicatedMa¯oriseatson localcouncilsmakessense,”saysa topchair.“Butingovernance,where Ma¯orihaveanequalsayonimportant matters,is asteptoofarforme.”
“Idon’tthinkthisisgoinganywheregood,and Ithinkitisincumbentontheleadersofallofthesane politicalpartiestoensuretherhetoric aroundthisissueismeasuredand groundedinfact.”
“Itmaybeanattractivepolitical football…butthewaythatdebatehas playedoutisreflectiveofsomething that Iamincreasinglyconcerned aboutinNewZealand: adeveloping divisioninthepoliticaldiscoursethat isartificiallydividedin awaysimilar towhatwehaveseenplayoutrecentlyoverseas.”
ActPartyleaderDavidSeymour said areferendumonco-governance wouldbe abottomlineifforminga GovernmentwithNational.
Theheadofaninvestmentcompanysays“therehasbeen a‘whites only’policytodate,andthatneeds tochange”.
Some37percentofsurvey respondentssaidthatincreasedcogovernancewas“rightforthetimes”, althoughmanyincludecaveatsin theirsupport.
Increasedco-governance divideschiefexecutives
Thenewentitieswillberepresentedbyregionalrepresentative groupscomprising50percentlocal
TimMcCready andFranO’Sullivan
“Wehavehadfiveyearsnowof aGovernmentthathasbeenquite tightly controlled by asmall group of Ministerswhohave alotofresponsibility,who Iamsurearejustastired astherestofus.
From autilitiesboss:“Ma¯orishould definitelyhave avoiceingovernance itsmoreaboutbalance.”
Crumblinginfrastructure: Particularlythehealthand transportsectors Rich-poordivideand criminality: Thenumberof homelesspeopleareincreasing andgoodpeopleonlowerwages aresuffering.Somehow,wehave tobeabletosupportthembetter.
B4 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM
Buttheextentofco-governance overlaidontheGovernment’sThree Watersplantoamalgamatelocal waterassetsintofourbignewregionalauthoritieshasproveddivisive.
However,NationalleaderChristopherLuxonhadruledout areferendumfornow:“We’renotinany placetohave areferendumrightnow becausethebottomlineiswe’renot clearwhatwe’retalkingaboutwith respecttoco-governance.”
ToplawfirmbossHaydenWilson saysthatco-governance,in alegal sense,isnot anewconcept,andwhile itissensibletodiscussappropriate governancemodelsforthepublic sector,heisconcernedabouttheway itisbeinglatchedontoas arhetorical toolinpoliticaldebate.
“Andalsonotethatthishasbeen happeninginlotsofspacesforquite sometime —it’snot,infact,new.”
LackofGovernment Transparency: Weneedtohold themtoaccount.
“IsubscribetoChrisFinlayson’s worldviewonthisissue,”saysa propertyCEO.
PrimeMinisterJacindaArdern maintainsherGovernmenthasbeen clearaboutwhereitwouldimplementco-governance,suchasthe establishmentofTeAkaWhaiOra (theMa¯oriHealthAuthority)toimproveindigenoushealthworkingin partnershipwithnewcentralised healthagencyTeWhatuOraHealth NewZealand.
Bigissues facing thenation
Thevexedissueof“cogovernance”frequentlydominates headlineswithsupporterssayingitis acrucialstepintheCrownmeeting itsobligationsunderTeTiriti.
“NewZealandisat atippingpoint initseconomicandsocialhistory,” said agamingCEO.“ThePrimeMin-
From arealestateboss:“She shouldberunningourcountry —not tryingtotellhimwhattodoashe isdoinganoutstandingjobconsideringtheresourcestheyhave.”
ArdernwasinEuropeattending theNatoSummitandtakingpartin finaltalksinBrusselswhichledtothe signingoftheEuropeanfreetrade deal.
Just 3percentsaytheyhaveplans inplacetocounterdisruption.
TheGovernmenthasurgedNew Zealandexporterstopursuemarket diversificationtoreduceoverrelianceon asinglemarket —known commonlyasthe“Chinaand”policy.
Others,suchasGrantSamuel’s MichaelLorimer,feltNewZealand’s contributiontoUkraineisstilltoo timid.
“Globalisation has seenChina becomethepowerhouseof manufacturingintheworld.We arebettertopursueimproved diplomatictiesandstrong businessrelationshipswith Chinathanfearthem.”
CEOssayvulnerabilitytogeopoliticalfactorsisnowregularlyassessedatboardlevel,writes FranO’Sullivan
TheimpactofRussiansanctions hascompelledcompaniestoexaminetheircounter-partiesfroma riskperspective.
Theywereaskedtosayhowthey weredealingwithfiveparticular risks:cybersecurity,modernslavery insupplychains,probityrelatingto investmentsandpartnerships,the Russiansanctionsandtheimpactof anescalationintensionsbetween ChinaandTaiwan.
From apropertyCEO:“Project managementandlogisticsarethe newsuperpowerneededtogetanythingdone,frominstalling adishwashertobuilding amulti-levelresidentialdevelopment.
“Ardenshouldbedoingsomuch more.Sittingonthefenceonsucha criticalissueisnotwhatweexpect
nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B5 MOODOFTHEBOARDROOM
Twenty-threepercentwere againstjoiningAukus,typicallyobservingthiswouldundermineNew Zealand’sindependentforeignpolicy; 28percentwereunsure.
Majoragribusinessexportersreporttheyhavemaintainedor increasedtheirbusinesswithChina aswellasforgingnewmarkets.
SupplyChains
thatshedoso,visibilityarounddifficultissuesispartof aPM’srole.”
NewZealandshoulddefinitelynot joinAukus,”cautionedJacobi.“It wouldruncountertoourindependentforeignpolicyandthespiritand possiblytheletteroftheanti-nuclear legislation.Itwouldpositionusasa futureenemyofChinaandimperil theeconomicrelationship.Itwould alsolikelyputusoffsidewithSouth Pacificpartners.”
Some,likeMainfreight,have divertedoperationsfromRussia.
Ukrainian President Volodymyr Zelenskyy singsthe national anthem duringhis visittothe recaptured cityof Izium.
Some88percentofsurvey respondentssupporttheNewZealandeffortonthisscore.
Therearefourpillarstothenegotiations:trade;supplychainresilience;cleanenergydecarbonisation andinfrastructure;andtaxandanticorruption.
Andwhenitcomestoassessing theprobityofinvestmentsand scrutinisingpartnerships, amajority ofCEOrespondentsareeither assessingrisksorhaveplansinplace.
InternationalBusinessForumsaid,“if thereisvaluetobefoundinIPEF,the UScanrelyonNZtohelpfindit. Withoutmarketaccess Isuspectthe directcommercialvaluewillbe limited.AndIPEFcomesat aprice— cuttingoutChinaandLatinAmerica runsagainstourfutureintegrationin theregion.”
Navigatingchallenging times
Wherethereisstrongunanimity frombusinessleadersisonthesupportthatNewZealandisgivingto Ukraine.NewZealandhasdeployed aHerculesaircraftandDefenceForce personneltotheUKtotrainUkrainian recruitstobesoldiersandgave$40 millioninfinancialsupport.
“Chinainparticularis arealfocus bothintermsofdirectimpactbutalso indirectimpactsthroughsupply chains,”said atourismchair.
SaidJacobi:“Carefulmanagement oftherelationshipisabsolutelycriticalforNewZealand’sprosperityin thenearfuture.Whilewecananddo lookforoptionsforourtrade,there issimplynoreplacingtheChina market.
“Weare afreedemocraticsociety beforeeverythingelseandneedprinciplebasedleadershipandtostand upwhenthingsarenotright.”
Buttheprevailingmoodwasthat NewZealandhadtogivesupport. “Unquestionably.Appeasementis feeding acrocodileandhopinghe eatsyoulast,”said apropertyCEO.
“Itisfutiletobelievethereare solidalternativestoChina manufactureintheshortto mediumterm.Theglobe, includingtheUS,areasreliant
Ardernrevealedearlierthisyear shehaddeclinedaninvitationfrom Ukraine’spresidentVolodymyr Zelenskyytovisittohiswar-torn country,citingtravelcommitments.
Afurther20percenthavebeen impactedbyRussiansanctions.
“Theworldisgeopoliticallyrisky now,”said atourismchair.“Small countriesinthePacificneedfriends.”
StephenJacobi,whoheadstheNZ
The“Chinaand”challenge Nearly40percentofthose respondentswhoaredoingbusiness withChinaeitherhaveplanstodiversifyintomoremarkets,orhave alreadydoneso.
US-dominatedIPEFandAukus? CEOshavebackedmovestoincrease tradetieswiththeUS.NewZealand hasjoinednegotiationswith13 nationstoformanIndo-Pacific EconomicFramework(IPEF) spearheadedbytheUS.ButtheUS willnotofferpreferentialmarket accesstoNZbusinessesunderIPEF.
Photo /AP
ister’stimewouldbebetterplaced leadingathome.”
New Zealand has also supported theUS-ledsanctioningof840Russian individualsandentities.
“Theworldin2022isnot2019,” saidanaviationboss.
“Nationalismwillonlysetthe worldback,reducingtheGDP ofmanycountriesaroundthe world.
WhenitcomestoChina,CEOs havelargelydiscountedtheriskofan escalationintensionswithTaiwan, whichUSPresidentJoeBidenhas pledgedtodefendintheadventof aChineseinvasion.
Some32percentofrespondents thoughtitwasworthwhilepursing IPEF(“For asmallcountryattheend oftheworld,keepeverythingonthe table,”said abanker);12percent believedweshouldholdoutfora meaningfulbilateralfreetradedeal, and51percentsaiddoboth.
SaidDeloittechairThomasPippos, “While Idon’tbelievethatitiscritical
Fouroutoffiverespondentstothe 2022MoodoftheBoardroomsurvey sayregularassessmentshappenas partoftheirorganisation’sriskmatrix.
reportingonclimatechangeis abig focusforthenext12months,”says independentdirectorCraigStobo.
”ThereisnoupsidefortheUSin aFTAwithNZalone,”cautioneda wineexporter.
Businessleaders showbackingforUkraine
Theprevailingsentimentfrom some46percentwasthatArdern’s jobwashereinNewZealand.
“Wecoulddomore.”
Athirdofsurveyrespondentsfelt sheshouldstilltakeupZelenskyy’s invitation.
“Withrisinggeopoliticaltensions, NewZealandneedstobefriendswith theUS.Perhapsevenmorethanwe needbettermarketaccess,”saidchair oftheNZInitiative,RogerPartridge.
Whenitcomestospecificrisks, some69percentofCEOsreportthey haveplansinplacetocountercybersecurityattacks.Governmentagencieshavespentconsiderabletime privatelybriefingexecutivesonNew Zealand’sincreasedvulnerabilityto cyberincursions.
Some48percentofCEOssupport NewZealandjoiningAukus; atrilateralsecuritypactbetweenAustralia, theUKandUS.
DentonsKensingtonSwanchair HaydenWilsonsaid,“NewZealand’s roleinFiveEyesisessentialtoour internationalpositionand akeyaspectofmanagingourgeopoliticalrisk. NewZealandmustbeseentobe relevantandtobedoingitspart.”
CEOsreportthatotherrisksincludebiosecuritywhereanoutbreak offootandmouthdiseaseinIndonesiaisprovidinganopportunityto refinebusinesscrisisplans.
closetoAustralia,playourpartin FiveEyes,andcontinuetoremain constructivewithChina.”
“Thetiniestrandomthingoften holdsup aproject —alackofhooks, forexample,becauseeveryone’s supplyofhooksisin acontainerthat’s beeninAustraliaforsixmonthstryingtogeton aboat.”
Aprofessionalfirmbosssaidthey weremaintainingfocusontheChina relationshipbutactivelydeveloping andenhancingrelationshipswith SoutheastAsiancountriesandtheUS. “MaintaininChina,growelsewhere,” wasthemaximfrom atradeboss.
FromPippos:“NZneedstoappropriatelyparticipateinsuchmatters andcan’talwaysbeanobserveror simplyjustcomment.”
“Whilethetheoryisstraightforward,diversificationisnotaseasyas makingtheobservationthatbusinessesshould,”saidThomasPippos, chairofDeloitte.
AsuiteofEuropeanleadershave visitedZelenskyyinKyiv;alsoAustralianPrimeMinisterAnthony Albanese,Canada’sJustinTrudeau andformerBritishPrimeMinister BorisJohnson.
CEOsreportsupplychaindifficulties arecontinuingtoexcarbateinflation bypushingupthepriceofimported goods,increasingcoststobusiness.
“Itwouldrequire acommitmentto adefencespendwellabovewhatwe havetraditionallybeenabletopoliticallydeliver(orneed),”said atertiaryeducationCEO.
C
“It’snot apriority,”saidexperiencedcompanychairRobCampbell.
Afurther23percentwereunsure. “Iamunsurewhatthiswillachieve andwhattheendgameis,apartfrom PR,”commented afoodandbeverage exporter.
Tourismandeducationsector CEOsarealsolookingtoreignite businessasChinaloosensfurtherits MIQrestrictions.“Simpletosaydiversify!,”said amanufacturer.“Noteasy toachievewheninsomecases,China is alargepartofAsiangrowthand theycanaffordtopay.”
From aprivateequityboss:“We shouldexploreallavenuestoretain aUSalliancedespitecurrentpolitical shortcomingsthere.”
FromStobo,“AukusassistsAustraliawithsubmarineprocurement andpresupposesChina’saggression inthePacific.Bothareweakreasons forNewZealandtojoin.Thinkwestay
Otherswereconcernedabout whethertheconflictmightescalate.
“Intheviewofgrowinggeopoliticalrisk,andthepossibilityof unforeseenevents,exportersneedto strengthenkeyrelationshipsinChina, diversifytheirofferingsinthemarket andpresstheGovernmenttostick withongoingcarefulmanagementof therelationship,whichenablesusto haveoursayoncriticalissueswhile maintainingpositiverelations.”
“NatoprovokedRussiabyits steadymoveeastwards,despite promisesnottodothat,”saida banker.“UkraineistoRussiaiswhat CubawastotheUS.”
—AndreaScown Mitre10
“Assessment,mitigationandTCFD
From aprivateequityboss:“We nowneeddeepunderstandingof China.Thepressreportsarenolonger sufficient.Chinaexpertiseneedstobe outsourced.”
“Aukusisdrivenby astrongand unreasonabledesiretokeepChinain itsbox,”concluded abanker.
Thebossof amajorconstruction firmsays“thesehaveallbeen amajor impactbutarealleasingnow— expecttheoutlooktobemostlyresolvedthroughfirsthalfofFY23.”
Some 9percenthavereduced business,butnosurveyrespondent saidtheyhavepulledout.
FranO’Sullivan
Therearereputationalreasonsto doso; anotableexampleishowAir NewZealandfounditselfintheGovernment’ssightsafterrevelationsof athirdpartycontracttosupplythe Saudimilitarywerepublished.
CEOsstronglybacktheGovernment’s supportforwar-tornUkraine,butthe questionofwhetherPrimeMinister JacindaArdernshouldvisititspresidentis adifferentmatter.
“Thebottlenecksarealsocausing delaysinfulfillingclaimswithcustomerswaitingmonthsfor anewcar ortogetbackintotheirhomes,”said TowerCEOBlairTurnbull.“It’sfrustratingforeveryoneinvolved.
“Wetake a‘bowtie’approachto managingthekeyrisksthatweidentify,”saysBecaexecutivechairDavid Carter.“Howevertherewillalwaysbe surprises;surroundingourselves withcompetentpeopleandremainingagileremains akeystrategy”
EOsaremovingtoaddress heightenedsensitivitiesto keyinternationalrisksthat ledto afallintheirconfidenceintheglobaleconomythisyear.
fromanelectedleader,”saidtheCEO of adevelopmentfirm.
FromanaviationCEO,“Wearea freedemocraticsocietybeforeeverythingelse.”
Exportersandimporters —some 28percentofrespondents —also reporttheyhaveplansinplaceto addressmodernslaveryinsupply chains.
“It’ssimplynotviabletobuild alternatesourcingsolutionsin themediumterm,asChinais thepowerhouseof manufacturingfortheglobe. TheNZGovernmentmustamp updiplomaticrelationsto upholdthedecadesof successfulglobalisation.
onthatnationasNewZealand is.Wearemanufacturing elsewhereinAsia,howeverthe factoryownersarestill frequentlyChinesenationals, therawmaterialsareusuallyexChina,andthelocal infrastructureisonChinese (oftenUS$)lendingbases.
Theyrankedpriceescalationat 6.56/10on ascaleof1-10where1 equalsnotaffectedatall,and10 extremelyaffected.Risingfreight costs,internationalsupplychain bottlenecks,shippingdelays,delays atportsanddrivershortagesallfell within a6.37/10-5.46/10band.
KirstenPatterson, chiefexecutive oftheInstituteofDirectors,isoptimisticabouttheCovidrecovery,but lessoptimisticaboutinflationary pressures.“Overallthatresultsinoptimismlevelsfor2023balancingout tothesameorsimilarlevelsas2022 —stillsomeuncertaintimesahead.”
“Thisputsgreaterpressureonthe governmentprogrammeinNewZealandtodeliver.”
Roundingoutthetopfivedomesticconcernsarethoserelatedtothe Government:thelevelandqualityof governmentspending(8.51/10)and policyuncertainty(8.25/10).
B6 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM Topdomestic concerns Top5 concerns CEOs rate theimpactof thefollowingdomestic concernsonbusiness confidenceinNZ: Outof10 Skillsandlabour shortages 9.00 Immigration restrictions 8.52 Leveland qualityof Govt spending 8.51 Inflation/costofliving pressures 8.30 Govtpolicy uncertainty 8.25 Economic issues Labour productivity 7.43 Housingunaffordability 6.94 Interest rate levels 6.89 LevelGovtdebt 6.69 ReserveBankpolicy settings 6.57 Emissionsreduction policies 6.34 Cost of carbon 6.02 Herald Moodof theBoardroom CEOsSurvey 2022/ Herald graphic No concern— Extremelyconcerned 1 10 Infrastructure issues Infrastructure constraints 7.46 Supplychain problems 7.36 Increasingcyber attacks 7.35 Energy priceincreases 6.59 Congestion in Auckland 6.38 Wateruse policies 6.25 Securityenergysupply 6.21 Implications: Oilandgasban 6.08 Wage increases 7.57 Fairpayagreements 7.20 Employment law changes 6.68 RMAissues 6.45 Ratesincrease 6.02 Competitiveness corporatetax 5.72 Exchangerate uncertainties 5.25 Availability of capital 5.03 Furtherwaves of Covid 4.79 Business environment Herald Moodof theBoardroom CEOsSurvey 2022/ Herald graphic CEOswereasked to rate each factoron ascale of 1to 5: Much lessoptimistic Much more optimistic Thebig questions Areyou moreoptimistic than youwereayear agoabout: Outof5 Businesssituation in yourindustry 2.68 Much less optimistic 14% Slightlylessoptimistic 40% Thesameaslastyear 17% Slightlymoreoptimistic 21% Much more optimistic 8% NewZealandeconomy 1.87 Much less optimistic 41% Slightlylessoptimistic 41% Thesameaslastyear 8% Slightlymoreoptimistic 10% Much more optimistic 0% Global economy 1.83 Much less optimistic 34% Slightlylessoptimistic 53% Thesameaslastyear 9% Slightlymoreoptimistic 4% Much more optimistic 0% 1 5 ‘Businessinfor abuffeting’ Confidenceinthedomesticeconomyhasfalleninthe2022MoodoftheBoardroomSurvey,writes TimMcCready
SarahSinclair
Butforthefirsttimeintwoyears, anxietyassociatedwithCovidhas fallentothebottomofthedomestic concerntable.ConcernsaboutfurtherwavesofCovidreceived ascore ofjust4.79/10.Thiscomparesto 8.38/10inlastyear’ssurvey.
Withthecostofliving,weneed tomaintainfocusonwhatwill actuallyfixthat,anddeliveron it.
“Weonlyneedtofocusonwhat wehavedonewellandbuildonthat in aworldthathas ademandforthe qualityproductsandservicesthat NewZealandisassociatedwith.”
Industryconfidencemixed
Thoughthisis asignificantdropin confidence,itisnotaslowasthe recorddepthsseeninthe2020survey(1.36/5).
BecaexecutivechairDavidCarter suggestsmanyofthesubstantive challengesNewZealandface,includingaroundinfrastructure,require investingnowforthefuture.
Despitethesignificantconcerns conveyedintheMoodoftheBoardroomsurvey,HealthNZchairRob Campbellsuggestsbusinessmightbe over-eggingthenegativityintermsof optimism.
“Businessescanworkthrough economiccycles,buttheyneedto haveconfidenceinthesettings.”
Anenergydirectornotes“inspite oftheoffshoreoilandgasban,the NewZealandenergy/electricitymarketisprovingtoberesilientand effective.”
WhatI’mlessoptimisticabout thisyearisthewideninggap betweengovernmentand businesswhenitcomesto collaboratingtoidentifytheright problemandfixit.There’s growingconcernthatthe Governmentistryingtodotoo much.Rightnow,forbusinesses likeours,thatmeansadding uncertainty,costandcomplexity.
From ZEnergybossMikeBennetts: “WehavefailedtoprogressivelyreduceorlessentheCovid-related economicstimulationandnowface moresevereinterventions.”
espondentstothe2022 Herald’sCEOsurveyrated theiroptimismintheNew Zealandeconomyatan average1.86/5 —a fallfromlastyear’s scoreof2.70/5.Thisison ascale where 1equalsmuchlessoptimistic, and 5equalsmuchmoreoptimistic.
I’moptimisticthatwe’redoingthe rightthingsnowtofightinflation forourcustomers:buyingwell, runningasefficientlyaspossible, andkeepingcostsdown.Andthe numbersshowwearedoingthat.
outperformglobal economicgrowth.
forthis,”saysMinterEllisonRuddWatts(MERW)chairSarahSinclair.
ChrisQuin,CEOFoodstuffs NorthIsland We’vegonestraightfromfighting Covidtofightinginflation.What workedthroughCovidwas keepingthingssimpleand focusedonwhatreallymattered: keepingourteamandcustomers safeandkeepingfoodonthe shelf.
Inflationandcostoflivingpressuresarealso amajorheadache, scoredat8.30/10.
Asistypicalinthissurvey,executives ratedoptimismintheirownindustry higherthaninNewZealandorthe globaleconomy,with aweighted averageof2.70/5(2021=3.20/5).
CEOsareparticularlyconcerned aboutskillsandlabourshortages, whichscored9.00/10on ascale where1=noconcernand10=extremelyconcerned.Thiswasalsothe top-ratedconcernlastyearwhenit receivedanevenhigherscoreof
OnerealestateCEOsays“New Zealandnotopeningourbordersuntil justrecentlyhashadmoreeffectthan manypredicted.”
tionhasnotyethad aqualitynational conversation.”
KirstenPatterson
Butdelvingdeeper,optimism varieswildlydependingonsector. Businessleadersamongthemost optimisticincludethoseworkingin education(3.5/5),telecommunications(3.1/5),andagribusiness (2.8/5).“Theprimarysectorandtourismpositionsustooutperformglobal economicgrowth,”saysindependent directorJonathanMason.
“Itishardnottobeoptimisticabout theNZeconomywhenyoulookat theyearsofCovidandthegood exportresultsweachieved,”says AucklandBusinessChamberdirector MichaelBarnett.
Thetopdomesticissuesofconcern arelinkedtotheongoingshortageof workers,withthepandemicseverely disruptingthelabourmarket.
“Ithinkthatbusinessresponseto mediaandinterestgroupconcernsof manytopicsexceedstheirreal-world concerns.”
“Thisisdespitecarefacilitiesfor theelderlybeingforcedtoreduce capacityandsendresidentstoeither theDHB(whohasnocapacity)or hometofamilieswhoareill-equipped tocope.Theseriousnessofthesitua-
TheNewZealand primarysectorand tourismpositionsusto JonathanMason.
“Consistencyoflong-termpolicy settingsandpan-partyagreementon keyinfrastructurespendsiscriticalto providingconfidencetocommit.”
