Tuesday,September 24,2019 Moodofthe BOARDROOMnzherald.co.nz/business

Walking a tightrope

150+ CEOs sharetheir views INSIDE •FranO’Sullivan•Thomas Pippos •GillSouth •LiamDann •Tim McCready •DuncanBridgeman D2 nzherald.co.nz | The Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM Mood of the Boardroom 2019 What’s inside The Herald’s Mood of the Boardroom 2019 CEOs Survey attracted participation from 157 respondents. This year there were some 140 chief executives including CEOs of some of NZ’s biggest companies, some publicly owned institutions and heads of several influential business organisations and several directors. The Herald survey is conducted in association with BusinessNZ. BusinessNZ put 15 questions from the survey to its membership attracting afurther 150 responses from business heads. The survey is now in its 18th year having been launched in December 2002 within a NZ Herald State of the Nation report.

Watch the debate Finance Minister Home and away The confidence National’s fast Executives’ pick and National’s Finance —D4 trick —D6-9 learner —D13 for mayor —D14 Spokesperson Paul Goldsmith will debate the survey results at a breakfast at the Cordis Hotel in this morning. The debate will be chaired by NZME managing editor Shayne Currie. nzherald.co.nz will feature video from the debate and interviews with leading CEOs attending the breakfast.

MOOD OF THE BOARDROOM Executive Editor: Fran O’Sullivan Writers: Bill Bennett, Duncan Bridgeman, Liam Dann, Tim McCready, Thomas Pippos and Gill South. Subeditor: Isobel Marriner Cover: Richard Dale Graphics: Richard Dale, Isobel Marriner Advertising: Christine Moxham Survey Co-ordination: Natalia Banking and Orr Coalition power Tax reform in limbo Rimell, Tania Calderon —D15-17 plays —D18-19 —D24 Mood of the Boardroom event director: Sarah D’Audney Growing prosperity and potential nzherald.co.nz | | Tuesday,September 24, 2019 D3

MOOD OF THE BOARDROOM Walking atightrope

PM loses ground in survey as CEOs citelackofexecution andfailure to ignite business confidence

CEOs Optimism Index Mood of the Aretheymoreorlessoptimistic Boardroom than oneyearago about: Fran Businesssituation in your O’Sullivan industry Weighted Average 2.37/5 rime Minister Jacinda Much less optimistic 17% Ardern’s standing has taken Slightlylessoptimistic 45% atumble among CEOs re- Thesameaslastyear 23% P sponding to the Herald’s Slightlymoreoptimistic 13% 2019 Mood of the Boardroom Survey. Much moreoptimistic 2% They now rank her fifth among the Cabinet Ministers on her ministerial NewZealandeconomy performance,marginally ahead of Weighted Average 1.96/5 leader Winston Much less optimistic 25% Peters and down from her second place ranking last year where she was Slightlylessoptimistic 58% seen as the Government’s overall Thesameaslastyear 13% standout performer. Slightlymoreoptimistic 4% The Herald survey, which is taken Much moreoptimistic 0% in conjunction with BusinessNZ, attracted 157 respondents from the Theglobaleconomy “big end of town” with afurther 150 Weighted Average 1.70/5 SME leaders who responded to a Much less optimistic 40% shorter version. Many of the NZX Top Slightlylessoptimistic 52% 50 listed companies were contribu- tors along with chief executives from Thesameaslastyear 6% all major trading banks, key dairy Slightlymoreoptimistic 1% sector players, araft of professional Much moreoptimistic 1% advisory firms and several well- and Grant Robertson under pressure in their “Year of Delivery” CEOs were asked to rate each factor on placed directors. ascale of 1-5: They cite the Prime Minister’s NZ Initiativechair Roger Partridge bate is the first time CEOs will have 1=muchless optimisticand strengths as her celebrity and per- judged him head to head with Robert- 5=muchmoreoptimistic formance on the international stage. said the Government had shown a son in this forum. Source:NZHerald2019Mood of theBoardroom Her handling of the willingness to listen and to Among the issues concerning CEOs Survey massacre has been applauded by reconsider policy proposals in CEOs: chief executives. But they say her Dealing to infrastructure const- Government’sfailure to execute in a response to evidence. raints and congestion on Auckland timely fashion on key Government roads rate high: 86 per cent agree with CEOs rate theCoalition policies, combined with an inability the Prime Minister’s Business Ad- to stoke business confidence, is con- visory Council that infrastructure is Government’s tributing to an overall loss of confid- abysmal in some areas like address- newbie Cabinet Minister at a“crisis point”. performance in its ence in the New Zealand economy. ing housing. in this year’s ministerial ratings this The survey also reveals 55 per cent “YearofDelivery” Business confidence as measured “Overall the Government has been will be some comfort. It is pertinent of CEOs believe banks are scare- by the Herald survey is now at is hopeless at meeting its own targets,” to note however, that more chief mongering when they say they will More impressive lowest ebb across all three metrics said Devon Funds Management executives rated him “most impress- pull operations back from New Zea- since the Global FinancialCrisis. chairman Paul Glass. ive”, than any of his other colleagues. land if the Reserve Bank’s capital Takingmental health 3.24 The upshot is the Ardern Govern- “Against the hype and even with NZ Initiative chair Roger Partridge proposals are implemented. seriously ment is now walking atightrope as its own PR machine this Government said the Government had shown a Seventy-three per cent say Phil Maintaining fiscal 3.17 it endeavours to build momentum hasn’t delivered on its key election willingness to listen and to reconsider Goff has the best attributes to be the esponsibility and restore domestic confidence be- policies on housing, child poverty, policy proposals in response to evi- next . Just 11 per SupportingMāoriand 2.99 fore any further international disrup- Ma¯ori economic and regional de- dence. cent rate . Pasifika aspirations tion drives sentiment down further. velopment,” said aMa¯ ori business But said Mainfreight CEO Don Aleadership vacuum has opened leader. Braid, “too much time in opposition Improvingchildwellbeing 2.67 up domestically as the Coalition Abanker said policy development has dulled the ability to deliver policy. Ardern: My hope, on international 2.63 makes heavy weather out of its had alate start. “Some of the policies More action. Less talk.” arising tidethat tradeagreements efforts to cement successes in what are good such as the intent behind New Zealand First is seen as strong Regional development 2.56 it has promoted as its “Year of Deliv- KiwiBuild. But the execution capa- influencer within Government with willlift all boats ery”. As the adjoining table shows bility has been overestimated and leader being particu- Policy,planningand 2.08 chief executives ranked the Coali- timeframes unrealistic.” larly successful in moderating Labour —D23 consultation with business tion’s focus on taking mental health For the Finance Minister the 2019 policies that business and the farming Buildingaproductive 1.85 seriously —one of arange of focuses survey is amixed bag: 54 per cent of community generally opposed, such Within their own businesses, nation in Finance Minister Grant Robertson’s respondents feel he is delivering as the proposals and labour and skills shortages rate as the Policy execution 1.69 first Wellbeing Budget —asthe most credible economic managementand employment changes. top factor keeping CEOs awake at Transformingthe economy 1.64 impressive among abunch of rated highly his maintenance of fiscal National Leader , night. indicators. But it has been rated as focus. Given he was pipped by also downgraded by CEOs this year, BusinessNZ sent 15 questionsfrom Addressingtransport 1.57 is now sitting well behind other the Mood of the Boardroom survey constraints Said Mainfreight’s Don Braid: too colleagues such as in to its members. It revealed top con- Addressingthe housing 1.55 their estimation of their respective cerns among its members were un- shortage/unaffordability much time in opposition has performances. certainty about the Government’s dulled the ability to deliver National’s Paul Goldsmith, is just policy direction, the international Less impressive policy. More action. Less talk. three months into the job as finance trade environment and being able to Scale1-5where 1=not impressive and spokesman, but 43 per cent say he attract talent. 5=very impressive

has the right qualities to deliver; 45 Source:NZHerald2019Mood of theBoardroom per cent are unsure. His debut in ● D30-31: Not acomfortable CEOs Survey today’s Mood of the Boardroom de- Coalition Legislate to removethe taint of backdoor funding

CEOs sent aclear message in the nationals but classes New Zealand- Transparency and in our foreign donation laws,” says Mainfreight’s Don Braid suggests Mood of the Boardroom survey —75 registered companies as local even aproperty firm boss. we should have zero tolerance: “no per cent of them agreeing the Gov- if their control or ownership is awareness of whois Chorus CEO Kate McKenzie says international political donations ernment should legislate to tighten foreign. all donors expect to obtain some should be allowed.” foreign donation laws in order to The donation issue was thrust into donatingand why influence as aresult of donating, Whereas adairy company chief remove the taint of backdoor funding the spotlight again last month when though she is “not sure ‘foreign’ executive suggests he is “not so sure through the use of New Zealand former National Party MP Jami-Lee are the important donors are any better or worse — about the relevance of donations, companies. Just 8per cent said this Ross revealed that then trade min- transparency and awareness of who because foreign actors are present isn’t necessary; 17 per cent were ister Todd McClay had helped to things to focus on. is donating and why are the import- with or without.” unsure. facilitate a$150,000 donation to his ant things to focus on”. However, Westpac CEO David Aparliamentary select inquiry party in 2016 from Chinese million- Kate McKenzie Chair of NZ Local Government McLean says the laws are already committee is looking into domestic aire, Lang Lin, through his New Chorus CEO Funding Agency Craig Stobo agrees, very tight. Deloitte’s CEO Thomas influence and interference by foreign Zealand-registered company Inner suggesting that all political donations Pippos says his sense is “this is anon- state actors. Mongolia Rider Horse Industry NZ should be transparent, which would issue,” suggesting agreater issue New Zealand electoral law forbids Ltd. allow “the fourth estate to then do exists with the use of donations above $1500 from foreign “That is an absurdly large loophole its forensic job”. to peddle fake news. D4 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM How CEOs ranked Cabinetonperformance

Kris Faafoi Grant Robertson Andrew Little David Parker Jacinda Ardern (Commerce/Consumer Affairs) (Finance) (Justice) (Trade and Export Growth) (Prime Minister) . 3.58/5 3.52/5 3.14/5 3.08/5 2.93/5

WinstonPeters Damien O’Connor TraceyMartin (Foreign Affairs/Deputy PM) (Defence) (Agriculture) (Children) (Transport) 2.92/5 2.66/5 2.59/5 2.56/5 1.61/5 —(bottom ranked) Tail-end Faafoi tops list

Commerce Minister seen as an engaging politician withasafe pair of hands, writes FranO’Sullivan

ommerce Minister Kris Along with Little, who also holds KiwiBuild has not progressed as well Craig Stobo. “Hipkins’ solution to cen- of significant change and improve- Faafoi is the politician that the prime security portfolios, Parker or as quickly as we’d hoped or tralise polytechnics doesn’t seem to ments.” most impresses top chief ex- is seen as ahighly competent minister. expected. But our ambition to build have aproblem definition which is Building and Construction Minister C ecutives on their ministerial Faafoi is seen as asafe pair of more affordable houses for New Zea- very poor policy. Otago and South- had surprised, said a performance in this year’s Herald hands. But more than that he is an landers has not changed and neither land polytechnics seem to be doing property CEO. “She has taken acom- CEOs survey. engaging politician with aconsulta- has the public appetite for the Gov- very well catering to the needs of plex portfolio, is working hard and is It is first time in the history of the tive style who listens to business. locals.” mastering it. Mood of the Boardroom survey that The Cabinet is driving change on Phil Twyford’s Agovernment relations firm head “Woods is impressively smart and aminister ranked towards the tail-end multiple fronts and some ministers was pungent. “Twyford’s performance is getting to grips with the Housing of Cabinet at 17th position, and who are seen as making better progress in performance in both in both transport and housing has portfolio remarkably quickly.” has only been in the position since moving the machinery of Govern- transport and housing been appalling. He was lost in housing Wine exporter Erica Crawford January, has substantially outranked ment along than others. and, on transport, allowed the Greens singled out Children’s Minister Tracy his colleagues. “Some ministers have got the bit has been appalling. He to convince him to halt nearly every Martin as the “breakout minister ... But Faafoi, rated at 3.58/5 for his between their teeth and are making was lost in housing. And new roading programme. David Clark she has impressed.” ministerial performance, trumps not real progress,” said Beca Group CEO is anice person but hasn’t aclue what The nine top rated Cabinet Minis- only Finance Minister Grant Robert- Greg Lowe. on transport, allowed the he’s doing in health and Iain Lees- ters by business are shown in the son (3.52/5) who was last year’s top- “Ron Mark is having avery positive Galloway can’t hide the fact he doesn’t graphic above. rated performer in the survey, but also impact in Defence and Defence Indus- Greens to convince him like the business sector. David Parker Other ratings were: Energy Minister Justice Minister Andrew Little (3.14/5), try, Kris Faafoi shows real understand- to halt nearly every new is blinded to rational policy with the (2.44/5), Regional Trade Minister David Parker (3.08/5), ing, energy and integrity, Megan farming sector.” Economic Development Minister Prime Minister Jacinda Ardern Woods is pushing us to abetter hy- roading programme. But others had distinct praise for (2.43/5) Social Develop- (2.93/5) and drogen future, David Parker is acting Government relations firm boss. some Cabinet Ministers. “I strongly ment Minister Winston Peters (2.92/5). on better water quality and Grant suspect that New Zealand owes David (2.40/5), Education Minister Chris CEOs were asked to rate Cabinet Robertson shows abroad understand- ernment to be building affordable Parker adebt of gratitude for getting Hipkins (2.34/5), Health Minister David Ministers on ascale of 1-5 where 1 ing of the drivers of economic homes with 60 per cent of voters in the renamed TTP ratified, despite all Clark (2.33/5), Local Government Min- equals not impressive and 5equals wellbeing”. aColmar Brunton poll saying they three Coalition partners being ister (2.10/5), Building very impressive. Faafoi’s portfolios also include wanted KiwiBuild to continue.” strongly opposed to it pre 2017 elec- and Construction Minister Jenny “The unsung performers of this Broadcasting, Communications and Unsurprisingly, former Housing tion,” said ICBC NZ chair . Salesa (2.01/5), Tourism Minister cabinet are David Parker and Kris Digital Media, Government Digital Minister Phil Twyford tumbled from CEO respondents said it has defin- Kelvin Davis (1.96/5 and Immigration Faafoi,” said aleading banker. “Both Services and the associate Housing seventh on last year’s Cabinet survey, itely been atougher year for Ministers. Minister Iain Lees-Galloway (1.69/5). have reached out to the business responsibility. The Prime Minister said where he was scored at 2.77/5, to “Lots of money allocated but no evi- ● D10: How Grant Robertson really community to genuinely ask for our on announcing his elevation to Cabi- bottom of the pack this year at 1.61/5 dence of real changes or impact as rates views and listened. net and membership of anew min- in the wake of the KiwiBuild fiasco. yet,” said atech services head. “Some ● D11: How business scores the Green “They can also put government isterial housing team led by Megan “Twyford did the right thing to of the portfolios require lengthy Ministers policies in their areas into perspective, Woods, that “after nine years of neg- relinquish advocacy of Kiwibuild —a change programmes but in many ● D18-D19: Business puts NZ First painting abroader picture.” lect there is alot to fix in housing. dreadful albatross,” said LGFA chair areas we should be seeing evidence Ministers under the spotlight. nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D5 MOOD OF THEHomeBOARDROOM and away

CEOssee Ardern as agreat global cheerleader butineffectual in NZ, writes Fran O’Sullivan

acinda Ardern’s New York dance card is fully booked with aformal meeting with J US president overnight and akeynote speech at the UN Secretary-General’s Climate Action Summit to follow. It is for her performance in this theatre —the world stage —that Ardern gets the most praise from the nation’s top executives. But acommon theme through this year’s Herald CEOs survey was that the Prime Minister was at great risk of being seen as an excellent cheerleader for New Zealand on the global stage, but increasingly seen as ineffectual at getting things done at home. The Prime Minister’s empathetic response to the Christchurch mass- acre, where 51 Muslims were mur- dered at the Al Noor and Linwood mosques, propelled her to interna- tional super stardom. The world’s tallest building — Dubai’s Burj Khalifa —was lit up with agiant image of Ardern embracing a woman at aKilbirnie mosque. The New Yorker headlined an article “Jacinda Ardern has rewritten the script for how anation grieves after aterrorist attack”, noting her empathy and action to ban military- style semi-automatics and insistence on not naming the killer. There were two glowing editorials in the New York Times headlined “America deserves aleader as good as Jacinda Ardern”, and “Jacinda Ardern leads by following no-one”. Jacinda Ardern and world leaders at the launch of the Christchurch call, in Paris (above). Below, with boss Jack Dorsey at The . Ardern went on to leverage the event by launching the “Christchurch aspirationalstyle but said she was call” to eliminate terrorist and violent PM’s scorecard challenged by execution. “What extremist content online at aspecial HowCEOs rate Jacinda Ardern’s specific actionable plans are there to meeting in Paris hosted by French performance achieve the lofty goals espoused? The President EmmanuelMacron. More impressive performance relative to the sexual It is hardly any wonder that poli- claims within her party are very tical leaders like Trump, Macron and Response to Christchurch 4.50 unimpressive and deeply cynical.” even Chinese President , terroristmassacre It was the “Ardern effect” —her have responded to Ardern’s growing PortraysNZappropriately 4.14 election as party leader just weeks celebrity and met with the 39-year- offshore ahead of the 2017 election —which old political leader. propelled Labour to the position Chief executives responding to the LeadershipofNZ 3.13 where it could become acontender 2019 Mood of the Boardroom survey Coalition management 3.01 for post-election coalition talks. rated her response to the Christ- Courageouslycalls out 3.01 But Michael Barnett from the church massacre at 4.5/5 —the high- otherinternational political Auckland Business Chamber said the est rating they awarded Ardern in this leaders Government was now probably at the year’s prime ministerial scorecard. point of needing to look like agroup They were asked to rate her on a Politicalperformance as 2.93 of leaders and not agroup of one. scale of 1-5, where 1equals not im- primeminister This view was reflected by others. pressive and 5equals very impress- Couragetotacklehard 2.92 Foodstuffs CEO Chris Quin rated ive. issuessuchasclimate Ardern’s “fantastic personal leader- Unsurprisingly, they also rated change ship”. highly her ability to portray New “She needs to focus on the talent Indulges in unnecessary Zealand appropriately offshore 2.62 of team and making tough calls and (4.14/5). 'virtuesignalling' at expense focus on the enablers that really help. But Ardern has aweak spot. of primerelationships Doing avery good job of acomplex Though she got the tick from many masses,” said Deloitte CEO Thomas constantly as us wanting to ‘punch Administration of National 2.61 coalition. No closer to business.” chief executives for courageously Pippos. “She is reliant on others to above our weight’ and ‘lead’ on par- Security andIntelligence “Jacinda is widely recognised on calling out other international leaders drive the development and imple- ticular issues. portfolio the international stage in away very where necessary, there was growing mentationofcomplicated policy and “In avolatile world, we need to Childpovertyreduction 2.54 few other PM’s have been,” said a concern that she has atendency to is severely limited in her ability to maintain friends with alot of different responsibility director. “This gives her ‘voice’. Her indulge in unnecessary “virtue- implement certain areas of change in countries. capacity to deliver as aPMathome signalling” at the expense of prime part because of New Zealand First.” “Macron entertained the ‘Christ- Ability to takethe country 2.38 is limited by the coalition and thin relationships, particularly with Aus- An infrastructure consultancy church Call’ because he needs to hold with herduring bench strength.” tralia. head agreed: “The Prime Minister the Muslim vote in Paris.” transformative change Others noted she seems to be Those international strengths also cares greatly about our people and But others said she had been very Capability to lead change on 2.15 beholden to NZ First and thus can’t contain her weaknesses. displays empathy and humility. She impressive in raising New Zealand’s majorissues get anything done. Despite launching aBusiness Ad- wants asociety that has more social profile globally, which is heart- “It is clear that the Coalition Agree- Builds confidencewithin 1.76 visory Council and holding multiple heart and no one disagrees with that. warming for Kiwis. thebusinesscommunity ment has bound parties to agreed meetings with leaders, she has failed “Not all current policy initiatives Wine exporter Erica Crawford ad- policies,” said Craig Stobo, chair of the to build confidence within the New are clear on how better outcomes will vised the Prime Minister she needs Less impressive Local Government Funding Agency. Zealand business community. actually be created. We need to get to find her “” and be “It is very difficult to get political CEOs rated her at just 1.75/5 on this on with the ‘doing phase’ and see if supported by astronger team. “The CEOswereasked to rate thePrime agreement to enact new policies or performanceindicator. Her capacity these polices are really going to present team bumbles too much and Ministeronascale of 1-5where react to economic and social change. to lead change on major issues was work.” seem to be scared of taking decisions. 1= notimpressive&5=very impressive The oil and gas policy decision is an also marked down to 2.15/5 along with One observant chief executive She is (maybe WAS as at 12/8) agood example of how not to consult with Source:NZHerald2019Mood of theBoardroom her ability to take the country with pointed out it was important for the face for New Zealand but definitely CEOs Survey the business community.” her during transformative change Prime Minister not to over-hype needs astronger,sharper team.” In contrast to last year’s survey, (2.38/5). either her, or, New Zealand’s interna- Crawford was referring to the staffer in her Leader’s Office could there was agreat deal of derogatory Given that her communication tional importance. sexual assault allegations which cost damage New Zealand’s international comment. skills are her strong point, this “New Zealand needs to be very president Nigel reputation. It may also have cost her Atelling example: “The Prime Min- cements the perception that she careful as anon-diversified, small and Haworth his job, and which are now some support with the business com- ister is awonderful shop window — needs to focus much more at home. remote trading economy,” said an the subject of two investigations. munity with several survey not much in store. “The Prime Minister is agenuine energy CEO. “Overseas countries Ardern admitted before she left for respondents saying, unprompted, But said Panuku chair Adrienne individual whose key strengths are don’t actually care about New Zea- Japan and New York that Labour’s that the sexual claims within Labour Young Cooper, “Ardern is awonderful around her ability to connect, project land. woeful handling of the allegations by had cast apall over Ardern. role model to our best hope —young empathy and communicatetothe “Our cringy insecurity plays out ayoung party volunteer against a Afinance chief praised her women.” D6 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM

