Mood of the boardroom: How business leaders view Jacinda Ardern (NZ Herald)

Prime Minister Jacinda Ardern is admired by chief executives for her leadership during a challenging term in government, writes Tim McCready

Jacinda Ardern’s leadership has been tested over the past three years: the Christchurch terror attack, Whakaari/White Island disaster and pandemic are front of mind for respondents to the Herald’s 2020 Mood of the Boardroom Election survey.

They rate her leadership at 3.88/5 on a scale where 1= not impressive and 5=very impressive.

A property CEO says what Ardern has coped with in her three years at the helm is nothing short of unbelievable: “It’s hard to think of anyone who could have handled these challenges with the same deft touch as she has demonstrated.”

“Would I rank her as highly without those extraordinary events? Possibly not — but that’s hypothetical and irrelevant. Does she have some huge challenges in front of her as far as the ‘new normal’ is concerned? Goodness yes. Does that change how much credit she must be accorded for her performance to date? Not in my view.”

“It is hard to imagine a more difficult term for a first-term Government that has been out of power for three terms,” says Deloitte CEO Thomas Pippos. “The Prime Minister’s leadership in some of the key challenges the country has faced has been without a doubt very positive.”

CEOs rate Ardern’s integrity (3.57/5) and courage (3.67/5) among her top capabilities, along with her ability to adeptly communicate and demonstrate empathy. They say these are attributes that can be leveraged internationally to help New Zealand in its recovery following Covid-19.

“She has led the country through some of our most challenging moments in recent history, and her empathetic style has clearly resonated both locally and globally,” says Spark CEO Jolie Hodson.

The PM’s ability to form a coalition is also rated highly by CEOs among Ardern’s capabilities (3.51/5), having successfully negotiated her way into power following the 2017 election. Alongside this is her rating for political management (3.33/5) — demonstrated by her ability to lead a stable Government over three years — which many previously considered unachievable with Winston Peters’ involvement.

But executives say Ardern has been let down by her MPs and Labour’s inability to deliver on 2017 election promises including KiwiBuild and Auckland’s light rail.

“An outstanding leader on all fronts, sometimes let down by members of her team,” says the NZIBF’s Stephen Jacobi.

A healthcare boss says she is great at leadership in a crisis, but “lacks plans for a future pathway forward and has no credibility on implementation of any policy”.

This worries CEOs, as they say the “hard stuff” for New Zealand is only starting now and her ability in this is yet to be proven.

Ardern’s lowest scoring capabilities from CEOs are for her vision and strategy for New Zealand (2.56/5) and economic management (2.17/5).

Beca Group CEO Greg Lowe says when coming into power, the Prime Minister promised to govern for all New Zealanders. “While she has handled some situations very well, we are still lacking a long-term plan for New Zealand that we can all get behind and make progress on.”

Key Performance Indicators

The highest scoring KPI for the Prime Minister from CEOs is her management for the response to the Christchurch terrorist attack (4.50/5).

Says director Anne Walsh: “The Christchurch Call showed international leadership in bringing change globally as to how multinational digital companies operate differently in the spread of terrorism and misinformation”.

The handling of the two other major crises over the past year also rate among Ardern’s top KPIs: Whakaari / White Island (3.94/5) and the Covid-19 crisis (3.90/5).

“No one would wish them on any PM. Jacinda has demonstrated genuine compassion towards her constituents,” says Precinct Properties chair Craig Stobo. “She is an outstanding politician who may be able to govern New Zealand without a coalition partner.”

The Government’s Covid response is a key part of Labour’s election campaign, with Ardern pointing out that relative to other countries, New Zealand is more open. She says our recovery is on track to be better than Australia’s with lower debt and unemployment levels and fewer deaths.

Ardern’s charismatic performance has received admiration on the international stage this year, with stark contrasts made between her Covid-19 response to the likes of US President Donald Trump and UK Prime Minister Boris Johnson.

Her ability to leverage her brand for New Zealand’s international advantage has again rated highly with CEOs scoring this 4.23/5. Says Erica Crawford, “She is one of New Zealand’s best assets on the global scene, she needs to cheerlead New Zealand.”

Another high-scoring KPI for Ardern is her political performance (3.84/5).

It will be disappointing to Ardern that child poverty reduction, a portfolio for which she is responsible for and has expressed a strong desire to address, was her second lowest KPI, receiving a score of 2.10/5.

But one of the most troubling KPIs for executives is Ardern’s ability to build confidence within the business community — for that they rate her 2.13/5. They say that Ardern’s repeated calls for kindness and empathy in politics alone do not make a great leader: “you need a workable plan and know-how to deliver it with and through others”. A director says “she does not inspire confidence that she understands business — but she does need business to succeed to generate jobs and pay taxes.”

They say her success as leader is driven mostly by the figurehead aspects of the role. But notes a professional director: “the hallmark of great leadership is having a superb team around you — and apart from Robertson — she just does not have that”.

“Labour has a very superficial engagement with the business community,” says a multinational boss. “They do the bare minimum and have no ministers outside of Grant Robertson who really understand business at all.”

Mood of the boardroom: CEOs compare finance rivals Grant Robertson and Paul Goldsmith (NZ Herald)

Grant Robertson: Capable, calm, credible

Chief executives send a clear message to Minister of Finance Grant Robertson: You’ve done well, but the real test is yet to come. It is testament to his performance in the wake of Covid-19 that, asked whether Robertson has been a credible Minister of Finance, an overwhelming majority of CEO respondents to the Herald’s 2020 survey — some 91 per cent, said Yes. Just 5 per cent said No; 4 per cent were unsure.