SomesuggestNewZealandisnot aspreparedastherestoftheworld todealwithcurrentchallengesand thoseonthehorizon.“Thereisa growingconcernofloomingrecessionarytimesandthatbusinessesoffshorearestartingtoplanandprepare
“Wehave anumberofinitiatives underwayaimedattacklinginflation andwe’redoingeverythingwe can tostaycompetitiveandkeepcosts down…butitisreallytoughrightnow andultimatelypeoplearegoingtosee itreflectedinwhatthey’repaying.”
“Inflationishugelychallenging, andwe’reconcernedabouthowthis isflowingthroughtothecostofliving forKiwis,”saysTowerInsuranceCEO BlairTurnbull.
Attheotherendofthescale,the leastoptimisticindustriesincludeentertainmentandleisure(1.3/5),food andbeverage(2.0/5)andretail(2.0/5).
Domesticconcerns
Infrastructureconstraints,ratedat 7.46/10,arealso amajorissue.
RogerPartridge,chairofthinktank TheNewZealandInitiative,recognisesthreatstotheeconomyabound athomeandabroad.“Risinginflation, risingborrowingcosts,skillsshortages,transportbottlenecksandan increasingregulatoryburden(especiallylabourmarketregulation)areall creatingheadwindsforbusiness domestically,”hesays.“Internationally,thestoryissimilar,andin somecasesworse.Businessisinfor abuffeting.”
Surveyrespondentswereaskedto putforwardotherpressingconcerns ondomesticissuesoutsidethose polled. Aseniorprofessionaldirector expresseddeepconcernoverthe nursingshortage:“Thisiscausinga crisis —particularlyinagedcare, despitetheGovernmentmaintaining apublicpositionthatallisfine.
9.18/10.Closelytiedtotheworker shortageandskillsgapisimmigration. Currentrestrictionssurroundingimmigrationsawthisratedat8.52/10.
“Myoverallsenseisthatweare driftingas acountryandnotreally movingforward,acceptingitisworse elsewhere,”suggestsDeloittechair ThomasPippos.
Whiletheborderisnowfullyopen, CEOsconsiderNewZealand’srelative latenessinreconnectingand“moving on”fromCovidhascontributedtothe confidenceknock.HarcourtsmanagingdirectorBryanThomsonsays thoughthereareseriousconcerns worldwide,suchasUkraine,“therest oftheworldseemsmoreadvanced regardingCovidrecovery.”
Othernotableconcernsinclude wageincreases(7.57/10),labourproductivity(7.43/10)andsupplychain issues(7.36/10).
Thenext12monthsaregoingto betoughonNewZealanders,it’s atimewhenGovernmentand businessshouldbeworking closertogether —notdrifting furtherapart.
LikewedidthroughCovid,the Governmentandbusinessare nowfighting acommonenemy ofinflation.
Awineindustryleader:“Wewill berelyingongrowthinexport marketsasopposedtodomestic growth.”
Despitethepessimism,some respondentsareoptimistic.
“Governmentneedstocontrolits spending,freeuplaboursupply,stop imposingunnecessarycostsonbusiness,andfixtheinfrastructureto assistinimprovingproductivity,” says afinancialservicesCEO.
StrahanWallis CEOClemengerGroup “Wearecautiousaboutprospects for2023butalsoknowthat researchshowsthesmartest organisationsincreasemarketing spendinthehardtimes,during recessionsordownturns. Mediaspendhasbeenupacross mostcategoriesoverthelast24 monthsasorganisationsget moreoutoftheiradvertising assets.Thereis apent-upneed nowforsmartcompaniesto createnewbrandcampaignsthat willensurecustomerloyaltyand aquickexitfromanyeconomic headwindsoverthecoming18-24 months.
MERW’sSinclairnotes“thereis growingconcernaroundtheriskof changeandthe‘NZInc’riskthismay createinrelationtoourattractivenesstomuch-neededoffshoreresources(expertise,capitalandpeople).”
“Despitetheremovalofdivisive masks,mandates,vaccinepassesand theoverreachingCovidprotection framework,NewZealandersremain unconnected,”explainsPrecinctPropertieschairCraigStobo.“Ourcities arebereftofpeople.”
R
RobCampbell
AtertiaryeducationCEOsays: “Theopeningofthebordersiskeyfor us,butiscomplicatedby abuoyant labourmarketandhighinflation whichisnotanoptimalsettingforan institutionlikeours.”
hitandis asourceofconstantstress anddisruption.Manyaretakingit uponthemselvestotrytosolvethe longertermproblemwithsome73.5 percentofthosesurveyedsaying theyhadincreasedinvestmentin trainingandskilldevelopment.
Thesurveyshowsskillsandlabour shortagesasthebiggestsingledomesticconcernwhenCEOswereasked torateissuesaffectingconfidence.
Nosurprisethenthatwhenasked whichissuesarethemostlikelyto
Immigrationrestrictionsaremakingithardforsomeemployerstofindandretainworkers
Capital expenditure 52% MORE 13% SAME 33% LESS 2% UNSURE IT expenditure 54% MORE 35% SAME 10% LESS 1% UNSURE Revenue 63% INCREASE 20% SAME 14% DECREASE 3% UNSURE Profit 51% INCREASE 24% SAME 21% DECREASE 4% UNSURE Staffing numbers 41% INCREASE 15% SAME 39% DECREASE 5% UNSURE CEO expectations overthenext 12months
On ascaleof 1to10,with 1reflecting noconcernand10beingextremely concerned,theratingwas 9forskills andlabourshortages.Immigration restrictionswasnextat8.52,just abovethelevelandqualityofGovernmentspendingat8.51outof10.
Andtheredoesn’tseemtobe muchlightattheendofthetunnel.
Thesurveyprobedfurther,asking howdifficultitwastofindorretain workersas aresultofcurrentimmigrationrestrictionsandtheirmanagementbyImmigrationNewZealand.
Theeconomyisstilltrucking along,asrecentGDPfiguresshowed, witheconomic growthbouncing backsharplyinthesecondquarter oftheyearwith ariseof1.7percent
Oneresorthadbeenforcedto makeunavailablealmosthalfits roomsbecauseitcouldn’tfind enoughworkers.It’sunderstoodone teamhadtosplitupandstayat
MOODOFTHEBOARDROOM nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B7
Thisisbynomeansnew,especiallyintheCovidera,buttheissuehas comethroughstronglyinthisyear’s MoodoftheBoardroomsurveywith labourshortagesandimmigrationrestrictionscitedasthebiggestdomesticissuesaffectingbusiness confidenceatthemoment.
That’spartlywhattheGovernment wantswithitsplantoresetimmigrationbyreducingthenumberof migrantscomingintothecountry.
Growing prosperity andpotential
Evenasborderrestrictionshave easedLabourhasdeclareditdoesn’t want areturntopre-pandemic relianceonimmigrantlabour.
AskedwhethertheGovernment’s movetobringinanextra12,000 workingholidaymakerswouldhelp addresslabourshortages,just26.5per centsaidyes;45percentsaidno.
Inflationisalso apinchpointfor many,withsurveyrespondentsgivingitandthecostoflivingcrisisa ratingof8.36outof10intermsof impactontheNZbusinessconfidence.Askediftheythoughtthe countrywaspastpeakinflation,49.53 percentsaidnoand30.84percent saidyes.
Moodofthe Boardroom Duncan Bridgeman
Askedtoratethegeneralbusiness situationintheirindustryon ascale of 1to5,with 5beingmuchmore optimistic,theCEOsgave aweighted averageratingof2.68.Thatcompares with3.2 ayearago.Thesurvey showedCEOsareslightlymoreoptimisticabouttheNewZealandeconomy(1.87outof5)thantheglobal economy(1.83outof5).
G
Taupois agoodexample.The GreatLakewasburstingattheseams lastweekendwith ajuniorrugby festivalattracting2000kids,their parentsandanentourageofrugby lovers.Itwas agreatoccasionand couldhavebeenevenbetterwerethe hotelsandrestaurantsnotso stretched.
Some38percentsaid“verydifficult”while30percentsaid“slightly lessdifficult”.Morethanhalfof respondentssaidemployeechurn wasincreasing(55.5percent),with6 percentsayingitwas“offthescale”. Twothirds(67percent)saidthey wereinvestinginautomationasa resultoftightlabourconditions.
keepCEOsawakeatnight,83percent wentwithsourcingandretaining skilledstaff.Thatwas abigjumpon lastyearwhenitwas71percent.
—upfrom a0.2percentcontraction intheOmicron-affectedfirstquarter. Thatmeansnolet-uponinterest ratehikesoverthenextfewmonths. Ingeneral,businessleadersareless optimisticthantheywere ayearago andmuchofthatistodowiththe labourshortageandinflation.
differentlocationsas aresult.
Andlikeeverywhereelseinthe country,severaltouristattractions, restaurantsandbarshadsignsonthe windowurgingcustomerstobe patientduetothelackofworkers.
Sourcingstaffhasbeenthebiggest issueforbusinesssincethepandemic
Labourshortages aretop of mind
Buttheproblemisthatnowisa verydifficulttimeformostbusiness toadjusttotherebalancing.Twoand ahalfyearsofcovidrestrictionshave drainedthestrengthofmanybusinessownersandunemploymentisat anear-recordlow.
oanywhereinNewZealand rightnow —bigcityorsmall town —andimmediately younoticethelabourshortagecrisis.Hotels,shops,cafes —they areallcryingoutforstaff.Thesame goesforfarms,smallbusinessesand serviceproviders.
Atechcompanychairsayswhile churnhasalwaysbeenhighinthe ITindustry,itisnotablyhighernow: “Andsomeofthesalarypackages beingoffered —likedoubletheir currentsalary —makeitalmost impossibletoavoid.”
Thecurrentrulesrestrictthe taskstheyareallowedtodoand wewouldreallyliketoseethis broadened.Pressuresonlabour supplyarefar-reaching,from productionthroughtoour hospitalitycustomers.This situationhasbeenbuildingfor threeyearsandtheimpactonour teamsiscompounding. Werealisethismaybe along termstrategybuttheneedis now.
Thelabourshortagehasbecome asignificanteconomicissueforNew Zealand,and acontributortothe ongoinginflationaryenvironment. Though arisingcostoflabourmay meanemployeesreceivehigher wagesasemployersattempttoattractandretainstaff,thecosttends tobepassedoninpriceincreases.
“Wehaveworkedthroughtheprocesswith ahandfulofourteamwho wereherewhenCovidfirsthitand havealmostmadeitthroughthe process,”writes aCEOintheproperty industry.
Furthercompoundingthishas beenNewZealand’sborderclosure, whichrestrictedtheflowofmigrant workersforthepastthreeyears.With thebordernowreopened,skilled workersandpent-updemandfrom youngerpeoplethatdelayedtheirOE areconsidering ashiftoverseas.
Whenaskedinthe Herald’sMood oftheBoardroomsurveytowhat degreeemployeechurnisbeingexperiencedintheirbusiness,just 3per centofbusinessleaderssaynotatall, and35percentsaychurnisata manageablelevel.
“Lessthanexpected,”saysDeloitte chairThomasPippos.AddstheCEO of apropertymanagementfirm:“The rateofchurnisprobablynohigher thanithasbeeninthepast.”
ImmigrationMinisterMichael Woodsaidthechangeswouldprovideimmediaterelieftothosebusinesseshardesthitbytheglobal workershortage.
Toomanysituationsvacant more Tim McCready holidaycaphelp addresslabour
“Ithasbeenlaboriousmorethan anythingelse,but Ireallyfeelforour peoplewhoareinthemiddleofit. Untilthelengthyprocessisdone,they can’tsettleinandmakethemselves athome —andthementalstrainof thatisreal.”
Willtheworking
DavidCarter
We’reextremelyconcerned aboutnothavingenough workerstocoverthe2023 harvest.That’sdespitedoing everythingwecantoattractNew Zealanders,providing competitiveremuneration, flexibility,training,andcareer progression. Lowunemploymentandthelack ofpeoplecomingtoNewZealand onWorkingHolidayVisasis exacerbatingtheissue.RSE workersare avaluedpartofour businessandwewouldliketosee theirnumbersincrease.
ACEOinthedesignsectorsays “theindustrysimplypoachesand incentiviseswith$40,000salaryincreasesandwehavehadtodothe same,whichisunsustainable.”
‘Someofthesalarypackages beingoffered currentsalary impossibletoavoidchurn’ —ITcompanychair
Growthinautomationinvestment Whenaskedwhethertheyare investinginautomationas aresultof tightlabourconditions,68percent ofrespondentssaytheyare. Afurther 27percentsaytheyarenotinvesting inautomation,and 5percentare unsure. Theheadof alargetechfirmsays theconvergenceofnewtechnologies —includingtheInternetofThings,AI and5G —iscreatingcompellingnew usecasesforbusinessesofallsizes toautomatepartsoftheiroperations, improveefficiency,andenhancethe qualityofdecision-making. “Thisisalsosupportingimproved environmentalperformancethrough sustainabilitysolutions,”theysay. “Nowisthetimetoinvestbehind theseopportunitiesandencourage morerapidadoption.” Businessleadersarequicktopoint outthattheheightenedfocuson automationisnotnecessarilydown tothetightlabourconditions,but insteadis along-termresponseto otherfactors. “Notbecauseoflabour,butto increaseefficiencies,”says MainfreightCEODonBraid. Asimilarresponsefrom atech boss,whohasintroducedautomation intothebusiness“morebecausewe needtodoformallymanualtasks more efficiently in order to remain competitiveinthemarket”. FromTowerInsuranceCEOBlair Turnbull:“Wehavebeeninvestingin automationfor awhilenowandthis investmentisincreasingwiththeaim ofdelivering abettercustomer experienceandefficiencies.Itisnot relatedtocurrentlabourconditions.” Changethetaxsettings Afollow-onquestionaskedwhether Governmentshouldchangethetax settingstoaccelerateinvestmentin
Viewpoints
Butwhenbusinessleaderswere askedwhetherthechangewillhelp, itwasmetwith amutedresponse.Of thosesurveyed,just27percentsay itwilladdresslabourshortagesin theirsector.
Addsanenvironmentalservices boss:“Whywouldtheycome?Australiaismorewelcoming.”
Auniversitybosswrites:“Ourchief challengeisaroundinternational students —whooftenbecomeothers’
—KevinMapson PernodRicardWinemakers NZ
Somebusinessleadersexperiencingsignificantstaffchurnarefromthe realestateindustry.Butwithhouse pricesfalling,salessluggishandhousingstockincreasing,oneindustry leadersays:“Staffareleavingbecause theyaresimplynotmakinganincomefromrealestate.”
automationtoliftproductivity.
Two-thirdsofrespondentsagree thatthiswouldbe
agoodidea.
agoodtool,butwe need
—likedoubletheir
Deloitte’sThomasPippossuggests: “Governmentneedstobetterallow themarkettooperateefficientlyand onlyintervenewhenthereisa (looming)marketfailure.”
“ItremainstobeseenifNew Zealand’soverallpropositionwill competewithothercountries,”says FoodstuffsNorthIslandCEOChris Quin.
“Ourabilitytodothiswaslimited in2020/21,buthasincreasedin2022 whichhasbalanceditout,”saysthe headof aprofessionalorganisation.
shortageofworkershas become aglobalphenomenon,withthepandemicseverelydisrupting thelabourmarket.Employersare findingitincreasinglydifficulttofind staffasemployeesseekouthigher wages,remoteandflexiblework options,andmoresatisfyingemploymentopportunitiesthatbetteralign withtheirvalues.
—makeitalmost
“Itwillhelp,butnotattheprevious levelsnoratthelevelsrequired,”says AccordantGroupchairmanSimon Bennett.
Boosttoworkingholidayscheme doesn’tgofarenough Toaddressthesignificantand ongoinglabourgap,theGovernment recentlydoubledtheWorkingHolidaySchemecapfor2022/23,which willsee afurther12,000working holidaymakersabletoenterNew Zealandandisextendingvisasfor holidaymakers.
“Lifelonglearninganddevelopmentiskeyto asustainablefuture,” respondsBecaexecutivechairDavid
Carter.“OurIntermediateDevelopmentAcademyisourlatestinitiative tobelaunched.”
A
m es
CEOsbelieve
shortages? 27% YES 45% NO 14% UNSURE
Increasedinvestmentinstaff development
Theremaining23percentsay trainingandskilldevelopmentlevels haveremainedthesame.
Immigrationdelayscausinga majorchallenge
Thecurrentimmigrationrestrictions anditsmanagementbyImmigration NewZealandisanotherareaseenas prohibitivebyCEOs.
productivity,”saysAccordant’sSimon Bennett.
ThomasPippos
Inanefforttoretainstaffandmake uptheshortfallinaccessibleskilled talent,businessesareplacingan increasedemphasisoninvestingin employees.
Just 4percentsaytrainingand skillsdevelopmenthasdecreased, thoughthereasonforthiswasmostly putdowntofinancialconstraintsand “expensemanagementduetothe pandemic”,orlockdownssignificantlylimitingtheabilityofbusinessestorunprogrammestothe sameextent.
Thisresponsecomesfromacross theboardintermsofsectors.“The agriculturalworkforceiswellunder strengthinkeyareas,”writesoneCEO. “Ittooktwoyearstogetnursesapproved,itiscrazy,”saysanother. From aconstructionCEO:“Oursector needsskilledworkersandultimately themarketneedsimmigration.”
SimonBennett
But asizeable56percentsay churnisincreasing,and 6percent considerittobe“offthescale”.
Some,includingtheCEOofan architecturefirm,saysNewZealand’s relativelatenessinopeninguptothe restoftheworldhascometoolate —“evengivingaccessnow,wehave missedvitaltimelines.”
Asubstantial45percentsayitwill nothelp,and14percentareunsure. Theremaindersaythisquestion wasn’tapplicabletothesectorthey operatein.Manyofthosethatdid respondpositivelyleft acaveat— whileitmayhelp,itwon’tbeenough tomakeupthesignificantnumberof worksthatarerequired.
workers.Thereis apotentiallydangerousbottleneckweface.”
“Thismaybe asuiteofchangestoraise
Theneedtoaddressworkforce gapsatpace,aftersuch aprolonged periodwiththeborderclosed,has heapedpressureontoImmigration NewZealand’svisaprocessingcapacity.Lastmonth,ImmigrationNew Zealandstoodup aReconnecting NewZealandIncidentManagement team,withauthoritytomake decisionsandimprovetheprocessingofapplications.Businessleaders areconcernedaboutthesedelays impactingtheirabilitytosourcetalent,butalsothetollitplacesonstaff whoalreadyresidehere.
Just15percentthinkthereshould benochangeintaxsettings,whilethe remaining19percentareunsure.“I don’tbelievein‘targeted’taxrelief,” saystheCEOof alargemanufacturer.
Amassive73percentof respondentssaytheirinvestmentin trainingandskilldevelopmentover thepasttwoyearshasincreased.
B8 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM
Whenaskedhowchallengingthis hasbeenon ascaleof1-5where 1=verydifficultand5=veryeasy,they give acombinedscoreof1.85/5.
AbossintheITsectorthinksthat “accelerateddepreciationisn’t neededtospeedupinvestmentinthis area”.
“Wehavelistenedtotheconcerns ofthesesectorsandworkedwith themtotakepracticablestepsto unlockadditionallabour,”hesaid.
“Weparticularlyneedtolookat untappedpoolsintheNewZealand market.Whetherthatisrethinking anddoingmoreintermsofpolicies forwomen,particularlycomingin andoutoftheworkforcearound whentheyarehavingchildren,or intoMaoriandPasifikapoolsoftalent.”
Westpacwascurrentlyrecruiting staffoutofsomeSouthAuckland schools.
“WearebringingthemintoWestpacandtalkingtothemaboutthe entry-leveljobsbutalsotheamazing careersthatyoucanhavedigitaland technology.”
“Whilstwestoodaheadofthe worldforthefirst12monthsofCovid becauseofthedecisionstakentolook afterNewZealanders Ithinkthatgloss cameoffinthesecondyearandnow wehavegot areasonableperiodof timewherewehavetobereally consistentandonmessageabout whyNewZealandis agreatplaceto comeworkagain.”
“Getting atablebookingwasreally quitetough.Andit’snotbecausewe have alackoftablesorseats.It’s becausetheyjustdon’thavethestaff tosupportcustomers.
McGrathsaidNewZealandhadto competehardagainstdestinations
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“Atthehigh-skillendskillslike technology,data,digitalandregulationareallinshortdemandandwe don’thaveenoughofthemintheNZ marketsoeverybodyiscompeting reallyhardforthattalent.”
“Thereis abitofcynicismthatI thinkwilltakesometimetoeaseoff, about‘if IcometoNewZealandwill Ibeallowedoutagain?’Weare aless easymarkettoattractpeopleinto.”
tohavethatstatedpubliclyitwould needtobereiterated.
“Andthat’sevenreallywell-known restaurantsinQueenstownthat,in myexperience,havealwaysbeen heaving.”
“Youcanrecruitandtrainupata juniorlevel.Butifyouwanttogeta technologyarchitecttheyareinshort supplyinNewZealand.
Thereis abit ofcynicism about‘ifI come toNew ZealandwillI beallowed outagain?’ CatherineMcGrath
N
“Butif Iamtryingtorecruitpeople whoaren’tNewZealandersintoNZ thatbecomes arealchallenge.”
“Wearegoingtohavetosaythat many,manytimesbecausewehave experiencedthelast12monthsdifferentlythanotherpartsoftheworld.
McGrathsaidconvincingNewZea-
“Theyare amarketthatwecompetewithand Ithinktheyarebeing moreassertiveandfasterabouthow totacklethattalentchallenge.” Technologyjobsareoneofthe hardestareastofill.
“Theyareincrediblywellpaidin Australiaandthatiswherewewould havesomespecificchallengesabout howattractiveisNewZealandasa markettocomeinto?”
McGrathsaidthoughitwasgood
recruitpeoplefromoverseasbutNew Zealandwasbeingperceivedas aless attractivecountrythanitusedtobe becauseofthetimeithastakento rejointheworld.
Thelabourshortageisoneofthe biggestconcernsMcGrathhasasshe seestheissuecomethroughfrom bothitscustomers’andthebank’s ownemploymentchallenges.
McGrathsaidshewasalsosurprisedtosee asigninherhotelroom thatsaidifshechosenottogetthe roomservicedtherewouldbe a$10 barcredit.
WithinWestpacNZitself,shesaid ithadchallengesbothatthehighskilledendandattheentrylevelfor slightlydifferentreasons.
Shesaidthebankwastryingto
Hangingoutthe‘welcome’sign
“Itisincrediblyimportant sothat wecanpullpeopleinandwehave gotservicestosupportthem.”
“Thatiswherebusinessesreally needtostepinandhelptoo.
ShesaidtheGovernmentneeded tolookatitfrom asystem-widelevel soimmigrationalignedwithinfrastructure.
ShewasdowninQueenstown recentlyforworkandsawevidence ofhowrestaurantsandhotelswere strugglingtogetenoughworkers.
landerstocomehomeforwork tendedtobeeasier.“Wehavehad somesuccesswiththat —ourCFOhad beenbasedoutofSingaporefor along timeandshehascomebackhome.
likeAustraliawhichhadthrownthe doorsopen.
“Iwas abittraumatisedwhen Isaw Australiagoingoutandsayingwe havegot35,000spacesopenthe doorsandcomeonin.
“Itreiteratesthatthereis areal shortageofrelativelyunskilled labour.”
ewZealandisgoingtohave toreinforceitsmessageof opennessinordertoattract foreignworkersagain,says WestpacNewZealandchiefexecutiveCatherineMcGrath.
ShesaidNewZealandalsoneeded togrowitslocaltalentthrougheducation.
We haveto be on message aboutwhy NZ is agreatplace to work, Westpac’s CEO tells Tamsyn Parker
Itwasonlylastweekthatthe GovernmentditchedNewZealand’s trafficlightsystem,withPrimeMinisterJacindaArdernsayingitwas veryunlikelyNewZealandwouldgo into alockdownsituationagain.
wanttheReserveBank’stogavea solefocusoninflation.
B10 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM
responsewhen(notif)thenextshock comes,”saidonepropertycompany chiefexecutive.
“Basedonthesectorsweareexposedtoitfeelslikewecouldseethe peakinthenextquarter,”saidTourismHoldings’GrantWebster.