What’saffecting businessconfidence? US trade war with Topten domestic factors impactingongeneralbusiness confidence More concerned is no laughing matter Congestion in Auckland 7.60 Infrastructureconstraints 7.39 Skills andlabour 6.99 Generaluncertainty 6.87 Survey shows lowest global confidence rating since GFC, writes FranO’Sullivan around theimpactand direction of currentor onald Trump’s twitter feed But 30 per cent disagreed. proposed Government gives an intriguing insight “A lot of the perceptions come from policies into the latest twists and misinformed sources,” said the chief Labour productivity 6.82 D turns in the trade war he is executive of an Australian bank. “My waging with China. But despite the perception is that many New Zealand International trade 6.81 entertainment value, the trade war is businesses are benefiting from Leveland quality of 6.63 no laughing matter. investing the time and effort in under- governmentspending The latest estimate, by JP Morgan standing how to do business in China.” Housingunaffordability 6.43 Chase, is that the average cost to US Chorus CEO Kate McKenzie said, “I households will be about US$1000 think people are more aware that Employment lawchanges 6.27 (NZ$1585) ayear after the next round there is aneed for greater understand- Immigration restrictions 5.96 of tariffs on Chinese goods is imposed. ing of China and its ambitions and its The Fed chairman, Jerome Powell, culture and how they are different Less concerned is also reported to have linked the from Western thinking and the risks Topten domestic factors deterioration in the outlook for global and opportunities inherent in that.” impactingonconfidencefor their growth and weak US manufacturing Asked if Fonterra’s losses on its and capital spending to US trade poli- Chinese investments raised the ques- ownbusinesses More concerned cies. tion of whether NZ —and companies Back here in New Zealand, CEOs —have too many eggs in the China Labour shortages/finding 6.83 responding to the 2019 Herald survey basket and should pursue greater re- theright staff say the trade war between the two gional diversification, some 54 per elephants of global trade is the biggest cent of respondents said yes. Generaluncertainty 6.50 international issue which is impacting But 30 per cent said China wasn’t around theimpactand on business confidence. They rate the the problem. Many cited poor direction of currentor trade war’s severity at 7.65/10. investments by Fonterra. proposed Government “We are part of the global system, “Fonterra is simply acase of poor policies what occurs elsewhere impacts on us management and governance,” said a Infrastructureconstraints 6.48 in New Zealand,” says independent leading retailer. “Regional diversifica- International trade 5.55 director Cathy Quinn. “No one believes tion for any global player is common environment that we are economically isolated or sense but it won’t necessarily insulate insulated from global events.” from global easing.” Employment lawchanges 5.51 Other concerns such as growing ANZ Institutional managing direc- Immigration restrictions 5.47 protectionism where new trade wars tor Paul Goodwin said, “I think China are erupting such as that between has been aremarkable success story Leveland quality of 5.34 Japan and South Korea; uncertainties for New Zealand. But we need to Governmentspending about the Chinese economy and re- recognise that our dependence is sig- Housingunaffordability 5.16 surgent fears about the prospect of an nificant and each business doing busi- Restrictionsonresource 5.13 international recession have ness with China needs to test itself on management/Landuse combined to send NZ CEO’s confid- what level is appropriate —normal ence in the global economy to arecord portfolio risk management practice.” ChangedReserveBank 4.85 low on aweighted average basis of An energy sector CEO was to the policies 1.7/5 in the Herald survey —the lowest point. “We need amature and consist- Less concerned seen since the Global Financial Crisis. ent approach to trade deals. But the Mainfreight’s Don Braid, whose risk of China putting abullwhip Top10international issues logistics business spans both the US through the NZ economy is real. impactingonNZbusiness and China, says New Zealand business “NZ is racist towards Asian econom- confidence should “take advantage of our neutral ies because we think colonially we are More concerned positioning to develop more trade”. superior. Last time Ilooked the British “We are an export led economy so empire was long gone.” Tradewar between theUS 7.65 any risks that affect confidence hurt When it came to the United States, andChina us as an importer of products and 30 per cent felt New Zealand was Protectionism 7.29 talent,” said aleading FCMG player. coming under too much US influence Uncertain Chinese 7.27 “We need policy that makes us as on key questions like using Huawei in economy competitive as possible against much domestic 5G networks amid claims it bigger players.” represented asecurity threat. International recession 7.20 Cautions leading chair Dame Alison “New Zealand is best to stay away fears Paterson: “The environment is uncer- from the two bull elephants staring “Trump” factor – 7.06 tain and people do not perform well Perceptions of Asia survey found 32 friendly to New Zealand, compared to each other down,” said Deloitte CEO US politicalinstability in uncertain times.” per cent of respondents believed 62 per cent the prior year). Thomas Pippos. Trade-related issues have pipped China posed athreat to NZ (up from Some 46 per of CEO respondents “It is too easy to become collateral Cyber security breaches 6.96 cyber-security as the number one in- 16 per cent the previous year; with 49 felt similar perceptions were also damage. US tariff hikes 6.90 ternational concern for business. per cent considering China was gaining currency in business. “One of our key strengths is our Climate change pressures 6.59 China is also flexing its muscles as global irrelevance that should allow us it emerges as aleading world power “New Zealand is best to stay away to work with all. Brexit uncertainty 6.34 sparking concerns about the South from the two bull elephants staring Cautioned atech services head: Competition forglobal 5.83 China Sea and domestically with its New Zealand should be aware and talent stance on human rights issues. each other down,” said Deloitte CEO operate an “eyes wide open” vigilance And there are other impacts from Thomas Pippos. “It is too easy to to all international corporate intrusion. Less concerned the increasing tensions between the “This includes vigilance around Scale: 1= no concern and US and China —NZ’s largest trading become collateral damage. One of what the US social media giants are 10= Extremelyconcerned. partner —which are spilling over to our key strengths is our global doing with our data too. Source:NZHerald2019Mood of theBoardroom affect sentiment. irrelevance” “More legislation to protect NZ and CEOs Survey Asia New Zealand’s latest our citizens is needed here.” Go for abilateral FTA with United States

If abilateral free trade deal with the “My answer is ‘probably’,” says ICBC believed to have given acommitment ahead of China ($3.3b) Westpac CEO David McLean is also US does ever come up in talks between NZ chair Don Brash. “But it depends to support it to the president. ● #1 market for intellectual concerned New Zealand might have to Jacinda Ardern and Donald Trump, abit on what pound of flesh an Two-way trade has consistently property exports/charges ($243m) — give up too much. there will be alarge number of New extremely mercantilist regime in been growing between New Zealand ahead of Australia ($184m) and UK Alegal firm head said it was awaste Zealand business leaders saying, “Go Washington would extract for greater over the last 10 years. Trade with the ($57.89m) of time under the current admini- for it”. access to the US market.” US is underpinning acrucial change On becoming president Trump stration. “Probably best to keep alow Alarge majority —79per cent — Director Joanna Perry says New in the New Zealand economy to high pulled the US out of the TPP and began profile rather than drawing attention of respondents to the 2019 CEOs Zealand should purse adeal if it is the value goods and services that deliver making bilateral deals with other to ourselves by attempting to seek survey say New Zealand should pursue only way of ensuring we can continue high paying jobs. The most recent parties. what could easily be perceived as afree trade agreement with the US. to trade with the US. trade data shows that in many of our Grant Samuel’s Michael Lorimer ‘unfair’ advantages.” “With the breakdown in global trade “Despite my personal wish to highest value sectors the US is NZ’s urges caution: “We will get screwed Phillip Mills of Les Mills said any deal rules and frameworks and the lack of ‘ground’ Trump, at the moment the US number one market,” under the current administration.” could not be allowed to undermine appellate judges at the World Trade market is too important to the NZ The US is: It is asentiment underlined by a health, social and environmental Organisation other arrangements will economy.” ● 3rd largest export market funds boss who says better to hold out standards. be important,” said adairy company Foreign Affairs Minister Winston ($9.24b) —behind China ($18.95b) and with the CPTPP agreement and If a“no” Brexit occurs, we may be boss. “But New Zealand needs to be Peters has already met twice with US Australia ($14.08b) negotiate as abloc with the US. “By better to do aFTA with the UK,” said selective and understanding of the Vice-President Mike Pence to press the ● 2nd largest market for services ourselves we will get screwed on dairy, Barfoot &Thompson’s Peter trade-offs.” case for abilateral FTA. Pence is ($3.6b) —behind Australia ($5.19b) and IP, and .” Thompson. nzherald.co.nz | The New ZealandHerald | Tuesday, September 24, 2019 D7

MOOD OF THE BOARDROOM

What keeps CEOs Fuel inquiry Staying agile amid awake at night? gains little CEO support global uncertainty 45% Sourcing and retaining skilled staff Not many respondents to the Mood of % the Boardroom survey think the 36 Commerce Commission’s inquiry into park CEO Jolie Hodson fears it is about lifting the bar again.” Achieving top line revenue growth fuel prices will result in lower prices global economic uncertainly Hodson says another aspect of Agile % for consumers. could act as abrake on busi- is that it arms employees with the skills 34 Just 15 per cent of respondents said S ness investment and con- they need for the future. Squads are Meeting customer expectations yes, with the majority —70per cent sumer spending. “That said, we’ve set up to be cross-functional, which —responding no and 15 per cent are invested heavily in our infrastructure, means people quickly learn new ideas. % unsure. as we always have done.” This makes them more employable. 32 Hodson says after taking the com- “A key challenge is labour shortages Regulatory challenges Retail margins are small pany on international roadshows: “In- of specialist skills in data, cybersecurity % vestors are generally interested in the ... and attracting this talent to New 23 in comparison to the sector and what we are doing Zealand,” she adds. Impact of policy uncertainty on overall price of fuel. An compared with what’s happening off- The move has attracted interest business shore. We’re in astrong position both from other companies in New Zealand % inquiry will only impact in terms of how we are investing and and overseas. Hodson says overseas 18 at the margins. how we are finding new sources of telcos, FMCGs (fast moving consumer Improving operational efficiencies revenue. goods companies), large supermarket independent director “Some of the markets they see have chains, Australian retailers and Euro- 17% negative yields already or negative pean companies have beaten apath Look at the proportion of interest rates. New Zealand is not there Akey challenge is labour to Spark’s door in order to learn how Competitive pressures yet, although we have alow 1per cent this works. % tax in the fuel price OCR. They see there’s some positivity shortages of specialist Spark plans to have a5Gmobile 16 (excise duty, GST etc). here. Like everywhere there are con- skills in data, network in place for the 2021 America’s Managing profit expectations cerns about what will happen with Cup but the project has been compli- % Mark Cairns, Port of chief international trade and the US-China.” cybersecurity ...and cated by the GCSB vetoing the com- 15 executive She says there will be an impact if attracting this talent to pany’s use of Huawei network equip- Digital disruption that relationship were to further erode. ment. The ComCom focus is on The technology global supply chain is New Zealand. Hodson says the network will still % threatened, as many things are made go ahead and selecting another partner 13 cost to the consumerso in China. Jolie Hodson will not slow Spark down. Changing organisational culture of course it will. “This isn’t only for us in New Zea- She says; “We’re in our RFP (request % land, but globally. In fact we’ve seen Agile working flattens traditional for proposals) process right now. We’re 12 Dame Alison Paterson some of the bans in the US being management hierarchies. Hodson says likely to have more than one vendor Achieving cost reduction pushed out to alater date because of this means decision-making power is in our network. That’s what we’ve seen % the realisation that it does actually hit greater in Spark’s squads and tribes — internationally. Most organisations 5 The biggest increase in the technology supply chain.” the names used for more fluid groups have done this”. CEO-Board relationship prices in the last 12 Closer to home, Spark is 15 months of workers combining on projects. She Afull 5G network needs new spec- % into amajor transformation to becom- says Agile means there is clear linkage, trum, which is another potential bar- 5 months outside currency ing an Agile workplace. Hodson says so that people can see directly how rier, with the spectrum auction sched- there were three drivers for the move: their work shows up for customers. uled for the end of 2020. Motivating key reports fluctuations has been the “Improved customer experience; “For us it’s about continuing to shift However, Hodson says, Spark aims % action of Government. speeding up our time to market and our way of working to high perform- to have early access to spectrum on 2 changing employee engagement and ance. We achieved most of what we ashort term rental basis to cover the M&A (Threat) independent director contribution.” wanted to in the first 12 months, now America’s Cup.

EVIE, NZ’S FAVOURITE ELECTRIC VEHICLE.

Meet the real Evie at mercury.co.nz/evie D8 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM Staffing abig issue for executives

Mood of the upward bias at the revenue line, Boardroom New temporary workvisa settingsshouldbe welcomerelief according to Forsyth Barr research. However, there were anumber of Duncan downgrades at the bottom line, Bridgeman cent) still expect to increase staff Forsyth Barr notes, with earnings per levels in the next 12 months, but they share revisions for the 2020 financial do cite labour issues as among their year finishing with just six upgrades biggest concerns. versus 16 downgrades from those hough international trade Labour shortages featured as the that gave earnings guidance. and domestic infrastructure biggest single domestic concern for Financial year 2021 revisions were are clearly big issues facing survey respondents’ own businesses also net negative with 11 upgrades and T businesses at the moment, —showing up as 6.83 on ascale of 17 downgrades. there’s no doubt getting access to one to ten. Immigration restrictions Most listed company results skilled labour continues to be and employment law changes are on reflected solid earnings, some challenging. the same side of the ledger, as is Ian Lees- dividend growth and strong balance The good news is the Government labour productivity, skills and wage Galloway said sheets. However, fund managers said is at least listening, as evidenced last increases. the visa changes when it came to companies’ outlook week in the changes announced to In short, sourcing and retaining would assist statements, the future was clouded the temporary migrant work visa staff is for many chief executives the between with uncertainty, particularly on the scheme. key issue keeping them awake at 25,000-30,000 international front. Some close attention is needed in night. businesses. It all pointed to agradual economic terms of the detail of the new settings So last week’s announcement by slowdown, something that showed but most business groups from the Immigration Minister Iain Lees- jobs skill shortgages list will be effective solution to ensure employ- up in last week’s GDP figure as well. outset have welcomed the move. Galloway around employer-assisted replaced with open access to the ers in genuine need are able to access Fonterra’s woes and its losses on There’s also asense of relief the temporary work visa settings should regions. the skills and attributes they need.” Chinese investments in particular are Coalition appears to have shied away be welcome relief, particularly for Lees-Galloway said the changes It is indeed agood sign that the being closely watched by the wider from pre-election promises to cut those in the agricultural and would assist between 25,000-30,000 government is addressing these business community, the Mood of the down on net migration: remember NZ horticulture space. businesses to fill shortages. issues, although many firms would Boardroom survey showed. First wanted it slashed by more than The changes, which start coming Canterbury Employers’ Chamber argue that it’s not nearly enough to Asked whether this demonstrates 80 per cent. into effect in 2020, include the of Commerce chief executive Leeann offset employment law policies, New Zealand and companies have In fact, by May this year —some introduction of anew employer-led Watson said three-year visas and which has driven up costs and too many eggs in the China basket, 18 months after the election —the visa framework, negotiating and renewals provide continuity and compliance. around 54 per cent said yes, 30 per annual net migration number had introducing sector agreements to confidence to both employers and Meanwhile, despite general cent said no and 16 per cent were bounced back to near record levels. plan for future workforce needs and workers. “This is amuch more uncertainty about economic risks, unsure. “To be fair, Ithink the Government reinstating the ability for lower-paid businesses are remarkably upbeat Generally there does seem to be has recognised the issue,” Alan workers to bring their families to New Does NZ have too many eggs in about their own prospects, albeit astrong sense of caution among McDonald, Employers and Zealand. the China basket? tainted by uncertainty. businesses with companies looking at Manufacturers Association (EMA) At the same time the new visa Two-thirds of respondents to the global trends, including trade general manager of advocacy, told system replacing six categories will % Mood of the Boardroom survey relations, and what they might mean the Herald at the time. “They require employers to be accredited, 54 reported they expect revenue growth for the economy. recognised the scale of the problem increasing the expectation on yes over the next 12 months with around Firms are experiencing tighter ...they’ve listened to employers.” employers to employ and train more % 52 per cent expecting profit growth. margins and are finding it That said, as the Mood of the . 30 This follows the recent listed increasingly difficult to pass on Boardroom survey shows, the The plans also include replacing no company reporting season, which higher costs. problems caused by skill shortages the existing skills band with % resulted in actual profit growth Aseemingly entrenched lack of aren’t getting any better. monetary thresholds aligned to the 16 slightly better than expectations and confidence in the Government is Ahealthy number of firms (38 per median wage, and the higher-paid unsure post-result revisions showing aslight adding to that uncertain outlook. nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D9

MOOD OF THE BOARDROOM Ourconfidence is waning

Businessintentions Pessimism about the economyhas persisted sincethe change ingovernment WhatCEOsare planninginthe next 12 months Capital expenditure Confidence in the general usiness leaders are less op- concerned they are about the impact harming the possibility of asuccessful business situation in their own timistic than they were a of various domestic factors for busi- transition to the future of work for NZ. More 43% sectorcompared to last year: year ago. Atotal of 62 per ness confidence, rated on ascale Aligned Government spending that is Same 32% B cent of business leaders re- where 1=no concern and 10 = much more effective in growing pro- Less 22% ● Agriculture sponding to the Mood of the Board- extremely concerned. ductivity is critical.” Unsure 3% 57% Less optimistic room survey say they are less optim- The top domestic factors Despite the pessimism from busi- IT expenditure 14% Thesame istic about the general business situa- influencing business confidence in ness, the International Monetary More 57% 29% More optimistic tion in their industry. the NZ economy are congestionin Fund released its annual review of Same 25% Just 15 per cent feel more optim- Auckland (7.60/10)and infrastructure NZ’s economy in the last week. Less 16% Banking ● istic, 23 per cent say they feel the constraints (7.39/10). It suggests New Zealand’s econom- Unsure 2% 89% Less optimistic same level of optimism as last year. The announcement last week that ic growth is “still solid”. It says despite Staff numbers 11% Thesame The figures were worse when the Auckland light rail project will be the loss of momentum in economic 0% Moreoptimistic More 38% respondents were asked their per- delayed until at least 2021 exemplifies activity and acooling in housing Same 33% ● Construction spective on the New Zealand econ- the lack of action that CEOs expressed markets, output has remained close Less 26% 60% Less optimistic omy. frustration on. The infrastructure to potential. It also praised the falling Unsure 3% 20% Thesame Afull 83 per cent say they are less issue is considered in more detail on unemployment rate and the govern- 20% More optimistic optimistic than they were one year D21. ment’s Wellbeing Budget —saying it In thenext12monthsCEOs expect ago. Only 4per cent say they are more Other major domestic factors struck the right balance between fis- theirbusinessestoshow: ● Dairy optimistic, 13 per cent say they feel impacting business confidence ac- cal prudence and tackling priorities Revenuegrowth 71% Less optimistic the same as last year. cording to CEOs include the availabil- like mental health, child poverty and Yes 66% 15% The same This poor outlook aligns with other ity of skills and labour (6.99/10) and Ma¯ori and Pasifika aspirations. Same 16% 14% Moreoptimistic surveys of business confidence, general uncertainty around the im- Some economists say that busi- No 15% Property which have shown consistent pessi- pact and direction of current or ness confidence surveys tend to be ● Unsure 3% 80% Less optimistic mism about the economy since the proposed Government policies biased against Labour-led Govern- 20%The same change in government to the Labour- (6.87/10). ments, and have little correlation to Profitgrowth 0% Moreoptimistic led Coalition in 2017. The most recent Foodstuffs North Island chief Chris actual economic growth. In line with Yes 52% ANZ Business Outlook found 52 per Quin says: “Talent and Skills shortage this, Skycity chair Rob Campbell Same 25% Tech ● cent of businesses surveyed and lack of clarity and progress on suggested one factor impacting busi- No 20% 54% Less optimistic expected economic conditions to de- vocationaltraining, along with an ness confidence is “business organisa- Unsure 3% 31% The same teriorate. unclear future of vocational training tions talking down confidence”. 15% Moreoptimistic Source:NZHerald2019Mood of theBoardroom Respondents were also asked how and immigration settings are really —Tim McCready CEOs Survey

Cathy Quinn, Independent and local Banking industry Dame Paula Rebstock, chair Agricultural industry director issues Nine players in the banking ACC There were seven responses from Iamoptimistic about the general including industry took part in the survey — As alarge the agricultural industry, ranging business situation for most of the where the including the top five banks: (ANZ, insurer with from meat producers to suppliers. businesses Iaminvolved with as we RBNZ will Westpac, ASB, BNZ and Kiwibank). a The majority (43 per cent) say they have high quality CEOs with good land on the Of those in the banking industry, substantial expect to authorise less capital business plans even if there are a capital 56 per cent say they expect to diversified expenditure over the next year variety of challenges. require- authorise more capital expenditure investment compared to last. The remainder (29 The New Zealand economy seems ments for in the next year compared to last fund, we are per cent) are split between spending tougher than 12 months ago and our banks year, 33 per cent expect it to remain concerned the same and spending more. there is less confidence generally (and what it will mean for accessing the same, and only one respondent about the The industry is split on IT spend, with which makes consumers more debt —the consensus by business expects it to decline. On IT spend, low-interest 43 per cent saying they expect to cautious. people is that it will be harder which 67 per cent expect it to increase rate environment and investment spend more in the coming year, and Trump, Boris, Brexit, the US-China will be negative to the economy). in the next year, 22 per cent expect returns, particularly given the 43 per cent saying they expect to trade war all make the global While most business people are it to remain the same. revaluation changes impacting our spend less. Just 14 per cent expect economy seem more uncertain and supportive of NZ facing the One third of banking leaders who liabilities. Uncertainty about the to hire more staff over the next year certainly unpredictable. challenge of climate change there is responded expect staff number to economic outlook is amajor factor compared to last, 43 per cent say As NZ is tied to the global economy, concern about requiring some decline over the next year, 44 per influencing business sector decision- they expect to hire less. we have to take account of that businesses to reduce emissions cent expect them to remain the making. While the Reserve Bank’s No respondent in the sector expects uncertainty. before there are technological same, and 22 per cent expect to see recent policy easing was meant to less revenue growth over the next All businesses are dealing with rising mechanism to achieve areduction an increase. provide pre-emptive support, it year compared to last —57per cent costs: wages, electricity and in emissions. In terms of revenue, one third signalled serious concern and has say they expect it to remain the same, compliance costs including through Similarly, it makes no economic expect to see growth over the next added to economic uncertainty. The and 43 per cent say they expect preparing for changes in regulation. sense to impose increased costs on year, 44 per cent expect revenue adverse effect will likely outweigh more. As for profit growth, almost At the same time there is business NZ businesses in this context and to to remain the same, and 22 per cent any stimulus from marginally lower half (43 per cent) say they expect to uncertainty caused by global issues give imports afree pass. expect afall in revenue. When interest rates. The capital require- see more profit growth over the next considering profit, 11 per cent ments review has amplified year compared to last, 29 per cent expect to see it increase, 44 uncertainty, with it yet unclear how expect it to remain the same, 29 per percent say it will stay the same, this might impact particular sectors cent say they think it will decrease. Cameron Bagrie, managing challenges mean the next few years and 33 per cent expect it to decline. of the real economy. It is unclear Every respondent in the agricultural director Bagrie Economics are likely to be tough. For the past Two-thirds are less confident about what the end game is regarding the industry says they are less optimistic We reside in a thirty years central banks have been the economy over the next year. monetary easing cycle. Cyclical about the economy compared to this world the big stabilisers. The remaining third say it will stay responses are being used to respond time last year. They are slightly more (including NZ) Any problem has been attacked about the same. In terms of the to structural problems that have positive about their own industry — where politics is through lower interest rates. They banking industry, 89 per cent are been with us for adecade. There is 29 per cent are optimistic, 14 per cent becoming are almost out of ammunition. less optimistic, the rest expect it to limited further room for monetary are neutral. The remainder (57 per more and more Government policy is going to be the same as last year. policy response. cent) are less optimistic. of ashambles. become more critical and important Central banks going . Both as astabiliser, can “fix” normal but also influencing medium-term economic prospects and setting an Roger Partridge, chairman and of these. But but one example. problems. The environment where society and co-founder of The New Zealand that makes it The dumbing down of New political overlay on economic business can prosper together. Initiative all the more Zealand’s education system is the The biggest immediate threat to the important that biggest threat to the future global economy is the trade war we focus on prosperity and wellbeing of New between the US and China. Iexpect things we can Zealanders. Dairy industry say they expect revenue to it will be resolved within the next 12 solve —like Ahighly-educated workforce is Seven dairy companies took part in the decrease. On profit growth, 57 per months as it is in the interests of both the skills and critical to ahighly productive survey, ranging from the top end of cent say they expect agrowth in countries to do so. For this reason, educational workforce. Yet our school students town to nimbler but still significant profit over the next 12 months, 14 Iamslightly less pessimistic about the attainment of continue to slide down the players. per cent expect profit to remain the global economy than Iamabout the our workforce (current and future), international league tables (and, Of these, 57 per cent expect more same, and 29 per cent expect afall domestic economy. The New Zealand the quality of our infrastructure, importantly, underperform capital expenditure in the following in profit. economy is facing aseries of series housing affordability (especially in our compared with earlier generations year compared to last year, 29 per cent On the NZ economy compared to threats. fastest growing cities) and resource of New Zealand school students). expect less. In terms of IT, 71 per cent one year ago, 71 per cent say they Taking ahelicopter view, our two management restrictions. On all four There are encouraging signs (such expect to spend more, 29 per cent say are less optimistic, 29 per cent say largest industries —dairy and tourism we are performing poorly. And there as the proposed NCEA reforms) the same as last year. they are the same as last year. —are vulnerable to climate change is little cause for optimism that the however, other initiatives (like the Over half (57 per cent) of respondents No respondent said they were policy and perceptions. necessary systemic reforms will be Tomorrow’s Schools expect staff numbers to increase, 29 more optimistic. At the same time, successive made. And in the last few years anew recommendations) will do nothing per cent expect them to stay the same, For the dairy industry, 71 per cent governments have failed to threat has emerged in the form of to address the more fundamental and 14 per cent expect afall in staff are also less optimistic compared implement policies to resolve our more activist, and less competent, problems besetting an education numbers over the coming year. to this time last year, 15 per cent ailing productivity growth challenge. government agencies developing or system that is failing to equip many When asked whether they expect have the same level of optimism Many factors have been blamed for contributing to policy that is poorly school-leavers with the levels of revenue growth over the next 12 as last year. our poor productivity performance, thought through yet capable of literacy, numeracy and knowledge months, 86 per cent say they expect Almost 14 per cent say they are including our small size and compromising the entire economy. and skills needed for today’s jobs, more, 14 per cent say they expect the more optimistic for the year ahead geographical isolation. The Reserve Bank’s ill-conceived let alone those of the future same. None of the dairy participants for the dairy industry. There is little we can do about either proposals to double banks’ capital is workplace. D10 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019 MOOD OF THE BOARDROOM Time to make boldmoves