This rating is up considerably from last year. Robertson’s rating in the 2019 Mood of the Boardroom survey had 54 per cent of respondents say Yes to that same credibility question and 29 per cent unsure.

He is the highest-scoring minister, receiving a rating from respondents of 4.18/5 for ministerial performance. To put this score into perspective, this is the highest rating a Minister has received in the Mood of the Boardroom Survey since then-Finance Minister Bill English in 2016, where he received a rating in John Key’s Cabinet of 4.51/5.

On his performance as finance minister, the word “capable” was frequently used. Fletcher Construction CEO Peter Reidy says he is “capable, calm and credible”.

NZ International Business Forum executive director Stephen Jacobi describes Robertson as “a source of strength and stability for the Prime Minister and the Government”. Says a transport executive: “thank goodness he is influential in cabinet”.

Beca CEO Greg Lowe says that Robertson has a good grip on the economy, its drivers and what makes it succeed. “He is a hardworking and capable minister,” he says. “Engagement with business is good but we could improve the teamwork between government and business.”

It was this influence that saw him fulfil Labour’s 2017 campaign promise to reduce net core crown debt to below 20 per cent of GDP in 2018.

“Robertson has done a superb job for three years,” says a government relations firm boss. “Where are the loony lefties now who cried out for him to spend spend spend when New Zealand had a sizeable surplus? He stared them down — thank God!”

Since the early days of the Covid-19 crisis, Robertson has proven his mettle in the eyes of New Zealand’s business elite. He has grown into this role and was superb throughout Covid — “whether we agree with his policies or not”, says a real estate boss.

He rolled out the  wage subsidy just days after the Government’s response to the pandemic was put in place. The subsidy was initially  for 12 weeks over the lockdown period,  then extended a further eight weeks for businesses still experiencing a significant hit to revenue. A third extension was announced when Covid  re-emerged in August.

The Government also introduced a temporary 12-week income relief payment for those who had lost  jobs, low interest and interest-free loans for businesses, and changes to the tax system to encourage investment.

Many top business leaders responding to the 2020 Mood of the Boardroom survey say their companies accessed the wage subsidy  —  41 per cent received the first iteration, 16 per cent received the second. “This was an excellent initiative. Quick and sharp response,” says a healthcare chief.

Some see it differently. A banking chair says  “as Minister of Finance, he has held the line in a number of areas, but has allowed Government spending to run riot over the pandemic”.

Independent director Cathy Quinn says the wage subsidy was “an important step to keep people in work and the economy going.”

But she says we now need business to adapt to the tough new environment as the Government can’t afford to subsidise indefinitely.

An executive in the transportation sector says “the real test will be if he gets back and whether he can drive quality spending as opposed to a lolly-scramble”.

Mainfreight CEO Don Braid says   Robertson has performed well under the conditions  — but notes “the real challenge now lies ahead”.

That challenge is New Zealand’s economic recovery, and the hefty Government debt. According to the Budget, Government debt will peak at 2024 when it hits $219 billion (just under 60 per cent of GDP).

Robertson insists New Zealand will pay down its increased debt  over time, through growing the economy. He has ruled out cutting significant public services and income support.

“When I look back to the late 80s and early 90s  I saw a different kind of approach to recovery from a downturn, one that was more of an austerity-based one — it was young people who bore a lot of the brunt of that.  I am determined we won’t allow that to happen.”

The Government’s approach was to invest in  young people now through training and job support.

Chair of Precinct Properties, Craig Stobo, says Robertson has been “unruffled and steady,” adding “the spectre of the 80s economic reforms informs his policy preference”.

It is unsurprising most CEOs focused on Robertson’s performance in relation to the Government’s Covid-19 economic response. However, there is   underlying disappointment that he has — so far — lacked long-term vision, and hasn’t used his position to deliver on the transformational change Labour campaigned on in 2017. A real estate boss says: “he lacks depth and strategic focus — it is all about the now.” Adds an executive recruiter: “I have severe concerns over his lack of focus and long-term thinking.”

The chief executive of an investment firm says: “He did a sound job in his first two-and-a-half years but he had the opportunity to create a massive lasting legacy and transformational change with the big spend up and appears to have wasted the opportunity on instead spreading money in every direction.”

Paul Goldsmith: Needs confidence, clarity

New Zealand’s top chief executives want Paul Goldsmith to find confidence and clarity.

National’s finance spokesperson has yet to make a major impact with many top business leaders, perhaps because he has been overshadowed during National’s leadership turmoil.

“Paul, like many in the opposition have been starved of oxygen in terms of public voice or debate,” says Deloitte CEO Thomas Pippos. Precinct Properties chair Craig Stobo has a similar view: “He has emerging credibility but low share of voice.” The 2020 Herald Mood of the Boardroom survey asked executives whether Goldsmith presented as a credible future minister of finance. Fifty-three per cent of respondents said Yes; 22 per cent said No.

The remainder — a significant 25 per cent — say they are still unsure, with many noting Goldsmith has lacked visibility at a time where strong opposition is needed.

“He’s been meek,” says an executive in the wine industry.

“He should have had a field day with this Government,” says an investment banker. “But he has been very quiet in Opposition.” Another high-profile banker says: “I haven’t seen enough to suggest he is a credible future minister of finance, but give him the benefit of the doubt.”