DamePaulaRebstock,chairof KiwiGroupHoldings,predictedcentralbankswillstruggleagainstthe self-reinforcingmechanismatplay withwageandcostincreases.
Just18percentsaidnoanda further 5percentwereunsure.
PrecinctPropertiesCraigStobo, cautioned“wehaveyettoseethefull flowthroughofinteraliafoodprices, wageincreasesand apeakininflation expectations”.
widenedoverthecourseoftheyear asmarketsgenerallyworryabout longertermgrowth,wearestill seeingstrongliquidityandcapital beingverymobilewithcrossborder transactionsstill afeature.
monthsendedJune,pushingthe annualrateto7.3percentfrom6.9 percent.Thiswas a32-yearhighand helpedfuel acostoflivingcrisisthe Governmenthasattemptedtoease through arangeofmeasures.
Monetarypolicywas asingle instrumentandsimplycouldn’tbe usedtohittwotargets,argueda seniorbanker.
However,attheotherendofthe spectrumthereweresomewho questionedthevalueof areview.
moreconsistentevidencethatevery aspectofthisprocessisontrackand proceedingfairlyquickly,andthey appearlessanxiousfornowabout accidentallyovertighteninginlight ofthestrengthofthelabourmarket.
77
Some,likeFoodstuffschief executiveChrisQuinn,felttheRBNZ shouldn’tbe“solely”focusedon inflation.
Thereviewshouldincludethe ReserveBankbutalsothe Government’sfiscalresponse,said oneseniorrealtor.
Areweatpeakinflation? —thejuryisstillout Atripartiteapproach maybeworthtryingasa circuitbreakertoavoid gettingstuckwith unsustainableinflation. DamePaulaRebstock
“Isuspecttheydidsuch agreatjob ofkeepinginflationincheckfor decadesthattheregrewthisbelief thattheycoulddotwothingsatonce (fullemploymentandlowinflation). Ofcourse,wenowseethefollyof that.”
Persistentlyhighinflationandcost oflivingpressureshavebecomea hugeconcernforCEOssincethe2021 survey.Theyrateditasthefourth highestdomesticconcernaffecting businessconfidenceinNewZealand inthe2022survey,scoringitat 8.30/10on ascalewhere 1equalsno concernand10equalsextremely concerned.
ithinflationrisingto peaksnotseensincethe 1980stheReserveBank hasfacedintense scrutinyoveritspandemicmonetary policyresponse.
IsRBNZ strayingfrom its brief?
Thisisn’taboutdumping AdrianOrr;it’sabout reviewinghowwe responded to an economicandsocial shockon ascalenever seenbefore. PropertyCEO
ButNationalPartyleaderChristopherLuxonhassaidthisdoesnotgo farenoughandhascalledfor afully independentreview.
ReserveBank %
wantanindependentreviewofthe ReserveBank %
Some77percentsaidyestothe surveyquestionaboutthepossibility ofanindependentreview.
tobringinflationdownwithouta
Butothersdidexpressconcern thattheReserveBankwasstraying
TheReserveBankhasalready indicatedthatthereareplansfora
Havewepassed peakinflation? 50% NO 31% YES 9% UNSURE
ItmaynotbeCovid,orevena pandemic;buttherewouldbe anothershock,hewarned.
Thiscautionwasunderscoredby ahigh-profiledirector:“Wehavehad someindicationsinthelasteight weeksthatwemayhavepeaked. However,sincethattimetheEuropean/UKenergycrisishasaccelerated.Wewon’tbeimmunetothese impacts.”
Beca’sDavidCartercautionedsalarypressurescontinueas aresultof theconstrainedlabourmarketanda growingpublicsector,andthisis against abackdropofrisingbusiness uncertainty.
“Thisiswhatmostbusinessesdo don’tthey?”
Theongoingchallenge ofreducing inflation AndrrewBarclay GoldmanSachs Thekeydynamicinglobalmarkets hasbeenthebroad-basedtightening infinancialconditionsascentral bankersandpolicymakersfacethe ongoingchallengeofreducing inflation —a dynamicwhichhasseen elevatedmarketvolatilityacross almostallassetclasses. Fromherepolicymakerscan eitherrunlowerratesfor alonger periodoftimewhichwouldsee higherinflation(althoughislikelyto bepoliticallytemptingtoavoida hardlanding),ortheycanmove morequicklytoremovethe inflationaryexcessescurrentlyinthe system.Thiswouldseegreatershort
Wethinkcapitalavailabilityand
“OurRBNZwasprobablynoworse thansomeoftheothersbutthey printedtoomuchmoneyandkept printingitwaypastwhentheyshould havestopped.”
Whilebusinessleadersinthe MoodoftheBoardroomsurveyseem waryoflayingblamedirectlyandare dividedovertheextentofpolicy failures,theydooverwhelmingly favouranindependentreviewto assesstheRBNZ’sresponse.
“Idon’tlooktoallocateblameto theReserveBankinthewaysothers do —includinghowtheyarelooking toconnectpurposetoMa¯oriculture —which Iamrelaxedabout,”said DeloittechairThomasPippos.
“Oneofmostwidelyagreed principlesineconomicsisthatone needsasmanypolicyinstrumentsas targets.”
W
formalreviewunderway —aspart ofitsstandardfive-yearlyprocess— andthatthiswillinclude areportby independentinternationalexperts.
59
Athird —31percent —believe inflationhaspeakedand 9percent areunsure.
Whilecreditspreadshave
Onebusinessorganisationleader arguedthattheRBNZwent“offthe railsbeforeCovidhit —andthenit gotworseinthepandemic.”
StatsNZsaidconsumerprices increasedby1.7percentforthethree
Othersfelttherewasroomfora broaderapproach.
FranO’Sullivan
Thisviewwassharedwidelyby respondents,althoughmanynoted
But30percentsaidnoand11per centwereunsure.
Some59percentofMoodofthe Boardroomsurveyrespondentssaid theysupported areturnto asole focusoninflation.
“Inflationshouldbetheprimary focus,but Ithink‘havingregardto’ otherfactorsisnotjustvalid,but essential.”
“Thisisn’taboutdumpingon AdrianOrr,it’saboutreviewinghow werespondedtoaneconomicand socialshockon ascaleneverseen before,wherethetoolswehave workedwell,wheretheyfellshort andwhat,withthebenefitof hindsight,wecanlearnfromour
liquidityislikelytoremainstrong— whilethecostofcapitalmayvary, NewZealandremainsanattractive investmentjurisdictionandwehave seenplentyofrecentexamplesof internationalpartiescontinuingto deploycapitaldomestically.
Inthisenvironmentmonetarypolicyis ablunttool.
Officialfiguresunderlinetheirconcerns.
“Inflationdoesn’thappenina vacuum,andnorshouldpolicy settingtocontrolit,”argueda propertysectorchiefexecutive.
Moodofthe Boardroom LiamDann
AnotherNationalPartypolicycall —returningtheRBNZto asolefocus oninflationtargeting —alsoappears popularwithbusinessleaders.
“Wedon’tneedthisgovernment (andtheirbureaucrats)doingany morereviews,”arguedanother businessorganisationleader.
thattheydidn’tseetheneedfora reviewtotargetReserveBank GovernorAdrianOrrorjudgehimfor decisionsmadeattheheightofthe pandemiccrisis.
Buthewarnedthathousingshould notbeconflatedwithitscoregoals.
“Thisisnotcriticalofthembutwe haveneverhadtoface acrisislike thisinrecentyearsandwehaveto learnwhatworkedordidn’t.
FiftypercentofCEOsrespondingto the Herald surveybelieveNewZealandisnotyetpastpeakinflation.
Mitre10’sAndreaScownsaid,“I wanttosayyes,aswehaveseen somepositivetrends.However,as significantimporters,NewZealand willbesubjecttoenergyprice impactsonthemanufactureofgoods byglobalsupplypartners.Muchof thisenergycosthasbeenhedgedand theimpactasthesehedgesrunout willbe asharpupswinginthecost ofmanufacturepassingthroughto thecostsofgoodssold.”
“Thecentralbanksgloballyover stimulatedeconomiesandweare nowpayingforit,”saidonecompany chair.
“WhatistheReserveBankdoing wadingintoareasoutsidetheirremit? Clawbackimmediately,”saidone respondent.
“Atripartiteapproachmaybe worthtryingas acircuit-breakerto avoidgettingstuckwithunsustainableinflation.Willalsoneedfiscal policytoplayitsparttogetbackto pricestabilityandthebenefitsitgives toeconomiccertaintyandgrowth.” termpainandthusbelesspolitically popular,butlikelytobebetterfor theeconomyandmarketsinthe longerterm. Westillthinkpolicymakershope
“Hindsightistooeasytobeclever with.If areviewwastobeundertaken itshouldbeforwardlookingwith scenariosthataretransparenttoall,” saidanenergysectorchiefexecutive.
“Wemayhavereachedthepeak inheadlineinflation,butasweare seeingwithsuppliercostincreasesin ourbusinesses,highinflationlooks settostayforsometime,”added FoodstuffsCEOChrisQuin.
Others —includingFinance MinisterGrantRobertson —have suggestedthecriticismsmacksof 20/20hindsight.Theypointto enormousuncertaintycausedbythe pandemic,theRBNZbeingthefirst majorcentralbanktobeginremoving stimulusanditsaggressivestancein thepast12months.
“Dualmandatesdon’twork,”said onecompanychair.
TheLabourPartymovedtheRBNZ to adualmandate —targeting unemploymentandinflationin2018.
Buttheyappeartowanttosee
fromitsbriefindevelopingpolicies aroundcultureandclimatechange.
Questionshavebeenaskedby senioreconomists —includingformer ReserveBankofNewZealand(RBNZ) staffandthepreviousGovernor— abouttheextentofthestimulus providedtosupporttheeconomy andthetimingofitswithdrawal.
recessionandareopentodoingthis overanextendedperiodifneeded.
BillBennett
● JohnDakinisCEOofthe GoodmanPropertyTrust
JohnDakin AucklandIndustrialwarehousing andlogisticspropertyisexperiencingunprecedenteddemandwith vacancyofprimeindustrialjust0.1 percentoftotalstock.Lateststats suggestthereareonlyfoursmall buildingsvacantacrossAuckland.
Wearerethinking howwereskill, upskill,andmove talentthroughour business,while doingwhatwe canwithinthe currentsettingsto bringinhighlyskilledrolesthat arehardertofind locally.
Lastyear,theCLCreportnoted thatmemberswillinvestaround$5 billionoverthenextfiveyearson reducingemissionsfrombusiness operationsandinvest afurther$750 millionondevelopingproductsand servicestoreduceend-user emissions.Hodsonsaystherealvalue oftheCLCiswhenbusinesseswork togetheracrosssectorstodevelop emissionreductionstrategies.
“Digitaltechnologiesareconverging.Weareseeingcombinationsof data,artificialintelligence,thecloud, andtheInternetofThings(IoT)workingtogether.Normallyyouare collectingsomethingorvideoing somethingorsensingsomething.This bringsnewopportunitiesandcreates compellingnewusecasesforbusinessesandorganisationstoautomate partsoftheiroperations”,shesays.
Findout howwecanhelpyourbusiness at spark.co.nz/IoT
Aclearbusinesspriorityis,setting anewstrategyfor ahighergrowth future.“Whenoursaleof a70percent stakeinourTowerCobusiness completes,wewillhavetheabilityto returnsignificantvaluetoourshareholderswhilealsoinvestinginfuture growthopportunities —acrossdigital infrastructure,newmarkets,and emergingtechnologies.”
T
On abroaderfront,Hodsonsays skillsshortagesrightacrosstheeconomyareparticularlyconcerning,and likelytogetworsebeforetheyget better.“Wearerethinkinghowwe reskill,upskill,andmovetalent throughourbusiness,whiledoing whatwecanwithinthecurrentsettingstobringinhighly-skilledroles thatarehardertofindlocally.”
Theyareallpartof anationwide shifttoloweringcarbonemissions andbuilding amoresustainable,climateresilienteconomy.ForHodson thisisanimportantjourneythatNew Zealandmusttake.Shetakes apersonalinterestandistheconvenerof theClimateLeadersCoalition(CLC).
Thisisthestrongestlevelof customerdemand Ihaveseenand wearespending alotoftimewith customersfocusedonimproving efficiencyfromtheirfacilities —to assistwithrisingcosts.Thisincludes buildingupgradestoimprove environmentalperformance,with initiativessuchasautomatedLED lightingandsolarenergysystems.
Ontheinvestmentsidewe remaincautiousaswearegoing through are-pricingperiodwith interestratesrising.Inoursector, however,strongrentalgrowthis largelyoff-settingtheexpansionof yieldsatthisstage.Wehave alow levelofdebtandwillremain cautiousinpricingnewopportunities, given high uncertainty both locallyandaroundtheworld.
JolieHodson
Strongdemand forlogisticsestate
Withoverhalfa millionbusinesses connectedtomillionsofthings, New Zealandhasthepotentialfor amoresustainableandproductivefuture, andSparkIoTcanhelpmakeithappen.
COULD NEWZEALAND LEADTHEWORLDIN
“Atthesametime,weareworking withourenergypartnerstoswitchto renewableenergy.”
MOODOFTHEBOARDROOM nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B11
risks,andworkingtohelpour suppliersandcustomersreducetheir emissions.”
Acceleratingclimateresponse
Sustainabilityhasnever been more important toNew Zealand,and Spark IoTtechnology couldhelp yourorganisationbecome moresustainable.
Rentshaverisenaround15per centthisyear,particularlyinstrong locationsclosetoconsumers. Factorsdrivingdemandarethe continuedriseindigitisationand e-commerce,desiretoholdgreater levelsofstockandcustomers buildingmoreresilienceintotheir supplychains.
Thereismoredemandthan supplyandwearebuilding arecord levelofnewdevelopmentswith workinprogressinexcessof$400 million —wewouldtypicallybe $100m-$150m.
echnologyadoptionleapt forwardbyfiveyearsinthe firsttwoyearsofthepandemicasemployeesand studentsweresenthometoworkand study.
andthetoolstomakebetteruseof electricity.Thereare awholerange ofopportunitiesopeninginthese areas.”
AtSpark,thechallengeisthat80 percentofthecompany’semissions arerelatedtoelectricity.Hodsonsays therearegainstobemadefrom decommissioninglegacytechnology. Thecompanyisclosingtheoldpublic switchedtelephonenetwork:“There’s amassiveamountofequipmentand energyusetiedupinthat.
Shesays:“It’s agroupofmorethan 100privateenterprisebusinesses. Ourmembershipaccountsfor around60percentofNewZealand’s emissionsandabout38percentof GDP.Collectivelyweemploymore than220,000people.Wehavecome together,andweworktomakean impact.Ourmembersmustcommit to ascience-basedapproachtoreducingemissions,talkingaboutclimate
Whiletheseconvergedtechnologiesimproveefficiencyandbusinessdecisionmaking,theycanmake apracticaldifferencetosustainability andenvironmentalprojects.
CONNECTINGNEW ZEALANDERS TO THETHINGS THAT MATTER
Hodsonsaysabouthalfthe revenueSparkmadefromitsIoT businessinthelastyearisdirectly relatedtosustainability.Thereare watermanagementsystemsandprojectsforcouncilstomonitorwater quality.MercuryEnergyusesIoTto watchthewaterflowaroundhydro powerstationsandcheckwhatis happeninginthecatchmentareas.
SparkCEOJolieHodsonsaysthe focusnowistoleveragethisdigital accelerationtomakebusinesses moreefficientastheyfacenewchallenges,andspeedupthedecarbonisationofNewZealand’seconomy.
SUSTAINABILITY?
Sparktookanownershipposition inAdroit, aNewZealand-basedIoT consultancythatspecialisesinwater monitoring.Hodsonsays:“Wecansee thereis agrowthopportunity,andwe areworking alotwithAdroit.Weare alsoworkingwithVectorlookingat nextgenerationelectricitymetres
ChrisQuin
Doyouhaveconfidencein GrantRobertson’smanagement oftheeconomy?
termproductiveeconomicplanfor NewZealand.Theyhave adifferent agenda.”
“AnyFinanceMinistercanspend butcanheandtheGovernmentpivot awayfromsugarcandyeconomics andspendlesstocurbinflationand startfocusingonkeysupplyside initiativestosupportgrowth?
DonBraid
“Beyondthat,theMinistershould focusonstrengtheningpublicsector decision-makingframeworksto achievetwothings:Reducewasteful spendingbygovernment,andavoid imposingunnecessarycostsonthe productivesector.”
RogerPartridge,chairmanofThe NewZealandInitiative,said“with highunemploymentandrisinginflation, IwouldliketoseetheMinister ofFinancereininpublicspendingto supporttheReserveBank’spolicyof restraininginflation.
hecountry’schiefexecutivesandchairsarenotimpressedbytheFinanceMinisterandGovernment’s wastefulspending.
Partridgesaidtopofthelistwas theGovernment’sFairPayAgreementproposals.Itshouldliberalise restrictionsonforeigndirectinvestmenttoenablefirmstoaccessthe capitaltheyneedtoliftproductivity.
46% NO 38% YES 16% UNSURE
“IwouldliketohearMinister Robertsonstateunequivocallythat
Thecurrentaccountdeficitwid-
Abuildingchiefexecutivesaid overallRobertson’sapproachwas okaybut“Iamconcernedaboutlarge andincreasinggovernmentoverheadsthataddstoinefficiency.”
enedto$8.5billionintheMarch2022 quarter,from$6.6billioninDecember,withthevalueofimportedgoods rising$871millionandservices exportsfalling$831m.
DonBraid,groupmanagingdirectorofMainfreight,saidRobertson’s starwaswaning.Hesays:“Atleast produce aplanthathassomeconsultationwithbusiness.”
T
Reducedebtandensureallocation ofmoniestoareasthatcanassistwith therecoveryandgrowthoftheeconomy,saidFranzMascarenhas,managingdirectorofCordisAuckland.
Workingfamiliesandbeneficiaries whopayincreasedrentsarenow mostlyworseofforbarelytreading watersinceinthefirstlockdownsin March2020.Foodbanksareseeing recorddemandandthewaitinglist forpublichousinghasrisen65per centto24,475sincethebeginningof Covid,treblinginthepastthreeyears.
GrantRobertson, ahigh-ratingMinisterofFinanceinpreviousMoodof theBoardroomsurveys,hassome worktodotorecapturethehearts andmindsofmanyleadingNew Zealandbusinesspeople.Askedif theyhadconfidenceinRobertson’s managementoftheeconomy,46per centoftherespondentssaidthey haven’t,38percentsaidtheyhave and16percentwereunsure.
AbankingchairmansaidRobertsonshouldhavedialledbackhis fiscalstimulusastheeconomy emergedfromCovid.Onthelongtermplan,hesuggestedRobertson shouldhaveremovedbarrierstoincomingforeigninvestmentfrom OECDcountries,fixedtheResource ManagementActtomakeiteasier andfastertogetconsentstobuild,
Aprofessionaldirectorsummed upthefeelingsoftheleaders.Shedid haveconfidenceinRobertsonbutnot nowbecauseofwastefulexpenditure.“Ourinvestmentneedstobein mattersthatwillliftourproductivity —openborders,education,health andsupporting adigitaleconomy,” shesaid.
AnairportexecutivesaidNew Zealandwasfallingbehindinreal wages,competitivenessandperformance.“Handouts,evengoodones, aren’tstructuralreformthatdeals withrealissues.It’s asugarhiton thosemostvulnerablelongterm.”
“Weneedtobeaskingsomehard questionsaboutthelabourmarket andwherealltheworkershavegone.”
CraigStobo,professionaldirector andchairmanofPrecinctProperties, said“Iusedtohaveconfidence(in Robertson)butinstitutionaldecay andmiserableexecutionhasshaken me.Covidcorporatewelfare,the$350 costoflivingspray,theGSTon managedfundsreversalandproposedincomeinsuranceschemepoint topolitical-pollingdrivingpolicy.
productivityistheprimarydriverof risinglivingstandardsforKiwis.”
andscraptheFairPaynonsense.
ChrisQuin,CEOofFoodstuffs NorthIsland,wantstaxreducedat lowerincomelevelstosupportcost oflivingwithoutinflation.Simon Bennett,chairofAccordantGroup, wantsprogressivechangeinemploymentrelationsratherthanbackwardlookingcollectivebargaining.
Robertson’sstarlosingitsshine
Oureconomyisholdingupwell, cushionedsofarfromtheenergy crisisbutthereis acostoflivingissue andalsoconcernsof arecession aroundtheworld.Unemploymentis lowat3.3percent,secondquarter grossdomesticproductgrew1.7per centforannualgrowthof 1percent attheendofJune,andinflationisat a32-yearhighof7.3percent.
ChrisTaylor,generalmanagerat SleepyheadandNZComfortGroup, urgedRobertsontostopwastingtaxpayers’moneyoneveryitemofthe HePuapua agenda.“Idon’tbelievehe ortheGovernmenthasshownany genuineinterestincreating along-
Moodofthe Boardroom Graham Skellern
HeaskstheGovernmenttopullthe obviouslevers —getimmigration going;leverageprivatesectortodrive someoftheiragendasratherthan tryingtobuild abiggerandmore cumbersomegovernmentmachine; andnotbesoexpansivewithpolicy ambitions,insteadbefocusedand crispinsolvingthekeyissues.
EconomistCameronBagriesaid the2023BudgetwoulddefineRobertson’smanagementoftheeconomy.
Businessleadersarecallingfor RobertsonandtheGovernmentto reducepublicspendingandproduce along-termeconomicplanthatincreasesproductivity.
Long-termplan
ChiefexecutiveshadothersuggestionsforRobertsonindevelopinga long-termeconomicplan.
©2022.Forinformation,contactDeloitteToucheTohmatsuLimited. Connectwithusatdeloitte.co.nz Obstacles Challenge Innovate Deliver Opportunities Don’tlimit your challenges. Challengeyourlimits. In atimeofexponentialchange,we’ll help youinnovate, transformand succeed,nomatterwhatliesahead. B12 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM
TheCovid-19ResponseandRecoveryFund,establishedinApril2002, wasclosedat$61.6billion,witha remainingbalanceof$3.2b.
AndreaScown,chiefexecutiveof Mitre10,said“ifaninvestmentwon’t drivevalue,thenre-thinkit.There shouldbe afocusininvestingin productivityimprovement.”
● Progressoninternationaltrade agreements3.16/5
Irrespectiveofthepersonalratings CEOsaccordedindividualMinisters, theyratedtheGovernment’sperformancehighlyinseveralareas.
Ardern’sfocusonmaintaining stronginternationalrelationships throughCovidcomesthrough;the offshoremissionsshehasledthis yeartoAsia(SingaporeandJapan), theUSandAustraliaarepartofthat.
“Feelslikeitneeds amajorre-set withbetterstakeholderbuy-infrom theget-go,andprobably anewname.
“While acaseforamalgamating somewatercompaniesmayexist,the ThreeWatersreformsare agood exampleofwhatiswrongwiththe Government’sapproachtopolicymaking.
Thisisreflectedinthelowscore of1.57/5theygavetotheGovernment foritspolicyplanningandconsultationwithbusiness.
● Maintainingstronginternationalrelationships3.32/5
● SupportingMa¯oriandPasifika aspiration.3.49/5
“Immigration: Ithinkeventshave racedwayaheadofpolicyinthis sphere.Thepolicybeingimplementedisdesignedfor aclosedborder economywhereunemploymentis10 percent,notaninflation-strainedone withdesperateskillsandlabour shortages.FollowAustralia’slead— sliptheleashandkeepaneyeonthe impacts.”
“Withoutchangingtheincentives, centralisationriskscompounding alreadypoordeliverybycreatinga bureaucraticmonopoly.
“Finally,theevidenceisclearthat socialunemploymentinsurance schemesleadtohigherunemploymentandadverseeffectsonoverall wellbeing.
ThemajorstarofthecurrentGovernmentisClimateChangeMinister JamesShawwhositsas aMinister outsideCabinet.CEOsratedhisperformanceat3.27/5.
Herearesomerepresentative views:
“Shawisinthewrongparty.He understandsclimatechangepolicy betterthananyone,buttheGreens aremoreinterestedinsocialissues,” said atopchair.