Few respondents criticise FinanceMinisterGrant Robertson’s goals —but they questionthe execution

Is Grant Robertson delivering credible economic and fiscal Boardroom management for New Zealand? backers 54% for policy Yes costings unit 29% Unsure National is against the idea of a % Policy Costings Unit to monitor the 17 government’s fiscal strategy, but it No is backed by the OECD and 62 per cent of our Mood of the Boardroom panel. Just 12 per cent of he Government’s approach respondents are against the idea. to doing everything through The unit will be set up as an reviews has been cited as independent office of Parliament T getting in the way of Grant and will provide costings of Robertson’s stewardship of the econ- political party policies ahead of an omy. election. “Opening up multiple challenging Clear support for the idea comes conversations and establishing work- from Oliver Hartwich, executive ing groups without clear outcomes — director of the NZ Initiative. He says or at aminimum directional out- the concept was aNew Zealand comes —iscreating uncertainty for Initiative policy recommendation both local and international invest- in the organisation’s 2014 report: ment,” said aleading banker. Mainfreight’s Don Braid warns, “A has fallen into avacuum, and here Guarding the Public Purse: Faster “We need certainty through policy is nothing else Ican readily associate growth, greater fiscal discipline. completion.” slowing economy may well test the with his management, good or bad.” Foodstuffs North Island CEO In the 2019 Mood of the Board- current fiscal management. He In contrast, the head of aprofes- Chris Quin says: “If it really works, room survey, alittle over half (54 per must find the courage to use the sional services firm had amore sym- it could make adifference”. cent) felt Robertson was delivering pathetic view. He says: “Crediblein An agribusiness boss says the credible economic fiscal manage- tools at his disposal to maintain our Wellbeing perspective but impacted plan: “makes sense”. ment. But asignificant number (26 per momentum.” by Reserve Bank actions”. Respondents worry about the cent) were unsure and 17 per cent This year’s survey reveals con- independence of anew watchdog, disagreed. ‘He hasn’t necessarily done siderable business angst about the this echoes some of Bridges’ Those commentingonrecord (in Reserve Bank’s approachtoincreas- objection to the plan. the main) portrayedapositive view anything wrong but hasn’t been ing bank capital and jawboning busi- An energy company CEO says about Robertson’s stewardship. bold. He is agood performer but ness to increase investment. he supports the idea: “So long as But Mainfreight’s Don Braid warns, caught in aframework of An auto firm boss said Robertson it is independent of the “A slowing economy may well test understands the role and importance Government whoever is in power”. the current fiscal management. He uncertainty’ —Mark Franklin, of fiscal restraint. “But he is letting the Chorus CEO Kate McKenzie must find the courage to use the tools Stevenson Group RBNZ get out of control, which will agrees that it should help, but at his disposal to maintain our be problematic in future. wonders how the unit can stay momentum.” poverty and productivity. sizzle and small on sausage. The “If we hit arecession, Iamnot sure independent. This year’s Herald survey did not In his Budget speech Robertson absence of knowledge of the base Grant will know what to do”. Peter Thompson from Barfoot directly canvass Robertson’s told Parliament: “Success is making starting point for the four capitals and This reflects another theme that and Thompson makes asimilar Wellbeing Budget —which is seen as New Zealand both agreat place to clear targets for improvement rein- emerged from the survey: Robert- point: “As long as it is fair to all aworld first. Instead, CEOs were make aliving, and agreat place to forces the notion that this govern- son’s performance is hampered by parties —big and small and asked to rate particular focuses in the make alife”. ment doesn’t want to be measured on others around him. Although everyone is aware of the rules.” Coalition’s Year of Delivery alongside Though few respondents criticised its progress.” respondents didn’t always agree The boss of agovernment new Budget initiatives and the tra- these goals, many were not im- Adirector noted, “it was abudget about who was doing the hampering. relations firm sees potential for ditional focus on fiscal management. pressed by the execution. like any other. It is remarkable how “Holding the line on fiscal position, bias: “Only if it is independent and The 2019 Budget departed from The LGFA’s Craig Stobo said, “The quickly Grant Robertson has turned though the coalition dynamicslead that’s not agiven. Putting aleft- the normal practice of focusing on Wellbeing budget was an important into : overconfident to to gross misallocation of resources. leaning economist in charge won’t economic indicators such as GDP milestone,built on work by the previ- the point of dismissing any kind of The central government structure do the job”. growth. Instead it emphasised spend- ous government, but like much cur- criticism.” leads to poor execution of the gross Paul Glass from Devon Funds ing on matters such as mental health, rent policymaking it was large on Simplicity’s Sam Stubbs added, “it misallocation”, says apower industry Management frames this as “It leader. depends on how political it is”. “Grant needs to be more visible — An investment banker calls it a he seems to have let ministers splash cynical political device. “The Government cyber breaches the cash without acoherent story or politics of this body will be driven big-picture narrative,” said an energy by the party in office at the time boss. of appointments.” Almost half, 49 per cent, of the bosses Vector chair Dame Alison Paterson. management practice, even though its But there was some ambiguity. “He Away from questions of bias, an surveyed say the Treasury Budget leak The head of aprofessional services mischaracterisation by former hasn’t necessarily done anything agribusiness CEO complains: “We and the exposure of passport details at firm is philosophical —“S*#t happens”. Treasury Secretary Gabriel Makhlouf wrong but hasn’t been bold. He is a pay for it” and an IT company head the Ministry of Culture and Heritage But an IT company boss was scathing: shrouded him in controversy on the eve good performer but caught in aframe- is concerned about “another silo”. have reduced their confidence in “These are fundamental errors that of his departure to be Ireland’s central work of uncertainty”, says Stevenson Craig Stobo, chair of the Local government sector cyber security. should not have happened under any banker. Group director Mark Franklin, neatly Government Funding Agency But these breaches were also a circumstances. New Zealand Chorus CEO Kate McKenzie says the summing up acommon perception. worries about duplication. wake-up call for the private sector government is paying ridiculous issues were about “general appropriate “So far so good,” said Carol Camp- He says: “Why can’t Treasury suggests aproperty company boss — money to independent IT contractors management of IT environments”. bell of T&G Global. provide this in atransparent “There but for the grace of not being and these fundamental risks or errors Four in 10 respondents say the high- But Auckland Business Chamber’s manner already? in the public eye go many of us.” should have been identified in testing.” profile data breaches haven’t reduced Michael Barnett was unimpressed. “More monitoring agencies “Cyber security is an increasing risk. Several felt the Budget leak was less their confidence in government cyber “What he is doing is standard, ordin- monitoring other departments is What is the ability to manage it?” asks atechnology issue than poor security: 11 per cent are unsure. ary. What is needed is the extra effec- nuts.” tiveness of governmentspending.” What should be top of Robertson’s priority list?

Chief executives say it is time that Now that the says: “We desperately need more infra- business community and enrol us for jects to happen and actually getting Finance Minister Grant Robertson structure capital. New Zealand has the some bold and transformational social, them in the ground,” suggested atrans- loosens the purse strings when it comes government’s books are balance sheet to do so.” environmental and economic port boss. to spending on infrastructure. strong, he shouldn’t be Others noted with interest rates low initiatives.” Among other suggested priorities Some 39 of the 111 respondents to this —the OCR is at 1per cent —the “Invest in Auckland specifically,” were afocus on lifting New Zealand’s open-ended question put infrastructure afraid to reach out to the opportunity is there now to borrow and said acompany director. lamentable productivity, more policies as the key priority they wanted Robert- business community and invest. “The country and the that encourage and reward growth and son to focus on. It is an issue that Robertson has machine need to fully understand the investment, and greater engagement In July, the Prime Minister’s Business enrol us for some bold under active discussion with officials as impact of Auckland on the country.” with business. Advisory Council recommended the they look to expand investment in Some, like Terry Copeland from Said MinterEllisonRuddWatts’s fin- Government resume work on 12 major and transformational conjunction with the private sector Federated Farmers, believe increased ancial partner Lloyd Kavanagh: “Grow roading projects that were put on hold social, environmental through special purpose vehicles. infrastructure spending will boost the productivity. Currently we are on a after the Coalition took power in 2017. Some industry leaders are keen to economy. Others want to see more road which does not provide the wealth Robert Scoines from Sanitarium and economic initiatives. get involved in Robertson’s projects. A discipline and agreater focus on getting the country need to look after our Health Food Company wants to see banking leader banking leader says: “Now that the things done. people in afirst world level.” investments in ports, roads and rail. government’s books are strong, he “Drive his colleagues to understand At Port of Tauranga, Mark Cairns shouldn’t be afraid to reach out to the the big gap between wishing for pro- ● D20: Issue 4—Infrastructure nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D11

MOOD OF THE BOARDROOM Influencing power When it comes to their ability to CEOs Score Greens’ Ministers influence policy outcomes, Greens co- leaders James Shaw and rate well behind that political pro, NZ First leader Winston Peters. limate Change Minister James Asked to rate the party’s co-leaders on Shaw was rated at 3.05/5 by this issue —onascale where 1=not chief executives in the Herald impressive and 5=very impressive, chief C survey —the highest score executives scored Shaw at 2.87/5, among Green ministers outside of Cabi- Davidson received just 1.63/5. It’s net and marginally ahead of Prime perhaps not surprising that Peters, Minister Jacinda Ardern on her own whose party is in aformal coalition with ministerial performance. Labour, received 3.59/5 from NZ’s Asked if Shaw had been an effective business elite for the same question. leader of carbon emissions reduction Cooper and Company chief executive policies, 50 per cent of survey Matthew Cockram reckons: “I don’t respondents said Yes; 30 per cent said necessarily like it, but there is no doubt No, and 20 per cent were unsure. that Winston and James have had a “James Shaw has certainly got the significant impact in getting their subject of carbon emission reduction positions implemented.” firmly on the table and has gained Atelecommunications CEO feels that business and community backing,” says “James Shaw has worked tirelessly and Beca’s Greg Lowe. often thanklessly to try to achieve cross- “This will encourage faster action but party consensus on difficult and we need to be mindful of tackling the James Shaw complex issues,” whereas aMa¯ ori immediate issues first. Rural emission business leader says: “James Shaw is reductions will need more science but Climate Change Conservation Associate Transport doing as well as he can with adisparate the science to reduce transport and party. Marama Davidson —no energy emissions is on our doorstep 3.05/5 2.29/5 2.09/5 comment.” now and we should be acting faster to There is aperception among some remove obvious pollution.” business leaders that the Greens have “He has the intellectual ability to Scale: 1-5 where 1=not impressive and 5=very impressive. Source: NZ Herald 2019 Mood of the Boardroom CEOs Survey. not been as effective as expected. understand how to tackle some big “The offshore gas exploration ban is problems and the pragmatism to get But others say it isn’t clear what “Having starting to deal with Julie to roads being built will upset most New the only policy Ithink James Shaw and things done. Not everybody around Shaw has achieved, suggesting more Anne Genter on some issues she seems Zealanders. Twyford lets her do what his party has driven, yet that risks him has that pragmatism which risks evidence of tangible action and change to have some similar attributes to she likes but she drives officials crazy making it harder to remove coal and so ideology only and no momentum or is needed. “The visibility of change is James Shaw of being intelligent and with her loony policies.” will result in more emissions,” says an improvement.” poor but he has the capability!” says one open to sensible engagement,” says Eugenie Sage received afairly mid- energy sector CEO. “The Zero Carbon bill Many believe Shaw has been par- respondent. Deloitte’s Thomas Pippos. dling grade of 2.29/5 for her work as hasn’t gone anywhere yet and policies ticularly effective in getting business on The head of an investment firm Others are more critical —Simpli- Conservation Minister and Land In- to make it real seem along way off.” board with Green policies. “The Green reckons “Shaw has been ahighly effec- city’s Sam Stubbs says she seems “hard formation. In contrast, areal estate boss says the Ministers —particularly James Shaw — tive co-leader for asmall party outside wired to hate cars and love trains”: She received just asingle comment Greens have made an impact: “if you look have surprised many in the business of government, and on key issues.” “Her passion, and the Governments —the partner of amajor legal firm says carefully, the Greens have had wins on community for their ability to listen,” Adrienne Young-Cooper, chair of need for the Greens, could commit the her role in the OIO approval process almost every one of their major policy says aleading banking boss. Panuku Development Auckland, offers nation to extremely expensive spend- has been underwhelming. “There is a platforms”. ZEnergy chief executive Mike him some advice: “he needs to lose the ing on atransport technology better lot of uncertainty in the business com- At the recent Green party AGM, Shaw Bennetts says “James has been very suit and be really innovative in address- suited to more population dense munity as now ministerial decisions highlighted astring of achievements — effective in managing conflicting views ing alighter more loving footprint on countries, and last century, not this seem to be going against the Overseas including the ban on new fossil fuel to an overall consensus that is accept- our beautiful so damaged planet”. one.” Investment Office’s technical recom- exploration, public transport initiatives able to all stakeholders”. Adds an auto- Shaw’s colleague Julie Anne Genter Adds another: “Genter represents mendations for political or party and the $100m Green Investment Fund. motive firm chief executive, “Thank who holds the women’s portfolio and the greatest risk to this Government. reasons rather than following acon- “This year’s budget alone contained goodness James Shaw is there, other- is Associate Health and Transport Min- She has let power go to her head, and siderate investment assessment”. $6 billion in new funding for Green Party wise nothing would be happening”. ister was scored at 2.09/5. her anti-car campaigns and opposition —Tim McCready initiatives,” he said.

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MOOD OF THE BOARDROOM CEOs rate National’s ‘top 10’ frontbench

Judith Collins PaulGoldsmith Todd McClay Spokesperson for housing &urban Spokesperson for education, sport & Spokesperson for finance, Deputy leader of National Party Spokesperson for trade, economic development, planning (RMA recreation infrastructure Spokesperson for social investment development, workplace relations reform) , drug reform, women and safety, tourism 3.51/5 3.31/5 3.14/5 2.86/5 2.83/5

Mark Mitchell Michael SimonBridges Spokesperson for Pike River re- Spokesperson for foreign affairs, Woodhouse Leader of the National Party Spokesperson for social entry, defence, disarmament GCSB &NZSIS Spokesperson for National Security development Spokesperson for health 2.73/5 2.68/5 2.67/5 2.50/5 2.40/5 Getsmart andfocus on the

Mood of the Shows improvement —but still away to go Boardroom Tim McCready When asked whether National Leader Bridges has atough job, they say rather than Simon. Put another way, as leader, most publicly with the Jami- Simon Bridges is hitting his stride as the jury remains out on whether Simon is unlikely to be the reason Lee Ross saga that began in August ocus on substance —that is the leader, just 26 per cent of respondents he can capture the hearts and those that support National support last year with an investigation into the clear message to National said Yes, 47 per cent said No, 27 per minds of his own team —let alone National.” leak of Bridges’ travel expenses. from respondents to this cent were unsure. the country. Comments from The political polls show National is Ross stepped down from National F year’s Mood of the Boardroom NZ’s business elite say though respondents revealed an consistently rating with 40-45 per but it was the fallout from the survey. Bridges’ leadership is improving, he unprompted undercurrent among cent support (except for aNewshub sustained public attacks by him on National leader Simon Bridges has away to go —Cooper and executives that Bridges’ Reid Research poll in June which had Bridges that impacted on the latter’s announced aJune shadow Cabinet Company chief executive Matthew leadership is not going far enough. them at 37.4 per cent). standing. reshuffle following the news that MPs Cockram suggests: “he is improving, “Does National have the right Concerns were also raised that Ross’ allegations have continued, and Alastair Scott would but has taken his time, though!” leader in Simon Bridges? Not sure. Bridges is seeking populist policies the latest revealing then-trade retire from politics at the 2020 elec- Those surveyed were asked to rate The only alternative is Judith that may not be in NZ’s interests. minister Todd McClay helped tion. Bridges’ leadership of the National Collins, for whom Ihave avery Says aprofessional director: facilitate a$150,000 donation from a The biggest winner in the reshuffle Party on ascale where 1=not high regard,” says Don Brash. “Walking away from supporting the company owned by Chinese racing was Paul Goldsmith. He picked up the impressive and 5=very impressive. Whereas an independent Climate Change legislation is wrong. industry billionaire Lang Lin. heavyweight finance spokesperson They gave him arating of 2.50/5. director says: “He isn’t resonating, We need to have bipartisan support Despite this, some respondents say and infrastructure spokesperson roles This is comparable to his score in last but apart from Judith (who would for this. We know it’s an issue. What there are signs Bridges is improving. and jumped from seventh to third in year’s survey of 2.44/5 —but well be adisaster as PM) there isn’t he should promote instead is allowing Says athink tank head: “Bridges the party’s parliamentary rankings. down from the rating of 3.16/5 he much choice.” business and agriculture to adapt as had atough first year as leader, but Chris Bishop was also awinner, received as acabinet minister in “While no doubt very new technologies come to the fore he is sounding increasingly confident picking up Goldsmith’s former roles in 2017’s survey. intelligent, Simon has not been and not give imports afree pass.” and looks like apotential PM.” transport and regional development. The low score for Bridges aligns able to develop apolitical Some respondents comments “He may not appear comfortable He moved from being ranked 35th with the dismal ratings he has following among voters,” says were unvarnished: “Get in some fresh on TV, but one-on-one or in small to 16th, overtaking several of his received in public opinion polls for Deloitte’s Thomas Pippos. leadership with charisma. Whether groups he is very encouraging and colleagues and clinching aspot in preferred Prime Minister: scoring 6 He adds: “What the polls tell us we like it or not, election decisions are has ateam behind him that are all National’s shadow cabinet. per cent in the most recent 1News is that National’s support is based on personality not substance,” capable,” says Barfoot &Thompson’s New Zealand’s top CEOs and direc- Colmar Brunton poll. probably attributable to the party suggests an infrastructure boss. Peter Thompson. tors seem to agree with the reshuffle, While executives agree that and anti-Government sentiment Bridges has had achallenging year —Tim McCready with abanking boss commenting: “Paul Goldsmith and Chris Bishop have great potential”. attention from respondents. says apublic sector boss. “Focus on how they would perform better than aging director Simon Ellis. But when asked what more Bridges Many suggested National needs to things that matter to Kiwis —not on the Government, rather than nega- Mainfreight boss Don Braid was needs to do to present avigorous identify and focus on key policy areas, personal politics that only capture the tivity and time spent explaining what direct: “The negative nit-picking in alternative to the Government at the rather than trying to do everything. attention of gallery.” the Government is doing wrong. opposition has been pathetic; shut up 2020 election, it was substance — “Be smarter and more strategic in Respondents also suggested that “Cut out the negative comments, and develop credible policy.” rather than individuals —that received what it criticises the Government on,” National spend more time focusing on lead from the front,” said Ovato man- But other respondents say National nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D13

MOOD OF THE BOARDROOM Goldsmith ‘a fast learner’

usiness leaders gave National rising star Paul Goldsmith Financespokesmanadvisedtoget acoherentset of policieswrites Tim McCready their third highest ranking B among the party’s top 10, but when it comes to the right qualities to deliver as finance spokesman many CEOs rate think it is too early to tell. In the 2019 Mood of the Boardroom National’s survey, respondents were asked to rate Goldsmith. policy agenda He scored 3.14/5, the third-highest score for National’s top 10 ranked MPs Allow Kiwisaver contributions to —behind housing spokesperson Judith continue beyond the age of 65 for Collins (3.51/5) and education those in the workforce 8.12/10 spokesperson Nikki Kaye (3.31/5). When asked whether he had the Reinstate the 90-day trial period right qualities to deliver as finance for employers 7.64/10 spokesperson, 43 per cent responded yes, 12 per cent said no. Raise the age of superannuation “Paul has adetailed knowledge of tax from 65 to 67 7.44/10 issues —hehas literally written the book on the history of tax in New Remove the ability to give Zealand. He has areasonable know- preferential pay agreements to ledge of economics, is extremely bright union members during public and is afast learner,” responded former sector wage negotiations 7.25/10 National Leader and Reserve Bank Gov- ernor Don Brash. “He also understands Increase residency requirement the seriousness of the economic prob- for superannuation to 20 years lem facing the country: the extremely 6.98/10 poor rate of productivity growth.” “He’s bright enough, but quirky,” said Repeal the governments foreign agovernment relations director. investment changes 6.34/10 SkyCity Entertainment Group chair Rob Campbell suggested Goldsmith While he has still to raise his profile the Waitangi Tribunal to join John many CEOs highlighted productivity A“regulations bonfire” removing needs to “get away from just saying as ashadow finance minister, Gold- Banks’ office as apress secretary. When and infrastructure. two regulations for every new what he thinks business wants to hear”. smith is aprolific author. He wrote a Banks was thrown out of Cabinet he “He needs to devise acoherent set regulation introduced 6.25/10 Another suggested Goldsmith book on the definitive history of tax- was taken on by National Environment of policies which would plausibly de- needed to “get some charisma”. ation in New Zealand (We Won, You lost, Minister . After National’s liver ameaningful improvement in Repeal the ban on new offshore With just three months as finance Eat That)and the history of Fletcher 1999 defeat he worked in ’s New Zealand’s rate of productivity oil and gas exploration 6.13/10 spokesman it is not surprising 45 per Building. He is also abiographer, cover- Labour Government as astaffer for growth,” says one respondent. cent of survey respondents are still ing the pantheon of New Zealand busi- former Cabinet Minister . Said an energy boss: “Joining the Return the brightline test to two unsure if Goldsmith has what it takes ness leaders including John Banks, Don He entered Parliament as aNational narrative together on economic, en- years and remove ring fencing of to deliver as finance spokesperson. Brash, Sir William Gallagher, Alan Gibbs list MP in 2011 and went on to hold the vironment, trade, social, infrastructure losses 5.29/10 Goldsmith was appointed in aJune and the Myers family. Commerce, Science and Innovation into acompelling, long-term and under- reshuffle after former National Cabinet In Gibbs’ biography, Goldsmith and Tertiary Education portfolios in the standable (street-level) vision.” Repeal the regional fuel tax in Minister Amy Adams announced she wrote that at one point Gibbs asked him: last National Government. “Creating aframework for stability Auckland 5.12/10 would retire from Parliament in 2020. “Paul, when are you going to stop living After the 2017 election, Goldsmith and investment that does not constrain “We haven’t seen enough either vicariously, writing about other aligned himself closely with National growth,” responded an automotive (Rated on a1-10 scale where 1=very way,” says an investment firm’s chief people’s lives and get up and do some- leader Simon Bridges. boss. poor and 10 =very good) executive. thing yourself?” After his maiden As economic and regional develop- Other advice for Goldsmith included Source: NZ Herald 2019 Mood of the “It is still early days, but Ibelieve he speech in Parliament, Goldsmith said ment spokesperson, he raised his pro- the need for him to “get really clear on Boardroom CEOs Survey has the right qualities from his early Gibbs laughed down the phone at him: file through blistering attacks on Shane how all parts of society can win under changes and comments,” says Barfoot “I meant get up and do something Jones’ administration of the Provincial aNational government”, and to “have &Thompson director Peter Thompson. genuinely useful; not go into politics!” Growth Fund. clarity regarding National party policies “Today’s Mood of the Boardroom de- Goldsmith, got his first taste for poli- In an open-ended question on what and being able to articulate them bate will be his first real test.” tics when he moved from arole with Goldsmith’s key priority should be, clearly.” substance A‘credible alternative’ should continue to highlight the Zealanders, being realistic about Two-thirds of business leaders —66per ● Repealing the regional fuel tax in relations firm head. strength and credibility of its team, sustainability and equality challenges cent —say that National’s proposed Auckland (5.12/10) “There are some good ideas, but it’s compared to those on the Govern- and addressing New Zealand’s under- policies are providing acredible Deloitte CEO Thomas Pippos says all tinkering,” says Whineray. “The ment benches. performance in productivity —was alternative to the policies from the Government policy is about deliberate centralised dynamics are different to “All that National has to do is point also amessage from respondents: . Just 8per cent choices that balance financial and non- the rest of the world and effective out Labour’s incompetence at run- “National needs to provide along- say they do not; 26 per cent are unsure. financial outcomes. oversight of expenditure absolutely ning the Government and the term vision for New Zealand as a “National is insignificantly different Pippos says achallenge with the beats the perception of scale country,” said apolicy boss. country, in order to work its way up to make agreat difference to New proposed economic policies that economies.” “It makes the contrast to National’s the OECD rankings rather than declin- Zealand,” says Mercury CEO Fraser National released is that they look to Don Brash added: “Some of what experienced and qualified front ing,” says MinterEllisonRuddWatts Whineray. “Can we have along-term appeal to the conservative wing of National proposes is apale shadow of bench even stronger.” partner Lloyd Kavanagh. vision and discussion about our place those that support National —which what it should be. For example, starting Cooper and Company chief execu- Said the chief executive of an in the world?” they “already have in the bag”. to raise the age of eligibility to 67 from tive Matthew Cockram said: “National investment firm: “In order to win, “Better than the Coalition? Certainly. “Key social issues around housing, 2037. Australia will get to 67 by 2023!” should reach out to those who have National has to own middle New But not good enough to lift our lousy poverty and inequality are not being Others suggest that National is been so cruelly misled by Labour’s Zealand —and right now they don’t. productivity growth rate,” cautions overtly addressed,” he says. struggling to resonate with the rhetoric and execution ineptitude. They are not progressive enough to ICBC chair Don Brash. electorate, and put this down to alack Show that just throwing money at capture hearts and minds of the real Last month, National launched its Some of their ideas are of ability to clearly communicate their issues does not solve them.” big-picture long-run issues for the economic policy discussion document. policies. “They are still pretty But CEOs also want National to future.” Among commitments, Leader Simon incredibly sensible but I unimpressive when it comes to adopt new policies that can demon- “Stay centrist and loud on how to Bridges said National would not don’t see astrategic plan developing and communicating their strate how the party has moved on address system changes for long term introduce any new taxes in its first term, policies… maybe it’s still asecret?” from the Key government. change,” advised atourism boss. would reinstate the social investment in place yet. questions Mark Franklin, managing “The world has moved on and National also needed to find a approach, and would reintroduce director of Stevenson Group. going back to that is insufficient to coalition partner. “They will be hard- targets in health, education and law and The proposed “regulations bonfire” become Government and the wrong pressed to get an outright win,” order. “Similarly, there is no positive -which has been compared to the thing for New Zealand.” advises an executive in the education The top three rated policies were: response to environmental issues. Donald Trump playbook -promises to Adds an independent director: “It sector. ● Allowing Kiwisaver contributions Putting to the side the challenges of “repeal 100 regulations in our first six still feels like areturn to more tra- Reiterated Barfoot &Thompson’s to continue beyond the age of 65 for MMP and the lack of coalition partners, months in government and eliminate ditional National policies. Ithink they Peter Thompson: seniors who remain in the workforce National would be more successful if two old regulations for every new one need to better read the mood of “They aren’t going to win it alone (8.12/10) it transformed to being more we introduce.” It scored 6.25/10 and society and set out some new ideas so need to work closely with an ● Requiring all government progressive and appealing to the received the most commentary from that demonstrate areal change from alternative party to go into partner- agencies to pay their contractors on majority of voters who occupy the respondents. the past on issues like climate, infra- ship with them before the election — time and within 30 days (7.99/10) centre of NZ politics.” “A ‘regulations bonfire’ sounds structure and taxation policies.” so the public know before they vote.” ● Requiring Treasury to have Several of the respondents say the good, but National’s own record in this Mark Franklin, managing director Though most respondents say greater focus on identifying wasteful release of the economic policy area over nine years was very poor,” of Stevenson Group said: “They must National’s strength is that it has a spending (7.96/10) discussion paper was astep in the right says abanker. stop acting like they are entitled to credible cohort of talented perform- The two lowest-rated proposed direction, but suggested National is not Michael Lorimer, Auckland be there and start rolling their sleeves ers, afew recommended National policies were: doing enough to move the needle. managing director for Grant Samuel up.” look to bring in new talent from the ● Returning the brightline test to “Some of their ideas are incredibly said: “This policy illustrates Bridges’ The need for National to consider outside. two years and remove ring fencing of sensible but Idon’t see astrategic plan naivety.” the long-term —including creating a “…but definitely not Luxon!” losses (5.29/10) in place yet,” adds agovernment —Tim McCready prosperous New Zealand for all New pleaded an investment bank head. D14 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM TheAuckland mayoralty