“Based on what little I have seen, he seems to be okay — but I am not ready to say ‘yes, he’s a credible future minister of finance’,” adds a recruiter.

This morning, Goldsmith will debate with Finance Minister Grant Robertson at the launch of the Mood of the Boardroom Election Survey. Several of New Zealand’s top bosses note that compared to Robertson — who received a positive response from 91 per cent of CEOs — Goldsmith lacks credibility.

Grant Samuel managing director Michael Lorimer says Goldsmith does not have a good grasp of the issues: “This was evidenced at last year’s breakfast debate and he has not improved since,” he says. “He needs to put up ideas — not just point out the faults in the Government,” says a healthcare boss. “While I don’t like Labour’s policies, I think Grant Robertson is a far better and more credible Minister of Finance.”

“He’s not as strong as Grant, but he has made some excellent suggestions and would be tested if he became minister, which would give him the chance to raise his credibility.” says an executive in the real estate sector.

But Goldsmith should take heart. The Opposition finance spokesperson is typically challenged when compared to an incumbent who has become established in the role.

Robertson also faced a hurdle connecting with the business community prior to taking the helm.

In the 2016 Mood of the Boardroom survey — when Robertson was up against  Bill English — one banker suggested Labour should replace him with “someone who understands the portfolio, like David Parker”. In the eyes of CEOs, Robertson is now their top performer.

Goldsmith took on the finance portfolio in June last year and was elevated to third in the party’s parliamentary rankings under Simon Bridges’ leadership.

He won praise as Opposition finance spokesperson in the early days of the Covid-19 pandemic.

Goldsmith commended the Government for the wage subsidy package and its Covid leave support. But he also called for more targeted and specific support for business with more rigorous measures around it if a wage extension was introduced — something that is now being debated as it comes to light that some large, profitable companies likely took advantage of the subsidy.

The tone he used to deliver his criticism of the detail in the Government’s economic response was in stark contrast to then-leader Simon Bridges, which drew strong condemnation and ultimately led to his demotion.

“Paul has continued to work hard and push on detail,” says a transportation boss.

Goldsmith retained the finance portfolio under Todd Muller’s brief stint as leader but dropped in ranking to number five — bouncing back to number three when Judith Collins assumed the leadership.

Despite his backing in the role by three leaders, CEOs say Goldsmith is still yet to prove he’s got the chops to run the government books. But they also acknowledge he is in an unenviable position, following in the footsteps of some high-performing predecessors — former National Party finance minister Bill English consistently rated top of cabinet during his tenure as finance minister.

“I compare him to Bill English — a hard act to follow,” says a CEO in the agricultural sector.

“I like Paul — and he is smart,” says a top lawyer. “But scratch beneath the surface and he can’t answer follow up questions.”

Another major concern raised by CEOs is Goldsmith’s lack of ability when it comes to communicating and connecting with the business community and the broader public.

“He is not really a retail politician, but he is extremely bright and is a very fast learner,” says a professional director.

“He is not yet credible, but he has the brain, if not the communication skills — he’s very dry,” says a lobbyist. A CEO in the transportation industry says he lacks mana and presence — “too much IQ and not enough EQ!”. Another CEO shares a similar view: “He’s dry, but capable.”

The head of an investment firm sends the following advice to Goldsmith: “He needs to command the key points and deliver them with more confidence and clarity.”

A real estate boss gives a backhanded compliment — referring to Goldsmith’s extracurricular interests: “He’s an excellent art historian.”

Mood of the boardroom: Wage subsidy a jobsaver for many (NZ Herald)

Some sectors have even taken on staff writes Tim McCready

Business leaders say the wage subsidy the Government implemented to support firms that had taken a revenue hit from Covid-19, was an important step to keep people in work and the economy going.

The Mood of the Boardroom 2020 survey revealed 41 per cent of respondents accessed the first round of the subsidy, and 15 per cent — the second round.

The subsidy was received across myriad industries, and those that took it up say it was a quick and sharp response that bolstered confidence and saved jobs. “I think this saved many jobs,” says a healthcare boss. “We did not make people redundant because of this, and they remain employed post the subsidy ending.”

“It was a significant help during times of extreme uncertainty to support staff and give them surety of employment,” says Fulton Hogan CEO Cos Bruyn.

There have been reports of some companies rorting the system and claiming wage subsidies they may not have been entitled to but some survey respondents say although they may have been eligible for the support, their businesses chose not to take it up.

LIC chief executive Wayne McNee says given how the business performed for the full year, the firm chose not to use it. A tech CEO says, “we felt it was a badge of honour not to need or use the wage subsidy in the first or second round”.

Chief executive Don Braid says Mainfreight applied and received $10.6m — qualifying under the rules. “But we returned the full amount when we recognised we were better off than others and could see improvement occurring.”

One CEO says their company accessed the first round, but repaid it in full as soon as it was clear the impact of Covid was less than projected. “It was hugely helpful in giving us the confidence to maintain full employment and remuneration at a time when some competitors were cutting one or both.”

But business leaders caution: “We need business to adapt to the tough new environment and the Government — and indeed New Zealand — can’t afford to keep subsidising business indefinitely.”

Business resizing — not just down

The buffer provided from the subsidy has no doubt saved jobs. Exactly half of the survey respondents say they haven’t had to downsize staff during the pandemic.

But even so there have been a significant number of casualties from the crisis — some 17 per cent say they have had to downsize by more than 10 per cent. Although some note the full impact of job losses will be revealed once the ventilator of the wage subsidy wears off.

The most dramatic reduction in staff numbers has been in the tourism industry.