Thisreflectsthefocusofthe LabourGovernment —whichhasa strongMaoricaucus —indelivering toMaoriafteryearsofdeprivation.
Addressingclimatechangechallengesisalsoanareawhichthesenior businesscommunityishighly investedinandcanseeprogress. competencywhichsitsquarely underRobertson’sbriefweremarked
“Ithinkthey’vechosenwellinRob CampbellasChairofHealthNZand Ithinkit’stherightreform —the duplicationandsilosinvolvedinall thoseDHBs,nottoforgetthegovernancestructure,haslongbeennuts. GenerallytheworkplantheGovernmenthasisimpressiveandambitious initsscale; Ithinkthoughthatthe numberofunforcederrors(GSTon KiwiSaverfees,anyone?)demonstratesthatthetalentisspreadtoo thintomanageiteffectively.
nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B13 Howthe Executive fared ThelistincludesCabinet MinistersandMinstersoutside CabinetrankedbyCEOs 1. JamesShaw(Climatechange) 3.27/5 2. GrantRobertson(Finance) 2.98/5 3. ChrisHipkins(Education) 2.95/5 4. DamienO’Connor(Trade) 2.92/5 5. KiriAllan(Justice)2.83/5 6. AyeshaVerrall(Covid-19 response)2.49/5 7. StuartNash(Tourism)2.43/5 8. MeganWoodsEnergy2.42 9. PeeniHenare(Defence)2/39/5 10. AndrewLittle(Health)2.37/5 11. JanTinetti(InternalAffairs) 2.34/5 12. JacindaArdern(PM,National Security &Intelligence)2.30/5 13. KieranMcAnulty (EmergencyManagement) 2.25/5 14. MichaelWood(Immigration) 2.19/5 15. CarmelSepuloni(SocialDev &Employment)2.13/5 16.AupitoSio(PacificPeoples) 2.12/5 17. MekaWhaitiri(Customs) 2.03/5 18. DavidParker(Environment) 2.00/5 19. PriyancaRadhaskrishnan (Ethniccommunities)2.00/5 20. DavidClark(Commerce& ConsumerAffairs)1.96/5 21. MaramaDavidson (Preventionfamilyviolence) 1.94/5 22. NanaiaMahuta(Foreign Affairs)1.93/5 23. WillieJackson (Broadcasting)1.89/5 24. PhilTwyford(Disarmament) 1.78/5 25. KelvinDavis(MaoriCrown relations)1.66/5 26. PotoWilliamsConservation 1.62/5
● Addressingclimatechange challenges2.71/5
MOODOFTHEBOARDROOM
PropertyCEO:“ThreeWaters reformsareessential —wesimply can’tkeeppumpingthepoointothe sea,andlocalauthoritiesneverlike tospendoninvisibleinfrastructure eveniftheircommunitiescanafford whattheyneed.Butitfeelslikethis reformisstuckin aquagmireofpoor communication,aidedandabetted by ahealthydashofracismand conspiracytheories.
rimeMinisterJacinda Ardernhasbeencatapulted rightoutoftheCabinet“top 10”inthe Herald’s2022CEOs survey.Inthisyear’sMoodofthe Boardroom,Arderncomesinat12th place —at2.3/5 —herlowestranking inthissurvey.
Thatsaid,some 7percentof surveyrespondentsmarkedhisperformanceas“veryimpressive”at5/5 with afurther30percentat4/5.
Theywere:
Whatwasmarkeddown? SomekeyareasofGovernment
Frustrationwith the Governmentrises
NZInitiative’sRogerPartridge: “TheGovernmenthasseen‘centralisation’as auniversalsolutiontothe deliveryofpublicservicesunder pressure.Butthecaseforcentralisation(forexampleinhealth,polytechnics,RMAconsenting)hasnot beenmadeout.What’smostimportantaretheincentivesandaccountabilitymechanismsfacedbyservice providers.
TradeMinisterDamienO’Connor’s successfulcompletionoftheRCEP (Asianregionaltradeagreement),the NZ-UKfreetradeagreementandthe signingoftheEuropeanfreetrade dealhasbeen asuccess.
PMhasdroppedtolowestrankingsofar,writes Fran O’Sullivan
Robertsonisthe“go-to”Ministerfor business.Butthroughoutthe2022 surveyitisapparentCEOsanddirectors’frustrationindealingwitha Governmentperceivedasfailingto connecthasgrownmarkedly.
Thiscompareswithherprior ratingsin2021(3.03/5);2020(3.91/5offthebackofftheCovidresponse); 2019(2.9/5)and2018(3/5).
“Thebiggestproblemwithcouncil ownershipofwaterassetsisthat constraintsontheprovisionofnew (orupgraded)waterinfrastructure constrainstheavailabilityoflandfor housing.Thiscontributestothehousingaffordabilitycrisis.Withoutnecessaryincentives,centralisationof(effective)ownershipofwaterassets willnotsolvethatproblem.
intoonenationalorganisation,the ThreeWatersconsolidationintoone nationalorganisation,theincreased roleforMaoriinthegovernanceof NZinstitutions(co-governance)and theproposedsocialinsurance scheme(unemploymentandhealth.)
● Maintaininganindependent foreignpolicy3.01/5
ImportantlyfortheLabourGovernment,whichfaces ageneralelectionin2023,some24percentofCEOs regardherperformanceasPMas“not impressive”,at1/5on ascalewhere 1equals“notimpressive”and 5equals “veryimpressive”. Afurther35per centratedherperformanceat2/5and 31percentratedherat2/5.Just 1per centthoughtherperformancewas “veryimpressive”.
“Withoneortwonotableexceptions(theHousingportfoliobeing one)consultationandengagement withbusinessappearstohavegone bythewayside.That’sdisappointing, andpotentiallyfataltoambition.”
“Thepolicyisnotsimply agood ideaatthewrongtime.Itis abadidea attheworstpossibletime.
ImportantlyforLabour,Finance MinisterGrantRobertson(whohas beenreplacedastopCabinetperformerthisyearbyClimateChange MinisterJamesShaw),comesinat 2.98/5.Butitis acontinuedslump fromhispeakinthissurveyof4.18/5 in2020 —wherehewasrankedfirst amongtheCabinetoffthebackofhis initialfiscalmanagementofCovid.
CabinetKPIs CabinetMinisters andMinisters outsidecabinet ranked by CEOs: 2.98 Grant Robertson Finance Herald Moodof theBoardroom CEOsSurvey Not impressive Very impressive1 5 Herald Moodof theBoardroom CEOsSurvey 2022 +0.21onlasty 3.27 James Shaw Climatechange –0.7 2.37 Andr Little Health 2.49 Ayesha Verrall Covid-19res 2.39 Peeni Hena Defence 2.92 2.83 Kiri Allan Justice 2.43 Stuart Nash Tourism 2.42 Megan Woods Energy 2.95 1 2 3 4 5 6 7 8 9 10
P
down.Amongthemwere ● Maintainingfiscalresponsibility 2.14/5; ● Addressingtheinfrastructure deficit1.88/5 ● Executionanddeliveryofpolicies1.63/5 ● Transformingtheeconomy 1.56/5 ● Policyplanningandconsultationwithbusiness1.57/5 Otherratingswere:regionaldevelopment2.62/5;implementing sensibleCovidpolicies2.28/5;taking mentalhealthseriously2.27/5;addressingthehousingshortage1.81/5; improvingchildren’swellbeing1.80/5; addressingtransportconstraints 1.80/5;andimmigration1.36/5. Typicalcomments:“Lotsoftalkon policybutlittleactualimpact —quite oftengluggingthingsup,”froman infrastructureCEO.“Alsohavedriven upgovernmentoverheadsdramatically.So,arguablycentralgovernment hasgotmoreexpensiveandless effective.” Majorreforms ThesurveyalsoaskedCEOstofocus onsomemajorareasofGovernment reform:amongthemimmigration,the RMA,increasedtechnology(includinggreentechinvestment),freshwaterrules,centralisationofDHBs
ImplementingHealthsystem reforms:“Thejuryisbarelybeing assembled,muchlessbeingsentout toconsidertheevidence;butTe WhatuOracouldbevery,veryimportant.
PartridgeadvisesNationallookto “ceasecostlyandineffectiveclimate changeregulationsandsubsidies operatingoutsidetheemissions tradingscheme(ETS)andredirect revenuesfromETStolower-income householdstoassistthemtomeetthe costsofclimatepolicies.”
“Thefactthatheisnot acareer politicianis arealpositive.”
“Hehashad afewstumbles —heneedstoeliminate these,”says afinanceexecutive.
Helaterclarifiedhewouldn’tgetridofanypublic holidaysifhewonthe2023election.
“HeisnotJohnKey.”
monthsisimpressiveinitself,”says PrecinctPropertychairCraigStobo.
Inthe2022MoodoftheBoardroomCEOssurvey,respondentswere askedtorateLuxon’sperformanceas Oppositionleader,byholdingthe Governmenttoaccountoncritical nationalissues,on ascalewhere1= notimpressiveand5=veryimpressive.
PUBLISHINGCALENDAR FORTHEBUSINESS REPORTSERIES2022: BUSINESS REPORTS
Alreadysome55percentofsurveyrespondentsbelieveheisstarting tocarveout astrongbrandfor National.
These reports arepremier,business-to-business publicationsprovidingcriticalsector insights alongside robustinformed contentand commentaryaboutissuesthatmatter to NZbusinesses. The reports canvastheviews of CabinetMinisters,business leaders,and business organisationchiefs.
DeloittechairThomasPippos adds:“In arelativelyshortperiodof timehehassoughttounifythe caucus,build afollowingandpositivelydifferentiatethemselvesfrom theGovernment.
“Reducetheregulatoryburdenon businessthrough acombinationof RMAreform,liberalisingoverseas investment,andundoinglabour marketreforms —fairpayagreements
Anindependentdirectornotesit willbeimportantthattheparty movesforwardin aprogressiveway toreflecttheexpectationsof amajor-
OneCEOwantstoseeNational reviseimmigrationsettingsin away thatis“directedsquarelyatpressure pointsintheeconomy —health, construction,services”.
thepartyshouldbalanceitsreputationforprudenteconomicmanagementwith aclearplanforhow Aotearoa’sgrowthandeconomic progresswillbeshared,“andhowwe willimprovesocialandenvironmental outcomesforthenextgeneration”. AmediabosssuggestsNational closelyre-examinetheideasformer PMJimBolgerfloatedaboutreimaginingcapitalism,and“BillEnglish’s socialinvestmentideasshouldbe pursuedandembeddedinpolicy.”
“Hehasensuredthatvoterssee Nationalas acredibleoption,”says RedShieldCEOFabianPartigliani.
interviews
The aredistributedwithintheHeraldandthe editorial content is carriedonlineat nzherald.co.nz/business.
BagrieEconomics’CameronBagrie observesthatNationalhasimproved off alowbaseat atimetheGovernmenthaswalkedintosomeeconomicreality.
envyoftheworld,”;and“Gohardon education —educationtodaydefines theeconomyin20years,”says CameronBagrie.“Weareinserious troublebasedoneducation achievementtoday.”
WhilemanyCEOswanttoseetax reform,taxcuts,andanendtothe bright-linetest,otherswouldpreferto seeNationalfocusmoreonsocialand environmentalinvestment.
Reducetheregulatoryburden Businessleaderssayitisimperative theincreasingregulatoryburdenis
Luxonhasalsobeenheavilycriticisedformaking disparagingclaimsoffshoreaboutNZ,includingtalking downthebusinesssector.Hetoldtheconservative PolicyExchangethinktankinLondon,that“businesses aregettingsoftandlookingtotheGovernmentforall theiranswers”.
Thissitsalongside expertcommentaryfromrespectedthought-leadersthrough andin-deptharticleswritten by theHeraldBusiness Reports team.
Inthe SydneyMorningHerald,hewasquotedas saying“NZhasbecomefearful,inwardandnegative as aresultofitsCovidsettings”.
“Thereseemstobeunityinthe partyafter alongperiodandhis
“Economically,NewZealandisdevoidofrealleadershipacrossthe entirepoliticalspectrum.
Theheadof atopinvestmentfirm advises:“Heneedstoshakethe Christian-rightreputation.”
Economicmanagement
Anothercallsforroadblockstobe freedupto“allowmorelabourto enterNewZealandin africtionless wayandthecountrytobemore attractive”.
Whenbecomingleader,Luxon promised anewerafortheNational party.“Wearethereset,”hepromised. “Muchhasbeenmadeofmyrelative newnesstoParliament,buttobe honest Iseeitasanadvantage. “Ibring afreshsetofeyes,andwhat Iseeisthatthisplaceandthiscountry needs arealshake-up.”
“Idesperatelywanttoseesome evidencethatNationalisdeveloping policiesaswellasslogansand soundbites,” apropertybosssays.
“Itis aglobalproblemwherepopulismisdrivingpolicy.Wedonothave realbenchstrengthacrosstheentire politicalspectrum —wehavesome talent,butnotthebenchstrength.”
ACEOintheenergysectorsuggestshe“hasn’thadanywinsandis stillanamateurpolitician”,whilean environmentalservicesCEOharks backtoNational’sheyday.
InhisrelativelyshorttimeasNational’sleader,Luxon hasmade arunofgaffesandbeenforcedtowalkback claimsonvariouspositions.Herepeatedlysaidthe Governmentshouldconsideraxing apublicholidayto payforthecostofMatariki —LabourDay.
Hereceived ascoreof3.24/5; 6per centofrespondentsgaveLuxona “veryimpressive”score.Themajority (70percent)ratedhimat 3or4/5.
CEOsarequicktopointout Luxon’sgreennessinpoliticshas sometimesheldthepartybackfrom wheretheythinkitshouldbe.
ChristopherLuxonhasbeeninthetopjobforlessthan
reports
Manysurveyrespondentsagree Luxonhasprovidedtheresetthe partydesperatelyneededafterbeing plaguedbybadpollingandinternal ructionssincethepandemic.
PlentyofroomfornewpoliciesfromNational,sayCEOs focusoneducation,withseveral notingitisthe“thekeytoprosperity”.
Theheadof atelecomsfirmsays
ayear,buthasunified awarringcaucusandmade astartin carvingout astrongerbrandfor apartythatnowhas agoodchanceinthe2023election,reports TimMcCready
Hewasforcedtoadmititwas amistaketosuggest onsocialmediathathewasvisitingTePukeduring recesswhenhewasholidayinginHawaii.Andthere wastheunfortunateuseoftheterm“bottom-feeders” in aradiointerview,todescribepeoplewhohavenot donesowellinsociety.
“BeingtheOppositionshouldbe aboutholdingtoaccountandoffering analternative.It’snotjustaboutopposingeverything,”saysanotherCEO.
“Onegetstheimpressionhedoesn’tunderstandthe ordinarypersonorthestruggleforsmallerbusinesses,” suggests awineindustryexecutive.
TheNewZealandInitiativechair RogerPartridge,wantstoseeNew Zealand“returnourstateschooling systemto astandardwhereitisthe
“Itcouldeasilybeforgottenwhere Nationalwasbeforehetookthereins —itwasanabsoluteshambles,”said amediaboss.
ityofNewZealandersasthepopulationdemographicschange.
MOOD OF THE BOARDROOM isoneof aseriesofeightpremier Business Reports publishedannuallyintheNewZealandHerald.
“Forgetthetaxcuts —giveNew Zealandaneconomicplanthathas merit,”saysBagrie.
Luxonbreathesnewlifeintotheparty
“Thosegenerationsarepassionate aboutendingracism,purposefullivingandsolvingclimatechallenges andtheNationalpartyneedstoadjust itselftoreflect amodernandprogressivecommunity.”
N
Luxontookoverasleaderof Nationalafterjust ayearinParliamentwhenJudithCollinswas toppledamidpoorpollinganda chaoticmovetodemotepoliticalrival SimonBridges.Inlastyear’ssurvey herratingwas amere2.06/5.
policiesreflect amoremature business-likeoutlookwhichwillbe goodtostimulatetheeconomy,”says CordismanagingdirectorFranz Mascarenhas.
andsocialunemploymentinsurance.” Dialupimmigration Withmyriadsectorsandbusinesses facingunprecedentedskillsand workershortages,theyalsowantto seeNational“focusonimmigration”.
“Holdinghispartytogetherfor10
ButothersnotedwhileLuxonhas made asubstantialimprovement,it isoff alowbaseandis“bestdescribed as aworkinprogress”.
“Attimes,theNationalpartylooks likeitisseekingtoappealtothe ageingconservativepopulationand notGen-Yand Zthatarenowexerting theirdominance,”theysay.
woundback,andtherhetoricthat “governmentknowsbest”dropped. “Weneed amoratoriumonexcessive regulation,”says abankingexecutive.
Gaffesandstumbles
ationalpartyleaderChristopherLuxon, aformerchief executiveofAirNZandof UnileverCanada,bringsa businessfocustopolitics.MPsare measuredbyKPIsandNewZealand businessleaderssayhisfocuson disciplineisanimportantskillsetfor thecurrentenvironment.
—TimMcCready
Managed&edited by Fran O’Sullivan: fran.o’sullivan@nzme.co.nz 021986145 tim.d.wilson@nzme.co.nz 027405 1778 CommercialenquiriestoTim Wilson: *These reports arealignedwith eventsandthetimingwillbe reconfirmedwhenthereisclarityoneventschedulingin2022 Infrastructure2022 DynamicBusiness 2022 (Pt2) Tues 22 Nov* Fri9 Dec* CoincideswithInfrastructureNZConference CoincideswithDeloitteTop 200Awards MOODOFTHEBOARDROOM B14 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022
Luxon’srisecoincideswith atime whentheglossiscomingoffthe LabourGovernment.Recentopinion pollsshowNationalandLabourneck andneck.ThelatestTaxpayers’ Union-Curiapoll,releasedlastweek, hadNationalandActabletoforma government.Nationalwasup 3points onlastmonth’spollto37percentand Actup 1pointto12percent.
WhenaskedwhatpoliciesNational shouldconsiderinordertoprovide aclearchoiceatthenextelection, manyCEOssuggestNationalsticksto thecoreissuesthatelectionsareoften wonorloston —lawandorder, education,andhealth:“Sortoutram raids,”saysone.“Getthehealth systemcaughtuponpostponed surgeryduetoCovid,”fromanother. Therewas astrongcallformore
“Shehascometogripswiththe portfolioquicklyandhasanimpressivelevelofgravitasandcredibility arounditalready,”said afinance sectorchief.
WhatdistinguishesWillisfrom themaretwofactors:First,shehas thegoodfortunetobeshadowing FinanceMinisterGrantRobertson whileLabour’spoliticalfortunesare onthewaneandtheeconomyis understrongpressure.Second,she hadalreadyserved apoliticalapprenticeshipandisabletomountcutthroughonissues.
DebbieNgarewa-PackerandRawiri WaititibecameMPsatthe2020 election —threeyearsaftertheparty waslastrepresentedinParliament. Theyhavebeen abeen avocaland forcefulpresenceinParliament.
Williswaspartof aliberalfaction thatrolledSimonBridgestoinstall ToddMullerasleader.Mullerwas replacedbyCollinswhopromoted Willisto13thplace.
“Nicolawillneed agoodsupport teamaroundher —greatthatBill Englishishelpingher,”said awellplacedfemaledirector.“Nicolamay needtoreadyherselftobePM —she hastheabilitytowinsupportfrom moreNewZealanders.”
“DavidSeymourisanexemplary
● RepealThreeWaters,returning ownershiptocouncils
Amongtheproposedreversals:
● ReserveBankActchanges: GivingtheReserveBanktwotargets (pricestabilityandemployment) withonetool(theOfficialCashRate) wasillogical.
46% YES 44% NO 10 % UNSURE
DoesActprovide amore credibleoppositiontothe Governmentthanother parties?
Seymourreceivedthehighest scorefromCEOsamongminor politicalpartyleadersinthe Herald’s MoodoftheBoardroomsurvey, scoring4.08on ascalewhere1 equalsnotimpressiveand 5equals veryimpressive.
Inthe2022MoodoftheBoardroomsurvey,73percentofrespondentsagreedWillishaspresented herselfas acrediblefutureMinister ofFinance.Some21percentwere unsure;just 6percentsaidno.
CEOswereaskedtoratehowwell shehasconnectedwithbusiness. Theyscoredherat4.24/5on ascale where 1equalsnotimpressiveand5 equalsveryimpressive.Notably17 percentratedherat5/5with afurther 39percentat4/5and23percentat 3/5;18percentwereunsure.
MOODOFTHEBOARDROOM nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B15 HOWTHEMINORPARTYLEADERSRATED DAVIDSEYMOUR (Act)4.08/5 JAMESSHAW (Greens)3.22/5 DEBBIENGAREWA-PACKER (Ma¯oriParty)1.99/5 RAWIRIWAITITI (Ma¯oriParty)1.99/5 MARAMADAVIDSON (Greens)1.92/5 Act’sDavidSeymouristhestand-out minorpartyleader,accordingtothe 2022 Herald CEOssurvey. Some39percentofsurvey respondentsmarkedhispolitical performanceas aminorpartyleader as“veryimpressive”at5/5,on ascale where 1equals“notimpressive”and 5equals“veryimpressive”. Afurther 41percentgavehim a4/5rating. “DavidSeymouristheonlyparty politicalleaderwith apolicycompass,” saidPrecinctPropertieschairCraig Stobo, acommentechoedbyanoiland gaschiefexecutivewhosaid:“Acthas theonlyvoiceofchallenge.” TheActleaderhascontinuedtopoll wellfor aminorpartyleader,hitting 6.6percentintherecentTaxpayers’ Union-Curiapoll.
But acompanychaircautioned, “earlydays.Neverhad apropercommercialrolesohardtoknowifshe hastheexperience.Balancingthat, sheisdiligentand ahardworker.”
gasCEO,inreferencetohowShawwas bootedfromtheco-leader’sjobinJuly, afteratleast aquarterofdelegatesat theparty’sannualgeneralmeeting votedtoreopenthepositionfor nominations.
ButtherewerealsosignalsWillis hastobecarefultofollowthrough.
AutilitiesCEOsaysActwouldbe excellentinconcertwithNational, and“is arationalpartythatbelieves intheenlightenment,ratherthan one-eyedideology”.
“Potentially,be amorecredible leaderoftheNationalParty,”saida consultingfirmchair.“Acredible LTOR,inmyview,”saidanother.
“Wewon’tallowNationaltolazily rolloverLabour’spolicieslikeithas inGovernmentsgoneby,”hesaid.
Anarchitecturebosssuggests National’ssilencehasbeen deafening,whereasSeymour“says whatisbeingspokenatthedinner table.” ArealestateCEOconcurs:
icolaWillishasbeentipped as aNationalPrimeMinister inwaitingby anumberof CEOrespondentstothe Herald survey.
SaidMainfreightCEODonBraid: “Wegot avisitthreemonthsago. Nothingpostthemeeting.Itfeltlike aonce-over!”
WhenaskedifActprovides amore credibleoppositiontotheGovernmentthanotherparties,46percent respondedyes.
NicolaWillis
“JamesShawis arationalist;unfortunatelyhehaslostthebackingofhis partywhoareanythingbut”(oiland
● StopthePublicInterest JournalismFund.“At$55millionover twoyearsit’snotlargeenoughto helporhinderthemediaasmuch asmanysuspects.However,itis perniciousenoughtodestroyfaith andtrustinourinstitutions,”hesaid.
Additionalreporting:FranO’Sullivan
73% YES 21% UNSURE 6% NO
Greensco-leaderJamesShaw
N
AtechnologycompanyCEOsaid: “Goodstart.Butshehasthepotential 100percent.Chris(Luxon)needsto herohermoreorstandasidemore.”
researchandpolicyadvisorforSirBill EnglishinOppositionbeforegoingon tobecome asenioradvisortoPrime MinisterSirJohnKeyin2008.
Concluded an aviationCEO:“She iscriticaltoNational,especiallyif Luxondoesn’twinthenextelection.”
TheirreflectionsonWillis’leadershippotentialwereunprompted.
“Theyarestill abitfundamentalist andstrange,”writesanenvironmentalservicesproviderboss.
“Sheisarticulate,”saidPrecinct Properties’CraigStobo.Othersnoted she“workshardandissmartand verycredible,”“understandsbusiness,taxandfinance”,and,is“doing wellwiththeopportunitiespresented her” —severalsinglingouthowshe capitalisedontheLabour’sfauxpax ofputtingGSTonKiwiSaverfees.