of respondents believe of respondents believe Phil Goff would be the John Tamihere would be 73% best mayor 11% the best mayor

Theincumbent—PhilGoff Thechallenger—John Tamihere

ncumbent Auckland could be more aspirational ust 11 per cent of credible with costed policy. mayor Phil Goff has failed though on where Auckland is Top prioritiesfor the next respondents chose for- “I think that JT thinks the I to fire with New Zealand heading, to develop acompelling J mer Labour Cabinet Min- Trumpian method might carry business leaders who want vision we can all buy into.” mayor of Auckland ister John Tamihere as him through,” he says. him to focus and step up the pace Lowe says avision would help the mayoral candidate with the Auckland Business Chamber’s if he gets another term in next clarify city priorities and provide % best attributes to become mayor chief executive Michael Barnett month’s local government aclearer platform for discussion 58 of New Zealand’s biggest city. says Tamihere began with afo- elections. with central government. Improving public transport “It has come down for me to cus on the basics, but has since CEOs and directors respond- One of the country’s leading % anyone but Goff,” says one chosen to try to be avisionary. ing to the Mood of the Board- bankers says: “Phil Goff may be 55 prominent chairperson who pre- “The problems Auckland faces room survey were asked to rate abit of ageek, but you know he’ll Public-private partnerships and city bonds to fund ferred the challenger over the are here and now, and his incumbent Goff on ascale where be diligent and across the detail”. large infrastructure projects incumbent. change will cost him any chance 1=not very well at all and 10 = Barfoot &Thompson’s chief % But despite not necessarily of winning,” he says. exceptionally well. He received executive Peter Thompson says 34 choosing Tamihereastheir pre- This was the sentiment from afairly average grade of 4.88/10. though Goff has the best attri- Bringing spending under control ferred candidate,some CEOs say many when asked whether But despite this low score, butes for mayor, it’s aclose call. % he is raising important issues and Tamihere’s campaign promises when asked who has the best “He knows the issues the city 31 offering visionary thought. —such as arates freeze and attributes to be Auckland’s is facing and if elected he needs Selling council assets to fund new infrastructure Aleading banker says he will replacing the harbour bridge mayor between Goff and mayor- to act and fix,” he says. % vote Tamihere because he is with adouble decker al hopeful John Tamihere,73per “We need to see where our 24 “looking for amayor who will megastructure —offer acredible cent picked Goff. petrol tax is going to and we need Improving how council works alongside the shake the hell out of the huge alternative to Goff. Throughout the campaign, to see timelines for the infra- Government bureaucracy which Auckland Only 9per cent of respon- Tamihere has made aname for structure —not just saying these % Council and its CCOs (council dents say they do, 77 per cent himself —suggesting atwo-level are issues and then form com- 20 controlled organisations) have say no, and 14 per cent are harbour bridge crossing, an mittees to look into.” Shifting the port away from the city become”. unsure. Many worry that some 0800 JACINDA phone number Agovernment relations boss % Another respondent says of his ideas are “all talk, incom- to report homelessness, and sell- reckons “Goff is dangerously 19 Tamihere has made some “valu- patible objectives” and lack the ing off the council-owned autocratic, but he’s bright — Building more roads to reduce congestion able contributions on CCO trans- detail needed to be realistic. Watercare in order to fund infra- whereas JT is fun but mad”. % parency, the port move, stopping “I don’t think anyone anybody structure projects. But there were also asizeable 15 light rail to the airport and util- takes Tamihere’s Auckland Goff, meanwhile, has argued number who commented Implementation of the Unitary Plan ising existing heavy rail bridge proposal seriously,” says he is asteady pair of hands with “neither” when asked to choose % connections”. one professional director. the experience needed in order between the two leading mayor- 13 Says Barfoot and Thompson’s Aleader in NZ wine exports to bring better public transport al candidates. Homelessness Peter Thompson: “If Tamihere opines: “A rates freeze will mean and cleaner water to Auckland. “Not sure Ifeel great about % gets the facts and shows strong Auckland will spend another Survey respondents tend to either —where is the focus on 9 reasoning, he will go close in the decade not improving infra- agree with this, commenting that running agreat city as abusiness Reducing council staff numbers election. At least he is addressing structure. Choosing Christine Goff is more “practical and ex- and its effectiveness?”, % the issues.” Fletcher to ‘shake things up’ with perienced”, and has the best questioned Foodstuff’s Chris 5 Mark Franklin, managing him is ajoke.” knowledge of the issues that are Quin. Reducing rates director of Stevenson Group Aprofessional director pleads important to Auckland. “Disappointed neither candi- % says he likes some of the things to the electorate: “John Tami- Beca CEO Greg Lowe says Goff date is awoman,” said an internet 2 Tamihere talks about, but “he here would be like voting for is more capable than John retail boss. Planting trees to improve the environment loses me when he makes up Donald Trump —please don’t!” Tamihere, and understands the “The test is of commercial % and makes promises that he Says another: It’s dreamland challenges of running Auckland acumen and governance ability,” 2 can’t afford”. Franklin suggests and God help Auckland if he better. said independent director Dame New double decker harbour bridge though Tamihere is getting some becomes mayor.” But he advises that: “Phil Alison Paterson. cut-through, he would be more —Tim McCready nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D15

MOOD OF THE BOARDROOM Support for Orr in banking battle

the across the Tasman when he Technically that may be the case, suggested the big banks operate here but business leaders are considerably Mood of the as amatter of privilege rather than less relaxed about the prospects of Boardroom amatter of right. negative interest rates or QE. He has pointed out that our Nearly 75 per cent said the Liam Dann banking sector is the most profitable prospect of these things was acause in the world. for concern. Where the previousGovernor Regardless of whether monetary eserve Bank Governor Graeme Wheeler was often criticised policy can remain effective at these Adrian Orr seems to have for alack of communication, Orr’s levels, business leaders are no doubt solid support for his battle tendency to say exactly what he well aware that the business R with the Aussie banks thinks seems to worry some conditions required to get there among business leaders. commentators. would inevitably be very ugly. The Mood of the Boardroom Orr has also been outspokenin Orr has also made the case for survey found more than 43 per cent defence of the Reserve Bank’s increased Government spending on of respondents saw the Reserve monetary policy moves. infrastructure to assist in boosting Bank’s proposed capital ratio increase In the wake of abold 50 basis point economic growth. as asound move to protect the New Adrian Orr has rate cut in August, he went on the That’s not something we’ve heard Zealand financial system. also been offensive arguing that now was the from aNew Zealand Reserve Bank More than half of respondents say outspoken in time for businesses to invest more, Governor before —although the bank bosses have been defence of the consumers to spend more and that Australia’s Governor Philip Lowe has scaremongering on the issue. Reserve Bank’s savers should look at alternatives to also made calls for more Federal The Reserve Bank is proposing a monetary policy low-yielding bank deposits. spending. lift in the amount of risk-weighted moves. Unfortunately business leaders Amajority of business leaders capital retail banks hold, from 8.5 per don’t seem to have taken those words were comfortable with Orr’s call, cent to 16 per cent. believe the increase will really be a employee costs).” to heart. perhaps reflecting broadly strong The increase is designed to make major impost on bank shareholders But most local business leaders Nearly 77 per cent said the OCR support from the business banks safer and better designed to with nearly 35 per cent saying they don’t really believe him it seems. cuts had not increased their community for more government handle periods of financial stress by will be affordable give the level of Just 25 per cent per cent of company’s appetite to invest in new focus on infrastructure including, holding enough capital to reduce the banking profits. respondents believe the increases projects. Just 13 per cent said they roads of national significance. probability of afinancial crisis in New ANZ group chief executive Shayne will result in Australian banks would now be more likely to invest. Nearly 54 per cent said they felt Zealand to aone in 200-year event. Elliott has threatened to review the reducing operations in New Zealand Orr has also warned that New Orr had not overstepped the mark But Australian bank bosses have “size, nature and operations” of the And more than 55 per cent said Zealand interest rates could head into with his call, although nearly 30 per pushed back, calling it overly New Zealand business if the Reserve they thought bank chief executive negative territory —following nations cent felt he had. conservative and warning that it Bank implements its proposed were scaremongeringwhen they like Denmark and Switzerland — Orr is clearly the most outspoken could limit the availability of credit changes to capital ratios, according to threatened to pull back on New although that is not yet in the Reserve and therefore the most controversial in some sectors of the economy and his submission released publicly Zealand operations. Bank’s forecasts. Reserve Bank Governor New Zealand increase interest costs for borrowers. yesterday. However alarger percentage(58 Orr has said he is “completely has seen. Westpac, for example,has argued The capital changes would see per cent) accepted that the increased open” to the possibility of negative With monetary policy facing such the proposals “go significantly further ANZ Group reduce investment and capital requirements could result in rates or unconventionaltools like unusual times and the Reserve Bank’s than is required” and go “well beyond reallocate resources away from New the banks reducing their exposure in quantitative easing. regulatory role becoming international norms”. Zealand to more profitable certain sectors such as dairying and He says he sees no reason why increasingly central to our financial It has warned that the changes businesses, Elliott says in the ANZ’s small business lending. monetary policy can’t remain system, he looks set to go on dividing could add 1per cent to mortgage formal submission. “This may also Orr has also been quite vocal in his effective as it rates fall. opinion for awhile yet. rates. lead the New Zealand business to defence of the moves making “Zero is no number,” he told ● Liam Dann is the Herald’s Business Just 17 per cent of business leaders reduce operational costs (including headlines in financial media across the Herald in August. editor at large

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MOOD OF THE BOARDROOM Scare tactics get short shrift

ReserveBank None of the banks are saying Banks’ “shrill response”decried, writes Fran O’Sullivan they’ll pull operations back in CEOs believethe ReserveBank’s proposals to requirebanksto New Zealand. What they are ust over half of CEO increase capitalwill: saying is if the proposals go respondents to the Herald sur- Result in banksreducing 58% through then they’ll have to vey agree the “more vociferous” their exposurestoSMEs J banking CEOs are scare- be careful about where they anddairy mongering when they say they will pull deploy their capital. That’s Be asoundmove to protect 43% back operations in New Zealand if the because certain sectors off the Reserve Bank’s new capital proposals theNZfinancial system, are imposed. customers andsociety economy —like farming and Across the Tasman, Reserve Bank Should be adjustedtoallow 38% SMEs —are required by the Governor Adrian Orr has been formorerisk appetite Reserve Bank to hold more demonised as “Shock and Orr” over his within theNZfinancial proposal to hike bank capital in New community capital against lending there, Zealand. Be affordable givenlevel of 35% say, than the home market. This provoked astrong response bankingprofits in NZ from the leaders of some Australian- Leading banker Will result in Australian owned banks, particularly ANZ Group 25% banksreducingoperations chief executive Shayne Elliott, who scare-mongering was unfortunate: in NZ threatened to review the “size, nature “Especially when cast against the and operations” of New Zealand if the Be amajor impost on bank 17% shadow of the corporate excesses wit- rules are imposed. shareholders nessed this year in the ANZ CEO de- But while 55 per cent of respondents bacle. The bank should have had to the Herald survey agree bank chiefs Adrian Orr has been demonised as “Shock and Orr” across the Tasman. ArebankingCEOs scare- protocols in place to stop these fiscal are indulging in scare-mongering, a mongeringwhentheysay they abuses.” further 31 per cent —which includes the Other comments included: “they’re Ican’t see any of the major will pull operations back in NZ if ANZ’s most recent results show its theReserveBank’s proposals are chief executives of some major dairy full of it —NZistheir most profitable banks withdrawing entirely share of New Zealand’s $62.5b agricul- companies —believe the banks will business” (funds boss), “banks still need implemented? tural lending market stood at 28.5 per reduce capital to some particular to make aprofit” (Chorus’ Kate from New Zealand. But there YesNoUnsure cent in February. sectors including their own if the cen- McKenzie) and “There will be impacts has to be areal risk that they 55%31% 14% “If the banks pull back, it is largely tral bank’s proposals are fully from these changes, but they are being will seek to grow their assets because they already intend to reduce implemented. overstated. There will be price adjust- Have ReserveBank Governor their exposure to asector and /or the Central to the belief that some bank ments, but less face it, interest rates are much more slowly (thus Adrian Orr'sbankingcapital country eg ANZ bank position,” said an chiefs are over-egging their opposition at lifetime lows so they are hardly likely restricting the availability of policies: agribusiness leader. is the fact that they are booking good to be earth-shattering,” (a major funds credit to the economy), and/or Increased your confidence 60% New regulations from the Australian returns on their NZ operations. boss). in thedetermination of the Prudential Regulatory Authority “The shrill response by CEOs of some Simplicity CEO Sam Stubbs said, “As sell down minority stakes. centralbank to protect the (APRA) were also seen as an influence. of the Australian-owned banks is appal- an ex-banking senior executive, the Don Brash ICBC NZ chairman and system “APRA regulations will cap the level of ling,” said Craig Stobo, chair of the NZ banks have rolled out the standard former Reserve Bank Governor. Undermined your 29% capital Australian banks can allocate to Local Government funding agency. playbook on scare-mongering. There confidenceinthe resilience the NZ market,” said amedia boss. “Just look at the profit ratios as are very few arguments they use in- include intangible assets like goodwill of theNZbankingsystem The Reserve Bank’s website contains compared to Australia (eg profit to volving verifiable numbers. The BIS and trademarks. For most banks, loans asummary of the submissions it market size ratio) and you can see assessments of NZ banks are very clear to customers are the most common Neither/No Comment 11% received for its April 2019 consultation plenty of headroom to increase capital,” and completely verify the Reserve type of asset on their balance sheet. Has theReserveBank’sdecision paper. said an energy sector boss. Bank approach.” Amanagement consultant sugges- to drop theOCR to 1% increased Earlier this year, Orr swiped back at “They probably believe this is one ted there were some smart solutions your company'sappetiteto the banks which have been putting the It is unfortunate that David of the outcomes but, even though they available. “Sensible people should be invest? boot into the central bank over its Hisco made the discussion have been important for our economy put in aroom to resolve this. However, proposed changes to capital over the past few years, they are having banking CEOs need to realise that a YesNoUnsure requirements. emotional because it has quite anegative impact right now on managed oligopoly comes with social 13%77% 10% Speaking to the Finance and Ex- allowed the quality of the the growth aspirations on NZ due to and strategic implications.” Has Governor Adrian Orr penditure select committee, Orr ac- debate to become clouded. their risk framework and “fiduciary” Other factors were also seen as overstepped his mandate by cused banks of “scaring the public with responsibilities,” said aconstruction clouding debate —particularly the their aggressive lobbying against the ANZ aside, all other banks callingonthe Governmentto boss. forced departure of ANZ CEO David increase spendingon proposed rules”. have been doing their best to The four major Australian banks Hisco over an expenses wrangle. infrastructure? He said banks have been “suitably work constructively on this dominate the New Zealand economy Said asenior director: “It is unfortu- aggressive” in the way they have been with total assets of $461.69 billion under nate that David Hisco made the dis- YesNoUnsure discussing any capital requirement issue. The subject is management. ANZ is the largest bank cussion emotional —because it has 29%54% 17% changes, particularly around the agri- complicated and few with assets of $164.96b under manage- allowed the quality of the debate to be Does theprospect of negative culture sector. understand it well. The media ment. BNZ is next with $105.31b; then clouded. ANZ aside, all other banks interest ratesand quantitative Orr said he anticipated any hit to ASB with $98.46b followed by Westpac have been doing their best to work bank margins as aresult of the could help by translating the easinginNZgivecause for with $92.92b. In contrast the most sig- constructively on this issue. The subject concern? proposed rules would be equivalent to complexity into ways that nificant NZ bank —Kiwibank —has is complicated and few understand it YesNoUnsure 0.2 per cent of their total margins. New Zealand mums and dads $22.73b assets under management. well. The media could help by trans- “One of our major banks has been Assets are the economic resources lating the complexity into ways that NZ 75%15% 10% the one that has been the most aggress- can understand. abank controls. This includes tangible mums and dads can understand”. Source:NZHerald2019Mood of theBoardroom ive in lending, and the most under- Director. assets like cash and loans but can also Atech services head observed the CEOs Survey capitalised in the agricultural sector.” Orr the evangelist has ‘not yet converted the unwashed’

Chief executives are concerned that the ence in the resilience of our banks. It The concept is sound but civic and national assets and we need ure. As such, it is acost the economy policy battle between Reserve Bank is both necessary and refreshing.” capital to flow to growing amore cannot bear. If acase can be made to Governor Adrian Orr and the banks is Views among director respondents it has significant risk that productive economy we are going to strengthen banking capital require- cultivating widespread uncertainty. were mixed. “I believe capital should in building in that level of drive up the cost of capital and reduce ments, there are superior ways to do While 60 per cent say Orr’s proposed be increased, but the proposal is too banks’ risk appetite.” it without severely damaging not only bank capital increases have increased much, too fast and without sufficient protection it actually Executives and directors from bank- the large Australian banks but also the their confidence in the determination thought to extremely serious NZ Inc drives the downturn that ing and funds sectors are to the point. New Zealand banks, not to mention of the central bank to protect the sys- consequences. We are alittle country,” ● “The major Australian banks their customers.” —Funds chair tem, afurther 29 per cent say their own says one. “There needs to be abalance stresses the system. have capital allocation decisions they ● “This is well outside international confidence in the resilience of our to what Adrian proposes and what the are required to make and they will norms and way above the Basel capital banking system has been undermined. banks are saying. It’s become too per- Property chief deploy capital to the best returning capital ratios agreed by the Bank of “This seems to have turned into a sonal. Grant Robertson needs to show areas. If NZ makes us aless profitable International Settlements post the GFC. ‘stare-down’ scenario which is likely to leadership on this topic,” says another. disagree with the extent of his proposal place for the banks to invest then they On top of this is the decision to intro- negatively impact business in the near Dame Alison Paterson, aformer Re- and the cost of that to the economy.” will reduce their investment here. That duce adeposit insurance scheme. All term,” said aproperty chief. serve Bank director, noted, “there has “The concept is sound but it has means that banks will restrict lending of this comes at acost which in the end Cooper and Company’s Matthew been significant negative comment on significant risk that in building in that to the economy and focus that on lower will be sheeted home to bank cus- Cockram said, “Orr seems to be aman the proposition but no commentary at level of protection it actually drives the return areas. There won’t be anyone tomers.” —Former banker. on an evangelical mission —but has not all on how the banks will deploy the downturn that stresses the system,” able to provide the additional funding But abroker said the reforms were yet persuaded the “unwashed” on the additional capital and how that said aproperty chief. “I have alot of at the scale required and so there will justifiable when you consider the con- merits of what he proposes.” circulates around the financial system”. respect for Adrian Orr but this worries be acredit crunch which will restrict sequences for NZ depositors of ranking This sentiment percolates many of While 43 per cent believe the Re- me. Proceed with caution.” the NZ economy.” —Bank director behind Australian depositors in the the comments in this year’s Mood of serve Bank’s proposal to materially Said asenior executive of aleading ● “It is apoorly designed proposal even of major bank failure, as pre- the Boardroom CEOs survey. But there increase bank capital is asound move dairy company: “Its impact on lending without acredible cost benefit analysis. scribed by Australian legislation. is also support for Orr. “Banks in NZ to protect the financial system, some in areas such as agriculture would be It will impose asignificant cost on the “The big issue is who wears the cost,” have had avery easy time of it for 58 per cent also say it will result in significant and coincide with aperiod economy ($700m per year, forever), said Cameron Bagrie, former bank decades, and seem to have lobbied and banks reducing their exposures to cer- of required spend to meet growing without aclearly articulated benefit economist, now chief executive of his scared their way into profits that are tain sectors like dairy and SMEs. regulatory and environmental com- based on aproper risk assessment. To own firm. “Banks are saying 100 per extremely high by international stand- “Adrian Orr’s objective is agood pliance requirements.” be beneficial, It would likely to have to cent falls on customers. Looking at bank ards,” says Simplicity’s Sam Stubbs. one,” said aleading banker. “A strong, Asimilar concern was reflected by avoid ahuge recession that impacts a ROE’s I’d say there is scope for share- “In standing up to their lobbying the stable banking system is critical to the atransport chief: “At atime when substantial part of the economy, which holders to wear some of it and still leave Reserve Bank is inspiring more confid- functioning of the economy. We just significant investment is required in was caused by afinancial market fail- the ROE in the sector pretty healthy.” nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D17