But 8 per cent of respondents say they have upsized due to the impact of the  pandemic. These are from a range of sectors, including food and agribusiness, banking, investment, professional services and IT firms. There have been several reasons for the staffing increase.

“We are taking the approach of investing through this crisis,” says ASB CEO Vittoria Shortt. “This means providing permanent roles for contractors and recruiting more people into our business.”

Chapman Tripp chief executive partner Nick Wells says there have been fewer departures from the firm: “Few want to leave for overseas, so we have grown slightly compared to what we would typically expect.”

A professional director says one of her companies initially pushed pause on recruitment — “however it very quickly became apparent that the needs of our customers required us to accelerate progress in order to continue to help with their evolving needs.”

CEO Chris Quin says Foodstuffs North Island upsized 6 per cent at peak due to panic-buying and growth in online.

Mixed impact on production levels

CEOs were asked how Covid will impact production levels within their businesses. The result is mixed over the coming two quarters, with a few (4 per cent) expecting a significant decline of more than 80 per cent, but others expecting no impact or even growth in production levels.

A law firm head: “We saw a decline over the past three months that averaged out at 20 per cent. A trend in the right direction is now evident — but still down  year-on-year.”

Most in primary industry and food and beverage say they don’t expect to see a significant impact in the coming months. “Demand persists for premium infant formula in the China market,” says director Ruth Richardson. “Demand signals remain very positive,” says an agribusiness boss. “But we do have a lingering concern — perhaps through our approach of being constructively paranoid — that the music will stop and there won’t be enough chairs.”

As has been the case for many aspects of Covid-19, CEOs say  in many cases production levels will depend entirely on the pandemic — and therefore the future remains uncertain.

“It depends totally on expectations of further Covid incursions, shutdowns and the opening of borders to both shows, sports teams, artists and tourists,” says non-executive director Joanna Perry.

From a food and beverage boss: “This is a hard question to answer looking forward as it all depends on the Government’s ability deliver on its elimination strategy.”

Production is clearly not just a domestic issue. A slowdown in world trade growth (which CEOs score among their highest international risks at 7.64/10 on a scale where 1= no concern and 10=very concerned) contributes to general uncertainty and nervousness in the business community in terms of future production levels.

MinterEllisonRuddWatts’ Lloyd Kavanagh: “We need to plan for each of the scenarios, and be agile in adapting depending on what unfolds. We can’t  project one outcome when there are so many variables.”

 

 

Covid changes

The disruption in the way businesses operate as a result of Covid-19 has been a catalyst for businesses to adopt new technologies more quickly than they expected and accelerate their use of existing technologies. McKinsey estimates this rapid migration to digital technologies has seen us vault five years forward in consumer and business digital adoption in a matter of around eight weeks.

The Mood of the Boardroom survey asked CEOs how the Covid-19 crisis has changed the way in which their business is conducted.

On a scale of 1 to 5, where 1= strongly disagree and 5=strongly agree, the top-rated changes to businesses are: increased use of online meetings (4.63/5), increased use of technology (4.45/5), more flexible working (4.36/5), accelerated growth of e-commerce (4.33/5) and reduced international business travel (4.31/5).

Beca’s CEO Greg Lowe said he was surprised during the initial lockdown at the effectiveness of working from home both for Beca and for its clients.

“The increased use of virtual meeting technology has not only increased the skill levels of all of us, we have realised that we can be more productive from remote locations and carry out more of our business activity remotely than we thought.”

Beca managed to maintain its delivery to its clients with thousands of people working from home — but that this is not a sustainable business model in the long term.

“Building relationships, developing people, creating more effective teams, increasing productivity all needs some form of person to person engagement. While undoubtedly we will see more flexible working (for many reasons) and less travel, I do not believe that large numbers of people want to work permanently from home.”

The adoption of flexible working saw one energy CEO reduce their organisation’s footprint and rethink the use of office space. But an investment fund boss reckons the importance on office space from more people working from home is overrated — “but this will be impacted by economic factors”.

Precinct Properties chair Craig Stobo says “the Covid wave has accelerated the digital wave”. Another executive in the tech sector says New Zealand should “use this to become a digital nation!”

A property CEO says Covid has given their organisation a greater appreciation of the critical importance of business continuity planning. “It is no longer a ‘nice to have when we get to it’ item on the board agenda.”

An increased focus on staff wellbeing and social purpose was also mentioned from executives spanning various industries as a major change from Covid.

“We have had a complete rethink on the role of HR and how teams work — including salary and incentive structures,” said one CEO in the utilities sector.

Mood of the boardroom: Resurgence pops plans for transtasman bubble (NZ Herald)

Support for transtasman travel but only when safe, reports  Tim McCready

The transtasman bubble proposal should be progressed once the Covid-19 flareup in Australia is under control. That is the message from New Zealand’s top CEOs in the Herald’s Mood of the Boardroom survey.

The result was overwhelming — 94 per cent of respondents are in favour, 5 per cent are unsure. Just 1 per cent of respondents say we shouldn’t continue to progress the initiative.

CEOs placed myriad caveats — “only when safe”, “define ‘under control’”, “risk must be minimal before relaxing”.

“It’s something we should keep a watching brief on,” says a tech entrepreneur. “Nothing in Australia gives me confidence in their capabilities to contain.”

Deloitte CEO Thomas Pippos asks: “The question is what does under control mean? At one stage Victoria was considered under control.”