Willishashad alengthycareerin politics.Ongraduationshebecamea
Shawwaslaterreturned.
FranO’Sullivan
SaidVectorchairJonathanMason, “Nicolahasthecombinationofbusinessandgovernmentbackground thatmakesher acrediblespokespersonforbusiness.”
Davidsondoesnothavethesame cut-throughwiththebusinesssector.
TheMa¯oriPartyco-leaders,who debutedforthefirsttimeinlastyear’s
● RepealtheZeroCarbonAct andassociatedutetaxandthe“Tesla subsidies”.Overturnthebanonoil andgasexploration
● Getridofhatespeechlaws(if introducedbeforetheelection)
● Scrapthe39ctaxrateand simplifyto atwo-ratetaxsystem
SaidtheCEOof amajorprofessionalfirm,“inthelastfewmonths manypeoplehavecommentedon howNicolaisimpressiveacrossa rangeofforumsandaudiences—a futureleaderandPM.”
In2012,shejoinedFonterra,taking onseniormanagementroles,aswell asservingontheboardofExportNZ. Shelaterstoodunsuccessfullyfor NationalinWellingtonCentral,but cameintoParliamentonthelistin March2018.
Says apartnerataninvestment firm:“Actis agreatgingergroup,but notcredibleinthesenseofever beingincharge.”
Oppositionpolitician,”saysone economist.“Hecombinespolitical convictionswithanunderstandingof policydevelopment,andcompared toChristopherLuxon —anddespite Luxon’sbusinesspedigree— Seymouristhefarmoreexperienced politicalleader.”
continuestoimpressbusinessleaders whorankedhimfirstthisyearintheir
tohispotential chops asfinance minister;35percentsaidno,andjust 18percentyes.Inthe2020survey, 53percentofrespondentssaidGoldsmithwas acrediblefuturefinance minister;22percentsaidno.
Shebecamedeputyleaderto LuxononNovember30,2021.Luxon appointedWillisasfinance spokespersonafterBridgesannouncedhisretirementthisyear.Willishas recentlybeenmaking aseriesof boardroompresentationsand speechestothebusinesscommunity.
● Actwouldbringback90-day trials,threestrikesandcharter schools.
“ApartfromJamesShaw,wehave nothadmuchvisibilityoftheothers,” noted adirector.
Seymourleads a10-strongteam inParliamentnotedforitsdiscipline andcohesiveness.Attheirannual conferenceinJuly,hereleaseda “laundrylistofreversals”whichthe partywouldstrivetoachieveinthe first100daysof anewGovernment whichincludedAct.
“Seymourinparticularseemsto befastoffthemarkingettingpress statements out —and those are typicallywell-argued,”saysa bankingleader.“Hehandlespress briefingswithparticularskill.Heis effectiveintheHouseandhas policieswithwhich Iamin agreement.”
“Atleasttheyaregettingoutinto thebusinessestoseehowbusiness lostconfidenceinthelockdown(in Auckland),”said arealestateboss.
AfuturePrime Ministerinwaiting?
ratingsofCabinetMinisters(and MinistersoutsideCabinet)onministerialperformancesoverthepastyear.
ButsomeCEOsnoteActistoo reliantonitsleader,lacksdepth,and isveryissue-specific.
IsNicolaWillis acrediblefuture MinisterofFinance?
Actpassesthe credibilitytest
TimMcCready
● Mortgageinterest deductibility,thebright-linetest,and ResidentialTenanciesActchanges wouldgo
Afurther44percentsaidno,and 10percentwereunsure.
Some12percentratedhisperforaminorpartyleaderas“very impressive”,trumpingthe 1percent whoratedGreensco-leaderMarama Davidsonas“veryimpressive”.
manceas
CEOssurvey,haveheldtheirground withthebusinesssector.
“ActisleavingNationalinthedust intermsofprovidinggenuine Oppositionwithalternatives.”
● RepealtheMa¯oriHealth Authority
Shehasheldtheshadowfinance portfoliosinceMarch15,andswiftly capitalisedonthe“costofliving crisis”.Willisalsoacknowledged havingreachedouttoformerNationalfinanceministersasmentors.
CEOsareimpressedwiththeAct Party,inparticularwithActleader DavidSeymourandhisabilityto tackletopicsthatotherparties deflectawayfrom.
Willis’sgrowingcredibility is abig turnaroundfromtheperformancesof herimmediatepredecessors:former investmentbankerAndrewBayly andformerCabinetMinisterPaul Goldsmith.Bayly,awardedtheroleof National’sshadowtreasurerbyformerleaderJudithCollinsfollowing the2020election,failedtocement himselfwithnearlyhalf —47percent —ofrespondentsin2021unsureas
● Getridofso-calledFairPay Agreements
“Thewinterseasonisalmostback
It’snot asurprisethattourismalignedCEOsinthe Herald’s2020 and2021MoodoftheBoardroom surveysweremorepessimistic aboutthebusinesssituationin theirindustrythantheyarenow.
“Wewanttotapintothecuriosity ofourtargethigh-qualitytraveller, whoweknowareadventurousand keentodigbeneaththesurfaceofthe placestheyvisit,whetheronthe beatenpathornot.”
Inthe2022CEOsSurvey,the CEOsofthesecompaniesare markedlymoreupbeataboutthe sector’sprospects.
“Backpackersarequalityvisitors. Theystayforlongerperiods,are likelytotravelthelengthandbreadth ofthecountryandtheygooffthe beatenpath.Indianholidaymakers liketotravelinNovemberandApril andtheybringqualitytothesector outsideofthepeakseason.It’s amix ofaudiencethatmakeupthehighqualitytourismsector.”
DeMonchysaystherearetwo buzzwords— meaningfultraveland transformativetravel —tomeetconsumerdesiresastheycomeoutof theCovidpandemic.“They’vebeen
TheIfYouSeekcampaign,being advertiseddigitallyandontelevision inkeyvisitormarkets,teasesaudienceswithsnippetsonwhatison offerandinvitethemtotakethetime toseekmorefromtheirvisit.
Thecampaignfeatures aseriesof short,artisticvideosshowing destinations,MaoricultureandactivitiessuchasvisitingTaneMahutain Northland,Hell’sGatenearRotorua, GreatTasteTrailinNelsonandthe HookerValleynearAorakiMtCook.
Thevideosinevitablyfinishwith aquestionorunsolved“mystery” withtheinvitationtocomeandfind theanswer.Forinstance:“Kina.What doesthisNewZealanddelicacyactuallytastelike?Well,comefindone.”
Butannualvisitorarrivalswere backtoabout480,000inAugustthis year,manyofthemvisitingfriends andfamilybutholidaymakerspicked up —particularlyAustraliansheading fortheQueenstownskifields.
MOODOFTHEBOARDROOM
DeMonchysaysthecampaign doesn’tgivethegameawayto consumers.Itissneak-peeksofsome well-knowndestinationsandplaces andexperiencesthataren’tasrecognisable.
hetourismrebuildisunder wayandgatheringpace.The industryisenticingtheinternationalvisitorsbackwitha bitofteaseand adollopofKiwidownto-earthfriendliness.
3.88m,fallingto52,665intheyearto Marchlastyear.
rket,writes Graham Skellern We’vetaken abold andcreative approachin destination marketingtoshow updifferentlythan othercountriesand cutthroughthe competitivespace. RenedeMonchyRenedeMonchy,TourismNewZealandchiefexecutive,hasspentthepandemicpromotingdomestictourism.Nowit istimetoenticebacktheinternationalvisitors. Photo/DeanPurcell Wewillcontinueto promoteNew Zealandisopenfor business.Not everyonethinkswe are.Weintendto drivetheeastcoast
“Weintentionallytalkabouthighqualityvisitorsbutwearenotjust goingafterthewealthypeople.It’sa deeperinsightthanthat.Spendingby visitorsisjustoneofthemetrics.We lookatthescopeofactivities,what timeoftheyeartheycome,andtheir environmentalconsciousness.
FranzMascarenhas,CordisAuck-
GregForan
Thelatestski seasonin Queenston hasgot offto acracking start.Thewinter seasonisalmost backtowhatitwas pre-Covid. GlenSowry
ewglobalcampaignwillensureNew
TourismNZalsoformed ajoint venturewithAirNewZealandwhich beganitsdirectflighttoNewYorkon September17.Theyarepromotingthe IfYouSeekcampaigninNewYork State,andmaking aspecialofferfor flightstoAucklandinthelowand shoulderseasons,withtheoptionto add avisittoanyoneofAirNZ’s20 domesticdestinations.
Industryexpertsincludingde Monchyacceptitwouldtakeatleast threeyearstoreturntothepre-Covid glorydayswhenthetourismsector becamethecountry’sNo 1export
earnerwithearningsof$17.5billion or$48millionperday –andthat’sstill lessthan 1percentoftheglobalvalue.
InMarch2021internationaltourismexpenditureinNewZealandwas down91.5percentto$1.5b.
Pre-Covid,TourismwasNew Zealand’sNo 1exportearnerwith annualearningsof$17.5billionor $48millionperday —that’sstill lessthan 1percentoftheglobal valueofthesector.ButbyMarch 2021,internationaltourism expenditureinNewZealandwas down91.5percentto$1.5b.
Teasingtouristsback
“Wehavethefacilities,infrastructureandnaturalbeautytosatisfytherequisitedemand.Whilethe benefitsofhigh-valuevisitorsare obvious,touristssuchasbackpackers areequallyimportant —nottomentiontheycompriseasignificant amountoftheworkforceforthe tourismbusinesseswhicharefacing significantlabourshortages,”hesays.
InQueenstown,it’salreadyhappening.GlenSowry,chiefexecutiveof QueenstownAirport,saystheski seasonhasgotoffto acrackingstart.
“We’vetaken aboldandcreative approachindestinationmarketingto showupdifferentlythanother countriesandtocutthroughthe competitivespaceforinternational visitors.
Publiclylisted,Auckland AirportandAirNewZealand— whichsawtheirearnings plummetasborderclosures wipedouttheinternationaltravel thatunderpinsthetourism business —mountedsuccessful capitalraisings;TourismHoldings soldassets.
DeMonchysaystheremaybe somemisinterpretationabouthighqualityandhigh-valuevisitors.
“Wearecomingoff azerobase(of internationalvisitors)andthat’sa funnyplacetobein.”
B16 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022
After atwo-yearCovidhiatus,the country’stourismagencyhasbacked uptherenowned100%PureNew Zealandbrandwiththelaunchofa newglobalcampaign:“IfYouSeek”.
landmanagingdirector,sayschoosingonevisitoroveranotherisnota recipeforsuccessandNewZealand needsallsegmentsofthebusiness.
“Theywanttoengagewithour cultureandpeople,andinteractwith ourenvironmentin arespectfulway. Wearesuperwell-placedforthat,”de Monchysays.
OverthepasttwomonthsTourism NZhasledthreetourismmissionsto LosAngeles,LondonandSingapore involvingnearly200tourismoperators,andconcentratingoninbound travelagents.
T
Theinternationalvisitorsare returning.StatsNZreportedthatfor thefirstmonthsinceMarch2020(the startoftheCovidpandemic),overseasvisitorarrivalsexceeded 100,000 —tobeexact134,200,coincidingwiththeschoolholidaysin NewZealandandAustralia.Thisis justoverhalfofthe255,600visitors inJuly2019.InApril2020,therewere just1734internationalarrivals comparedwith528,255inDecember 2019.Annualarrivalstillthenwere
Theairlinesandcruiseshipsarereturning,and Zealandagainprospersinthecompetitiv USmarkethard.
“Weareverydrivenbyresearch andinsightstounderstandwhatour individualvisitorswantandwhatwe needtodoforourdestination.Wecan thenmakeinterventionsthatmove theneedle,”saysdeMonchy.
Government takenote
Retail,accommodationandtransportsurprisinglymadeup1.1percent oftheJunequartergrossdomestic productwhichgrew1.7percent.The accommodationandfoodservices componentwasup30percent.
stuckathomethinkingaboutlife. Theywanttogetoutofthecities, exploreandenjoythecountryside, andmakeitmeaningful.
Butlabourandimmigration issuesremain ahandbrake,as GrahamSkellernreports. —FranO’Sullivan
“Thetemptationasyourestart yourmarketingaroundtheworldis tobombardconsumerswithallthe manythingstheycandoinNew Zealand,”saysRenedeMonchy, TourismNewZealandchiefexecutive.
AirlinesneedtoreturntofullserviceinandoutofNewZealand,the Chinese —oneofthecountry’skey markets —needtoresumetravelling, andcruiseships,whichcarried 322,00passengersandcontributed revenueof$570m,needtogetback tofullsteam.Thisshouldallstart happeningnextyear.
“Thisgivesus acompetitiveadvantage.Butoverthesummermonthsit willtake awhileforthelong-haul NorthernHemispherevisitorstoreturn,”Sowrysays.
—GrahamSkellern
CordisAucklandinSymondsSthas justcompleted a$170million expansion,makingitthelargesthotel inNewZealandwith640rooms.
CarrieHurihanganui
Ithasset atargetof80-82percent ofpre-Covidseatingcapacitybythe endofitsfinancialyearonJune30.
Chineseareunlikelytostarttravelling beforethemiddleofnextyear.
AucklandInternationalAirportexpects airtravelinandoutofthecountry’s maingatewaywillreturntomorethan 80percentofthepre-Covidcapacity bythemiddleofnextyear.
FranzMascarenhasintheCordisAucklandChairmanSuite.
GrantWebster,chiefexecutiveof
“Generally20percentofourworkforcehasbeenstudentsbutthelate announcementoftheborderreopeningmeansinternational studentswon’tbecomingtillnext yearandthisdampensourabilityto recruit.”
Wehavetomakesure touristoperatorsare openandvisitorscan dineoutonMonday night.
towhatitwaslikepre-Covid.We quicklysawstrongdemandoutof Australiawhentheborderre-opened fortheminMay.Therecentfour-day SnowMachineMusicFestivalsold 5000ticketsinAustralia.
“Weneedtocompetewithother countriesbyinvestingmore,”says Webster.
MOODOFTHEBOARDROOM
fortourism Wecertainlysee tourismachieving pre-Covidnumbers inthenextcouple ofyears.
Thereareclearsignsof arecovery, acoupleof
“Weneedtobeonourgametobe competitiveandgivethevisitorsthe experiencetheyexpect,”shesays.
aspectsneedtobeaddressed— availabilityoflabourandimmigration settings.
Weneedtoopenup theimmigration settingsandgetthe laboursupplyand holiday visassorted. GrantWebster
“WearefortunatethatQueenstownisseenas ashort-hauldestination. Iwaschattingwith askierfrom GoldCoastwhowasvisitingfor10 days.Hehad a20minutedrivetothe (GoldCoast)airportand athree-hour flighttoworld-classfacilities.
“Thereis aconcernoverthe hospitalityofferingbecauseofthe availabilityoflabour.Wehavetomake
intothecountry
Thenew17-storeyedPinnacle Tower,withthe252sq mVIP ChairmanSuiteand317sq mClub Lounge,seating88people,hasadded 244roomstothehotel,previously calledTheLangham.
“Weareoneofthemostbeautiful countriesintheworldbutweneed tomarketourselveseffectivelyto ensurewereceivethepatronagewe deserve —andthisneedssignificant funding,”hesays.
Mascarenhas, amemberofthe AucklandUnlimiteddestination committee,saysthetourismsector needsmorefinancialsupportfrom Governmentandlocalcouncilsin marketinginanenvironmentof significantcompetitionfromAustralia andothercountries.
“Thecapitalcostsofthemotor homeshavegoneup,almostdouble digit increases, and international visitorsmissedoutontheearlybird discountsintheshoulderseasonbecausetheborderwasn’topen,”he says.
saysMascarenhas,but
towershowsbullish
Thecurrentaccreditedemployer workvisaapplicationcantaketwo monthsforapprovalandthisisfartoo
EmirateswillreturnwithitsA380 aircraft,capacity480passengers, flyingdirectfromDubaidaily.Emirates willalsoflyintoChristchurchvia SydneyfromtheendofMarch.
morethanfivemillionofthemare inclosereachofJFKairportinNew York.
FranzMascarenhas
TheHookerValleyandAorakiMtCook,featuredinTourismNewZealand’s“IfYouSeek”destinationmarketing.
fromNorthAmericaoverthesummerseason.Whetheritwillbesustainedisyettobeseenandalongwith theimpactofhigherfaresweremain cautious,butrememberwestill haven’tseenplaceslikeJapanand Chinacomebackintothemixyet.”
“Itwillbeverywelcomedand beneficialforthetourismsectorbut astheairlinescomebackweneedto havethefullsuiteofservicesand productsinplace,”saysCarrie Hurihanganui,chiefexecutiveof Aucklandairport.
BeforetheCovidpandemicstruck, 29airlinesfrom43destinationswere arrivinginAuckland.Bytheendofthis yeartheairportisexpecting23airlines tobeflyingfrom37destinations.
CarrieHurihanganui
Auckland gears upfor overseas arrivals
“Weareoptimisticaboutthetourismrecoverybutwecan’ttakeitfor granted.Wearein acompetitive environment —theAustraliangovernment,forinstance,hasallocated $60mtorestarttourism,Canadaand UnitedStatesarespending alot —and oursectorneedsadditionalfunding.
New outlook
“ThebigthingisChinawhichmade up10percentofthecapacitypreCovid.Wehaven’theardorseen anythingfromthem,”saysHurihanganui.“CountrieslikeChina,Japanand HongKongstillhaveCovidrestrictions inplace.”
Mascarenhassaysforward bookingsforthesummerarelooking
TheSkyCityNewZealand InternationalConventionCentre, cateringforupto4000peopleand duetobecompletedbytheendof 2024,andtheproposedcruiseberth upgradewillbringfurthervisitorsinto Aucklandandthecountry.
Shesaysinternationalpassengers beganincreasinginJulycoinciding withtheschoolholidaysinAustralia andNewZealand,andthenextsurge willbeinOctober/Novemberwith moreairlinesarriving.American AirlineswillbeflyingfromDallas, UnitedAirlinesfromSanFrancisco,Air CanadafromVancouver,AirAsiafrom KualaLumpurviaSydney,andAir QatardirectfromDoha.
Foransaysit’sestimatedsome60 millionAmericansareactivelyconsidering atriptoNewZealandand
“Weneedtoopenuptheimmigrationsettingsandgetthelabour supplyandholidayvisassorted. Alot ofworkneedstotakeplacetoget NewZealandinthemindsofpeople overseas.
“Itwasquicker,betterandcheaper forhimtocometoQueenstownthan skiingdomesticallyinAustralia.
“TheTasmanroutesareverybusy andweareseeingplentyofbookings
TourismHoldings,whichruns afleet ofcampervans,says“weareseeing gooddemandforsummerandearly nextyearandpeopleareresponding welltopriceincreases.
longtofillcriticalroles,hesays.This is ahandbrakeontourism’srecovery.
“TheappealforvisitingNew Zealandisstillthereandtheshapeof the(tourism)recoverywillbe interesting,”saysHurihanganui.
Hesaysthereturnofcruiseships andairlinestothecountrywillbring asignificanteconomicboostand “from alongertermperspective,we certainlyseetourismachievingpreCovidnumbersinthenextcoupleof yearsandthenresumingtherapid growthwewerepreviouslyexperiencing.”
GregForan,chiefexecutiveofAir NZ,says“afterthebordersopened, thefirstwaveoftravelwasfamilies andfriendscatchinguponlosttime, butnowwe’reseeingstrengthinthe leisuremarket.
promising.“Wehavesomeverygood businessonourbooksandtheboom shouldstarthappeninginthefirst quarterofnextyear.Weareworking reallyhardtoboostourworkforce.”
nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B17
“Weneedmoreliberalandinnovativeimmigrationandvisapolicies thatareaimedatattractingoverseas resourcestocomeliveandworkin NewZealand.
TheGovernment’sfocusonhiring Kiwis,whichis anaturalpriority anyway,at atimewhen unemploymentislowisonly lengtheningtherecruitmentprocess andmakingitmoredifficulttofind whatisnow ascarceglobalresource (labour).
AirNewZealandisflyingthenew routetoNewYorkandre-engageswith ChicagoattheendofOctober.Andits jointsharingagreementwithSingaporeAirlineswillsoonsee18flights aweekinandoutofAuckland.
suretouristoperatorsareopenand visitorscandineoutonMondaynight.
Hesaysthebulkofthebookings arefromAustralia,theUSandsome leisuretravellersfromEurope.The
“That’s ahugemarketandwe intendtodrivetheeastcoastof UnitedStateshard.Wewillcontinue topromoteNewZealandisopenfor business.Noteveryonethinkswe are.”
“Theinvestmentis areflectionof thebullishoutlookwehaveonthe futureofNewZealandtourism,”says FranzMascarenhas,managing directorofCordisAuckland.“Inthe shortterm,webelievethereis alot ofsuppresseddemandbecauseofthe Covid-19impactandthiswillseean inevitableboominvisitors.”
B18 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM
FreshwatersaysthattheUniversityofAucklandhadmorethan 5000Chineseinternational studentsin2021.
“Theremaybe ashort-termboost duetothenumberofstudents offshorewhohavebeenwaitingto cometoAotearoa,butwepredict aslowrecovery”,saysAuckland UniversityofTechnology(AUT) vice-chancellorDamonSalesa.
TheAustralian EducationMinistry hassaidthatpoststudyworkrights willbeincreased... Thismakes Australiamore attractivefor international students. DawnFreshwater
Empowering NewZealand’s sustainable future
Hesays:“Wewouldliketobe sureImmigrationNewZealandwill beabletohandle thevolumewhen itcomestoprocessingthe2023 applications.
Fierce competitionmeans academic leadersexpect aslowrecovery in international student numbers
BillBennett
E
“Theyhaveindicatedtheywon’t beprocessinginternationalstudent visasuntilthreemonthsbeforethe firstsemesterof2023begins.”
Hesaysthere’s achallengewith thepipeline.
“OtherstudentscomefromIndia, Malaysia,SouthKorea,HongKong, theUS,IndonesiaandVietnam.”
NewZealand’sborder reopened inJuly,buttherewerestricterrules onresidencyandworking rightsfor internationalstudents.
Thatwasbefore theGovernment introducedborderrestrictionsas partofitsprecautionsduringthe Covid-19pandemic.
ThepictureissimilaratAUT whereSalesasays studentsfrom eachregionfacetheirownsetof challenges.
UniversityofAucklandvicechancellorProfessorDawnFreshwatersays:“TheUniversityofAucklandhasretainedandrecruited studentswhile theborder has been closedbyofferingteachingonline andthroughfivelearningcentresin
Educationsectorplayscatch-up
“Governmentpolicyisforquality overquantitywhich meansNew ZealandisunlikelytoseethepreCovidvolumeofstudents.
The big questionnowis‘will internationalstudentsreturnnow theborder has re-opened?’
China.Wearebuildingfrom asolid base.
“Manyofthesestudentswere studyingwithusinChina,both onlineandattheChinaLearning Centresweestablishedinresponse totheborder closure.
genesisenergy.co.nz/sustainability
countrieshaverecentlyincreased theworkrights.”
lastofthemajor Englishspeaking studydestinations tobeopening bordersto international studentsandour immigration settingsareless favourable. DamonSalesa
Salesasaysthese“willhavea negativeeffectoninternationalrecruitment,particularlyforcountries suchasIndia.”
“ThismakesAustralia moreattractiveforinternationalstudents andcomesontopofAustraliaand otherEnglish-speakingcountries— Canada,theUnitedKingdomand theUnitedStatesopeningupto studentsmuchearlierthanNew Zealand.“Wearehavingtocatchup at atimewhenthecompetitionfor studentsisfierce.”
“Studentsarewith universities forseveralyears,soitwilltaketime forchangestotranslateintosimilar levelsofstudentsasbefore”.
Chinaremainsthelargestsource ofinternationalstudentsinNew Zealand.
“WhileNewZealandhasreduced thepoststudyworkrights,other
“NewZealandisthelastofthe majorEnglishspeakingstudy destinationstobeopeningborders tointernationalstudentsandour immigrationsettingsarelessfavourable.”