MOOD OF THE BOARDROOM Some call for Hisco inquiry

nindependent inquiry is We have to know New Zealanders justified to address the cul- ture and conduct issues ex- are getting the full benefit of a A posed by the Hisco affair competitive banking market and say one-thirdofrespondents to the the profits extracted are fair and Herald’s 2019 CEOs survey. The “Hisco affair” rocked the mar- appropriate to the risk says ket when ANZ NZ chair Sir Foodstuffs’ Chris Quin announced the chief executive of New Zealand’s largest, most profitable Report and other issues. It would be bank had departed after aprobe Bank inquiry great for the professional service found he had charged the personal Is an independent inquiry firms but no one else. All boards are use of “chauffeured cars” to the bank. justified to address theculture very focused on culture and conduct The bank had earlier been cen- andconductissuesthathavebeen in light of this report. An inquiry will sured for incorrectly attesting to risk exposedbythe ‘Hiscoaffair’? take abackward view when organ- compliance over five years. isations are already looking forward The Reserve Bank requires banks YesNoUnsure and proactively looking to make to maintain aminimum amount of 33%55% 12% appropriate changes where neces- operational risk capital relative to the sary.” risk of each bank’s business. ANZ’s An insurer agreed, saying allow the right to use its own risk model was Royal Commission insights and removed. actions from Australia to be reviewed The upshot was severe embarrass- David Hisco departed ANZ after aprobe. and applied in New Zealand. “This is ment for Key and other directors who asound and reasonable approach the had attested the bank had complied The actions of the CEO and Reserve Bank and FMA are undertak- with regulations. Key later admitted ing.” Aleading banker pointed out the to the Herald that the board had failed subsequentsilence and obfuscation earlier Reserve Bank and FMA review in its due diligence obligations to the by the board are extremely of culture and conduct showed no Reserve Bank. disconcerting says Simplicity’s Sam systemic conduct issues in the bank- Amajor funds chief said it has ing and Iife insurancesectors. probably reached the stage where Stubbs Said Dame Alison Paterson. “The some kind of inquiry may be required FMA is already very focused on con- just to restore confidence back in the duct and culture and enhanced system. “We need ahealthy system. shade on Hisco’s reputationwhen it sequent silence and obfuscation by ‘whistle-blowing’ processes should It is though very unlikely that sig- was revealed ANZ had failed to dis- the board of our biggest bank and flush out anything untoward. There nificant systemic issues will be un- close that Hisco’s wife had bought a most profitable company are ex- should be care to emphasise the covered.” plush St Heliers house for less than tremely disconcerting,” claimed Sim- materiality definition.” “We have to know that New Zea- the bank paid for it. plicity CEO Sam Stubbs, who has been Other had amore pungent view. landers are getting the full benefit of But it also resulted in aFinancial outspoken over the need for an in- “David Hisco’s behaviour was ap- acompetitive banking market and Markets Authority inquiry which said quiry. “It sets avery poor precedent palling. But there are already FMA, that the profits extracted are fair and the sale should have been disclosed for corporate governance in New RBNZ and APRA reviews under way. appropriate to the risk,” said as arelated party transaction in its Zealand. If KiwiSavers are going to be What benefit would afourth review Foodstuffs’ Chris Quin. 2017 financial statements —aview the happy investing around another $75b bring?,” questioned adirector. “I suspect the CEO was an extreme bank’s board contested, saying the in New Zealand capital markets over ICBC NZ chair and former Reserve example,” said an agribusiness boss. sum involved was not material. the next 10 years, they must know Source:NZHerald2019Mood of theBoardroom Bank Governor Don Brash underlined “However the Australian banking sec- “ANZ is still defending an unten- that recent bank actions will be dealt CEOs Survey that nothing the ANZ Bank did had tor review highlighted systemic able position with respect to no with effectively by regulators and the “slightest impact on the financial issues that are probably also present disclosing the related party trans- politicians.” dollar inquiry to confirm what we soundness of the bank, let alone the in New Zealand.” action,” said an energy sector boss. Atech services head wanted the already know —ahigh-profile CEO, soundness of the banking system. Nor Asubsequent leak threw more “The actions of the CEO and sub- CEO further held to account, the poorly motivated, has been found out did it have any impact on ANZ Bank wife’s house sold and any gain on taking advantage of weak govern- customers.” Dame Alison Paterson says the FMA monies paid back. “This was an un- ance processes resulting in him losing Mainfreight’s Don Brash said leave forgivable misuse of funds and his job and damaging the reputation the banks to sort their integrity out is already very focused on conduct leaders of NZ companies should be of his employer,” said amedia boss. “with customers deciding if they have and culture and enhanced ‘whistle- demonstrating the highest levels of “We don’t need another inquiry,” or not”. blowing’ processes should flush out personal and public integrity.” said independent director Cathy But, cautions the LGFA’s Craig But most respondents —55per Quinn. “I believe all businesses have Stobo, the NZ banking sector is “one anything untoward cent —donot support an inquiry. sought to learn from the Australian more misdemeanour away from a “We don’t need amultimillion- Royal Commission Inquiry, the APRA Royal Commission of Inquiry”. Newrequirements‘could do harm’ The 1per cent conundrum

Westpac CEO David McLean warned Some people Italk to are its powder dry in Businesses say it will take more than Governor undermined business that the Reserve Bank’s increased capi- case something adrop in the OCR to 1per cent to confidence and raised the suspicion tal requirements for the big banks were spooked more. People really goes increase their companies’ appetite to he was working to enhance the in danger of harming the New Zealand have said to me: “What wrong, which is invest in alower interest rate Government's chance of being re- economy, in an interview for the 2019 admirable,” he ac- environment. elected in 2020,” said abanker. Mood of the Boardroom survey. do they know that I knowledges. Reserve Bank Governor Adrian Minter Ellison’s Lloyd Kavanagh He has expressed extreme concern don’t? McLean says Orr has urged Government and said it suggested the Reserve Bank’s about changed Reserve Bank policies he was not business to reassess their hurdle concerns about the economy were and strong concern about access to David McLean suggesting “sugar rates on investment projects since greater than they have said, aview capital for the general business com- rush” type the bank reduced the OCR to 1per supported by several funds chiefs. munity. in the long run, the Australian to see why New Zealand’s risk appetite handouts, but rather getting things cent. But 77 per cent say it will not But others like Stevenson group’s banks would emerge relatively un- was seen as so low that it requires the done in infrastructure, education, be the spur for increased investment. Mark Franklin applauded the positive scathed from the new capital extraordinary level of protection of health and housing. That would have “Fifty basis points is irrelevant to decision, saying it gives the market requirements, he said. these capital requirements, he says. areal sustainable, long-term impact for the decision-making,” said an energy some steer. They will survive, says McLean. The bank chief says interest rate the country. “Building more sustainable sector chief. Barfoot &Thompson’s Peter “They’ll either give NZ the capital be- cutting by the Reserve Bank is poten- things with their investment is amuch “What is relevant is the confidence Thompson said it should provide a cause we can get areturn or they won’t. tially counterproductive as it is having better way to do it but that takes longer in policies and regulatory settings. springboard to get on and build But, guess what, we’re about 10 per cent an unnerving effect on New Zealand to get going and they’ve just taken far And that isn't solid.” infrastructure —like asecond of the Australian banks. If they don’t confidence, rather than the bold, too long to get going.” “Bank margins have gradually harbour bridge. invest here, they’ll invest somewhere proactive stance they were perhaps For now, the economy’s funda- been increasing and the prospect of Aleading policy advocate said Orr else, Australia or wherever.” aiming for. “Some people Italk to are mentals are still there for doing good increased bank capital provisioning was the governor of the RBNZ, not Meanwhile, what happens to the spooked more. People have said to me: business, McLean says. He believes it means further margin hikes are Minister of Finance. “If he wants to New Zealand economy? he asks. ‘What do they know that Idon’t?’” is the intangible things that are causing likely,” said aproperty boss. run fiscal policy, he should run for McLean says regulations like capital Businesses were telling him, they the slowing economy —things like “Whilst the lower risk free rate Parliament.” But Simplicity’s Sam requirements should be decided by a were not investing at these rates though confidence. “Confidence took ashock means areduced weighted average Stubbs felt as an ex-commercial separate banking regulator rather than they were at all-time lows. with the election and then acouple of cost of capital, corporates investing banker and fund manager, Orr was the Reserve Bank, abody like APRA They were saying: “Lower rates are government actions early on, but most in long-dated assets will still need to extremely well-placed to make these (Australian Prudential Regulation Auth- not going to make much difference Government policy hasn’t been anti- have aview on the risk free rate comments. ority) in Australia, for instance, which because the thing holding me back is business” he says. through the lifespan of that asset,” “Rarely in NZ's history have the works like the FMA (Financial Markets worry and uncertainty.” He thinks domestic concerns have said aleading chair. requirement to invest, and the ability Authority). The Westpac CEO argues Govern- been overtaken by the global worries. Anumber of CEOs said they had to fund the investment via debt and The Reserve Bank’s moves on bank ment fiscal policy should perhaps be And the global situation is quite already made significant investment local savings (KiwiSaver, , NZ capital requirements had been “sub- doing more of the work the Reserve alarming, although the hope was the big decisions. Super, et al), been there at the same optimal policy making”, he says. “They Bank is trying to achieve with cutting players would find some middle And there was ahint Orr’s move time. We must seize this should have done acost-benefit interest rates. The Government should ground. Scenarios that could play out had spooked some. opportunity.” analysis up front, they should have spend more but it is important it holds between China and the US could be “If anything, by dropping the OCR Asked if Orr was overstepping his flagged some of these issues for debate “to some fiscal discipline” to the oppo- “quite scary” McLean says. He believes by more than the market was mandate by calling on the like the 100 or 200 years risk factors sition’s chagrin —astrange role- aconcern is that NZ could become expecting, despite unemployment Government to increase spending on before coming out with adraft policy.” reversal. caught between two powers and have reaching its lowest level in years, the infrastructure, 54 per cent said no. It would have been very interesting “The Government does need to keep to make difficult choices. D18 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM Winston Peters: ‘the voice of reason’

Business chiefs say Peters and his party havehad amoderatingeffect on Labour, writes Tim McCready

usiness leaders say Winston church massacre, and on multiple trips is in tune with the view of a to the Pacific. wide cross section of New But it is in the domestic arena where B Zealand and understands CEOs have chipped in. what the electorate can accept and Respondents also noted the labour what it will not. law changes and climate change as When business leaders were asked areas where NZ First is having anot- to rate Winston Peters on his ability able influence. to influence the major coalition part- Banker Don Brash says the business ner (Labour) in government to achieve community owes the partial retention policy outcomes on ascale where 1 of the 90-day trial period for smaller =not impressive and 5=very impress- businesses to NZ First, “and the farm- ive, they gave him an impressive score ing community may well owe NZ First of 3.59/5. for moderation in the Zero Carbon Bill”. Amajor wine exporter jokes that “in reality, Winston runs the country!” Iscored Winston as Furthermore, most respondents — some 64 per cent —say that Winston being impressive in his Peters and his party have had amod- ability to influence erating effect on Labour within the Coalition that is producing better out- because he exercises a comes for business and farming com- veto right over alot of munities. Only 13 per cent say he hasn’t, and 22 per cent are unsure. strategy —however Iam “It seems that sometimes Winston is the voice of reason and experience not saying that is good. at the Cabinet table,” says one Public sector boss chairperson. “Yes —and keep it up Winston,” says NZ First are engaged, independent director Cathy Quinn. “We do need to see that the climate seem to be pragmatic change legislation allows business and and focused on farming to adapt in asensible time frame. producing better “I’m not saying we shouldn’t reduce outcomes. emissions in NZ or play our part —I very much believe we should. But we Chris Quin, Foodstuffs shouldn’t expect business (including farming) to reduce emissions before Foodstuffs North Island’s Chris there are variable pathways to do so. Quin adds: “NZ First are engaged, seem That is unreasonable, unfair and bad to be pragmatic and focused on pro- for our economy. For example, if we ducing better outcomes.” want farmers to cut emissions, we In some ways this is now seen as need to look at allowing the use of astrength. At the Red Meat Sector genetically modified grasses and the Conference this year, one speaker like which would facilitate this.” urged attendees to vote for NZ First Quips another respondent: “It is a for the moderating effect the party bit of aworry when we all say: thank brings —joking that we have moved God for Winston!” from first-past-the-post to athird-past- But not everyone was afan of NZ the-post electoral system. First moderation. Fulton Hogan man- When Prime Minister Jacinda aging director Cos Bruyn agrees with Ardern was unable to get the support the moderating effect, but is “unsure of NZ First and was forced to reject to operate. This has been amost what Ibelieve is the mass majority of Peters also has abig role to play as if it is producing better outcomes”. the ’s recommen- successful coalition in an unexpected New Zealanders?” our foremost diplomat and has driven Explains apublic sector boss: “I dation to adopt acapital gains tax way. Alobbyist agrees, saying Peters’ apunishing schedule in recent month scored Winston as being impressive in (CGT), Peters brushed off questions “It’s not amatter of being happy or cunning and ability to understand with visits to Washington DC to meet his ability to influence because he about whether NZ First held too much who won or who lost. What really negotiating gives him ahuge advan- Vice-President Mike Pence, to Turkey exercises aveto right over alot of power: matters is: have we got the right policy tage —“he also understands middle NZ to meet President Recep Tayyip strategy —however Iamnot saying “Politics and coalitions are difficult —all of us —that has the support of better than the Greens or Labour”. Erdog˘aninthe wake of the Christ- that is good.” Seymour needs to sharpen up his Act

Act Leader David Seymour’s infa- dancefloor —largely invisible in this mous appearance on reality tele- term,” says Deloitte’s Thomas Pippos. vision show Dancing with the Stars has One of Seymour’s most public continued to dog him: “Less dance achievements this year has been the twerking more policy tweaking progress made on his voluntary eu- please,” says Craig Stobo, LGFA chair. thanasia private members bill, which Adds an investment chief: “Hope- would allow terminally ill adults to less. He should return to Dancing with request assisted dying. The End of the Stars.” Life Choice Bill is due to return to the When survey respondents were House tomorrow for afourth debate. asked to rate Seymour’s performance Following the mosque attacks, he in holding the Coalition Government labelled the gun buyback scheme a to account on ascale from 1=not waste of time, noting that the “people impressive to 5=very impressive, he who are prepared to line up in the received ascore of 2.31/5. full public glare and hand in their The Act party relaunched earlier firearms at below-market rates are this year, unveiling anew logo and not the people we should be worried afocus on freedom. about”. It announced afreedom to earn, David Seymour Abanker commended his passion, and afreedom of education policy to gets his twerk noting that at times he seems to be go alongside its freedom of speech on in Dancing the only voice of reason within Parlia- pledge. with the Stars. ment: “He was able to shame the Seymour is hoping to boost Act Government into retaining the essen- back into the 6to8per cent territory shrill,” says Cooper and Company’s Independent director Cathy Quinn Atransport chief suggested: “he’s tial features of charter schools and it occupied between 1996 (6.1 per chief Matthew Cockram. “It is ashame says Seymour is impressive but actually better than Iexpected for a has embarrassed it on its largely cent) and 2002 (7.1 per cent). really, as he is smart and articulate needs more MPs to be able to achieve one-man band.” ineffectual gun buy-back pro- “Seymour is alone voice and the with good instincts and aheart that more. “I admire his positivity none- “By all accounts anice guy albeit gramme.” media representation of him is as a wants the best for New Zealand.” theless,” she says. somewhat quirky —while stiff on the —Tim McCready nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D19

MOOD OF THE BOARDROOM ‘Solution in search of aproblem’

Tim McCready Will the Provinvial Growth Fund help to address New Zealand’s usiness leaders and contro- versial Cabinet Minister infrastructure challenges? Shane Jones haven’t gone so % B far as to smoke apeace pipe. 2 But this year’s Herald CEOs survey are very confident it will shows the sting has gone out of % business criticism with just afew 22 personally derogative comments on are quite confident Jones compared to 2018 when he was % slagged off for “pathetic populist pos- 76 turing” and “short-sighted political are not confident it will help. point scoring”after the string of per- sonal attacks he mounted against leading business people. “It’s asolution in search of aprob- Respondents were asked to rate lem which, when it finds aproblem Jones on his performance as Regional that does need solving, discovers it’s Economic Development and Infra- not the right solution,” says areal structure Minister over the past year. estate chief executive. “It’s also —let’s On ascale where 1=not impressive be fair —not the Government’sPGF, and 5=very impressive he received but NZ First’s, and it would exist ascore of 2.43/5. whoever Winston Peters had chosen Jones has toned down the bom- Shane Jones as his coalition partner.” bast so his personality does not and Christopher “The idea is agood one but these eclipse his policies. Luxon buddy up things take awhile to feed through, This came after aword from Prime —ayear ago so we’ll only be able to judge its Minister Jacinda Arden, who Jones Jones was success in afew more years,” suggests told the Herald had said to him “no calling for heads atop banking boss. news is good news”. to roll at Air NZ. Beca’s chief Greg Lowe suggests His championing of the new Infra- the existenceofthe PGF is encour- structure Commission has raised his tor Craig Stobo. Aprofessional direc- “In some aspects it has, particularly ● Apolitical slush fund (60 per aging asignificant increase in ideas reputation with that sector. tor suggests it is a“NZ First get re- in attracting investment into the cent) to improve regional growth. But he But his jawboning has also got elected fund”. smaller regions,” says aprofessional ● Getting much needed econom- says “a more integrated regional plan, results. , where he The Provincial Growth Fund has services chief. ic focus on regional New Zealand (24 bringing acollection of initiatives called for top brass to go after the been allocated three billion dollars “Solely based on the recent allo- per cent) together within aregion that can airline axed some provincial routes, over three years to invest in regional cation to rail infrastructure improve- ● Delivering infrastructure in- support each other, might give more this year hosted Jones on an in- economic development. ment betweenthe North and Auck- vestment that will boost regional links effective outcomes”. augural direct flight from Auckland Investments include upgrades to land,” adds atop exporter.” and infrastructure (11 per cent) Questions about the way in which to Invercargill. infrastructure, such as the announce- Business leaders were asked to When asked how confident they the PGF operates were frequently Jones, who refers to himself as the ment earlier this month that the choose as many of the following that were that the fund would help to raised by respondents. “Investing in “provincial champion”, has attracted Auckland to Whanga¯rei rail line will apply in terms of the Provincial address New Zealand’s infrastructure the provinces is agreat idea —this criticism over the ProvincialGrowth be upgraded to the tune of $94.8 Growth Fund (PGF). They say the challenges, 2per cent are very con- model for doing so is ajoke ...,” says fund which sits within his portfoilo million, getting freight trains back up fund is: fident and 22 per cent are quite one investment boss. “It has potential responsibilities. and running by next September. ● In need of financial monitoring confident. The overwhelmingmajor- in places, but is also open to be used “It has delivered for Mr Jones and Some say it has already delivered to ensure appropriate investments (61 ity —76per cent —say they are not to finance projects that never stacked NZ First,” suggests independent direc- on what it set out to do. per cent) confident it will help. up in the past,” says another. D20 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM Aradical community initiative

Tim McCready countries on average,whereas in New Zealand, central government he ’s controls 88 per cent of public ex- recently released report — penditure. Business interest in local- #localismNZ, Bringing power ism was fired up when NZ Initiative T to the people —argues the executive director Oliver Hartwich Respondents were asked to case for localism in New Zealand. It organised agroup of his think tank indicate their level of support for calls for aradical shift of political and members to go to Switzerland — fiscal power from central govern- which is the poster-child for localism each of the following local ment to communities. —onastudy mission in 2017. government funding options The Mood of the Boardroom asked Vector chair Dame Alison New Zealand’s leading CEOs and Paterson disagrees in the idea for Additional business and personal directors whether central govern- New Zealand —atleast “until there income taxes dedicated to local ment should give more decision- has been an assessment of thecapa- government making responsibility to city and dis- bility of local body politicians to Support: trict councils; 67 per cent of assume this responsibility”. % respondents agree, 20 per cent dis- This lack of confidence that local 8 agree, and 13 per cent are unsure. government in New Zealand has the Oppose: Beca’s CEO Greg Lowe says that capability and capacity for localism % local authorities are facing increasing to work here was frequently raised 92 infrastructure challenges but in many by respondents. cases they do not have the funding Aprominent chairperson suggests Anew local government GST, say an mechanisms to pay for all the localism in New Zealand could work additional 2per cent improvements needed. “only if they are capable of carrying Support “Better regional investment plans out the additional responsibilities”, % would help the conversation but says he has seen nothing that 21 between central and local govern- gives him the confidence that they Oppose: ment about how these needs can be can. % funded and implemented,” he says. The CEO of alarge retail chain 79 Port of Tauranga chief Mark Cairns takes asimilar stance, suggesting agrees with the suggestion, assuming Oliver Hartwich “councils across New Zealand are Local government should make that “taxes or rates raised in aregion exceptionally good at incompetence better use of their current funding are hypothecated to that region”. making is in. “In most instances in rates —which are acost allocation —Iam not in favour of increasing any tools Says an energy boss: “decentralis- New Zealand we should have the method linked to council costs, and of their responsibilities”. Support: ation isn’t about existing councils same rules across the country — not to the success of the economy or Alobbyist head offers amore % having more power, it is about dis- central government cannot absolve land prices. candid take: “Hell no. They are often 94 tributing that power on relevant its responsibilities to NZ Inc,” he says, Conversely, central government is completely loony and Iwouldn’t trust Oppose: topics to even smaller democratic giving water quality, water safety and the direct benefactor of growth: re- most of them to run apub raffle.” % units.” fluoridation as examples. ceiving increased GST, income tax The NZ Initiative has published a 6 Asoftware boss agrees, suggesting In NewZealand, council revenue and corporate tax when the economy string of reports on localism, includ- that “decisions are always better is largely separated from economic grows. ing examining the myths, facts and made when the decision maker is performance. New Zealand is unusual in that it challenges about local government; closer to the community”. Local government is the core is among the most centralised advocating for aLocal Manifesto to Simon Ellis, managing director at funder of transport and water countries in the world. Local govern- restore local government account- Ovato NZ, is unsure, and says it services for new development, yet its ment is responsible for almost half (46 ability and giving aglobal perspective depends in what areas the decision- revenue is derived from property per cent) of public spending in OECD on localism.