“The latest outbreaks seem to show this is less likely and riskier than first envisaged,” says Chapman Tripp chief executive partner Nick Wells.

Some CEOs say we shouldn’t be progressing until there is no community transmission on both sides of the Tasman.

“We need zero community transmission in each country and rapid tracing technology that crosses borders to even be considered,” says a dairy industry boss.  “Rapid testing may have a role to play when and if it becomes available.”

But others are amenable to travel with cases present in the community — so long as steps are taken to ensure the risk remains low.

“Progress on pandemic management and the use of technology can both be used to provide a quarantine-free system for travel with selected countries,” says Beca CEO Greg Lowe. “We just need to get on with solving the technical challenges so we can implement when the health settings are right.  No one wants to be unsafe, but we do need to have a plan.”

Australian Prime Minister Scott Morrison has said Australia is working on a “hotspot” model that would not necessarily require zero transmission.  He said this could also extend to Covid-free parts of New Zealand.

Morrison said all states and territories except for Western Australia had agreed to an update of the roadmap to recovery, with the goal to reopen their borders by Christmas. It will focus on testing regimes, data sharing and interstate borders — rather than issues like hospitality venue capacity.

Jacinda Ardern has said that — so far — Australia’s hotspot model will not be reciprocated holus-bolus. “Ultimately, for the hotspot arrangement, it doesn’t change the work that we’re doing on the bubble which is focused on putting New Zealand and Australia in the position to have quarantine-free on both sides of the Tasman. Right now though, neither country is in a position to offer that in its entirety because it’s just not safe.  “If a New Zealander chooses to go to Australia because there is no quarantine, they will know that they’ll be covering the cost of their quarantine on return to New Zealand.”

Back in May when a travel bubble with Australia looked promising, the Trans-Tasman Safe Border Group was established, co-ordinated by the Australia New Zealand Leadership Forum.

The group — made up of 11 government agencies, six airports, two airlines, health experts and airline, airport and border agency representatives from both Australia and New Zealand — submitted a blueprint for transtasman travel to both governments with the objective of removing the need for quarantine.

Auckland Airport CEO Adrian Littlewood was part of the effort, and said at the time “New Zealand and Australia have a great opportunity to really set some potential standards for travel restarting around the world.”

Its original aim was to have the bubble operational and flying by the July school holidays.

Prior to the Covid crisis, New Zealand was the most popular outbound travel destination for Australians, with 1.5 million visitors arriving from Australia in 2019, accounting for 40 per cent of all foreign visitors to New Zealand. Australia was the most popular outbound travel destination for Kiwis. New Zealand is Australia’s second largest source market for visitors, with 1.4 million visitors in 2019, accounting for 15 per cent of total visitors to Australia.

Unsurprisingly, a travel industry CEO is supportive: “It absolutely should be progressed — our economies and social structures are too intertwined.”

Chairman of the New Zealand Initiative Roger Partridge says the open border will be significant: “We all have an interest in Australia succeeding and expanding our ‘domestic’ marketplace for tourism by an extra 20 million people.”

Precinct Properties chair Craig Stobo reckons the industry should be innovative in its thinking. “We had 1.5 million Aussies come last year … tourism will have to go for a high-margin value proposition — not a low value volume growth strategy as we have done in the past,” he says.

Most CEOs agree quarantine-free travel across the Tasman is unlikely to happen soon.

“With the rate of community transmission and the time it will take to get this under control, we should not expect or depend on this opening up in the next three months,” says marketing boss Anne Walsh.

Mood of the boardroom: The show must go on — online (NZ Herald)

In any normal time, the political leaders would have been put through their paces and challenged by business chiefs on their election policies.

The 2020 election is like no other.

The Covid-19 restrictions in Auckland saw BusinessNZ move the conference online.

Instead of a pumping crowd, there was a sea of empty chairs. Mask-wearing journalists and a guy who sanitised the lectern in between four political leaders: James Shaw (Green Party), David Seymour (Act), Judith Collins (National) and Jacinda Ardern (Labour).

Winston Peters (NZ First) appeared through video-link and BusinessNZ’s members watched online.

Tim McCready summarises the show.

Jacinda Ardern

Labour Leader Jacinda Ardern was positive. She highlighted everything her Coalition government had done to support business through Covid, and reiterated “the best economic response is a strong health response.”

“Ours is a response I will defend as being among the very best in the world, because not acknowledging that would be a disservice to five million new Zealanders who made it happen,” she said.

2020 has not been easy: “For business it has been hard and disruptive — a pandemic sweeps away business as usual. It is incredibly hard for business to plan in a global pandemic.”

But she said there was a limited window of opportunity to leverage our reputation as a “clean, green, and safe nation”.

“We will launch an investment attraction strategy… and compete to win the global companies we want to invest in New Zealand and locate part of their business here.”

Ardern said New Zealand could use its standing to attract more investment like Microsoft’s plant establish its first data centre in New Zealand.

“We have a plan and we are rolling out that plan … “Supporting our people, our businesses, and our international reputation”.

Judith Collins

National leader Judith Collins spent a significant time pointing out the flaws in the current government — beginning with its response to Covid.

The prospect of yoyo-ing in and out of lockdown is a significant impediment to business, and she criticised what she called the “mind-blowing stupidness” that saw the Government allow corner dairies to open during lockdown period but not the butchers and greengrocers next door to them.

“Let’s put essential industries aside. We should be looking at what’s a safe industry.”

She was also vehement in her denunciation of Labour’s failure to fulfil its promises.