‘Butitismyexpectation,thatthe UniversityofAucklandwillreturn toour2019numbersoverthenext fewyears.”
“However,inthecontextofan internationalcompetitionfortalent, theAustralianEducationMinistry hassaidthatpost-studyworkrights willbeincreasedfromtwoyearsto fouryearsforselectbachelor’sdegrees;threeyearstofiveyearsfor selectmaster’sdegrees;andfour yearstosixyearsforselectPhDs,” says Freshwater.
The Herald spokewithtwoCEO respondentstotheMoodofthe Boardroomsurveytogettheirpredictions.
“ManystudentsfromChinaare currentlyreluctantorunableto traveloverseastoreturnorcommenceoncampus.”
ducationwasoneofNew Zealand’sbiggestexport earners,bringingin$5 billion ayearinearnings.
Freshwatersaystherulechanges impactthesub-degreesectorwith Master’sandPhDstudentsentitled tothree-yearpost-studyworkrights andundergraduatesuptothree years,dependingonthetimespent studyingoncampus.
Bothvice-chancellorswantto seeimprovementsinvisaprocesses andprocessing,somethingthat theyseeasbeingessentialtohelp recovery.
Supermarketshake-up
O’Rileycitestwotechnologyadvancesthatarechangingthefaceof theworkplace.
● Costoflivingcrisisparticularly foodandhousing
HecautionsNewZealandisnot goingtobeinposition“wherewe haveenoughpeopletomatchthe numberofvacancies.”
“Giventheindifferentoutlookfor Europewemightgetmoreinterest fromthatpartoftheworld,butthat interesttoworkinNewZealand currentlydoesn’texist.”
FinanceMinisterGrantRobertsonsaidthatan
Whenaskedinthe Herald’sMoodofthe Boardroomsurveywhetherthesupermarket sectorshakeupwillhelptomakegroceryprices moreaffordableandunderstandable,overhalf ofbusinessleaders —some53percent— respondedthatitwillnot.
BrettO’Riley
Tauranga-basedSequalLumber hasdevelopedanautomatedproductionsystemthatsuppliescustomcutradiatapinetimberandeliminateswaste.Sequalhasalsobuilta digitaltwinthatmonitorsthewhole businessandprovidesinsightsinto theproductionsystemforthebest outcomes.
KGHis53percentownedbyNewZealand Post,25percentbytheNewZealand SuperannuationFund,and22percentbythe AccidentCompensationCorporation.
ManyCEOssuggestthatwhileitmayhave someimpactongroceryprices,itwillonlybe atthemarginsandwon’tbesizeableenoughto make arealdifferencetopeople’spockets.
“It’s atriplewin —wecanbevery deliberateaboutitbyincorporating joined-upthinking,”saysO’Riley.
Whereasanadvertisingbossreckonsthat “Governmentwillgetplayedbythesupermarkets
It willrequiremuch moretaxpayersupport. TheGovernmentwon’t havetheappetiteto investthecapitalneeded
atechnologicalfuture.Thereshould be,forexample,softloansorchanges todepreciationrulesaroundnew plants,hardwareandsoftware,and thisshouldincludeupskillingpeople tousetheequipment.”
Earlierthisyear,CommerceMinisterDavid ClarkreleasedtheGovernment’sresponsetothe CommerceCommission’smarketstudyintoNew Zealandsupermarkets.
Buteconomistspointoutthattheprice escalationcanalsobeattributedtoweather conditionswhichimpactcropyields,andRussia’s invasionofUkrainewhichispushingtheprice offertiliserandraisingcommodityprices.
contributedsignificantlytotheinflatedfood costs,up15percentyear-on-year.
Whiletheheadofanenergycompanythinks thechangeswillmake adifferencetogrocery prices,theyask:“buthowdidthecompetition commissionletitgettothisinthefirstplace? Thatistherealissue.”
“Welookforwardtoworkingconstructively withtheGovernmentunderournewownership structuretodeliveronourpurpose:Kiwimaking Kiwibetteroff,”hesaid.
NewZealandneedstotransitionits growthfromunitsoflabourtounits oftechnologyandautomationforthe sakeofimprovingefficienciesand productivityandcreatinganadvancedeconomy.
“Ifweinvestinnewplantandcan’t findpeopletorunormaintainit,we needtobringpeopleintothecountry andtrainthem.Weincreasethe skilledworkforce,wedevelopnew technologyandwecanexportit.
HesayscountrieslikeSingapore, DenmarkandIsraelhavemovedto advancedtechnologyandthey haven’tdonethatbyaccident.“We need asignalfromourgovernment thatitistakingtechnologyand economictransformationseriously.
DespiteRobertson’sreassurance,manyare warythatKiwibankwillstruggletogetthecapital itneedstobesuccessful.
Ofthosesurveyed,27percentaremore optimisticthattheGovernmentshakeuptothe sectorwillhaveanimpact,withtheremaining 20percentunsure.
“Informationiskeytotransparency,andthis isappliedtomanyindustriesinNewZealand,” responds atransportationboss.
“Thismeansnotonlyupskilling employeesbutalsopeoplewiththe potentialtobeemployed.”
Absolutelynot —the sectoriscurrentlypretty efficient on aglobalscale Athirdplayermight makeitslightlymore competitive,butonlyat themargins.
“Itdoesn’tmeanbillionsofdollars spentinoneyear,butforpeopleto changetheirbusinessmodelsthey needclearareasofassistancesothey cangetonwithit.”
Thereshouldbesoft loansorchangesto depreciationrules aroundnewplants, hardwareandsoftware, andthisshouldinclude upskillingpeopletouse theequipment.
“TheGovernmentisparanoidaboutforeign ownership…orthinksthatthepublicis,”saysa chairinthebankingsector.
SaysO’Riley:Globallythehealth sectorisshortofsixmillionworkers. Wesee25percentoftrucksoffthe roadinAustraliabecausetheycan’t findenoughdrivers.Ifyoulookatthe demographics,thepopulationin mostWesterncountriesisfalling.
“Weneedtherightgovernment incentivesandpoliciestopreparefor
Halter’ssolar-poweredsmartcow collarsandappenablesheatdetection,healthmonitoringandherd managementonthefarm.Thetechnologyreducestheon-farmworkload andcombatslabourshortagesby automatingcowmovements,creatingvirtualfencingandoptimising pasturegrowth.
“Lookatitscost-to-incomeratio,itis avery poorinvestmentthatwillrequiremuchmore taxpayersupport,”says abankingboss.“The Governmentwon’thavetheappetitetoinvest thecapitalneededtotransformKiwibanksothat itcancompetewiththeAussiebanks.”
NZSuperFundhadbeeninterestedin purchasing amajorityshareholdinginKGH,but itwithdrewitsinterestasitdidnotalignwith theGovernment’scommitmenttopublicand NewZealandownership.
TheCommissionmade14recommendations, includingintroducing amandatorycodeof conduct,establishinganindustryregulator,and ensuringloyaltyprogrammesareeasyto understandandtransparent.
O’Rileysaysexamplesoftechnologyadvancesare: ● deployingroboticsandartificial intelligence(informeddata)into manufacturing and engineeringpractices;
thatitcancompetewith
“Absolutelynot —thesectoriscurrentlypretty efficienton aglobalscale,”saysthechairofa largetechcompany.“Athirdplayermightmake itslightlymorecompetitive,butonlyatthe margins.”
asusual…ourfoodpricesarealmostcriminally high.”
ongoingshareholdinginKiwibankdidnotfitNZ Post’sandACC’slong-termstrategicand investmentplans.
Whenannouncingtheacquisition,Robertson stressedthattheGovernmentisfullycommitted tosupportingthebanktobe agenuine competitorinthebankingindustry,“ensuringthe bankhasaccesstocapitaltocontinuetogrow on acommerciallysustainablebasisandoffera viableandcompetitivealternativeforNew Zealanders”.
Whenaskedinthe Herald’sMoodofthe BoardroomsurveyabouttheGovernment buyingbackKiwibanktokeepitfullylocally owned,only22percentofCEOsagreethatit wastherightthingtodo.
Techcompanychair
TheGovernmentaccepted12ofthe recommendationsandistakingstrongeraction ontheothertwo.
Butalmosttwo-thirdsofsurveyrespondents —some63percent —saytheydisagreewith themove,withtheremaining15percentunsure.
● Agovernmentstrugglingto managebloatedreform programmes
BuyingbackKiwibank totransformKiwibankso theAussiebanks.
Foodpriceshavedramaticallyincreasedover thepastyear.StatisticsNZdatashowsanincrease of8.3percentintheyeartoAugust —thebiggest increasein13years.Fruitandvegetableprices
usinessesneedtoprepare fortechnologyadvances andskillstransferstoovercome achroniclabourshortageinNewZealand,saysEMAchief executiveBrettO’Riley.
GrahamSkellern
From atechchair:“Themixedownership modelhasworkedsowell.Floating49percent ofKiwibankandapplyingthedisciplineofthe investmentcommunitywhilegivingthebank increasedcapitalwouldhavebeenawesome.”
Onechairsuggeststhat“themainimpacton supermarketpriceshasbeenthelabour shortagesimpactingthepickingoffresh product”.
O’Rileysaysalongsideinvestment ininfrastructure,thereneedstobean investmentinskills.“We’veseenthe successoftheApprenticeBoostpaymentprogramme.It’snotthegovernment’sresponsibilitytofunditallbut gettingpeopleintohigherpaidroles goeshandinhandwithinvestment.
B
Whiletheheadof aprofessionalservicesfirm disagreedwiththepremiseofthequestion, notingthatreportinghasbeenmisleading:“They havenotboughtitback —itwasownedbythe Crown,andisstillownedbytheCrown!”
nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B19 MOODOFTHEBOARDROOM
SmartCow founderCraig Piggottwiththe solarpowered Haltercollar.
Lastmonth,heexpandedontheGovernment’s commitment,andoutlinedhowitwouldmake supermarketgiantsopentheirwholesalearms tocompetitorsat a“fairprice”.
OnGovernmentmovesinbankingandsupermarkets, TimMcCready looksattheviewoftheboardroom
● automatedwarehousingand increasedcontractmanufacturing;
“Yes, Isupportthemove,”saystheheadof acorporateadvisoryfirm.“Although astateownedenterprise/partialfloatscenariowould havebeengoodforcapitalmarketsand improvedthebank’sabilitytoaccesscapitalfor growth.”
Bankingboss
Atthetimeoftheannouncement,Kiwibank chiefexecutiveSteveJurkovichsaidthe acquisitionwouldenableKiwibanktocontinue todeliveronitsgrowthambitionsandhaveeven moreimpactforitspeople,customers,and Aotearoa.
Onthisissue, abankingbosssuggeststhat peoplehavebeenmisled.“Iftheso-calledexcess profitsof$400mwentawayovernight,that wouldmean asavingof$1.50perpersonper week.Itisjustnotfairtogivepeoplean expectationofpricesreducingsignificantly.”
Newtechwayofthefuture
● enterpriseresourceplanning softwaretomanageday-to-daybusinessactivitiessuchasaccounting, procurement,projectmanagement, riskmanagementandcompliance, andsupplychainoperations.
“TheGovernmentandNewZealandershave beenveryclearthatthesupermarketindustry doesn’twork.It’snotcompetitiveandshoppers aren’tgetting afairdeal.
BrettO’Riley’stop issues
O’Rileysaysthissortoftechnology isproviding afantasticshowcasefor companiesandanopportunitytoget themontotheglobalstage.
Lastmonth,theGovernmentannouncedthat itwouldacquire100percentofKiwibank’s parentcompanyKiwiGroupHoldings(KGH)for $2.1billionfromstate-ownedshareholders, subjecttoregulatoryapprovalsfromtheReserve Bank.
● Shortageofworkersandtheneed fortechnologytotransform businessmodels
“Theduopolyneedstochange,andweare preparingthenecessarylegislationtodothat,” saidClark.
WhatdoCEOsthinkofthe flagshippolicies?
“Thatiswhylightrailisbeing proposed —SymondsStisdone,” notesaninvestor.
“Vivhasimploded —althoughI thoughtshewasprettycapable,”says anotherrespondent.
Anotherchiefexecutivereckons: “Onbalancewhenconsideringtraffic congestion,climateissues,andcost oflivingpressuresinAucklandit becomes acrediblealternative.”
W
Whenaskedabouttopinfrastructure issuesforAuckland,completingthe CityRailLinkwaschosenby65per centofrespondents —unsurprising giventhelevelofdisruptionithas broughttothecitycentre.
started —itisgrosslyuneconomic— butnowthatitisnearlyfinished,it shouldbecompletedassoonas possible,”says abankingboss.
Havingbordersstayshutforso longmeantwewerelockedofffrom therestoftheworldandthatwillcost us,hesays.
“Collins’mainqualificationsforthe rolearethatheisnotWayneBrown, andheknowshowcouncilworks withallitsfrustrations,”says aboss intherealestatesector.“Whyanyone wantsthisjobis amysterytome— themayorissetuptofailwithone voteand ahostofpeoplewhosemain positiononanyproposalis‘no’.”
Some58percentareagainstthe policy,withseveralrespondents suggestingitisthefrequencyand accessibilityofservicesthatprevent peoplefromusingpublictransport, ratherthanthecost.
Collinspromoteshimselfasan inclusivecandidate,whoworkedin youthdevelopmentandcommunity liaisonrolesbeforeenteringpolitics.
AccordantchairSimonBennett says:“Showme abusinessthatis strugglingtoremainviablethatisable tofind$400millionspare.”
Barfoot &Thompsonmanaging directorPeterThompsonisworried abouttheheartofthecity,saying Covidrestrictionsdiddamagebutso didotherpoliciesthatheseesas discouragingpeopleandlettingthe ramraidersin.
Andthenthereweretwo
Shiftingtheport,completingthe CityRailLink,abandoninglightrail plans,advancing asecondharbour crossingandintroducingcongestion chargingandmoretollroadswillall helpsthecity,hethinks.
Heislessoptimisticthanhewas
“Longterm,Aucklandisgoingto requirelightrail,butthecurrentplan isnottherightone,”says aprofessionalserviceschiefexecutive.
“Crimehasbecome amajor issuesincetheextendedAuckland lockdown,”saysoneindependent director.TheCEOofan entertainmentbusiness recommendsthemayorshould “putpolicebackonthestreetsin Auckland.”
“Themayormustprovidean alignedandinclusivevisionfor Ta¯makiMakaurau’sfuturethat brings asenseofpurposeand belonging,”saysBecaExecutive ChairDavidCarter.
AnneGibson
Otherinfrastructureareas
Forhisownbusiness,Thompson anticipatesslighterlowerprofitsfor thelatestyear,aftertheproperty marketcorrectionwhichstartedlate lastyear.
PortsofAucklandproposalnot achievable BrownsayshewilldemandPortsof Aucklandpaythecity$400million ayearingroundrenttoforceitto startfreeinguplandformorevaluableusesthanfreightandcarimports.
“Infrastructureneedsrenewed vigour,thecitycentreneeds attention,andbusinessdoestoo,” hesays.
Heis aformermayoroftheFar NorthDistrictCouncil,servingtwo termsbeforebeingtossedoutatthe 2013 local elections.
Priorityinfrastructureprojects
businessleaderswanttoseethe mayorfocusonincludeimproving publictransport(56percent), introducingpublic-private partnershipsandcitybondstofund largeprojects(55percent)and advancingthesecondharbour crossing(51percent).
recommendedshiftingAuckland’s porttoNorthland. Atopchairperson suggestsheis a“cantankerousman” andwillbullyhiswaytoensure thingsgetdone —notingthat“three yearswillbeenough!”
Anti-moneylaunderingregulations,wagerisesandothercompliancecostswerehittingbusiness hard,hesays.
Whenaskedinthe Herald’sMood oftheBoardroomsurveywhichofthe toppollingcandidatesofNewZealand’scommercialcityhasthebest attributestobecomeaneffective MayorofAuckland,51percent plumpedforbusinessmanBrown.
JusttwopeoplethoughtCraigLord wasbestplacedtobecomeAuckland’smayor,while19percentsay don’tknoworprefersomeoneelse.
“Weneedtoopenupparkingand attractpeoplebacktotheheartofthe city,”saysthebossoftheagency whichsellsaroundoneinthreeAucklandresidentialproperties.
VivBeck,whojustlastweekpulled outoftheracesoasnottosplitthe centre-rightvote(althoughhername remainsonvotingpapers),received endorsementfromjust12percentof respondents.Shehadstoodaside fromherroleasCEOofHeartofthe City,butfailedtomakecut-through andbecamemiredincampaignfin-
“What atragicsetofchoices,”was theresponsefromaninvestmentfirm partner,summarisingthemoodof manyofthosewhocommented.
Wayne Brown
Thompsonworksfromofficesthe agencybought afewyearsagoon ShortlandStandbecauseheisinthe CBDregularly,hesaysheknowsit wellandseesitas averydifferent placetopre-March2020whenthe firstCovid-19lockdownoccurred.
But21percentthinktheproposal is astepintherightdirection.Others wereunsure.Fromoneentrepreneur: “Abouttime.PortsofAucklandhas blatantlydisregardedpublicvoice whenextendingfootprint.Theircontrolneedstobecurbed.”
HehaschairedAucklandDHBand led asuiteofotherlargeorganisations with aturnoverofmorethan$1 billion,been adirectororchairof variousCrown-ownedcompanies andrecentlyledtheNorthIsland SupplyChainreviewfortheLabourNZFirstCoalitionGovernment,which
QueenStchanges,lackofcarparking andCovidlockdownshavedamaged Auckland’sCBD,accordingtothe headofthelargestrealestateagency.
Healsowantsimmigrationrules relaxedtoallowmoreinternational studentsbacksotheyonceagain populatethecitycentreandbringlife andenergytoit.
fromthecityreceivedtopbilling from33percentofrespondents.
takeyearstorecover.”
“NewZealandnotopeningour bordersuntiljustrecentlyhashad moreofaneffectthanwhatmany predicted.”
HebelievestheReserveBank’s OCRmoveswereneeded,butinterest ratescan’tkeepgoingupbecauseit putssomuchpressureonborrowers. Thecostoflivingincreasesalsoconcernhim.
Collins’flagshipfreepublictransport policyhasbeenestimatedbyAuck-
“Ihavebeenon aboardchaired byWayneBrown,”saysoneprofessionaldirector.“Heisthekindofnononsensepersonwhowouldcut throughmanyofAuckland’sproblemsassuminghehasatleastsome supportaroundthecounciltable.”
Buthalfofthesurveyrespondents —52percent —saythatthiswillnot beachievable.“Itis asimplistic soundbitethatdoesn’taddressthe multitudeofinterrelatedissues,”says DeloittechairThomasPippos.
tobedonegraduallyoverthe comingyears,”says arealestate boss.“Thisislikelytobeonthemind ofCouncilformanyyears.”
landTransporttocostabout$130m initially,risingto$500mby2030.
previouslyaboutNewZealandbusinessandtheeconomyhere.
But27percentdisagreedwith Beck,withsomenotingthatbuscapacityhasbeenreached.
“Noneoftheseexciteme,weneed newleadershipwith avisionforthe future,”saysHarcourtsmanaging directorBryanThomson.
“Getridofthesesillywalkwaysand openuproadsagaintogettrafficinto andthroughthecitywithease,”he saidreferringtoQueenSt’snarrowing vialandscapingandthenewessential vehicleareaononesection.
ThoughBeckisnolongerinthe race,herplantoscraptheGovernment’s$14.6billionlightrailproject andreplaceitwithpractical,cheaper andquickersolutionsacrossthecity includingbetterbusservicesdrew favourfromrespondents,with42per centofrespondentsagreeingwiththe proposal.
Respondentswereparticularly vocalabouttheneedtocleanup thecitycentre,andtoprovidethe citywith avisionand asenseof purpose.
AucklandBusinessChamber chiefexecutiveSimonBridges, suggests alaundrylistof challengesforthecityto overcome.
“TheCRLshouldneverhavebeen
51% Supportamong respondents Efeso Collins 16% Supportamong respondents
ancingissues.
Thompsonisconcernedaboutcity crimeandwantsmorepoliceand longersentencesfortheramraiders andthosewhohurtothers.
“Moreandmorecostsarebeingput ontobusinessownersthroughnew regulations.”
Just23percentofbusinessleaders agreewiththisflagshippolicy,with thoseinfavourhopingitmaysolve widerchallengesacrossthecity.
Lastyear’s107-dayAucklandborderclosuretokeeptheDeltavariant containedtook ahugetollonthecity anditsbusinesses,hesaid.
Ahigh-profilechairpersonsuggeststhecostwillbeminimalwhen youfactorinhowmuchfaresare subsidisedalready —“andgetting peopleoutofcarsistheonlywayto reducecongestion,asyouwillnever beabletobuildroadsfastenough.”
Cracking down oncrime
Othertopissuesincluded improvingpublictransport(46per cent)andintroducingpublicprivatepartnershipsandcitybonds tofundlargeinfrastructure projects(38percent).
... TimMcCready analyseswhatbusinessleadersthinkofthecandidatesvyingtoleadAucklandintothefuture
“Needstohappenandwillneed
ayneBrownis,byfar, thebestcandidateto becomeAuckland’s nextmayorintheeyes ofbusiness.
“StopbeingsoPC.Theydothe crimethentheyshoulddothetime.”
EfesoCollins,whowaselectedto AucklandCouncilatthe2016local elections,trailedfarbehindinsecond placeonthesurvey,receivingthe nodfrom16percentofrespondents.
Weneedtoopenup parkingandattract peoplebacktotheheart ofthecity.
HecitedQueenStwherehe believeschangeshaven’tsucceeded andhewouldpreferittorevertback towhatiswas.Planterboxeswere notneeded.“Wedon’thavethe crowdsthereanymore.Wewantthe vibrancyofQueenStopenedup.”
ShiftingthePortofAucklandaway
Brownisregardedas adisruptive playerwhowillgetthingsdone.
“At asuperficiallevel,someone frombrandingneedstocomein withsomeeventsandmarketing budgetandgiveAucklandasa placetoliveandas atop internationaldestination aboost. At adeeperlevelthereis asense ofmalaisethatcanonlybesolved byleadership.”
Lowsupportforfreepublic transport
“Itis100percentCouncil-owned,” says atopbossinthetravelsector. “IfhesendsitbankrupttheCouncil willenduprecyclingthe$400mback totheportcompany.”
“It’sallverywellsittinginWellingtonandshuttingdownAuckland— it’sthecrime,homeless.It’sgoingto
Whenaskedwhatthetoppriorities shouldbeforthenewMayorof Auckland,CEOswereresoundingly clear:55percentofsurvey respondentssaythenextmayor mustreducecrimeinthecity.
Apropertybosssaysthatfaresfreepublictransportwill“giveusa fightingchanceofmakinginroadson ourterribletrafficandclimatefailure.”
Politiciansdidnotrealisethedamagetheiranti-Covidpolicieshaddone towhatwasonce agreatarea.
PeterThompson
B20 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM BetterQueenSt,moreparking:realestatechief
“Thiswouldinvolvesubstantial lossofrevenuebutwouldprobably notresultinsubstantiallyincreased useofpublictransport,”saysone chairperson.Anotherasks:“Whysubsidiseeverybody,includingtourists?”
RedShieldCEOFabian Partiglianisays atoppriority shouldbeto“stimulatetourism,in particulartore-energisethecity centre.”ThisisechoedbyCordis managingdirectorFranz Mascarenhas,whosaysthecity needs aclearstrategytoboost tourism —“especiallygivenits impactonGSTreceiptsand contributiontotheeconomy.”
● Energysecurity—havingHuntly powerstationas avitalback-up whenrenewableelectricityruns short
EnglandsaysGenesis’fixedprice gassupplycontractsandcoalpurchasedwellinadvanceofglobal supplyissueshavesofarcushioned NewZealand’selectricitysystem
● People— retainingstaff, particularlyincallcentre,LPG driversandITspecialists
Asthecountrytransitionstoan evenhigherleveloflow-carbonrenewableelectricity,thermalback-up willremainessentialtomaintain security,eventhoughitwillbeused lessoften,hesays.
Theindexprovidesanobjective ratingofnationalenergypolicyand performanceacrossthreedimensions —security,equityandenvironmentalsustainability.