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MOOD OF THE BOARDROOM Theroad to improvement

Majorityof leaders havegivenavote of confidencetonew Infrastructure Commission writes TimMcCready

he Prime Minister’s Business Advisory Council was on the money when it warned Prime TOP TEN T Minister Jacinda Ardern New Zealand is at an “infrastructure crisis point”. CEOs rate Infrastructure NZ’s top 10 priorities. Some 86 per cent of CEOs and directors responding to this year’s ● Deliver national long-term investment pipeline —4.31 Mood of the Boardroom survey agree: ● Reform NZ’s antiquated planning laws, local Just 7per cent disagree, 7per cent are government structures and funding —4.21 unsure. ● Private investment in infrastructure/release capital Roads, ports, hospitals and mass through asset recycling —4.13 transport systems frequently appeared ● Develop aligned national planning and development among comments from respondents as framework —4.12 areas that need urgent attention. ● Scale development of housing and infrastructure to Beca chief executive Greg Lowe says meet growth —3.96 New Zealand’s current infrastructure — ● National review of resilience of NZ’s strategic on many fronts —isstruggling to meet networks —3.96 current demand and is falling further ● Road pricing to optimise traffic flow and raise behind in regions that are growing. “We revenue —3.79 need to be catching up on the infra- ● Independent NZ Infrastructure Commission structure backlog, not letting it get (underway) —3.75 bigger,” he says. ● Accelerate Housing and Urban Development Adairy industry chief executive Authority —3.61 makes the case that infrastructure is an ● Price water service delivery —3.51 enabler for athriving and productive economy that impacts on everything — Scale 1-5 where 1=unimportant and 5=extremely from people’s mindsets, productivity important and life balance, through to the flow of goods and services. “Make it easy to be productive and get things done.” It wasatacrisis adecade ago Waste Management’s managing director Tom Nickels suggests “if we do and National did bugger all. not address our inadequate infra- structure, we risk becoming anice place Investment firm boss to visit providing you don’t mind second rate amenities.” surprised that we’re at acrisis point”. Atransport chief executive says the The Business Advisory Council’s infrastructure challenges are more damning indictment of New Zealand’s acute in some regions over others, infrastructure regime says there is “no “however the country is years behind overarching vision or leadership in and must not only catch up —but get New Zealand for infrastructure de- in front of the curve”. velopment”. The significance of infrastructure as If we do not address our inadequate “This means there is no nation- aconcern to our top business leaders that suggested building more roads to building narrative upon which to build can be demonstrated from aquestion infrastructure, we risk becoming a reduce congestion should be a“top astrategic direction,” it says —although respondents were asked about busi- nice place to visit providing you three” priority for the Auckland may- it acknowledges the problem at hand ness confidence. don’t mind second rate amenities oralty. was not created by the current govern- Asked how concerned they are Waste Management’s Nickels says ment but is instead intergenerational. about the impact of infrastructure says Waste Management’s congestion in Auckland remains a Barfoot &Thompson’s Peter Thomp- constraints on business confidence (on managing director Tom Nickel major constraint on productivity and son agrees, adding that many of the ascale of 1to10where 1=noconcern quality of life in general. existing issues have been around under and 10 =extremely concerned), they and planning, and procurement and ence the commission would make an “The movement of goods and prior governments before. “It is amatter scored it 7.39/10. This was the second delivery support: impact. services have become extremely chal- establishing what are the essential ones highest constraint among those polled, ● It will provide expert advice, plan- Bollard is aformer Governor of the lenging. Our drivers’ unproductive time and to actually get on and rectify such,” the constraint of highest concern was ning and strategy, and support the Reserve Bank and Secretary of Treas- is increasing and it is becoming more he says. “Costs of fixing won’t come congestion in Auckland —also linked delivery of major infrastructure pro- ury. The five other members of the difficult to meet customers’ needs in a down, so the longer they are put off the to infrastructure —which scored jects across the country. board are: Infrastructure New Zealand’s timely way,” he says. more the costs will go up”. 7.60/10. ● It will also be aone-stop shop for former chief executive Stephen “We must invest in roading infra- Says the managing director of alarge The head of amajor education in- investors, including publishing apipe- Selwood, MinterEllisonRuddWatts structure to free up traffic over the next investment firm: “It was at acrisis a stitution reckons “crisis” is the new buzz line of infrastructure projects. chairwoman Sarah Sinclair, Watercare decade or two in support of the forecast decade ago and National did bugger all”. word. “A bit overdone in places,” he ● As an autonomous Crown Entity Services chief executive Raveen growth of greater Auckland. For the says. “Not sure it is acrisis —but it is with an independent board, the com- Jaduram, former banker and independ- longer term we also need to invest in Funding rail certainly challenged,” says an energy mission will have the credibility and ent director Sue Tindal and Simpson our rail system.” Some 55 per cent of CEOs felt rail boss. Local Government Funding influence required to effect real change. Grierson special counsel David Coch- On rail, an agribusiness boss dis- investment in NZ could be bolstered Agency chair Craig Stobo suggests “New Ministers will retain final decision mak- rane. agrees: “Where railway works best is through an in increased share of the Zealand’s infrastructure is abig bucket… ing rights, as is appropriate. The Government has shifted trans- between large population centres, over National Land Transport Fund (petrol I’m not sure that all of it is in crisis.” Some 7per cent of respondents were port infrastructure focus from roading huge distances with straight lines and excise tax and road user charges). But The Government recently appoin- very confident that the Bollard-led to public transport and rail, including limited hills to climb, carrying consist- 30 per cent felt this mechanism had ted Alan Bollard to chair anewly commission would help address New the recent announcement of funding ent cargo on alarge gauge and with a no role to play in rail investment. launched Infrastructure Commission. Zealand’s infrastructure challenges. for the construction of aHamilton-to- modern rolling stock —New Zealand Asimilar number (55 per cent) felt Commission will Some 58 per cent were quite con- Auckland passenger rail service. has none of these.” rail investment could be stepped up have two broad functions —strategy fident. But 35 per cent had no confid- Though when asked to rate the coali- He suggests the answer has to be through the public purse: an tion government on its performance in getting the roads right: “Imagine the increased share of funding from gen- We need to be catching up on the addressing transport constraints on a benefit of atwo-lane highway from one eral taxes to fund health and environ- scale where 1=not impressive and 5 end of the country to the other. The mental benefits of rail; 35 per cent infrastructure backlog, not letting it =very impressive, respondents gave a new two lanes could be built where the were opposed. get bigger says Beca chief executive grade of just 1.57/5. railway lines currently are. We need to There was two-thirds support Greg Lowe Many of those responding to the stop half-doing both.” however for bolstering investment survey specifically mentioned roading The boss of alobbying firm says that through commercial, industrial and improvements as essential to the “with Twyford in charge and no money residential land development adjac- country. Aquarter of those surveyed spent on roads anymore, no one is ent to rail. Improving the shape of water services

When asked which of the following authorities (similar to Wellington we manage our water resource, needs to come with asimpler and more electricity and telco models, we should options would be the most effective Water) 29% followed by astrategy to best manage, effective funding model —the obvious corporatise and privatise the provision pathway to improving water service ● Establishing national regulation monitor and fund implementation.” choice being paying for water and of water services,” he says. outcomes across New Zealand, across the current local authority Beca’s Greg Lowe says: “Expertise and waste services directly rather than Says atech boss: “Water is NZ’s most respondents said: ownership model 14% capacity in the water sector is thinly through aregional council water rate.” precious resource and its management ● Establishing anationally regulated ● Leaving water services provision as spread across alarge number of local Managing Director of Fulton Hogan Cos needs sorting out on delivery, environ- model across asset owners that are not it is under local council control 8% authority asset owners, who cannot Bruyn thinks we “need to have five or ment and infrastructure levels. local authorities (similar to Watercare) Independent director Dame Alison adequately fund future infrastructure less water authorities across New “It is WRONG on every level that water 46% Paterson says we are infants when needs. Asset consolidation into sensible Zealand to create scale and can be extracted and exported at low/ ● Establishing national regulation compared with the Netherlands’ groups would allow prioritisation of efficiencies”. no cost while Kiwis languish in some across ashared services model with management of water, and “there is a infrastructure investment year-on-year Whereas achair reckons none of the areas with unsafe or inaccessible water assets still owned by local need for careful consideration of how to address community demands. This above are suitable. “Following the water.” D22 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM Advantage in the long term

Taking thefar-sightedapproach will pay dividends, Mercury’sFraser Whineray tells Gill South

ong term thinking from the from bullying to loan-sharking, says Government is what Fraser Whineray. “All of the stuff is preying Whineray, the new chair of on people with very limited choices L the Prime Minister’s Business because of the cost of capital,” he says. Advisory Council (BAC), would like to see and is something he will be Education and Future of pushing in his extra advisory role. Work Whineray, who was already a Education is another key element member of the BAC, chairs his first Whineray will be looking at in his role meeting in December. at the BAC, in the context of the Future “My view is to make sure that of Work report. they’ve got some really decent long- There needs to be better under- term stuff which will make adiffer- standing about the integration ence to multiple forms of capital,” he between immigration, future of work, says. but also the “original skilling” rather The Prime Minister established the than the re-skilling that goes on, he Council last year to: argues. ● provide high-level free and Employers and organisations are frank advice on policies that directly going to have to get much better at affect business providing afive to 10 year view of ● harness the expertise of the the skills they want, says the BAC private sector to inform government chair. policy, and This will help parents and school ● build closer relationships students with their subject choices, between governmentand business he says. Whineray, chief executive of Mer- How universities decide on cury, took over as chair last week courses can be based on funding from —who drivers, not actually what the market finishes up as Air New Zealand chief needs, says Whineray. executive tomorrow after eight years “So getting the match-up five to 10 with the airline. years out, so children coming through He will be chair until March next will feel happy that they’ve trained year, when the Council will be paused in something that there’ll be astrong in the run-up to the next general demand for, I’m really keen to see election. that,” he says. Others on the now 12-strong coun- cil include: Rocket Lab’s Peter Beck, New Zealand can lead the Genesis chair Barbara Chapman, way on decarbonisation Jacqui Coombes (Bunnings),Anna Meanwhile the Mercury chief execu- Curzon (Xero), Andrew Grant tive is well aware of his responsibili- (McKinsey &Company), Miles Hurrell ties ahead at the energy company. (Fonterra), Bailey Mackey (Pango “We need it well known Productions), David McLean (West- domestically that New Zealand is pac), Joc O’Donnell (HW Richardson), absolutely in the box seat for decar- Gretta Stephens (Bluescope/NZ Steel) bonisation,” says Whineray, who said and Rachel Taulelei (Kono). his company’s biggest achievement in the past 12 months was announcing 10-year plan for KiwiSaver the Turitea wind farm after 14 years Whineray said he would like to see of planning. abipartisan 10-year plan for But this process needs to win the KiwiSaver, an “unscrewing of the energy trifecta —itneeds to be simul- value on KiwiSaver”, as he puts it. taneously cost-effective, it has to be The idea would be to get to 10 per asecure energy supply, and over cent gross savings compulsorily in a time, it has to be renewable. decade. “We are decades and trillions If people had that backup, it would ahead of all of our trading partners,” ultimately take pressure off those says Whineray, and this message pension decisions ahead, says Denmark this year where he learned should be conveyed to them in trade Whineray. more about the Danish flexicurity Fraser Whineray’s Big Three discussions. It would be abasic example of system. The initiative is about ensur- Regulatory challenges andthe impactofpolicyuncertaintyonhis businessare When trade partners are worrying savings reducing people’s cost of ing flexibility and security for citizens. the concerns most likely to keepMercurychief executive, Fraser Whineray up about trade miles, New Zealand capital, giving them more resilience “For me, flexicurity is really import- at night, he says,inthis year’s Mood of the Boardroom survey. negotiators can point to the country’s and building New Zealand’s capital ant for people not being put in des- His priorities for his energy business in the next 12 months meanwhile are for a electricity system and —thanks to its markets at the same time, he argues. perate situations which just grossly qualityexecution of growth capital expenditure, followed by digitisation of the efficiency —“all those goodies which This KiwiSaver pool could be used elevates the cost of capital risk, says customerexperience withassociated cost reductions. are being shipped overseas and still, for important policies. Denmark, for Whineray. The need for asmooth 2020 election especially as far as energy, climate and end to end, our carbon is better,” says instance, has used some of its pension One of the pillars of flexicurity is water settings are concerned, is number three on his prioritylist. the Mercury chief executive. savings on flexicurity. that employees have income support “That is ahuge competitive advan- during employment transitions. really important for the market com- Whineray. They can retrain in that tage and Iwant to make sure, on a Flexicurity “I think they do need some time petition to work for people. And period. bipartisan basis, that just how good Whineray led aNew Zealand Initiat- to find the right job. Better employers they’re not forced to take the next If they don’t have this buffer, New Zealand’s electricity sector is, ive mission of CEOs and directors to will get better employees so that’s thing that’s put in front of them,” says people are vulnerable, to everything isn’t being forgotten.” Leaders divided on PM’s skills pledge

Nearly 20 per cent of respondents Translations, Fonterra, New Zealand embrace and lead change in our Christopher Luxon told the launch Others didn’t take kindly to the idea have signed up the Prime Minister’s Steel, McKinsey &Company, H.W. sector,” he said. function. of apledge but backed the idea in Business Advisory Council (BAC) Richardson, Foodstuffs, Auckland The Prime Minister has also asked But Mark Franklin, director of principal. Said one agribusiness boss: New Zealand Skills Pledge Airport, Watercare, YoungShand, The State Services Commission to see Stevenson Group, saw the pledge as “Pledges are stupid. It’s like the Boy or are intending to, the Mood of the IceHouse, Ngati Porou Holding which Government departments are atime-wasting exercise. “There are Scouts chasing anew badge. The Boardroom survey found. Company and Capo, Tourism Industry best placed to sign up. fora like this, the Zero Harm initiative Business Advisory Council has raised The pledge asks companies to Aotearoa and Pango Productions. The pledge was the first recomm- etc, which are props for executives awareness of the issue which is great, publicly disclose their investment in Some 15 per cent of survey respon- endation from the AFuture that and government rather than and companies should then assess on-the-job training and re-skilling dents were unsure they would join. Works: Harnessing Automation for a decisions and outcomes,” he said. their position.” hours annually and to double the Foodstuffs North Island CEO, Chris More Productive and Skilled New The outgoing chief executive of Anumber of respondents indicated number of on-the-job training and re- Quin said the company was an early Zealand report, developed by the BAC Chorus, Kate McKenzie said it was not they were planning on doing it. Aboss skilling hours provided by 2025. signatory while Greg Lowe, Beca and consulting firm McKinsey & yet clear what it required companies from the waste industry commented: Twenty-eight companies are Group CEO said the engineering Company. to do. “It is under consideration but we need named on the BAC’s website as having company was considering it. “The report is unique in that you Mark Cairns, CEO of Ports of to be sure it is more than virtue- signed up the pledge. They are: Spark, “As we continue the journey to can see automation’s impacts from a Tauranga, did not think it was relevant signalling or tokenism.” Meridian, Lewis Road Creamery, Air adapt to amore automated world, we task, job, sector and region to his business. “We don’t see the job Another logistics industry head New Zealand, , see aclear need to increase that perspective which is invaluable losses through automation as being said they would prefer “an outcome- Westpac, Xero, Mercury, Whitecliffe, investment and make sure that our knowledge for policy makers and significant in our industry,” he based goal rather than an input based DB, Flux Capacity, Straker people can not only adapt, but businesses,” former BAC chair commented in the survey. one.” nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D23 MOOD OF THE BOARDROOM

Eight key economic shifts for NZ

The Government’s 30-year Economic Plan has an overarching vision to “build aproductive,sustainable and inclusiveeconomy to improve the wellbeing and living standards of all New Zealanders”. The plan was released by Finance MinisterGrant Robertson, Economic Development Minister Phil Twyford, Research, Science and Innovation Minister Megan Woods and Small BusinessMinister at Callaghan Innovation in Lower Hutt yesterday. The plan has four goals. To grow and share New Zealand’s prosperity, support thriving and sustainable regions, transition to aclean green and carbon neutralNew Zealand and deliver responsible governance with abroader measure of success. The plan outlines eight key economic shifts that are needed to enable the Government to achieve its vision.

The NZ economy moves from labour when and where they need it Strong and revitalised Sustainable and ● Transitioning to alow volume to value with Kiwi ● People continually updating the regions so: affordable energy systems emissions economy businesses, including SMEs, skills they need for success in the ● People and businesses so: 6 ● Businesses and 4 thrive, irrespective of where 1 becoming future of work TransformNZ’s housing more productive by: ● Higher wages and better they live or work households can access affordable, ● Building on NZ’s existing conditionsatwork ● Regions are connected and clean energy to achieve our market to unlock strengths and international equipped with modern and resilient economic potential 8 productivity growth and connections to leverage new Deeper pools of capital are infrastructure ● NZ’s foothold in high-value make houses more opportunities in domestic and available to invest in ● Place-based comparative clean energy systems is established affordable so: international markets infrastructure and grow advantages and innovation strengths and NZ’s know-how is exported to the ● The housing shortage is 3 NZ’s productive assets so: are backed world ● Investing in new technology overcome and capital investment is and being at the forefront of digital ● NZ has the modern ● NZ’s climate change targets are focused towards more productive innovation including to drive infrastructure needed to enable the Enable astep change for met by driving emissionsreductions areas of the NZ economy mitigation and adaptation to climate transition to alow emissions Ma¯ori and Pacific change economy economies resulting in: Land and resource use ● Current and future generations 5 ● Higher economic, social, delivers greater value and can access affordable housing in the ● Thriving and dynamic small, ● Kiwis have confidence to invest medium and large enterprises in innovative NZ firms environmental and cultural improves environmental places they desire close to the best 7 outcomes resulting in: ● Regions and businesses have wellbeing jobs for them People become skilled, access to the world’s knowledge and ● The Crown and Maori, as ● Shifting land use to higher value ● Aproductivebuilding and adaptable and have access innovation through stronger partners, having strong, ongoing and use while maintaining and improving construction sector results producing to lifelong learning international connections effective relationships our environment 2 through: ● NZ businesses have timely ● Success in business, education, ● Redesigning activities to safe, healthy and durable homes and ● Businesses accessing skills and access to capital to innovate &grow employment, regions and land use minimise waste buildings My hope: arising tide that will lift all boats

Jacinda Ardern we inheritedinour health and To achieve that we need to education systems. encourage enterprise and creativity. esterday Finance Minister These initiatives create rewarding, We’re doing this is by increasing the Grant Robertson released skilled jobs across our economy at a returns to research and development Y the coalition Government’s time when stimulus is also needed. through our R&D tax credits. And Economic Plan. This pulls We’ll also keep tackling the long- we’re pursuing ambitious trade together awhole suite of initiatives term challenge in housing. Our policy to create better opportunities that are well under way, but it does economy works for everyone only for New Zealand businesses overseas. more than that —itlays out our when everyone has awarm, dry We must also make sure people blueprint for a30-year collaboration home, and adecent standard of living. can train and re-train for the jobs of with business to help transform the That’s something Iultimatelybelieve the future. We’ve always been an economy for the benefit of all New people from across the political exporting country, but Ihope to see Zealanders. spectrum want to see. ashift in the way we think about what The initiatives in this plan will That’s why we’ve stopped the state we have to offer. advance our wellbeingagenda, to house sell-off, stopped offshore One of the most valuable things grow and share New Zealand’s speculators from driving up house New Zealand can offer the world is prosperity more fairly across prices, and built over 2000 state skills and knowledge, from our communities and regions, and to houses in the last year. farming sector to our creative better protect our natural heritage. As our economic plan lays out, industries. That’s why we’re This plan will drive better fiscal, social there is astrong role for both reforming the vocational education and environmental outcomes, rather Government and business to play in sector to ensure our polytechs are than emphasising one over the other. growing the economy. By uniting viable, create more apprenticeships Our economic reality is in flux, and behind this plan, we will demonstrate and enable New Zealanders, no we don’t shy away from that fact. We what we can achieve when matter where they live, to participate know that the nature of work is of our peers, but while the economic Government and industry work in and benefit from our transforming changing rapidly. The response to We will demonstrate ground everyone’s running on is together towards acommon vision of economy. climate change will entail industry getting rockier now is the time to higher living standards across New Now’s the time for us to future- transformationworldwide. We’re in what we can achieve prepare for the future. Zealand. proof our economy, and that’s why the midst of atechnological when Government and We need to invest in infrastructure, Business leaders agree that growth the Government’s plan provides revolution. The economic norms of because it’s the springboardfor future in New Zealand has been predicated leadership and certainty for our yesteryear are being rewritten daily. industry work together growth. This Government is investing too much on capital returns, and not business community. This is about The near-term economic towards acommon record amounts in hospital and enough on productive investment. setting out our vision, as well as the headwinds are strengthening, too, on school building programmes, To build an economythat works for steps to achieving it, and getting on the back of fears around fallout from vision of higher alongside large investments in all of us, we need to focus on with the job. Brexit and from ongoing trade transport safety, regional roads, and productivity and innovation, Iwant to see growth that brings disputes involving the US and China. living standardsacross public transport, and we’ve done that especially through small businesses. New Zealanders along with it. Iwant Our trading partners and the New Zealand. while maintaining aresponsible Growing the value we generate to see the rising tide truly lifting all countries we compare ourselves to budget surplus. from our outputs —from kiwifruit, boats. We achieve that by giving are facing slowdowns. Australia just We’re improving the efficiency of fashion, to screen production and every New Zealander the tools they reported its lowest rate of growth We’re seeing stronger than our construction sector, through the space exploration —isthe best way need to participate fully in our since 2009 last quarter. In the same expected export profits, and lower Construction Sector Accord and to make sure we all share in the changing economy. quarter, the German and UK than expected unemployment, Building Act reform, and improving benefits of growth. It also means we’re Our economic plan sets out an economies contracted. New showing that businesses are urban development frameworks to not relying too heavily on any one ambitious vision, and together with Zealand’s growth rate continues to confident taking on new staff. In New better meet future needs. And we’re part of our economy, which means the business community we’re outperform against this volatility. Zealand we’re running ahead of many addressing the infrastructure deficit we’re less vulnerable to shocks. getting on with making it areality. D24 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM It’sCoalitionManagement 101...

Fran O’Sullivan funded to the tune of $2 million. Should PM have sought captive and so their recommendations Michael to explain why the capital Prime Minister Jacinda Ardern should Other group members —Bill Rosen- were as expected,” said adairy sector gains tax was needed. “Their problem have secured New Zealand First’s sup- berg, Michelle Redington, Hinerangi NZ First supportbefore CEO. “Did they really expect NZ First is they didn’t sell the argument. In- port for acapital gains tax before Raumati-Tu’ua, Robin Oliver, Nick to support what was clearly going to stead they left the idea in avacuum establishing the Tax Working Group say Malarao, Joanne Hodge, Kirk Hope, launching the Tax Working be acapital gains tax recommendation? which the opponents filled,” said a nearly two-thirds of business leaders Marjan van den Belt, Geof Nightingale Group? Ithink the whole thing was relatively leading banker. responding to this year’s Mood of the and Craig Elliffe —were paid $800 per convenient for Labour where they can Some felt the Government’s credi- Boardroom survey. day. % say the recommendation was clear, but bility was enhanced by dropping the The upshot, they believe, was a Under the group’s proposal, acapital 62 that through MMP, the people have proposal. “The Government listened major impact on the Government’s gains tax would have covered invest- Yes spoken and the support wasn’t there.” to the view of the electorate,” said credibility when it was forced to jetti- ment properties, land, shares, business % Aconsiderable number —some 23 Beca’s Greg Lowe. “The public of New son the proposal. assets and intangible assets like intel- 22 per cent —felt the Prime Minister was Zealand don’t want this extra burden.” “It’s Coalition management 101,” said lectual property, but excluded the fam- No right to test opinion on what had been “The capital gains tax policy did Craig Stobo, chair of Precinct Properties ily home, cars, boats and artwork. % aflagship commitment by her during nothing to address the issues it was and the Local Government Funding Sir Michael said the tax would bring 16 the 2017 general election to setup a aiming at. No one is going to support Agency. “What awaste of money,” in $8 billion over the first five years, Unsure working group, and, if atax was recom- policy that doesn’t have positive out- added Devon Funds Management’s and the revenue raised could help pay mended, to introduce legislation before comes.” Paul Glass. “Unfortunately the report for other initiatives —such as cutting the 2020 election with astart date the Noted alobbyist: “She was never was poor and the recommendations of the personal income tax rate and cut- change,” she said. “All parties in the following April. going to get New Zealand First’s sup- little use.” ting KiwiSaver tax rates for low and Government entered into this debate port for ascheme that hit small Aprivate equity boss labelled the middle-income savers. with different perspectives and, after Government credibility loss businesses and farmers. Anything NZ working group afrustrating sideshow: But on April 17, Ardern announced significant discussion, we have Anet two-thirds of respondents First would have supported wouldn’t “an absolute waste of time and there was no mandate —and no con- ultimately been unable to find acon- believed the Government’s decision have got past Labour’s centre-left resources when the outcome was a sensus —for the proposed capital gains sensus. As aresult, we will not be to drop the capital gains tax proposal support base. foregone conclusion without Coalition tax regime. introducing acapital gains tax.” led to aloss in its own credibility. “Proposing it hurt their credibility support from Day One”. “The tax working group gave the Ardern said under her leadership, There was ageneral view that poli- with the business and rural commun- The working group, chaired by for- Government, and the country, an op- the Government would never again tical management of the issue was ity. Accepting that it was never going mer Labour Finance Minister Sir portunity to look at the fairness of our push for acapital gains tax. poor. to fly and moving on helped Labour’s Michael Cullen on $1062 aday, was tax system and debate options for “The tax working group was clearly Others noted that it was left to Sir credibility.” Taxreform in state of limbo