“We would not promise to build 100,000 houses in ten years. We would not promise light rail up Dominion Road and then not do it. We would not cancel or delay 15 roads. We will deliver on what we promise,” she said.

Collins spoke of her vision for New Zealand in the wake of Covid-19.

“It’s an opportunity for New Zealand which we can either ignore and worry about everything that might go wrong, or we can seize the opportunities.

“It is a time for vision. That vision does not mean going back to the past.”

Winston Peters

New Zealand First Leader Winston Peters joined via video link from his hotel room, while on his bus tour of the South Island. He started by criticising the Labour-led Government asking “what are we doing in lockdown in the South Island when [the re-emergence of Covid-19] is an Auckland issue?”

He said New Zealand is entering a completely new era — “we are not going to revert back to how things were just a few months ago”.

The Greens also came in for criticisim. “If you are sceptical that ‘woke’ is a problem, let me say: ‘Green school’.” Labour’s proposed Matariki holiday was also slammed, along with its proposal to increase the top personal income tax rate to 39 per cent — “taxing people will not regain our prosperity.”

As for New Zealand First, Peters said it is standing on several platforms, “one is the experience we bring to office and the moderating presence we have in Government. And if you doubt that, just two words: capital gains tax.”

He wrapped up saying he cannot believe the level of carelessness about the election: “Don’t stuff the country. That’s what the election is about. Don’t stuff the country. You’ve got two votes — buy some insurance.”

James Shaw

The Greens don’t always get an easy run with business. But many have an affinity with Greens co-leader James Shaw who was in his element at the BusinessNZ election conference.

He laid out three areas he thinks the NZ economy can expand on, which don’t require the physical movement of people.

Shaw pointed to NZ’s growth in weightless exports over the last couple of decades — particularly in the ICT sector.

He wants to establish a digital export office at NZTE to give the sector focus and significantly boost exports.

Sustainable agriculture was another opportunity with “value over volume” sitting nicely alongside environmental sustainability. “We need to move more towards supporting farmers and growers to enable them to take advantage of that and support them through the transition,” he said, adding that he’d love to finally be rid of the false narrative of town versus country.

But if he had to pick a winner for New Zealand, Shaw said it would be the development of electric transport. He said NZ has an advantage here — including using technologies developed for the America’s Cup: “We have a niche industry that is starting to emerge here that I think we could encourage and grow — that will ultimately lead to significant exports as the whole planet addresses the need to decarbonise.”

David Seymour

Act leader David Seymour opened up by likening the Government’s borrowing to “fiscal child abuse,” due to the amount of debt that future generations will have to deal with.

He told the BusinessNZ audience that New Zealand needs to stop comparing itself to Victoria and Sweden, and instead seek to do better. “Why are we not Taiwan?,” he asked. Seymour suggested we’d have a better outcome if we relied on both the public and private sector in our Covid-19 response, and not just the Ministry of Health.

In terms of encouraging future growth to aid our recovery, Seymour said we need to allow businesses to grow without restriction.

He said the current regulatory environment is unattractive to value-added tech — citing genetic engineering as an example — and thinks we could make good progress in this area if not for the “medieval superstitious genetic engineering rules”. It was a similar situation for fintech: “we might be able to get Kiwis back if our regulations weren’t so hostile.”

Foreign investment restrictions should also go: “We desperately need capital to raise productivity, we need to strengthen relationships and investment connections with democratic OECD countries.”

“There is no better vote you can give to raise the standard of debate in parliament and ensure we come out stronger as winners.”

Mood of the boardroom: Covid-19 restrictions are bordering on ridiculous (NZ Herald)

New Zealand’s border controls have become a major handbrake on business across most sectors and must be addressed, writes Tim McCready

Chief executives agree that New Zealand business needs to do everything possible to support economic recovery in the wake of Covid-19.

But hindering this is the capacity constraints at the border, preventing many overseas workers with essential skills and expertise from entering the country.

Some 48 per cent of respondents to Herald’s Mood of the Boardroom 2020 Election survey said that border restrictions have slowed business operations due to the inability to bring essential skilled executives, investors and workers into the country.

Companies can request to bring critical workers into New Zealand through Immigration New Zealand (INZ), with applications considered on a case-by-case basis. INZ says the bar for exemptions is set high to help contain the disease and protect the health of people already in New Zealand — but some of our top executives describe these exemptions as a “bit of a lottery”.

In early August — just prior to the re-emergence of Covid-19 in the community, Prime Minister Jacinda Ardern said the Government was looking at loosening the strict visa regime.

Since then there has been little change, although Ardern said at the recent BusinessNZ election conference that Labour would look to allocate a 10 per cent quota at managed isolation facilities to allow critical workers into the country, and would “keep looking at our ability to grow capacity” for a greater number of people to enter the country.

Executives agree that water-tight borders are critical, but they say this allowance for critical workers must be urgently addressed or there will be a very real risk to key projects, businesses and to the economy.

The lack of transparency in the process to determine whether an exemption will be granted or not is troubling to many executives who also raised questions on prioritisation following exemptions granted to America’s Cup syndicates, the Avatar film crew and to workers for a synthetic horse-racing track in Waikato.

Says one director: “It has taken weeks of negotiations and significant cost for the company (which is an essential industry). Perhaps most frustrating is the sense that those with the ears of the Ministers or those with PR value or high net worth can jump the queue — as we have seen on a number of occasions.”

There seems to be some merit in this claim, with some respondents saying they prefer to not go on the record in this story as they are using “back channels” to facilitate visas.