“Biomassneedstobeproducedin NewZealandbecauseitisnot economicaltoshipitin.”
EnglandisleavingGenesisinthe middleofnextmonthforelectricity distributorAusgridinSydneyaschief executive.ChristchurchAirportCEO MalcolmJohnsreplaceshimatGenesisinmid-March.Meanwhile,the reinswillbeheldbychiefcustomer officerTraceyHickman.
WA VE 200056 MOODOFTHEBOARDROOM
MarcEngland’stop issues
“We’vehad awell-balancedtrilemmaoverthepast10to20years. Wehaveescapedtheenergycrisis. Retailelectricitypriceriseslastyear werebelowCPIinflation —while priceshavegoneup100or200per centelsewhere,”saysEngland.
T
nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B21
● CEOtransition— supporting interimchiefexecutiveTracey Hickmanandensuringthere’sa smoothhandover
MarcEngland
Genesisis offeringthe MarketSecurity Optionsproduct asprotection fromvolatile pricesand shortfallsin renewable generation.
Thegasandcoal-firedHuntly powerstation,builtinthelate1980s, willcontinuetoplayanimportant roleinprovidingsecuritytotherenewablesystemdaytodaywhilethe country’senergyconsumersdecarboniseoverthelongterm.
“WithoutHuntly,givenwerelyso muchontheweatherforelectricity, powerwouldbelessreliable,”hesays. “ThesecurityHuntlyprovidesneeds tobesupportedbyappropriatecom-
“WehavetomakesuretheResourceManagementActreformsensurerenewablesarebuiltwithout barriersinplace,andthenewgenerationmeetsdemand.
Thefuture is here
“Ifourtrilemmagetsoutofbalance, thenweknockourselvesoffcourse. Huntlyhas aroletoplayinthelong term.Thepowerstationmayburn lesscoalandmoregastohelpdecarbonisation,anditcouldrunonbiomassbutthat’s a10-yearjourney.
mercialagreements,ormarketdesign changesmaybeneededtoavoida shortfallinthefuture.
There’seventheWorldEnergy TrilemmaIndex;lastyearNZwas rankedninthequalwithUnited States;Sweden,Switzerlandand Denmarkmakingupthetopthree.
Buthewarnsthatbufferwon’tlast forever.Forthelongterm,Genesisis offeringtheMarketSecurityOptions productforrivalgenerators,big powerusersandelectricityretailers toprotectthemselvesfromvolatile pricesandpossibleshortfallsinrenewablegeneration.
“Marketreformsarebeingimplementedoverseastosecureback-up generationthroughtherenewable transition.Wehavetheopportunity nowtodiscussreformsandmarket settingsanddesigntoensurean orderlytransition.”
heelectricitysupplyislikely tobeatleast95percent renewablewithin10years butNewZealandstillneeds asoundback-upplan,saysMarc England,CEOofGenesisEnergy.
Englandwarnsitwillbeexpensive togetto100percentrenewable.
“Abiggerprizeisusingelectricity todecarboniseenergymorebroadly —suchaselectrification,electric vehicles,convertingindustrialboilers andusingalternativerenewable sourcessuchasbiomass.”
“Weareprotected.Weareanenergyindependentcountryonthe wholewithwind,sun,water,geothermalandgas.Ouronlyconnectivity totheworldiscoalwhichweimport.
frompriceshocksseenelsewherein theworld.Morerecentrainfallhas alsoaddedto ahealthylevelofhydro energyfortherestofthisyear.
Theenergysystemneedstobalancethreefactors —cost,reliability anddecarbonisation.It’s asituation theindustryreferstoasthetrilemma.
Genesisordered amilliontonnes ofcoal18monthsagoandduetohigh rainfallinthehydrolakeshasa stockpileof900,000tonnes.Butthe priceofcoalhasgoneupfourorfive times.“TheGenesisbalancesheet couldn’tsustainthecashoutifwe boughtanothermilliontonnesofcoal now,”saysEngland.“We’velaunched themarketsecurityoptionsforothers tosharetheriskwithus,andalsocap thepricesandreducevolatility.”
Huntlyhasplacein arenewable world
We willsupportNew Zealand’simporters andexporters to meet thechallengesfacing us nowand inthefuture.
Powercompanieshaveusedswap optionstoreserveback-upthermal powerbutGenesis’“swaption” agreementsexpireattheendofthe year.
Port of Taurangaconnects NewZealandandtheworld. We have investedin thepeople,plantand property to accommodate thelargestships to visitNewZealand,andprovidethemostefficient andlowestcarbonsupplychain.
Genesis’forecastshowsNewZealand’selectricitygenerationwillbe 96-98percentrenewableby2030, throughhydroschemes,windfarms andsolarpanelsystems.Butthere willstillbetimeswhenitdoesn’train, thewinddoesn’tblowandthesun doesn’tshine,Englandsays.
Genesishascalledforexpressions ofinterestbytheendofSeptember. Thesystem, aformofinsurance, wouldlockinguaranteedpower supplyfromtheHuntlystationwhen extragenerationisneeded.Participantswouldpay afeetoreserve generationandspecifywhenthey wantpowerdeliveredatwhichtime thepriceofcoalwouldbefixedalong withtheassociatedcarboncost.
Energysecurity needsbackingup with acommercial agreementfor thermalpower, GenesisCEOtells GrahamSkellern
M
Aprofessionaldirectorsayshe wouldprefertosee asimplecapital gainstax,while abankCEOsays: “Honestly,havethecouragetoimplement acapitalgainstax.”
orethanhalf,54percent, ofthebusinessleaders surveyedforthisyear’s MoodoftheBoardroom believethecorporatetaxrateisnot competitivewhenitcomesto attractingforeigninvestment.
There’slittleenthusiasminthe nation’sboardroomsforleavingthe topmarginalincometaxrateat39 percent.Therateisforhighincome earnerswhotakehomemorethan $180,000 ayear.Almosthalfofthose
Aphasedreductionissupported byanairindustryCEOwho comments:“Capitalandtalentare highlymobile,failtolearnthisatyour owncost.”
FoodstuffsNorthIslandCEOChris Quinsays:“The39percentmarginal taxrateisacceptableifgovernment spendingiseffectiveandthelower incometaxrateisreducedfundedby lowergovernmentspending. That waywecanclosetheincometocost gapwithoutcausinginflation”.
Labour’staxpolicies
Afundmanagerexecutivechair saysthemovedoesn'thelpdomestic
Theoriginaltest,establishedbythe previousNationalGovernment,was fortwoyears,laterextendedtofive.
Recentlegislationtolimitinterest deductibilityforinvestmentsonresidentialpropertythatcanbeusedfor long-termaccommodationisnot popularwithNewZealand’sbusiness leaders;45percentsaytheyhaveno supportforthemove.
Morethan athirdofsurveyrespondents,37percent,saytheyhave nosupportfortheextension.Almost thesamenumbergiveittheirreasonable(18percent),orfull(17percent) supportwith25percentsayingthey somewhatsupportthemeasure.
Governmentplansforvarious wealthdisclosureinitiativesarenot supportedbyalmosthalf,47percent, ofthesurveyedbusinessleaderswith onedirectordescribingthemovesas: “ASocialist-MarxistdrivethatputsNZ
surveyed,48percent,saytheyhave nosupportforthepolicy,withonly 11percentgivingittheirfullsupport.
TheCEOof arealestatebusiness says:“Bright-lineis atest.Itshouldnot necessarilymeanthatcapitalgains aretaxed.
“Onthefaceofit,28percentis toohigh.Butweonlyhave asingle taxoncorporateprofits,notthe doubletaxwhichiscommoninmany othercountries”,says afinancesector chair.
initiativesis,atbest,lukewarm.
Aquarter,26percent,ofrespondentsareunsureabouttheplanned residentiallossquarantiningrules while29percentdon’tsupportthem.
“Itisfinethatthesetransactions arelookedatandpatternsofcapital gainstakingtaxedifthereisevidence oftrading.”
Talkingaboutthepropertytax initiativesingeneral,thedirectorof afoodandbeveragecompanydescribesthemas:“Absurdlycomplex workarounds. Alow-ratelandtaxor acapitalgainstaxis afarbetterand moreeffectiveapproach.”
At28percent,NewZealand’s headlinerateofcorporatetaxis higherthantheglobalaverageof25.2 percent.Itissignificantlyhigherthan theUKat19percent,ortheEU memberstateswhichaverage21per cent.Closertohome,Australiais movingto acorporatetaxregime wheremostcompanieswillpay25 percent.
RedShieldCEOFabianPartigliani says:“Fixinghousingsupplyshould bethekeyfocus”.
Themostpopularpropertyfocusedpolicyistheexemption build-to-rentinvestorswillgetfrom interestdeductibilityrules.Thiswas announcedearlierthisyearbyHousingMinisterMeganWoods.About two-thirdsofrespondents,63per cent,saytheyhavesomelevelof supportfortheplanwhile20percent havenosupportforit.
Surveyresponsesaresimilarfor thehistoric10-yearbuild-to-rent exemptionwith23percentof respondentshavingnosupportfor thepolicy,24percentsaythey “somewhatsupportthepolicy”,23per centsaytheyhavereasonablesupportforitand12percentgiveittheir fullsupport.
LastyeartheGovernment announceditwasextendingthe
businesses:“Ourtaxrateiseffectively thetopindividualtaxrate.”
ProfessionaldirectorCraigStobo wantstoseetheGovernmentlookat theideabutsaysitshouldnotbedone inisolationfromothertaxratesincludingpersonal,trustandPIEtax rates.Heisnotalone;anenergysector CEOsaysanychangesshouldbepart of awiderlookattaxandhowit works. Abusinessownerwantstosee “abetterstrategy,notanisolatedoneoffsolution”.
B22 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM
CraigStobo
Aroundtwo-thirds,64percent,of surveyrespondentsthinkthegovernmentneedstoconsider aphased reductionoftheheadlinecorporate taxrateto25percentby2027.That willseeourcorporatetaxmatch Australianrates.About22percent don’twantthattohappenand14per centareunsure.
Apartfrompropertyandhousinginitiatives,supportforGovernmentmovesislukewarm,writes BillBennett Doyousupportthe
bright-linetestfortaxonthedisposal ofresidentiallandto10years.
Thecorporatetaxrate Government’splansfor asocial employmentinsurance Zealand’sheadlinecorporatetax
Around athirdofrespondents,38 percent,saytheyarenotconcerned and 8percentareunsure.
There’ssomeagreementwiththe Gvernment’staxpoliciesthatimpact thepropertyandhousingmarket. Beyondthatsector,supportfor
scheme? 19% YES 62% NO 18% UNSURE AreyouconcernedthatNew
rateisnotsufficiently competitivetoattractforeign investment? 54% YES 38% NO 8% UNSURE
havesimilarlevelsofconcernasin thepast. Acompanydirectorsays: “ThisGovernmenthasironically grownwealthinequality.Theydon’t knowwhattheyaredoing.”
Asalways,it’sneverquiteas simpleasthat,withcommentsraising theimportanceofconsideringoverall taxburdens,ratherthanjust focussingonheadlinerates, acceptingthattheweightingdifferent stakeholdersplaceoninterrelated considerationswillalwaysvary,and thecontextofthedebatewillalways evolvewithtime.
Theupshotisthattaxappearsto becurrentlylessemotivethanitwas, including agreateracceptancethat wehavecertainsocietalchallenges thatneedtobeaddressedfirst,but alesseracceptancethattheGovernmentisdealingwiththosechallenges. Thefactthatthetaxdebatebetween thetwomajorpartiesislargelyatthe marginhelpsdampenthecurrent debate,withthesentimentlikelyto onlybecomestrainedifthepolicy differencesgrow.
What’suncleariswhetherandto whatextentthisisdrivenbyrespondentsseeingmorevisiblechallenges withthoseatthatendofthewealth spectrum,includinghomelessness, thetaxburdenfallingdisproportionatelymoreonlabourthancapital, and/orthegenerallackof acapital gainstaxinNZ.
Consistentwithsomeoftheearlier comments,andasevidentinthe natureoftaxpoliciesdifferencesas betweenLabourandNational,the politicaltaxpolicydebateisvery muchatthemarginhavingregardthe totalityoftaxpolicysettings.
“Focusoneconomicgrowthand jobgrowthwhichwillliftincomes”, says afoodindustryCEO.Aninfrastructurebosshas asimilarcomment suggestingthegovernmentfocuses on:“Building acompetitiveeconomy andliftingproductivity.”ChrisQuin, FoodstuffsNorthIslandCEO,says: “Reducingtaxburdenatlowerincomelevelstobalanceincomeand costbetter”.
axandtaxpolicyseemto garnerasmanyopinionsas therearetaxpayers.
Themargincanhoweverbequite anemotiveone,withpolarisedviews oftenshapedbythepersonallens
National’splantoindexpersonaltax ratesgetsthefullsupportof42per centofsurveyrespondentswith41
Thelikelihoodbeingthatallthese factorsandmorearepossiblycoming intoplay.
Viewsoftenshapedbythelensthroughwhichrespondentsviewfairnessandequity,writes ThomasPippos
TheGreens’taxpolicieswerenot popularwithsurveyrespondents. Almost90percentsaytheyhaveno supportfortheideaof awealthtax onnetworthofmorethan$1m.
Two-thirdsofbusinessleaders,62per cent,saytheyhaveheightenedlevels ofconcernaboutwealthinequality aftersuccessivewavesofquantitativeeasingandmonetarypolicyresponsesincreasedthevalueofmany assets. Athird,35percent,saythey
● ThomasPipposischairofDeloitte
TheGovernment’splannedsocial unemploymentinsuranceschemeis unpopularwithoverhalf(62percent) ofsurveyrespondentssayingthey havenosupportforplan.Just19per centsaytheysupportit.
Greens’taxpolicies
Morethisyear(71percentversus 59percent)continuetobelievethat theGovernment’sroleinwealthinequalityisensuringsuitablelevelsof welfareandincome(thatis aheightenedsafetynet),withthemajorityof respondents(80percent)continuing tohavenorealattractiontogenerally taxingwealthandassets(outsideof capitalgains)inadditiontoincome (acceptingsomecommentsarguing theoppositeforNewZealand’smost wealthy).
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backintodarkages.”Anotherdirector says:“Thewealthprojectismisguidedandjustleadstothewealthy holdingtheirassetsoffshore.”
Interestingly,lookingattheresults fromtheothersideofthesamecoin, intermsofLabour’staxpoliciesand thoseofNationalthatlooktorepeal thesame,thereappearstobe astatisticallysignificantlevelofrespondents whoareunattractedtothecurrent taxsettings,butappearbegrudgingly moreacceptingofthemremaining, whichmaystemfromrespondents acceptingthenecessityofraisingthis additionalrevenuegiventhewider contextNewZealandfaces(as broughtoutincertaincomments).
Sevenin10NewZealandbusiness leadersbelievethegovernment’s mainroleintacklingwealthinequalityshouldbethrough“ensuringsuitableminimumlevelsofwelfareand income”.Inotherwords, aheightened safetynet.Some13percentofthose answeringthequestionthinktaxing wealthandassetsinadditiontoincomeistheanswer.Noonethinks taxingincomeat alevelhigherthan 39percentis aviableoption.
hascostusbusiness
Ofthetwobroadareas,the39per centtaxratecontinuestobeas largelyunpopularasitwasinprior years,with48percentofall respondentsnotsupportiveofit,and another16percentonlysomewhat supportive.Inmanyrespectsthatis notthatsurprising,asitislargely symbolicinnatureandreallyonly impactsthosethatderivematerial levelsofincomeintheirownnames thatcannotbeleftwithininvestment structures.Itdoesn’tthereforeimpact NewZealand’smostwealthy,it exacerbatesthetaxationoflabour overcapital,anditwouldimpact mostrespondents.
T
Thereis aheightenedviewthatthe Governmentislookingtotaxcapital further,havingregardtothevarious wealthdiscloserprojectsinplay; whethertheHighWealthprojectand orthenewreportingrequirementsfor domestictrusts;witharound79per centofrespondentsfeelingthisisnot justaboutgatheringinformationto betterunderstandthelieoftheland, butalso ameanstoanendtotax capital(insomeway).
Nosimpleanswertothe taxquestion
Consistentwiththis,concerns aroundwealthinequalitycontinueto grow,withrespondentshavinga heightenedlevelofconcernrelative tolastyearat62percent(from57 percent).
Consistentwiththat,survey respondentsremainconcernedwith thecompetitivenessofourcorporate taxrate(54percentversus38per cent),albeitthestrengthofsentiment haswanedby12percentsincelast year.
throughwhichrespondentsviewfairnessandequity.Twoareaswherethis comesintoplayarethevariousresidentialpropertytaxmeasuresand the39percenttaxrate,withboth areascontinuingtoraise afairdegree ofdisquietfromrespondents.
Intermsofcompetitiveness againstAustralia,thesentimentremainshighandunwaveringyearon year(2022=64percentand2021=67 percent),that astagedreductionin ourcorporate28percentratetothe Australian25percentrateisdesirable.
Similarly,thepropertytax measuresgenerallyalsodon’tfind favourwithrespondents,withthe interestdeductibilitylimitationson residentialpropertybeingtheleast popularofall,carryingnearlythe samelevelofunpopularityasthe39 percentratewith45percentwho don’tsupportand20percentwho somewhatsupport.
Timewillthereforetellwhatrole taxwillplayintheupcoming2023’s election.It’sunlikelytobecentre stageandmorelikely acurveballthat couldeitherworkfororagainstone ofthemajorpartiesdependinghow itisplayed;withtherecentGST debacleonKiwiSaverservingasa timelyreminderhowemotivetax policycanbe,andhowitsbestto treadcarefullywhenlookingtonavigatethroughit.
Fornow,thegreaterconcerns seemtobewhetherthattaxrevenue isbeingappropriatelydeployedby theGovernmentanditsagenciesto addresstheissuesathand, aconcern thatappearstobegrowingrather thanabating,andwithrespondents somewhatrestlessandfrustratedaccordingly.
MOODOFTHEBOARDROOM
taxbase,respondentsweresplit 80:20againsttheidea.Ofthoseopposingtheidea,41percentareagainst itgenerally,while 8percentsay:“the fiscalsituationdoesnotrequiresuch ameasure”and31percentsay:“are largelysymbolicanddonotreally addresswealthinequality”.
Morethanninein10business leaderssaytheyhavenosupportfor theGreensideatointroduce atop personaltaxrateof42percentfor anyoneearningover$150,000.One suggeststhe$150kthresholdisfartoo low.TheCEOof acommunications businesssays:“Theirpoliciesdonot aimhighenough.Theyshouldbe taxingthemega-wealthy,nothardworkingKiwis.”
National’staxpolicies
Whenaskediftheysupporta wealthtaxas awayofbroadeningthe
percentsayingithasreasonable support.Only 2percentdonot supportit.Thereislessenthusiasm fortheOpposition’sideatorepeal mostofLabour’spropertyrelated taxes. Athirdofrespondents,34per cent,fullysupporttheplan,while1 centhavenosupport.
Opinionsaremoresplitoverthe proposaltorepealthe39percenttax ratewith41percentofthesample saying they are fully behind it and 23 percentsayingtheyhavenosupport fortheplan. Atechnologycompany chairsayshethinks“thereductionof the39percentmightbepolitically adifficultsell. Ithinktaxcutsfor genuinemiddle-incomepeopleis probablybetter.”
Moreinterestingseemtobethe outcomesofthequestionsthatlook togleanpreferencesaroundthetax policiesofthemajorparties.
Asallparticipantsarenotequally informedanddonothavesimilar outlooks,thenumberof permutationsandcombinationsare endless;notingthatthesurvey respondentsarelikelytobesimilarly informed,andalsohavesomewhat similaroutlooks(intermsofoperatingatthemostseniorlevelsofparticipatingorganisations).
Complicatingmattersisthat outsideoftheperceivedpolicyclarity thatheadlineratesafford,andeven ignoringeffectiverates,thenumber ofpiecestothetaxpolicyjigsawand howtheycanbeconfigured is eyewatering -evenbyequally informedparticipantsthathavesimilaroutlooks.
‘Taxappearstobe currentlylessemotive thanitwas,includinga greateracceptance that wehavecertainsocietal challengesthatneedto beaddressedfirst,buta lesseracceptancethat theGovernmentis dealingwiththose challenges.Thefactthat thetaxdebatebetween thetwomajorpartiesis largelyatthemargin helpsdampenthe currentdebate,withthe sentimentlikelytoonly becomestrainedifthe policydifferencesgrow.’
Acceptingthatcontext,thesurvey resultsdohave acommonalityof themes,andbroadlycontainsimilar sentimentstorecentsurveys,includingthatundertakenlastyear.
Possiblyalignedwiththissentiment,respondentsareraisingmore concerns(inthecomments)around inequalityandequitythantheyhave inthepast,includingtheappropriatenessofthosewiththegreatestlevels ofwealthneedingtocontributemore thanwhattheydo.
RogerPartridge
Anenergysectorchiefexecutive respondedtoLabour’staxpolicies withanalternativetake:“Ithinkthere shouldbe areintroductionofinheritancetax.Youshouldnotbeableto makefuturegenerationswealthy withoutputtingintheeffort.Taxing incomeis aretrogradetax,betterto taxconsumptionfurther.”
RogerPartridge,chairoftheNew ZealandInitiativewarns:“Thewealth taxproposedbytheGreenPartywill leadtocapitalflight,whichisthelast thingNZneeds.”Tworespondents commentedthattheywouldprefer tosee acapitalgainstaxwhiletwo otherssayaninheritancetaxordeath dutywouldbe abetteroption.
Wealthinequality
thecomingyear.Around athird,35 percent,sayspendingwillbeatthe samelevelasthepreviousyear.
Skillsandshortageswasalsolisted asthetopbusinesspriorityforthe next12months.TimRobinsonof RobinsonBowmakerPaulsayshis biggestbusinessregretofthepast yearwas:“Havingtosaynotowork duetohavinginsufficientstaffto resourcethejobs.”
Timefor aresetonimmigrationandinvestment KirkHope’stopissues ● Skillsshortages —aligntraining (needstohappenfaster)and improveimmigrationsettingsto ensureNewZealandisattractive andwelcomingtomigrants ● Attractcapitalbychanging settingsonforeigndirect investment ● Removeuncertaintyfrompolicy settings GrahamSkellern NewZealandisfallingbehindinthe chaseforskilledworkersandit’stime toresetimmigrationandinvestment policies,saysBusinessNZchief executiveKirkHope. “Australia,UKandCanadahave movedfasterinopeninguptheir immigrationpolicies —theyareour biggestcompetitorsforskilled migrantsandwehavetoshiftmodes quitequickly,”Hopesays. Australia,forinstance,has increasedthenumberofpermanent residentvisasfrom160,000to 195,000 ayear. “Therealityisthatwearenotonly competingwithcountriesbutalsowe havebeenoperatingin aconstrained environmentwith astrangetraffic lightsystemthathasbeenan impedimenttomakingdecisions.” HopesaystheCovidandimmigrationsettingshavebeentight,andthe borderonlyfullyopenedinJuly. “We’vehad atrafficlightsystemin orangethatno-oneunderstood —it couldhavegonetogreensoonerand wecouldhavebeenmorepragmatic aroundCovid.Wecouldhaveusedthe testtoworkregimeforeveryoneand notjustforcriticalworkers —meaning peoplecouldgobacktoworkassoon astheytestednegative.Wedoneed tobeconsistentwithothercountries overmanagingCovidandhelpingthe economy.” HopesaysinAustraliathereisone jobvacancyforeveryunemployed person —500,000vacancies —and inNewZealandtwojobvacanciesfor everyunemployedperson. “Wehaveoperatedanadhoc immigrationpolicyanditneedstobe linkedto aclearoverarching economicplanandpopulation strategy. “Wedohave(alotof)peoplein trainingwhichisgoodbutaspeople leavethecountrywewillneedmore midandlow-skilledworkersto replacethem.Thetwovacanciesfor everyunemployedpersonis challengingforNewZealand. “Wehavetobemorestrategic about arangeofpolicyareas.Ifyou have astrategyaroundpopulation— wehavehaphazardlystumbledtofive million —thenyoucanplanfor infrastructureandmaintenanceand notplaycatch-upallthetime.The
46
ofrespondentssaiditwas“very difficult”tofillvacancies
tionofcurrentorproposedgovernmentpolicies.