But there are worse places to be,says Thomas Pippos,and ourtax systemcontinues to be wellrespected

ax is an emotive topic, par- mer is not well understoodwhile 88 ticularly when there is a per cent indicate that the latter is not policy vacuum. There are well understood. T also as many opinions on tax Adding further to this sense of as there are taxpayers. But outside of limbo around the state of tax reform tinkering with rates and thresholds, is that the majority of respondents (52 which themselves raise challenges, per cent) do not believe inequality substantive tax reform is never easy. (wealth and/or income) should be This is especially true when it is addressed through the tax system. politicised in an MMP environment. Interestingly, of the 34 per cent Judging by business leaders’ who say inequality should be more answers to the tax questions in this overtly addressed by the tax system, year’s Mood of the Boardroom sur- there seems to be appetite for some vey, the Government has found this form of redistributive taxation,with out the hard way during the last year, the majority of those (63 per cent) with the Tax Working Group process being in favour of increasing the top leading to no reform in the one area personal tax rate as amethod to that it was effectively established to reduce the gap between “haves” and consider —namely the taxation of “have nots”. capital gains. Additionally, 19 per cent said there Aby-product of the tax working should be some form of comprehen- group process is that respondents’ sive death duties/inheritancetax, and confidence in the Government, in 17 per cent liked the idea of some form particular their political management of annual wealth tax. abilities in acoalition environment, Perhaps unsurprisingly,86per has been noticeably impacted. cent were against the idea that the Sixty-two per cent of the corporate tax rate should be respondents believe that the Prime increased as away to deal with Minister should have secured the inequality. support of New Zealand First for a In terms of increasing the highest capital gains tax before embarking on marginal tax rates, an issue is that the the tax working group process (22 per top 3per cent of income earners are cent said “no” and 16 per cent remain already paying almost aquarter of “unsure”). And 68 per cent of personal income tax revenues. respondents said the impact of drop- Turning to that group of people for ping the capital gains tax was a more is not amagic bullet nor does significant loss in credibility for the Thomas Pippos says acapital gains tax seems to now be part of our past. Photo /Jason Oxenham it address inequality in any real way Government (rating it 1or2onascale other than symbolically giving the of 1-5, where 1=major loss in credi- Tax Working Group when those against acapital gain tax Apart from being costly and long- impression that it does. bility and 5=major gain in credibility). outnumbered those for one. So have winded, such approaches provide for Where does this leave us then Though these results largely re- proposal respondents changed their minds on apolitical battleground fought on given the potential for aglobal flect the “new reality” that exists the policy as aresult of the current soundbites rather than principle, economic downturn? under acoalition government,itisstill % context or the tax working group which as in the present case stifled Well, while all of this does sound amaterial matter for respondents, 55 process itself? Respondents may also any reforms rather than actually alittle morose, the irony is that New painting aless than optimal picture supported neither capital gains simply be less comfortable with a facilitating them. Zealand is an exemplar for level of government coherence around option capital gains tax under the current Juxtapose this approach with the headed political management when what was meant to be alegacy policy % Government. manner in which the bright line test compared to some of our main initiative. 34 Under any rationale, acapital gains and loss quarantining rules —both trading partners in the Northern In saying that, the decision not to supported narrower option targeted tax seems to now be part of our past. targeted at the areas of most concern Hemisphere. proceed with acapital gains tax has at rental property investment Labour have tried, and visibly failed, relating to residential property — In this context, there are worse been met with acollective sigh of multiple times to introduce one in were introduced relatively quickly (in outcomes than being stuck in limbo relief by most respondents, with 55 % recent memory. the case of the former, by the previ- when our tax system continues to be per cent supporting neither of the 11 So, where to from here then, from ous National Government). well respected by international stand- capital gains tax options presented. supported broader excluding family atax policy perspective and substan- It’s one of those situations where ards and when our economy con- Just 11 per cent supported the broad home. tive tax reform? It feels like we are you are damned if you do and tinues to be the gift that keeps on regime proposed (excluding the fam- in astate of limbo —which actually damned if you don’t. giving for all politicians regardless of ily home). And only 34 per cent Government there was considerably accords with survey respondents — The related additional context is political stripes —irrespective of supported the narrower option more support from Mood of the 77 per cent of whom don’t believe one where tax still mystifies people. whether it is “nurtured and re- targeted at rental property invest- Boardroom survey respondents for a there is any opportunity for substan- Survey respondents consider that spected” or “used and abused”. ment, which is somewhat surprising capital gains tax. From 2011 to 2017, tive tax reform under the current there is little awareness, or under- For now, things are still reasonably as targeted rules in problematic areas the broad sentiment had actually Government (other than tinkering standing, that asmall percentage of positive at the end of the known achieved widespread support in prior been in favour of acapital gains tax with rates and thresholds). the population pay the lion’s share of world. years’ surveys. including that not moving on one was Such responses also call into ques- personal tax, or that around half of Afurther irony with these results alost opportunity. tion the public working group ap- all households pay no net tax. ● Thomas Pippos is the CEO of is that historically under aNational It wasn’t until last year’s survey proach to tax reform. Eighty-three per cent said the for- Deloitte New Zealand nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D25

MOOD OF THE BOARDROOM Keeping up with expansion

Anne Gibson Peter Thompson’s Top issues he pressing need for atoll- ● Topthree issues facing thenation based second Auckland Transport issueswithin Aucklandregion harbour crossing, lack of a Education—pay of teachers and control over Boards T railway connection to the Newlegislation placed on businessowners thatcontinueto airport, rising business compliance takeprofit from their business costs, aclose two-man mayoral race ● Topthree business priorities for thenext12months and spring house sale resurgence — Complete amajor re-brand of the company all are issues for Peter Thompson, Followthroughwith ournew Wellness Programme Barfoot &Thompson managing direc- Ensureweprovide best practicesfor our people to implement tor. intotheir everyday sellingactivity Last December, the city’s largest agency, with more than 40 per cent of the residential sales, was named quarters on Shortland St where the winner of the best real estate Thompson said expansion had meant company in the world at the Inter- Auckland needs leasing further floors in the tower to national Property Awards, and be able to accommodate growth. Thompson acknowledgesbusiness asecond He believes Auckland business is success and details expansion,such harbour being penalised with new compliance as taking over anew outlet at Pokeno and regulatory costs: “We’re which is an area where he sees fast crossing ... rebranding and although we have growth. We’ve been existing signage on our 76 buildings, But he also sees issues for Auck- we need council consent and atraffic land, particularly as it continues to talking about it managementplan on each site —yet grow yet he fears some aspects are all we’re simply doing is going not keeping pace with that expansion. for so long but through arebranding.” “Auckland needs asecond harbour let’s increase The regional fuel tax is another bug crossing, be it atunnel or abridge. for him, an example he sees of the We’ve been talking about it for so long the size of it city with so much potential being but let’s increase the size of it when when we plan it. penalised for its growth. we plan it. If we’re thinking six lanes, The Phil Goff vJohn Tamihere go to eight. When we built the original Peter Thompson mayoral race was “a very close fight” harbour bridge, we had tolls. Any but Thompson said he favours Goff major city Igoto, they have tolls and as “better the person you know”. He no one complains about the road toll praised councillors Bill Cashmore north of Auckland,” he said. and Desley Simpson as effective. He also wants aheavy-rail link As for Auckland’s housing market, from the city to Auckland airport, he envisagesaspring volume surge saying ashort connection was all that “and you’ll always see prices increase was needed to make that areality. over September, October, November. “I’ve joined the board of the Auck- It’s aseasonal trend. Ican’t see prices land Chamber of Commerceand a harbour bridge plans were too big, he Thompson also raised concerns much more is yet to be done. falling back. There’s no Government survey of the biggest issues for Auck- says but the crossing issue does need about the city’s ageing underground As head of the privately-owned election this year so we have aclean land is transport and the amount of addressing; he wants to see action pipe system, saying though Water- agency chain with around 2500 staff three months towards the end of the time it takes to get anywhere.” and says keeping the existing bridge care’s Central Interceptor would go a working from Kerikeri to Tuakau,the year. We are optimistic about more Mayor candidate John Tamihere’s makes sense as atoll-free alternative. long way towards improvement, business with 76 offices owns ahead- activity.”

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Forsupport andadvice call 0800 300362 Download our complimentary guide to the Employment RelationsAct changes at www.sleepeasy.ema.co.nz D26 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM Infrastructure deliveryand retainingskilled workers is of vital importance Timetoturnwords into actions

he business community needs to see the Govern- Brett O’Riley’s ment driving tangible pro- big issues T gress in investment ● Topthree issuesfacing the decisions, putting spades in the nation ground and developing apipeline of 1. Access to skilled people skilled workers, says EMA chief 2. Infrastructuredeficit executive, Brett O’Riley. 3. Global economy “Only that will put ahalt to the downward spiral on business confid- ● Biggestachievement past 12 ence,” he says. “Planning and invest- months ment have simply not kept up with Championingresource projected growth, and constant management reform delays and re-litigation of key infra- ● Biggestregret of the past12 structure projects have exacerbated months an already-fraught position.” Ongoing infrastructure deficit He says no one should be sur- prised that business confidence is ● Topthree business prioritiesin wobbly, and about the pervading the next 12 months sense of doom and gloom following 1. Customer centricity the Reserve Bank’s cut to the Official 2. Digital Cash Rate. 3. Service development “It served to highlight the fragility ● What’s likely to keep me awake of our growth prospects, exacerbated at night? by global trade uncertainty, and Sourcing andretaining keyskilled ongoing domestic issues like housing staff; competitive pressures and and skills shortages, immigration meeting customer expectations. delays and compliance costs.” Though it is not all bad news and the Government does deserve some No oneshould be surprised thatbusiness Eastern Bay of Plenty and Northland.” O’Riley says there are encouraging kudos, there’s alevel of frustration at He says another key obstaclefor signs around housing growth, led by initiatives that have emerged under confidenceiswobbly. business is getting the people they Housing New Zealand, embarking on the Government’s first Wellbeing need. While immigration has dropped the largest state house building pro- Budget, which the business commun- Brett O’Riley EMA from about 64,000 to around 50,000 gramme in decades. It plans to build ity feels has been at the expense of ayear, about half of those immigrants more than 2000 new state homes a some of their key needs. in tourist numbers, he says. The new adirect result of deliberate agreed stay in Auckland. “We are at last year, for at least the next decade, as O’Riley says one of the greatest Infrastructure Commission, supp- strategies like Tourism 2025, inbound seeing progress towards addressing well as refurbishing asimilar number concerns from members in the EMA orted by the EMA, has akey role in foreign investment attraction, NZ- processing delays. But with skills of existing state homes. region from Taupo north —the getting infrastructure delivery back China Free Trade Agreement and shortages at acute levels across most “In the longer term, the Resource country’s economic powerhouse —is on track. regional innovation strategies. sectors, we need these people and we Management Act and related legisla- the worsening infrastructure deficit. O’Riley says none of this should be “Outside the main centres, the Pro- need housing for them. Unfortun- tion reform is key to removing There are acute issues caused by asurprise to local or central govern- vincial Growth Fund is now starting ately, construction of affordable bottlenecks and improving pro- the failure to keep up with natural ment where the funding debate con- to further stimulate growth activity, homes has not kept up, let alone other ductivity, and we are delighted the population and economic growth, tinues because the growth is both and that has certainly bolstered re- infrastructure such as schools to sup- Government has committed to this new migrants and the rapid increase residual and stimulated. “The latter is gional confidence in areas like the port new housing areas.” programme of work,” O’Riley says. Finestfish forour talent pool

Retainingexperts in NewZealand shouldbeapriority, ChapmanTripp’sNick Wells tells Gill South

Retaining high quality professionals And though the Government whose skills are in demand around Nick Wells’big issues could have handled certain issue the world, is an issue New Zealand ● Top threebusiness priorities better —aiming high on things like business continues to wrestle with. next 12 months renewable energy and then They are regularly drawn away to Technology and innovation backtracking —itisputting issues on international markets, particularly Clientengagement the table, which need to be those with language skills such as Culture, our people and confronted, says Wells. Mandarin and Cantonese, says Nick community “The thing we like is that there is Wells, Chief Executive Partner of law ● Biggest achievement past 12 an ability to engage with Government firm, Chapman Tripp. months and be listened to,” says Wells. “While New Zealand is agreat Retention of and dedication of a New Zealand has arelatively posi- working environment and it has great complement of highquality tive political environment to conduct quality in its talent pool, it’s abit of people business in compared with Australia, aconcern that we can’t retain all of the UK and the US, he adds. that talent because we’re in amarket ● Biggest regret Wells predicts that housing will be that can’t match offshore salaries,” he Never doing enough for the what hurts the Government in the run says. community we work,liveand up to the election. The ideal for New Zealand would play in This process was much more dif- be reaching aproductivity which ● Single biggest factor to assist ficult than anyone anticipated and it’s allows business to be more competi- my businesstoremain why, instead of many thousands of tive on pay, he says. internationallycompetitive houses, only afew hundred have Wells is concerned the evident from New Zealand come onstream, he says. uptick in the Australian economy will Abilitytoafford globally aligned Chapman Tripp is working on im- be aserious resources threat for New salariestoattract more subject proving its own performance with the Zealand. matterexperts backtoNew help of technology. It is automating “Singapore, Hong Kong (a little bit) Zealand, to thenconnectback certain contract processes which is and Asia, but particularly Australia with the internationalmarket, to allowing it to compete at different when it fires, it fires at ahigh rate of increaseproductivityfor the New price points in the market and appeal productivity. That’s amajor concern,“ Zealandeconomyasawhole. to anew type of client. he says. If successful, it will lead ultimately Stepping up performance in trans- The ideal for New Zealand would be reaching aproductivity which allows to needing fewer junior lawyers and port, infrastructure and productivity business to be more competitive on pay, says Nick Wells. employing more technical staff. would play abig part in improving “It’s been quite alot of work in New Zealand’s competitiveness, says comes to issues around sustaina- The Chapman Tripp partner the surveys,” he says. collaborative teams, it sounds alittle Wells. bility, the environment and company reports seeing positive signs of health While international trade is unpre- bit like some of the transformation Infrastructure provides alot of culture, he says. in the business community which is dictable right now, the mixed mes- that Spark’s gone through. work for his law firm and also helps For them, “it’s about more than not necessarily being discussed pub- sages from the New Zealand business “But it’s really just facing up to, this the legal environment as awhole, he doing bill-ables and earning money, licly, he says. environment presents aconfused is the technological world we’re work- says. they want to see afocus around work “The employment market is still picture, says Wells. ing in and we’ve got to keep working Chapman Tripp’s relatively young, that serves agreater good rather than strong and our clients talking to us “What worries me is you might find and moving with that,” he says. idealistic lawyers expect the firm to what we are doing at the moment,” show adegree of confidence in the us talking ourselves into negative be taking responsibility when it says Wells. momentum that you don’t get from territory that doesn’t really exist.” (Additional reporting Fran O’Sullivan) nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D27

MOOD OF THE BOARDROOM Disruptions and disruptors

Iexpect major disruption in my My organisation is actively Do you believe the current Are you reassessing your global sector in the coming three years disrupting the sector in which global political landscape is strategy as aresult of the as aresult of technological we operate having agreater impact on your changing pace of globalisation innovation % organisation than in recent and protectionism? 58 years? 65% Agree 56% agree 33% 63% No 20% Disagree Yes 41% disagree 9% 31% Yes 15% Unsure No 3% unsure % Unsure We are developing unique technology 6 Unsure Although there are anumber of solutions that can be widely deployed to Although we don't have an offshore technologies that hold the potential to help our clients do things they could not do business, global trends and developments before, in at least one case on aglobal scale. As partly government owned the level of revolutionise the use and construction of sensitivity to government matters has have ahuge impact on our business locally. infrastructure as we know it, the timing, Clients that embrace these solutions create Technology boss enhanced outcomes for their businesses. increased dramatically. public acceptance and capital investment Independent director requirements are not likely to become Greg Lowe, CEO Beca No, we attend many global events to keep up evident within ahorizon 1timeframe. with the play on what is happening around Not disrupting, but we are changing and Geopolitics is now avery relevant Steve Killeen, CEO Downer consideration. We are changing the the world, and actively pushing how good NZ raising the bar in our industry. is to live and work. Logistics boss structure of our organisation as aresult. Iwouldn't classify it as major disruption but Consulting head Peter Thompson, Barfoot &Thompson more an opportunity. Advancements in technology is achallenge to all businesses We innovate, focussing on health factors. The global environment is scary but that Wine exporter Only in the sense that it can produce a and it is amajor factor in business, but in Government distracted from what it can should not make us afraid. our business, it won’t replace the fact we Grant Webster, Tourism Holdings We made an early investment in artificial change domestically (and having the still have to deal face to face with our humility to accept what it cannot Limited customers. Technology is an aid for us to intelligence. Silvana Schenone, partner internationally). create better opportunity. Energy boss Services exporting requires free mobility of Property CEO MinterEllisonRuddWatt key professional skills into overseas markets. The global political landscape is Complex operating rules in some countries Open banking and disruption will threaten unprecedented in its superficiality – (such as non-trade barriers) make effective many financial provider models, which are unfortunately probably afunction of its deployment harder and therefore choices on distribution and commission heavy. constituents. where to operate internationally need to be Sam Stubbs, managing director Simplicity Thomas Pippos, CEO Deloitte made carefully. Professional services firm CEO Yes and it’s both exciting and terrifying! NZ can be aworld leader here. Technology firm boss D28 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM Is US shareholderprimacy dead? NZ CEOs aheadofthe play withconscious

Fran O’Sullivan and Gill South voluntary action on climate change including measuring and publicly hen JP Morgan Chase reporting their greenhouse gas CEO Jamie Dimon emissions, setting apublic emissions issued aletter on behalf reduction target, and working with W of the powerful US Busi- suppliers to reduce their emissions. ness Roundtable abandoning the idea Coalition members have also com- that companies must maximise mitted to support the Paris Agree- profits for shareholders above all else ment and New Zealand’s commit- it reinvoked the debate on whether ment to it, the introduction of a capitalism is dead. Climate Commission and carbon The Roundtable statementcame budgets enshrined in law. as US President Donald Trump and In July 2019, to mark its first an- the candidates vying for the Demo- niversary, the Coalition launched a cratic presidential nomination took second higher ambition pledge aim at companies for putting profits reflecting the latest science that before the needs of workers and illustrates the need to limit global customers on issues as varied as drug warming to 1.5 degrees and aligns pricing, outsourcing and data privacy, with the Government’s ambitions in reports .For the Zero Carbon legislation. The Coali- decades, US wages have climbed only tion hopes to transition new and moderately as the pay of top execu- existing signatories to this more am- tives at public companies has soared. bitious pledge over time. Thankfully for Dimon this new era of prudence did not affect his own Isee this not so much as pay packet. According to US Securities and copping out of Exchange Commission filings his full capitalism, but compensation for 2018 totalled US$31 million, up from US$29.5m in 2017 recognising that business The compensation includes abase is part of society. If your salary of US$1.5 million for Dimon and US$29.5 million from performance- actions as abusiness do based incentives. Another irksome fact. Dimon is JP not support or indeed Morgan’s second largest shareholder. actively undermine the At the bank’s annual meeting in- vestors voted to approve his pay over society of which you are the objections of ashareholder- apart, then in the long advisory firm; with investors holding nearly 72 of the shares voting in Jamie Dimon (above); climate change signatories take aselfie (below). term you are killing favour of the non-binding approval yourself. It’s the just above the 70 per cent threshold The US Business Roundtable difference between a that is viewed as aminimum by US has issued aletter essentially corporate-governanceexperts. Insti- symbiotic or aparasitic tutional ShareholderServices had advocating that the primacy of criticised the bank for not providing shareholder interests is over relationship with society enough clarity to shareholders on how it determines the compensation. and instead adopting conscious as your host organism. These are the everyday contradic- capitalism’ ideas by proposing a Property CEO tions at the heart of US capitalism — in practice —that spark critics to claim broader company responsibility Organisations from all sectors of the US Business Roundtable’s new to society which it can better the economy are represented in the statement about the purpose of a Coalition and together the signatories corporation is posturing. serve by considering all make up 60 per cent of New Zealand’s The Business Roundtable’s August stakeholders in its investment gross emissions. letter said business leaders should decisions. Has your business But atech services head cautioned: commit to balancing the needs of “This is urgently needed in all organ- shareholders with customers, em- adopted similar commitments? isations. Not just the PR spin on it but ployees, suppliers and local com- % genuine ‘action for change’. In some munities. 88 companies this will require existen- “Americans deserve an economy Deliver value to customers tial thinking and planning for whole- that allows each person to succeed % sale change (e.g. aplastics company through hard work and creativity and 86 term you are killing yourself. It’s the short-term. “It has been encouraged might need to reinvent itself).” to lead alife of meaning and dignity,” Invest in employees by supporting difference between asymbiotic or a to focus on shareholder returns to the said the Roundtable’s statement. “We them to acquire new skills for a parasitic relationship with society as exclusion at times of other stake- ESG reigns? commit to deliver value to all of them, rapidly changing world your host organism.” holders, he said. ESG refers to environmental, social for the future success of our com- % Others said societal expectations Not all New Zealand respondents and governance factors which are panies, our communities and our 84 have changed and profit before all were in accordance with the changed central to measuring the country.” Support the communities in which things is no longer acceptable. Lead- stance in the United States. sustainability and ethical impact of an The group —representing chief your business works and protect the ing with purpose is not only neces- Craig Stobo, chair of the NZ Local investment in acompany or business. executives from 192 of the American environment by embracing sary but every day it is more strongly Government Funding Agency, saw These criteria help to better deter- most powerful companies —has sustainable practices demanded by stakeholders. Com- the new approach as aluxury only mine the future financial perform- named issues such as diversity, social % panies best deliver long term value large companies could afford. He said: ance of companies (return and risk). inclusion and the environment as key 81 for shareholders by delivering good “Nice for some. There is aclear shift The sustainability focus is critical and to the new conversation. Generate long term value for value for customers, and that in turn in New Zealand to ESG-style reporting seen as very much in shareholders’ Their statement came amid grow- shareholders implies investing in employees, deal- on stakeholder commitments by long-term interests —particularly to ing national debate in the US about % ing fairly with suppliers, and gener- larger businesses. For most SMEs, secure the critical social licence to the responsibilities of corporations at 78 ally being, and being perceived as, a however, the first rule of business is operate. atime of stark economic inequality. Deal fairly and ethically with responsible employer. to stay in business.” Aproperty CEO added that this suppliers Others said they had been operat- Michael Lorimer, founding direc- broader approach was about recog- New Zealand CEOs ahead in Source: NZ Herald 2019 Mood of the ing this way for some time. tor of the New Zealand office of Grant nising business is part of society. the social license debate? Boardroom CEOs Survey Independent director Cathy Quinn Samuel, was unambiguous in his re- “If your actions as abusiness do In response to aquestion in the said: “I think for some time most sponse: “The US Business Roundtable not support or indeed actively under- Herald’s CEOs survey, asking New businesses have understood acting in is wrong,” he said. Others described mine the society of which you are a Zealand chief executives whether committed to generating long-term the company’s best interests and the Roundtable’s letter as “claptrap” part, then in the long term you are their businesses have adopted value for shareholders and 78 per maximising wealth for shareholders and a“silly way to frame the issue”. killing yourself.” commitments similar to the five cent say they deal fairly and ethically requires companies to take into ac- Acasino operator noted “as a outlined in the Business Roundtable with suppliers. count wider interests. Idon’t think it’s Climate Change casino group we deal with long-term letter, alarge majority said they had. These issues get to the heart of the revolutionary, it’s common sense.” ZEnergy was already across alot of social licence issues as an integral They ranked their biggest respon- debate over businesses’ licence to “I actually don’t think this idea is this new approach but had not put part of doing business.” sibility as delivering value to cus- operate. that new as ultimately if you focus it all into one statement as the US In the Maori business sector, one tomers (88 per cent) followed closely Deloitte CEO Thomas Pippos said only on short-term wealth at the Business Roundtable had done, said leader pointed out that “Maori by investing in employees by sup- the Roundtable commitments may expense of long-term health of the Mike Bennetts, the firm’s CEO and a economic development is about our porting them to acquire new skills for be anew sentiment in the US —“but business (ie by not supporting your key figure in the development of the people, and how we conduct our arapidly changing world (86 per its not new in New Zealand”. employees to re-train, supporting Climate Leaders Coalition. business for today for future genera- cent). “I see this not so much as copping your local community, sustainable The Coalition was launched in July tions.” Some 84 per cent say they are out of capitalism, but recognising that business practices), it will undermine 2018 to promote business leadership And he last word goes to alogistics supporting the communities in which business is part of society,” said a your business,” said atransport chief. and collective action on climate firm head —who agreed with the their businesses work and are protec- property CEO. “If your actions as a But Sam Stubbs, founder and man- change. five principles but warned: “let us ting the environment by embracing business do not support or indeed aging director of Simplicity noted that So far, 120 CEOs have signed the not forget the responsibility to gen- sustainable business practices. actively undermine the society of business in New Zealand had been original joint statement, which erate acceptable and increasing Eighty-one per cent say they are which you are apart, then in the long funded and encouraged to think too commits their organisations to take profitability”. nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D29

MOOD OF THE BOARDROOM Government appetite for tax reform wanes?