Workers in limbo

Ross Taylor, chief executive of Fletcher Building, says that businesses have a growing number of key people who would normally be able to come into the country, now stuck in limbo with no timeline of when or if they will be let in.

“These are not low skilled people, but people that bring key skills that are either not available here or are in short supply,” he says. “As such they do not displace potential jobs for Kiwis — they in fact allow us to keep growing and providing employment and development for Kiwis.”

The restriction on movement is acutely challenging for some of New Zealand’s leading professional services firms. KPMG relies on internal international hires to augment the lateral and graduate recruitment of its New Zealand staff.

Godfrey Boyce, KPMG chief executive, says overseas hires in 2018 and 2019 accounted for about 28 per cent of KPMG’s total lateral intake, but so far this year overseas hires are just 15 per cent of total recruitment — and none of these people have been able to enter the country due to the border.

“These overseas hires augment our significant domestic recruitment and are pivotal to us being able to service our clients and train and develop the significant number of New Zealand university graduates we recruit each year.”

He says this situation is impacting the two largest parts of KPMG’s business — audit and consulting.

“As a result of the economic consequences of the global pandemic our audit division is responding to the most challenging financial reporting season in decades and the vast majority of audits are taking considerably more time than prior years and our audit teams are working significantly longer hours,” says Boyce.

The inability to bring in overseas hires into the consulting division has put constraints on undertaking work in key industry sectors for New Zealand’s recovery, including financial services, government and infrastructure.

Deloitte chief executive Thomas Pippos says his firm has sought to bring 23 internationally-based people into the firm since the border restrictions began, and has now stopped progressing any more.

“Of these, a small number have been able to join our firm while still overseas and have been able work from international locations,” he says. “Slightly more roles are now having to be being reconsidered, but the vast majority of these roles are sitting in limbo until we have a clearer steer as to the way forward.”

Another CEO in the property sector gives an example of a recently appointed chief technology officer who is based offshore. “He is making it work and will continue to do so but not an easy situation to assess differing market needs without a visit — he only recognises his team from Zoom!”

For corporates with offices in other parts of the world, the border restrictions have brought additional challenges. ICBC — which opened its New Zealand office in 2016 — has key personnel seconded to New Zealand from its China-based head office that can’t get into the country.

ICBC NZ chair Don Brash says the deputy general manager position is one example: “The previous person in this role was transferred to another position in China at the beginning of the year. Her replacement was appointed months ago but of course can’t get into the country.”

The border restrictions have also been tough on the bank’s New Zealand-based expatriate staff who have had to get used to long periods of separation from their China-based families.

“Their China-based families can no longer visit New Zealand,” says Brash. “And when family members in China become seriously ill, the expatriate staff in New Zealand cannot visit them, since they would be unable to get back into the country.”

This is a growing concern for many survey respondents.  They say employees who are citizens of other countries and cannot visit family members may instead choose to return home overseas. This will leave critical roles vacant, with no suitable skilled workers to recruit from within New Zealand.

Major projects and infrastructure at risk

New Zealand’s top CEOs are concerned that this lack of skilled workers will put at risk high-profile infrastructure projects and other critical services.

The City Rail Link — the largest transport infrastructure project ever undertaken in New Zealand — is one of those major projects heavily reliant on skilled overseas workers. Chief executive Sean Sweeney says border restrictions will be a big issue for the project:

“We have a large number of specialist overseas workers who we need to get into the country, and the project also has a large fly-in fly-out (FIFO) cohort which has been effectively grounded, as well as a large group of overseas specialists who have relocated here for the project but do need to get home every so often to see family.”

This sentiment is echoed by another boss in the construction industry, who says the construction market relies heavily on skilled labour from offshore and the lack of skilled workers has impacted all of their major projects.

Vince Hawksworth, Mercury CEO, uses the current construction of the Turitea Windfarm and medium-term hydro generation upgrade programme as examples.

“These projects rely on access to multinational companies with key personnel required on site at critical times,” he says.

“The situation is further complicated where such resources are required for an extended period and there is a need to bring family through the border. This is relevant for projects with long duration. We are currently experiencing challenges in this regard.”

Beca CEO Greg Lowe  says Beca is an NZ headquartered regional multinational, which means its people often travel widely across the Asia-Pacific region in support of projects and clients to make sure the right people are in the right place. “Some of this can be done remotely in the short term, but not all of it,” he says.

Transpower chief executive Alison Andrew says her company is facing similar challenges and it simply isn’t possible to acquire all the skills needed in the New Zealand market.

“For example, we need people with highly sought-after skills in lines engineering, operations planning engineering and other specialist skills. We need to be able to recruit from overseas,” she says.

Andrew says Transpower also has specialised equipment provided by large international companies, and relies on their specialist resources to come in from overseas to install and commission, repair and maintain the equipment.

Some executives say they have been able to use technology to help mitigate this skill shortage in some instances. Said one construction sector CEO: “We’ve recently had instances where works are being completed while instructions are forthcoming via Facetime!”

Critical skills needed

The need for skilled workers is far reaching across nearly all industries. Agricultural companies’ huge demand for seasonal workers is expected to challenge the sector in the coming months.

Turner and Growers director Carol Campbell says these workers — many from the Pacific Islands — are highly skilled in performing vital technical and sometimes physically demanding work such as thinning, harvesting and plant training.

“While some of these workers have been unable to return home given border restrictions, right now New Zealand is facing a serious shortage of trained agricultural workers for the forthcoming harvest,” she says. “This is a major concern and could result in produce being left on trees and reduced exports.”