“Whatdoes astrongdomestic marketlooklike?Whatisthe populationmark?Ofcourse, abigger domesticmarketenablescompanies togrowandoperateinternationally.”
There’s acleartrendtowards increasedspendingoninformation technologywith60percentofSMEs expectingtoincreasebudgetsover theyear.Onlyoneineight,12.5per cent,saytheywillspendless.
Hopesaysbusinessconfidenceis lowandthepolicyenvironmentis quitevolatile.Businessesaren’tsure whatcomesnext.
Skillsandlabourshortagestopped thelistwhenmemberswereasked tolistthemainconcernsfacingtheir businessesandagainwhenaskedto
killsandlabourshortagesremain apressingissueforNew Zealand’ssmallandmedium businesses(SMEs).
Two-thirds,65percent,ofBusinessNZ respondentssaytheyareconcerned thatNewZealand’sheadlinecorporatetaxrateisnotinternationally competitiveenoughtoattractforeign investment.Thisisupfrom40per centinlastyear’ssurvey.
“Beforeandduringthefirststages ofCovidwewereanattractiveplace toliveandwork;thathaschanged overthecourseofthepandemic.We havesomecatchinguptodo.
Three-quartersofrespondents,75 percent,wantthegovernmentto consider aphasedreductionofthe headlinecorporaterateto25percent by2027.Thiswouldbringtheheadlinecorporatetaxrateinlinewith Australia. InfrastructureCommissionhasdone workonthis.
Spending 45% ofrespondentsexpecttoincrease theircapitalexpenditureinthe comingyear. Tax 65% respondentssaytheyareconcerned thatNewZealand’sheadline corporatetaxrateisnot internationallycompetitiveenough toattractforeigninvestment Businessleadersareconcernedaboutthechallengeoftryingtofillvacancies,writes BillBennett
“WehavetonormaliseourCovid settingsandshiftourimmigration settingstoalignwiththerestofthe world,”saysHope.
Spending
ClosetohalfofallBusinessNZrespondents —45percent —expectto increasetheircapitalexpenditurein
Thesurveyattractedresponses from102respondents.
S
Oneproposedgovernmentpolicy thatwillget atickfrombusinessis itsplannedreplacementoftheResourceManagementAct.TheRMAis unlovedbyBusinessNZmembers. WhenaskedtoratehowwelltheRMA hasworkedtofacilitategrowthand
“Thereisplentyofautomation workgoingonbutweneed aregime thatwelcomesinvestmentandcapital asbusinessesgrapplewithskills shortages.Wealsoneedpeopleand theirrelationshipstoexpandthe capitalintensityinNewZealand.”
RMA 67
RMA
Tax
Diggingdeeper,BusinessNZasked memberswhetherimmigrationrestrictionsweremakingitharderto findorretainworkers.Almosthalf,43 percent,saidtherestrictionsmake it“verydifficult”and,echoingthe earlierquestion,no-oneanswering thesurveythoughttherestrictions madeit“veryeasy”.Onlythreeper centthoughttheymadeit“easy”.
ItappearsthatmostNewZealand SMEsaretacklingtheskillsshortage head-on.
Whenthesurveyaskedhowwell theirlocalcouncilperformedin facilitatinggrowthanddevelopment theresponseswere alittlelessnegativebutstillheavilyskewedtothe lowendwith46percentsayingcouncilshadnotperformedwellandnone sayingtheyperformed“verywell”.
Theoverwhelmingmajoritysaid theyfounditdifficulttofillvacancies. Justunderhalftherespondents,46 percent,saiditwas“verydifficult” and afurther41percentsaiditwas “difficult”.No-oneansweringthesurveythoughtfillingvacancieswas “veryeasy”.
Inflationandcostofliving pressureswerealsohighonthelist ofmemberconcerns.Reflectingthis, TimBayleyofBaywickWineCellars sayshisbiggestregretduringthelast yearwas:“Notincreasingmyprices sooner.”
listtheconcernsfacingthewider businesscommunity.
Staffshortages %
Otherconcernsmentionedwere thecurrentimmigrationrestrictions andtheuncertaintyaroundthedirec-
B24 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022 MOODOFTHEBOARDROOM
Achievementsandregrets Leaderssharetheirbestachievementandbiggestregretofthepast12months BESTACHIEVEMENT: “Investinginourpeople(long term)andstrategyaround thistocontinuetoattractand retainthebest” BIGGESTREGRET: “The challenge(ongoing)ofIT systems” —KiriBarfoot, Barfoot&Thompson BESTACHIEVEMENT: “SurvivingCovidimpactsand govtpolicychanges/ additionalsickleave/holiday etc” BIGGESTREGRET: “Not maintainingprovisionaltax payments” —FraserWood StitchPerfect BESTACHIEVEMENT: “Rebuildofbusiness Methodology” BIGGESTREGRET: “Slow entrytonewmarkets” — ScottFullerXception BESTACHIEVEMENT: “Exceedinggrowth expectationsbychanging distributionpolicy” BIGGESTREGRET: “Notto make acrucialchangeearlier” —RichardKettleAHDLt BESTACHIEVEMENT: “Signingleaseon afactory thattreblesourfloorspace” BIGGESTREGRET: “Insufficientinvestmentin ERPsoftware” —Keith Jessop,FlowKayaks BESTACHIEVEMENT: “Winningtwokeyprojectsto reshapetheelectricitysector inWesternAustralia” BIGGESTREGRET: “Having tosaynotoworkdueto havinginsufficientstaffto resourcethejobs” —Tim Robinson,Robinson BowmakerPaul BESTACHIEVEMENT: “Makingmybusiness independentofother suppliers” BIGGESTREGRET: “Not increasingmypricessooner” —TimBayleyBaywick WineCellars
Shortageof skillsand labour topconcerns %
Inits2022survey,BusinessNZ askedmembers,whichincorporate SMEs,howdifficulttheyfounditto fillvacanciesoverthepastyearon ascaleofonetofive.
PizazzGroupfounderDavid Pountneysayshisbusiness’best achievementoflastyearwas anew eCommercewebsite.KeithJessop, theownerofFlowKayakssayshis biggestregretlastyearwas:“InsufficientinvestmentinERP(enterprise resourceplanning)software.”Kiri Barfootsaystheongoingchallengeof ITsystemswasherbiggestregretof theyear.
ofrespondentsdescribedtheRMA asperforming“notwell”forgrowth anddevelopment.
Hopesaystheforeigndirect investmentrulesareverytightand asmoretechnologyandautomation isdeployedtherulesshouldbe directedtowardsattractingcapital andskilledmigrantsintoNew Zealand.
development,on ascaleofonetofive, two-thirdsofrespondents(67per cent)optedforthelowestrank:“not well”. Aquarterrateditattwoand sevenpercentgaveit aneutralthree rating.NorespondentsgavetheRMA apositiverating.
Threequartersofsurvey respondentssaidtheirorganisations increasedtheirinvestmentintraining andskillsdevelopment overthelast year.KiriBarfootofBarfoot &Thompsonsayshercompany’sbestachievementinthelastyearhasbeen: “Investinginourpeoplelongterm andhaving astrategyaroundthisto continuetoattractandretainthe best.”
There’slittlelove amongCEOsforthe RMAasreform nears,writes BillBennett
‘Keeping thecountry inaspic’
MarkCairns,formerlyCEOofPortofTauranga,sayswhiletheRMAisnolongerhisconcern;“four-yeardelaysto consentingPortofTauranga’sberthexpansionare adisgrace”.
ThethreenewActswillbethe NaturalandBuiltEnvironmentsAct (NBA),theStrategicPlanningAct (SPA)andtheClimateChangeAdaptationAct(CAA).
ClimateAdaptationAct(CAA) willaddresscomplexissues associatedwithmanagedretreat.
Whenaskedtoratehowwellthe RMAworkstofacilitategrowthand developmenton ascaleofoneto five,respondentstothe Herald’s CEOSurveyclusteredatthebottom endofthescalewith31percent givingit ascoreofone.
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Thethreepiecesoflegislation replacingtheResourceManagementActaremadeupof: NaturalandBuiltEnvironments Act(NBA)isthemainreplacement fortheRMA.
ProfessionaldirectorMark Cairns,formerlyCEOofPortof Tauranga,sayswhiletheRMAisno
Equallyitisusedasa whippingboywhen thereareotherproblems holding back growth suchaspoor productivity,restrictions onforeigndirect investmentandsoon.
longerhisconcern,“four-year delaystoconsentingPortofTauranga’sberthexpansionare adisgracegivenourrelianceonshipping as asmallislandtradingnation,a longwayfromourexportmarkets.”
Onebusinessleadersuggestedit shouldbegiven ascoreofzero.
TheCEOofanenvironmental firmsays:“Whileitcanbeimproved, thereareseriousconcernsabout howtheNBAwillworkinpractice.”
No-onegaveit ascoreoffive.
MatthewCockram,chiefexecutiveofCooperandCompanywhich hasdriventhedevelopmentof Auckand’sBritomart,saystheRMA isnotoptimal;“equallyitisusedas awhippingboywhenthereare otherproblemsholdingback growthsuchaspoorproductivity, restrictionsonforeigndirectinvestmentandsoon.”
AnaviationCEOdescribeditas “ashamblesinwaiting”.
Some36percentgave a2/5rating and17percent3/5.
TheCEOof adevelopmentbusinessdescribedtheactas“ahuge train-crashofmismanagement”.
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T
AresourcessectorCEOsaysthe existingact“setsthecountryin aspic”.
heResourceManagement Actissettoberepealedand replacedwiththreenew Actsbeforetheendofthe year.Itclearlywon’tbemissedin thenation’sboardrooms.
Itwillseemorethan100existing RMAcouncilplanningdocuments reducedtoabout14.
Successful business stories Make yoursone of them
AleadingbankersaystheRMA hasbeen amajorconstrainton developmentsinceitsinceptionin 1991.
FultonHoganCEOCosBruyn saystheactwasbecoming increasinglydifficulttonavigate.He describeditas“averycostlyand time-consumingprocesswithno guaranteeinoutcomeandbecoming abarriertoentry”.
Therewasplentyofcriticalcommentreflectingthebusinesssector’s frustrationindealingwithRMA hurdlesinrecentyears.
Noteveryoneishappyaboutthe replacementlegislation.
Businessleadershavecalledfor RMAreformformorethan adecade. Thependinglegislationfollowsa July2020reviewconductedby formerAppealCourtJudgeTony Randerson.
StrategicPlanningAct(SPA)will requirethedevelopmentoflongtermregionalspatialstrategies.
nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B25
MatthewCockram
CraigStobo,thechairofPrecinct Properties,notes:“Itisironicthat ministersalsoconsidertheRMAto beineffective.However,theirmitigant —thedevelopmentoftheInfrastructureFundingandFinancing programmeremainsstillborn.Subsequentministerialfasttrack consentingbegsthequestionwhy wewouldgobacktoslowtrack consenting?”
Therewerefewpositivewords abouttheRMAalthough auniversityleadersaysit“Hasmitigated somerisks,buthasnotenabledthe opportunitieswe’veallneeded,at therateandinthewaysweneed.”
BecaexecutivechairDavid CartersaystheRMAisinneedof arefresh.
● AucklandMayoralelectionchoices givemegreatconcern.Weneedan environmentwhereourbestand brightestareencouragedtostepup.
MikeBennetts
Topissuesfacingthenation— CEOshavethefinalword
BryanThomson HarcourtsNewZealand
● Educationneeds amajorshakeup (let’sgetbacktobasics).
● Politicaluncertainty.Loweringthe temperatureandincreasinggenuine communicationaboutchange.
CosBruyn
BrettO’Riley
● NZisbecomingincreasingly polarised.Weneedanopennational conversationaboutissuesthatdivide.
● Freehealthcare,educationand digitalaccessforall.
● Exports.Moretrademissionsand changetheMinisterofForeignAffairs.
CraigStobo PrecinctProperties
VodafoneNZ
● Health:Needtoreduce administrativecostsanddrivemore productivityoutofsector.
● Increaseremunerationforthe
WestpacNZ
ASB
● Inequalityakapoverty .Therehas tobe asustainedeffortatsupportfor workingclassyouthandfamilies.
● Incompetentgovernment strugglingtomanagebloatedreform.
KevinObern OfficeMax(NZ)
MichaelLorimer GrantSamuel
ChrisQuin Foodstuffs(NorthIsland)
● Createclearlongtermstrategy andpoliciesforthecountry.Increase theelectioncycletofouryears.
● Anefficienteconomywithminimal compliancecostswhilestillgetting keyresults.
● Stressanduncertainty .Ensuring stabilityandconfidenceinwhanau.
● Gettingwinsontheboardwith carbonfootprintdeclines —business specificplans.
● Supportinghomeowners challengedbyhigherinterestrates— beingawareofissuewithbusiness helpatthemargin.
MOODOFTHEBOARDROOM
EMA
● Challengingeconomicconditions —targetedsupport.
RogerPartridge
politicians.
● Taminginflationwithouttriggering
● Ukrainewarspillingoverinto NATOcountries.Increaseeconomic sanctionsonRussiatohitthecitizens.
DavidCarter Beca
● Labour —throughimmigration settings.
● Divisivenessandpolarisation— we’retearingourselvesapart, multiplestreamsaroundeducation, justice,equityetc.
● Continuetoimplementcarbon reductiontargetstoachievea minimumof1.5degreewarming.
CatherineMcGrath
● Growinginequalityexacerbatedby highinflation.AtASBwearedoubling downonfinancialwellbeingefforts andpartneringwithcommunity groupstofindeffectivewaysto supportthosewhoneedhelp.
● Changeimmigrationsettingsto ensureNZmoreattractivetoskilled migrants.Moreroles(likenurses)in favouredcategoryandaccelerate/ shortentheapprovalprocess.
● NZwillneverbe ahigh-productivity,high-wagecountrythatshares thebenefitsofprosperityfairlyunless werepairoureducationsystem.
● Risingcrime:Needmoreeffective policinganddeterrents.
MarkCairns Director
● Assistancetotrulyvulnerable Kiwis.
● Shortageofworkersandneedfor technologytotransformbusiness models.
● Skillsshortage —combinationof easingimmigrationsettingsaswellas makingAotearoaanaspirational placetolive.
● Liftthecapabilityofourpoliticians.
● Inflationmustbetamed,this requirescourageousmonetarypolicy supportedbyfiscalprudence.
● Geopoliticaluncertainty— diversificationofexportmarkets.
● Theabsoluteandrelativedecline ofoureducationstandards.
● Boostproductivity —digital transformationoftheNZeconomyto improvecompetitivenessand integrationwiththeglobaleconomy
It won’tchange the world.
Surveyrespondentsweregiventheoptiontocommenton how theywouldresolvethetopissuesfacingthenation
FultonHogan
● Linecallbetween“Ongoing depletionofourNaturalCapital”and “RisingSocialInequity/Anti-Social Behaviours”(challengingtofocuson thefuturewhentheproblemsfor manyareimmediate).
● Immigrationandtalent,open immigrationtogrowproductivity, alignwithBusinessonwhatisneeded.
JasonParis
JonathanMason Vector
Itjustworks.
● Costoflivingcrisisparticularly foodandhousing.
● Pricestability(controlinflation)— resolvethefacttheReserveBank mandateofpricestabilityand maximumemploymentis aconflict.
● Government’spolicysettingsand policyexecution...theworst governmentsinceMuldoon.
● Socialhousingandsupportfor thoseunabletosupportthemselves vsaddressingthosewhochooseto notactas acontributingmemberof societyeventhoughtheyarecapable ofdoingso.Weneedtohave asafety netthatdoesn’tinvolvemotel accommodation.
● Education —a needtobothliftthe minimumstandardsandgettingour mokopunabacktoschool.
FabianPartigliani RedShieldSecurity
● Lackofconfidenceinprudent/ reliableGovernmentdecisionmaking.
● LeadershipatCentralGovernment seemstolackbusinessknowledge andrespectforthebusinesssector. Weneedbetterengagementand understandingoftherolebusiness playsinprosperityofourpopulation.
● Climate.Encouragegreater investmentinrenewables.
● Educationsystemrequiresa systematicandstrategicapproachto solving agrowinggap.
BagrieEconomics
● Investinginthetransitionto alow carbonfuture.Weneedtobias towardsoptionsthatprovidethe greatestreductionforthelowestcost.
● Increasingregulationthatisnot drivingbettereconomicoutcomes. Governmentoversteppingitsrole.
arecession —goodRBNZpolicy.
VittoriaShortt
WA VE200263NZH B26 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022
● Inflation:AdrianOrrneedshelp fromtheGovernment.Themoneyline fortheeconomyisitseconomic capacity.Thatlineneedstoberebuilt.
● Labourandskillsshortages —open borders, attract and incentivise talent, enablemoreyoungtourist-workers.
TheNewZealandInitiative
Ontherecord CameronBagrie
RobCampbell Director
ZEnergy
● Educationandtheopportunityfor business-partnereddualeducation.
● Somethinghaschangedsince Covid.Findingandretaininglabouris becomingincreasinglymoredifficult.
● Infrastructure.Wetalkabout along termplanbutreallydonothaveone.
● Addressskillsshortage— structuralreformtoNZimmigration lawsandpolicies.
● FixAuckland’smainroad(s) —it’s beenbrokenandworked-onfor decadesandwefacethird-world congestionon adailybasis:the benefitsoffixingthiswouldbevast.
● Theriseofreligiousintolerance. FromMosqueattackstothe campaignsthatcriticiseandaimtodeconstructreligiousschool’svalues andbeliefs.Weneedtoprotect
● Skillsdeficitexacerbatingthe economiccycletothedownside.
● Globaluncertainty —notmuchthat canbedone.
CommercialPropertyCEO
Investmentbanker
● Reconnectionwiththeworld,with thebordersreopening —putinplace intermediarysettingstoallowa strongreturntomarket,with permanentsettingstofollow.
● Standardofeducationand engagementofstudents.Weneedto payteachersmore,focuson fundamentals,andenable
Tourismboss
● Immigrationsetting —relaxto enablemoreinboundtalent.
● Growingsocialinequality— developcompellingGovernmentplan toaddressminimumwageand greatercountryprosperity.
● PublicServicespending —change government/councilorchangethe waytheyspend.
Professionalfirmboss
Topissuesfacingthenation— CEOshavethefinalword
MarketingCEO
● Wellingtonbureaucracyculture.
● Lackof acoherentGovernment plantodriveCovidrecovery/medium termprosperity.
● NZexport/importsupplychainis notsolvingitselfatthesameratethe globalsituationis,andtheupper northislandportcapacityisatthe core of the problem. Get the Port of Taurangaberthextensionmoving, whichisstuckintheenvironmental court,forwardiscriticaltoshortterm resilience.
Notforattribution
● Policysettings/directionbasedon Wellingtonbeltwayparadigmsthat don’tmatchreality.Introducesome reality/datarequirements.
Opentheborderstoskillsand immigration.Othercountriesmoving muchmoreaggressively.
MOODOFTHEBOARDROOM nzherald.co.nz TheNewZealandHerald | Friday,September23,2022 B27
● Thelocalisingandconsolidationof radicalandextremistdiscourses,now connectedwiththeanti-vaxresponse, butwhichhasunderminedcorecivic positionsinNZandwhichrisks distortingourcoredemocratic processesandcivilsociety(aswe’ve seeninlocalbodyelectionsandwith anelectionyearcomingup).
● Immigrationpolicy —stepback andembracegrowth.
EducationCEO
● Allowbothsidesofthedebate— ifweareseriousaboutclimate change,weshoulddebatethemerits ofnuclearpower. Iamnotinfavour becauseofearthquakeriskbutwhy arewetryingtodefygravitywithLake Onslowwithnoopportunityto debate?
EnergyCEO
● Softmediafailingtoaddressthe deficienciesofcentralandlocal government.
● LawandOrder:Whilepreventive initiativeshelpinthemediumterm, intheshorttermtheremustalsobe consequencesforlawlessness.Police needtoreturntopolicingtodemand, beingvisibleatknowntimes/places wherecrimeratesarehigh.
HousingCEO
● Insincereandrelativelyinept Governmentresponses/policies— could/shouldbefixedbypressure fromoppositionparty?
● Amarketdownturnandassetprice deflationhitting‘middle’NewZealand —addressedbyappropriate GovernmentandReserveBank settingsandresponses.
● Immigrationofskilledlabour: developworld-classpolicyand promotion,linkedtotourism, investment,business,artsandculture andsport.
● RandomGovernmentactions basedonpoordataandpoorpolicy.
● Provisionofroadingandhousing inWellington(thecurrentplanswill makethecityunliveable).
● NZ’swoefulproductivity —create astructuretotrulydrivethis(notthe ProductivityCommission!)
Constructionfirmboss
PrivateEquityboss
● Housingaffordability/youth unabletogetahead.
● ForgettingCovidandgettingback to“normal”ortheotherwayaround —getbackto“normal”,byforgetting Covid.
● Executionofthevastarrayof massivechangeprojects.
● ResolvingEthno-Nationalismvs Democratic-Nationalism— referendum.
Financialcompanychair
● Abilitytoputinplacegrowth initiatives.OftenlocalGovernment hurdlesversuscentralGovernment.
● Furtheropportunityforkeyassets likeKiwiRailtobe amoreeffective partofensuringwehave acompetitiveexport /importsupplychain.
BUSINESS REPORTS WITHTHANKS TO OUR SPONSORS
TradeCEO
● Qualityofeducationaloutcomes. MinistryofEducationneedstobe broughttoheel.
Entertainmentfirmboss
LogisticsfirmCEO
performancemanagementin teaching.
EnvironmentCEO
● Education,Health,Sustainability— threeportfoliosthatrequire adeep strategy,welldesigned,longtermand wellresourced.
● Furthereasingofimmigration settingstoaddressskilledshortages inkeysectors(technology,primary sectoretc).
● LevelofincreaseinGovernment debt —$62.6billion —forCovid.No solutioninsight.Willneedtobe servicedinanincreasinginterest environmentandrepaid.
● Goodintentingovernmentgetting unwoundbybadorconfusedpolicy. Listentoindustrybefore implementingbadorconfusedpolicy.
● Labourshortages:educationand training afocusformediumtermand inshorttermfar,farmorepermissive immigrationpolicyisoverdue.
Manufacturingboss
● Centralgovernment’slackof coherentstrategiesandplans.
● Sanctityofpropertyownership, andequalityunderlawforallKiwis (powergrabssuchasThreeWaters, variousstalled/canned developments, adividedhealth system).
● Inequality:thecontinued intractableinequalityinhealth, educationandhousing —changethe quantumofinvestment,alongsidethe currentsystemschange(andmore).
● Immigration.Needtargetedand streamlinedimmigrationtoenable businessesandeconomytogrowand deliverservices.
● Localgovernment’slackof coherentstrategiesandplans.
Lawfirmboss
● IncompetentGovernment —vote themout.
● LawandOrder —weneedto addressthedegreeoflawlessness thathasemergedandisbreaking downvalues. astrategyisrequired.
● Costoffoodandfoodsecurity— abasichumanrightthatweneedto address.Notsure Ihavetheanswer asitiscomplicatedbutgivenwe producemorethatwecaneatwe shouldbeabletoaddressthis.
freedomofreligioninallits expressionsinlawandallowits peacefulpractice.
● Forging aconstructiverelationship withMa¯ori.
● Productivity —needtoresolvethe mixbetweenhandoutsversus ahand up;workfromhomeis aneedlethat needstobethreaded.Develop aplan toincreaseoverallproductiveness.
Oil&GasCEO
● Immigrationsettings —tootight andtoorestrictive.Thisis arealdrag ontheeconomyandhighly inflationary.
● Shortageoflabour —openupthe borderforsensibleimmigration.
Needs amassivechangeastheyare arrogant, out of touch, can’t deliver andsomearevindictive.
● Energysecurity ourgaswillrun outandwehavenobackupsave burningloadsofcoal.
WE’RE HERE TO HELP YOUR BUSINESS Talk to us about your currentbankingneeds. westpac.co.nz WestpacNew ZealandLimited. B28 nzherald.co.nz | TheNewZealandHerald | Friday,September23,2022