With the demise of the CGT,business leadersexpectlittle movementontax reform,writes FranO’Sullivan

hief executives believe the Coalition has lost its appetite for substantive tax reform Taxing C other than tinkering with rates and thresholds. Some 77 per cent felt the questions oppportunity had gone in the wake of the jettisoned Tax Working Group report on Capital Gains Taxes. Some 55 per cent of respondents “They have taken it off the table,” to thisyear’s survey supported said Chris Quin, CEO of Foodstuffs. neither of the capitalgains There was scepticism from an auto options presented; 34 per cent firm boss who believed that though supported the narrower option there was an opportunity for reform, targeted at rental property he doubted that “Jacinda could man- investment; 11 per cent the age her team (including Winston) to broader option excluding the deliver on awell thought-through familyhome. policy.” “There are CGT rules on “The capital gains tax review investment properties now,” said poorly managed and will inhibit their Panuku chair Adrienne Young — ability to do further major changes Cooper. “Rigorously enforce unless they take avery different them.” approach,” agreed an innovation sec- “Most of the estimated tor head. revenue to be generated from the Among the menu of tax changes proposed CGTwas to come from business leaders would like to see agradual increase in real estate were: values. It was an odd assumption ● Policies to tax internet-based from aGovernment committedto trade to put international firms on a making housing more affordable. level playing field with what domes- If that revenue was not realised, tic businesses have to pay —tech the proposed CGT involved avery services firm boss. substantial increase in ● Address the corporate tax rate: compliance costs for little “It harms our competitiveness and is revenue gain,” pointed out a high by international standards” — banker. Don Braid of Mainfreight. “There is beauty in simplicity, CEOs were critical about how tax- and the bright line testand ation revenue is being spent. KiwiSaver goes along way to “It’s clear that tax is increasingly Sir Michael Cullen outlines the proposals for the now-jettisoned capital gains tax. achievingthe benefits of aCGT being used as atool to influence i.e. better allocation of capital into public and social policy outcomes, “Media prefer to focus on the Accepting that asmall but done their job in investigating the the productive economy,” beyond simply collecting revenue,” wealth disparities and rich business generally adifferent group of facts,” said achair. “The current levels observedSam Stubbs from said aprimary sector chief. people,” chimed agovernment of income inequality are the lowest Simplicity. Said an energy boss: “People have relations firm boss. households hold the greatest in history and more people have been Others said: less of an issue paying tax if they “And it’s politically convenient that levels of assets, and derive the lifted out of poverty by Capitalism ● If any nationwas starting know it is well spent. Centralisation this is not understood,” agreed an than any other economic or political from scratch,CGT is agreat idea. will not deliver this.” innovation firm head. greatest income (both from system.” Introducing it to an economy There was also concern that the Some 89 per cent of CEO labour (taxed) and capital (which “There are other much much wherehousing investment has Government might look to slap respondents also felt it was not well smarter ways of addressing this. Let’s become avital part of middle New higher-incomeearners with ahigher understoodthat around half of all may not be taxed)), and that start amore intelligent, transforma- Zealand’s superannuation householdspay no net tax (income there is wealth inequality in NZ, tive and genuine national conversa- thinking is fraughtwith Is there any opportunity for tax, GST and ACC) and are in fact net do you believe that this wealth tion. Every Kiwi wants to see life problems”—Lobbyist substantive tax reform under recipients after transfers such as improving for all citizens but increas- ● Isupport the principle of a Working for Families. inequality should be more ing tax burden on innovators, entre- CGT but the practical imple- the current Government (other “New Zealand’s social welfare overtly addressed through the preneurs and others is NOT the way mentation of this was never going than tinkering with rates and model is antiquated and abused,” said forward, said aCEO. to work” —Funds boss. atech services head. “Additionally tax system? “There will always be wealth in- “I support aCGT, as longasthe thresholds)? when people have no motivation to % equality ie ‘haves’ v‘have nots’, but net tax take is not increased” — % work it lowers the national pro- 52 addressing the needs of the ‘have Education leader 77 ductivity level and leaves the poten- No nots’ is more important than transfer- No tial for more social harm and unrest. % ring value between the groups,”said % “This area of NZ society needs a 34 amedia boss. Is it well understood that around 12 genuine and urgent rethink. People Yes “The ideal outcome is to achieve half of all households pay no net Unsure who genuinely need help must % ‘haves’ and ‘super-haves’.” % always receive it but the current 14 Abanker noted that official data tax (income tax, GST and ACC) 11 system is flawed in so many ways.” Unsure suggests that in New Zealand, unlike and are in fact net recipients Yes Just 34 per cent felt that wealth the US, there has been no significant Source:NZHerald 20129 Mood of the Boardroom inequality should be more overtly increase in wealth inequality over the after transfers such as Working CEOs Survey addressed through the tax system; past 20 years. “What has happened for Families? accepting that asmall but generally is that the huge increase in the price tax rate to drag in more revenue. adifferent group of households hold of housing has put very substantial % “This is especially frustrating when the greatest levels of assets, and de- economic pressure on the bottom 88 anyone proposes that increased rates rive the greatest income (both from two quintiles of the income distri- No be applied to higher income where labour (taxed) and capital (which may Is it well understood that asmall bution in recent years.” 9% we are already paying the lion’s not be taxed). percentage of the population The 34 per cent of respondents share,” said an agribusiness head. “Capital Gains taxes have not as- who felt wealth inequality should be Unsure “Expect apre-election bribe to in- sisted with areduction in wealth pays the lion’s share of all addressed through the tax system 3% crease top threshold taxes and redis- inequality elsewhere in the world,” personal income tax (that 12% were asked to rate options: 63 per tribute to middle and lower said BusinessNZ CEO Kirk Hope. cent ticked more progressive per- Yes thresholds,” scoffed amedia chief “For NZ it would simply tax an pay just under half and 3% pay sonal income tax rates; 88 per cent executive. already scarce resource (capital) and just under one quarter) before were against increasing the corporate way to curb the infatuation with Asked if it was well understood redistribute to government expendi- tax rate; 67 per cent felt it worthwhile property. This targets property, and that asmall percentage of the popu- ture —which is avery low-quality taking account of transfers such to persevere with measures that tax capital,” said private equity player. lation pays the lion’s share of all outcome. It would be better to de- as Working for Families? capital gains (like more bright line The 2019 Budget data shows in- personal income tax (12 per cent pay velop and execute policies that in- type tests); just 19 per cent agreed dividuals will pay $36 billion in tax just under half and 3per cent pay just crease wealth and asset accumu- % with some form of comprehensive for the 2018 financial year and in the under one quarter) before taking ac- lation for lower socio-economic 83 death duty or inheritance tax and 80 2019 financial year wage earners and count of transfers such as Working households.” No per cent were opposed to some form individuals will pay an estimated for Families, 84 per cent of those “Outside of taxing capital gains, % of annual wealth tax . $37.4b, growing to more than $40b in surveyed said no. wealth inequality is not something 9 Said Dame Alison Paterson: “A CGT 2020. Aformer banker put it pungently: that equitably can be addressed Unsure would be equitable but should be And, the Tax Working Group “The narrative has been tax the rich through tax,” said Deloitte CEO % balanced by reductions in taxation.” noted, personal income tax is the ‘pricks’ because they aren’t paying Thomas Pippos. 8 “I think adirected property fo- largest source of revenue for the their share. Which is bollocks.” “Unfortunately the media haven’t Yes cused tax (Stamp Duty) is the ideal Government. D30 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019 MOODNotOF THE BOARDROOM acomfortable

Uncertainty is seenbycompany heads as being thebiggest dampener on business confidence Achievements andregrets Mood of the Boardroom Gill South Leaders share their best achievement and biggestregret over the past 12 months

Wellbeing Budget which didn’t scare the horses, Best achievement: Best achievement: Best achievement: Best achievement: neither did the canning of A the capital gains tax, but the Coping with and Built world first flat bed bringing six new Exporting 22 New Zealand business community is adjusting to new EU powder coating line for immigrants to New SharpGrades in a still not comfortable with the policy changes and policy direction from medical regulation, pre-finishing heat Zealand and having month. Biggest regret: the Labour-NZ First Coalition Govern- harder than you’d think sensitive building their skills produce the Not being able to find ment after its second year in office, according to responses in asurvey and essential to our materials. Biggest workflow we needed. sufficient competent of BusinessNZ’s membership. BusinessNZ asked 17 questions market. Biggest Regret: regret: Not investing Biggest regret: Not staff to fulfil our export from the NZ Herald’s 2019 Mood of Ishould have bought a sooner in flat bed being able to bring the market. the Boardroom CEOs survey to its membership and collected 150 re- small block of factories technology. immigrants in earlier Rodney Sharp, Progressive Group sponses from awide range of com- in close proximity while Jeff Stewart, Climate Coating due to immigration panies including those from the con- struction, manufacturing, agriculture they were available. constraints from the and tech sectors. Christchurch issue. This research found that 46 per Murray Fenton, Adept cent of companies put the uncer- Peter Henderson, Bay tainty caused by the Government’s Biggest achievement: Sandblasting Services policies as being the biggest damp- Biggest achievement: ener on business confidence for the Starting prototype general business community. In their $16 million turnaround phase on aproject for Best achievement: Surviving death by athousand own organisations, it ranked as the in EBIT to go from $10 biggest concern too (38 per cent). US customer which has cuts from government policy which is business The level and quality of govern- million loss to $6m been 2.5 years in the unfriendly including but not limited to compulsory ment spending was another concern profit Biggest regret: for the general business community, making. Biggest regret: minimum wage increases, foreign buyers ban, according to almost 30 per cent of having to raise more Not buying more USD at dropping of the 90 day trial, union reps entering respondents. debt, couldn’t quite “Businesses need reassurance that 0.7 at the beginning of the workplace without consent, capital gains tax the Government’s policies won’t lead squeak through despite to lower economic and business the year threats, regular changes to LVR, the Auckland real growth,” said BusinessNZ chief execu- our team working hard Craig Wilson, Kilwell Group of estate sales volume nosedive. Biggest regret: tive Kirk Hope. on this. Companies The overall policy direction and Renting anew larger premises. policy surprises like the oil and gas Hartley Atkinson, AFT Mark Ridling, The House &Building Wash Company exploration ban are contributing to Pharmaceuticals this lower business confidence, he added. “Business really wants positive for most, according to the survey’s make NZ exporters meet the standard key issue highlighted by the respondents saying affordable hous- policies that can support agrowing findings. Companies were expecting of the importing country. Rather than BusinessNZ survey, with 37 per cent ing was an issue for them making it economy,” he said. to spend more or the same on most do the hard yards of negotiating of those surveyed saying it was areal harder to retain staff. cases —36per cent were expecting equivalency they cop-out at market concern for their businesses. One business owner commented: Uncertainty to spend more, and 34 per cent the access. This leads to NZ exporters One IT company head said: “We have lost acouple of employees same amount as the previous year. needing to spend to meet these mul- “Supply of skilled labour is ahuge based on their desire to live in place % For many of these companies in tiple overseas standards,” said one issue and our biggest.” where they can afford to buy ahouse. 46 the BusinessNZ membership, they respondent. Employment law changes and We pay relatively high wages to assist of companies put the uncertainty were still feeling like they were win- BusinessNZ’s Kirk Hope however, wage increases were also both high our staff but it is still very difficult for caused by the Government’s policies ning at this point. They said they were applauded New Zealand trade on the list of concerns for businesses many and impossible for alot to buy as being the biggest dampener on growing their export markets, had negotiators for the job they were in their own businesses and for the in Auckland.” business confidence in the general increased productivity, and were doing across the many aspects of general business community. The lack of affordable housing in business community achieving growth thanks to inno- gaining access to overseas markets Respondents called for better govern- the big cities was areal source of % vation and good R&D. They were for exporters. ment internal training and skills ef- stress for staff, said anumber of 38 succeeding at recruiting key staff, in Countries with large pre-existing ficiency. respondents. said it was the biggest concern for some cases they had too many cus- trading blocs weren’t likely to meet Over half of those surveyed, (57 Said one business leader, “Workers their own organisation tomers and they were buying busi- New Zealand’s production standards per cent) meanwhile said it had been invariably cannot simply move to a nesses, opening factories, expanding so New Zealand negotiators often very difficult or difficult (one or two more affordable housing area. They Co-owner of The House &Building branches, and increasing margins. focused on international standards out of five) to fill staff vacancies over remain but require increased wages. Wash company, Mark Ridling, de- like ISO standards, he said. the last year. scribed government policies as Exporters’ concerns “Gaining market access also means Anumber of respondents said that Skilledlabour “death by athousand cuts” for his The unpredictable international overcoming non-tariff barriers that retaining staff and hiring staff with the Auckland business which is reliant on trade environment over the past 12 hinder New Zealand exports like correct skills was one of their three % an active real estate market. months was, unsurprisingly, high up apples into Australia or beef into top priorities in the next year. 37 His business was hit in the last year on the general business community’s Indonesia, where appealing to WTO Meanwhile half of the survey’s said skilled labour supply it was a by compulsory minimum wage in- list of concerns, the survey found. respondents found it difficult or very real concern for their businesses creases, the foreign buyers ban, the This was the second biggest concern Expenditure difficult to fill staff vacancies from % dropping of the 90 day trial, the threat for the general business community, overseas over the last year. 57 of acapital gains tax as well as regular according to nearly 35 per cent of % Rodney Sharp, owner of Hamilton- said it had been very difficult or changes to LVR, and what he calls the respondents. 36 based engineering business, Progress- difficult to fill staff vacancies “Auckland real estate sales volume For exporting firms, they have alot of company heads were planning to ive Group said not being able to find nosedive.” to contend with in the current clim- authorise less capital expenditure in sufficient competent staff to fulfil the The shrinking disposable income And while Ridling’s woes are quite ate, the study found. Respondents the coming year company’s export market had been affects their health, mentally and sector-specific, one of the clear mes- said their lives would be improved % aproblem in the last 12 months. physically and higher wages become sages coming through from anumber if there were more free trade 28 Another business head added: “We afocus for them.” of respondents in the BusinessNZ agreements (FTAs), FTAs with the UK were planning to authorise more operate in export education. Immi- survey was that they were readying and the EU were seen as especially gration and NZQA handicap us.” NZ businesses want parity with for aslowdown and tougher times important. rules has been successful,” he said. Peter Henderson, director of Bay Australian corporate tax ahead. There was some anxiety about Astable exchange rate was also on Sandblasting Services in the Bay of BusinessNZ asked respondents about The survey found that over athird New Zealand’s ability to negotiate the the wish list for anumber of exporters Plenty, said that immigration red tape New Zealand’s relatively high head- (36 per cent) of the company heads advantageous deals exporters in this survey as well as access to was hampering his ability to bring in line corporate tax rate in the OECD, surveyed were planning to authorise needed. capital for expansion and amore skilled people to his business. where it ranks seventh highest which less capital expenditure in the coming “Market access negotiators from level playing ground for New Zealand it said made it insufficiently competi- year than in the previous year, while New Zealand routinely give away too companies against their competition Housing still an issue tive to attract foreign investment. 28 per cent were planning to auth- much in their negotiations. Rather in overseas markets. Being based in an unaffordable hous- Half of those surveyed said they orise more, and 30 per cent expected than pushing for the importing part- ing market can contribute to com- were concerned about this. to spend about the same. ner to accept our production stand- Supply of skilled labour panies’ ability to hire, the survey Peter Brown, managing director of Investment in IT was still apriority ards, they bend over backwards to Supply of skilled labour was another confirmed, with 32 per cent of Miscanthus New Zealand said: “It is nzherald.co.nz | The New Zealand Herald | Tuesday,September 24, 2019 D31

MOOD OF THE BOARDROOM The top Key Coalition priorities Complete Landscape findings Supplies Housing attract heavy criticism. Staffing Nearly half of respondents gave it Managing likely downturn in % a“not impressive” one out of five, and the NZ market Business confidence —nearly half (46 percent) 32 afurther 24 per cent gave it alow Attempting to growinthis of BusinessNZ companies surveyed said that the of respondents said affordable two out of five. general uncertainty around the impact and housing was an issue for Asked for suggestions to include in environment direction of government policies were having them making it harder to the proposed replacement for the the biggest effect on the confidence of the retain staff RMA, respondents suggested it Shaun Newman, general business community. This was also the should allow for denser urban hous- TrailLite biggest concern in their own businesses too (38 becoming more attractive for Kiwi ing and to make infrastructure pro- Increase productivity per cent). investors to invest overseas, thus jects easier “to get across the line”, and Increase market share starving smaller New Zealand busi- for there to be more clarity for Develop and retain our people Some businesses preparing for downturn — nesses of development capital.” councils to work with. Anumber of businesses said they were Another respondent said: com- One company director who had a Mark Douglas, preparing for adownturn in the next year and panies look at some key indicators Martin Personnel talked of taking steps of preparing for anew when determining whether to seri- RMA Strict control in costs environment although for most, their businesses ously assess investment options in a operationally were still doing well. However 36 per cent of country. “Unless we are competitive % the companies surveyed said they were going with the key indicators, we don’t get Nearly 50 More salesactivity to authorise less capital expenditure in the alook-in.” Reducing debt coming year while 28 per cent said they would Others were more sanguine about of respondents rated the Resource be investing more and 30 per cent said they it. “High quality foreign investment Management Act a“not impressive” Peter Brown, Managing would do invest the same amount. seeks high quality businesses to in- one out of five Director, vest in. There is no long-term Miscanthus New Zealand International trade concerns —the ructions sustainable advantage to NZ to woo current submission which had Finalise contract to establish in the international trade environment were the foreign investment using avalue pro- required 12 sets of consultant reports, major Miscanthus stand for second biggest concern affecting confidence (34 position of alower corporate tax rate.” asubmission of over 2000 pages and carbon negativerenewable per cent) for the general business community. When asked if the Government an estimated timeline for adecision diesel production. Respondents also expressed aconcern about should consider aphased reduction of over 6months, saw plenty of room Set up New Zealand’s first the international trade environment (20 percent) of the headline corporate tax to 25 for improvement. graphene production plant. for their own businesses and wanted to see more per cent by 2027 matching Australia’s, “The time and substantial cost are consistency with foreign exchange. nearly 70 per cent of respondents adrag on progress. Get the carbon benefits from said they would like to see this. “There should be arecognition that both of these officially Skills shortages and immigration —skills Australia may not be the place to business needs confidence in regu- recognised. shortages from New Zealand and recruiting from aspire to, said one business owner. lator plans in order to invest/stream- overseas are amounting concern for the line process,” they commented. And Other businesspriorities for business community with 57 per cent saying it Corporate tax there should be abalance of environ- the next 12 months: was either difficult or very difficult to fill staff mental impact with economic bene- Anumber of companies talked vacancies over the past year. And it was very % fit. about getting ready for difficult or difficult to fill staff vacancies from Nearly 70 Local councils were meanwhile turbulent times or adownturn overseas over the last year for close to half (49 being blamed by businesses for pro- ahead, keeping aclose eye on per cent) of the companies surveyed. of respondents would like aphased jects not being done. staff costs and achieving reduction of the headline corporate The survey found 100 out of 148 stability in alocal and globally Resource Management Act (RMA) —nearly tax to 25 per cent by 2027, matching respondents said their council was unstable environment. half of the respondents (49 per cent) gave the Australia’s not impressive, or not very impress- Improvingproductivity,finding RMA the thumbs down, giving it aone out of ive (1 and 2out of five) at facilitating more “forward work” is top of five. Afurther 24 per cent gave it atwo out of “We have asubsidiary in Australia. growth and development. mind for these BusinessNZ five. There were too many councils and other Although the headline tax rate there Aquestion from BusinessNZ on companies, and they are stakeholders getting in the way of projects is lower, the actual cost of compliance whether businesses should pay getting greenlit, said respondents. and doing in business in Australia is higher rates than domestic rate valuing the importance of higher than in NZ.” payers was declined, with 52 per cent innovation, ICT development, Corporate tax —Aresounding 69 per cent of giving afirm no and afurther 21 wellness, and retaininggood businesses would like to see aphased reduction How to improve RMA respondents unsure. staff. Seeking more export of the headline corporate tax in New Zealand BusinessNZ also checked with its “Higher payment for higher markets remainsapriority for come down to 25 per cent by 2027, to match membership how well the Resource services is fine, but this should be anumber of respondents, as Australia. The current rate is not sufficiently Management Act had worked to fa- transparent and ideally voted on in well as diversifying and capital- competitive to attract foreign investment, cilitate growth and development in some method and paid for by raising. thought half (51 per cent) of those in the survey. the last year and it continues to targeted rates,” said one. Aclear vision for future infrastructure

Infrastructure is abig challenge for theproductivityofNew Zealand,saysBusinessNZ’s KirkHope

The Government’s plan for infra- engineers they would need to do the for challenges and opportunities. through the pay scale,” says Hope. structure is one of the most pressing work and how quickly, asks Hope. “When you look at the landscape Other issues on the business com- issues that need to be addressed for Housing is included in the infra- and where the demand is coming munity’s list of worries include the the business community right now, structure issue, he says. from, we’re doing okay. Asia is still ongoing immigration policy, says says BusinessNZ chief executive Kirk The Labour-led Coalition Govern- going fairly well for New Zealand,” Hope, which makes immigrants on Hope. ment has been on aroll with social says Hope. three year visas, leave New Zealand There is no doubt infrastructure is housing but there is less to be certain The Business NZ chief executive is for ayear. abig challenge for the productivity about with the general housing mar- thankful for the Comprehensive and “The process by which we enable of New Zealand, so having avery ket. Progressive Trans-Pacific Partnership people to come into New Zealand clear, long-term plan around infra- (CPTPP) signed last year, which he remains challenging,” says the Busi- structure is crucial, he says. Skills shortage thinks will lead to more free trade ness NZ chief executive. “We have $40 billion allocated for An issue which is really starting to agreements. At the same time, businesses are infrastructure over 10 years but it’s crunch business is skills shortages, The CPTPP broadens zones and still trying to understand the still not very clear what that money and these are across the spectrum, markets for New Zealand, he says. implications of the Coalition Govern- is going on. When you make very big says Hope. Meanwhile aEuropean Union free ment’s climate policy. decisions around infrastructure and There is relatively high unemploy- trade agreement would break down They are currently digesting the switch from roads to light rail, there ment for 18-to-24 year olds, but It’s alot of barriers for New Zealand new regulatory framework for are consequences.” about getting these young people export business, he says. drinking water safety and improving The Government has done well in “workforce-ready,” he says. “The more free trade access, the outcomes for wastewater and getting on to the review of the Re- There were some strong policy better insulated we are against re- stormwater. source Management Act, but there’s reasons for putting country’s poly- gional and global headwinds,” says If you are aSME business owner still alot to do around legislation technics recently to go into asingle Hope. who wants to look at the next step which would enable New Zealand to entity but the Government must of growth or development and are build quality infrastructure quickly, make sure that it doesn’t lose the Alaundry list of worries questioning if the time is right to says Hope. He warns that though the pipeline of people currently in the Kirk Hope’s top three Looking at business confidence commit to more expansion, it’s alot new Infrastructure Commission will system, he says. issues locally, New Zealand businesses have to think about, says Hope. be very helpful, it will have astrategic ● Aneed for aclear, long-term plan had to think about araft of new Another concern keeping business purpose only. Free trade agreements for infrastructure government policies, says Hope. owners up at night are the conse- The Government is fiscally well As the US and China have avery The increase in the minimum quences of the Reserve Bank’s positioned to put money into infra- public trade stoush and the UK’s ● Skillsshortages wage was significant for SMEs, he increased capital requirements on structure projects if there is a relationship with the European Union ● The (too) longlist of policy says. the big banks which Hope is sure will downturn, but would the country be gets frostier by the minute, New Zea- changes “In reality, it does not just hit the restrict businesses’ access to capital. able to attract the builders and land exporters will have to be alert minimum wage workers, it goes right —Gill South D32 nzherald.co.nz | The New Zealand Herald | Tuesday, September 24, 2019

MOOD OF THE BOARDROOM

Grant Robertson

Herald managingeditor Shayne Currie

The 2019 Mood of the Boardroom Paul Goldsmith debate features Finance Minister Grant Robertson and National's finance spokesman Paul Goldsmith

Mood of the Boardroom Fran O’Sullivan, debate 2018 NZME Head of Business

Confidence, capital and credit fuel entrepreneurship and economic expansion. Elaine Chao

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The Mood of theBoardroom CEOsSurveyispresentedby The NewZealandHerald in associationwith Business NZ