Campbell says businesses are actively recruiting to fill this gap but the reality is that the loss of deep expertise and knowledge will significantly affect the sector this year.

Mavis Mullens, who chairs the massive Māori farming company Ātihau Whanganui Incorporation, says sheep shearing will be impacted by this loss of expertise too. Her business has relied on overseas shearers for the past three decades. She says that roughly 20 per cent of the nation’s shearers through the main shearing season come to New Zealand from overseas.

“It normally takes three to four years for shearers to become skilled economic units,” she says. “As their competency lifts, they will often travel the world shearing where their ability to earn can be doubled.”

Sirma Karapeeva, chief executive of the Meat Industry Association says we have a major issue heading our way. “Eighty out of the 103 migrant halal workers currently in New Zealand on visas will have to leave with no certainty that companies will be able to recruit into those roles in the near future,” she says.

“Halal Certified exports account for $3 billion of export revenue. We cannot recruit sufficient numbers from a small pool of a tiny minority in our local community — we need to look to migrants to fill those roles.”

Pernod Ricard Winemakers says its top challenge will be finding the people to take on seasonal vintage workers due to the current border controls, but operations director Tony Robb is taking a pragmatic approach:

“Whilst these roles have historically come from all over the world and brought people to New Zealand, we are always keen to attract New Zealanders to these roles, and particularly for the coming season,” he says.

Responses to the survey show the demand for critical workers is also evident in the tech sector. Xero director Susan Peterson (who chairs Xero’s people and remuneration committee) says that while there is a strong pipeline of candidates in the New Zealand market for entry level and intermediate roles, it becomes difficult at a senior level.

“We struggle finding the critical skills required for these roles in the New Zealand market alone and have actively spoken and hired candidates from overseas in the past to fill these roles,” she says. “As a result of Covid and the New Zealand border restrictions we have had to pause at the ‘final offer’ stage a number of highly skilled overseas-based candidates keen to join Xero in New Zealand.”

Peterson says if the restrictions remain in place, Xero may need to look to source and base those people with senior and critical skills in other locations around the world.

Border rethink essential

What’s clear from the responses to the survey is that we must think of solutions to the current capacity constraints at the border, to allow in essential skills that are needed in our economic recovery.

Sir John Key told business leaders at the Covid-19 recovery summit in Auckland that there are things we can do faster, including “letting a bunch of other people come in that companies would happily pay for because they would create jobs.”

He said there was “huge accommodation” available that could be used for quarantining.

“You could use stuff that is Government-owned, like Whenuapai. I mean, there is no particular reason why we can’t scale it up… Just do more of it!”

At the same summit, Helen Clark said that major private sector partnerships are needed to scale up the quarantine system.

“If post-election the thinking can go to how to try to remove this choke point which is existing quarantine capacity that would help a lot, even on the existing two-week quarantine setting,” she said.

Sir Peter Gluckman and Rob Fyfe, who together with Helen Clark co-authored the paper ‘Re-engaging New Zealand with the world’ asked “Do we need to start exploring alternative strategies that might at the appropriate time allow increased border flow, thus allowing more of New Zealand to flourish?

“And when would that be? What would be the criteria?

“The internet and video conferencing can take us only so far. We will need face-to-face contact if we are to maintain and grow the flow of goods and services into New Zealand. This country needs its global connectivity.

“We have gained significant advantage through our stringent lockdown and early elimination of the virus allowing the domestic economy to reactivate.”

They said we will rapidly progress to a position of relative disadvantage if our trading competitors are able to engage with our customers and suppliers in ways that are not possible for us.

“The alternative would be to remain in a state of effective national isolation, which could even last into 2022 or beyond. That may be our best option now, but that won’t always be the case, and we need at least to explore alternatives.”

Clearly, CEOs agree. Fletchers boss Ross Taylor says there needs to be a parallel border entry process put in place for businesses that allows the movement of a limited number of key people.

“It should provide additional capacity above the current levels so it does not compromise the ability for New Zealanders to return home. And it should be user-pays — so at no cost to taxpayers,” he says.

This approach would resonate with most top executives. They are happy to meet the costs associated with a fast-track process and the associated health and safety requirements.

And if that’s a win for their business, that’s a win for the economy, and ultimately a win for New Zealand.

Mood of the boardroom: Debt mounts in wake of Covid-19 (NZ Herald)

CEOs are sceptical the Government can build a sustainable, added-value economy, writes Tim McCready

Chief executives are highly concerned over mounting government debt and forecast deficits as a result of dealing with the economic impact of Covid-19.

They scored the issue at 3.91/5 on a scale where 1=not concerned and 5=extremely concerned in the 2020 Mood of the Boardroom survey.

Finance Minister Grant Robertson has defended the increased debt: “The whole point of us saving for a rainy day, the fact that our Government kept net debt below 20 per cent, was to use it when the rainy day arrived. That’s what we’re doing here. Our debt levels still remain low compared with the rest of the world.”

Despite the 3.91/5 rating, NZ’s top executives are relatively sanguine  when it comes to their comments: “Even with the projected increase in government debt, New Zealand’s government debt will be modest by international standards,” says a banking chair. “But given our vulnerability to geological and geopolitical shocks, that seems very desirable.”

“At interest rates only just above zero, as long as enough goes into infrastructure, we will earn our way out,” says Simplicity boss Sam Stubbs.

Robertson says it will be important to build a sustainable economy that adds value. Some 81 per cent of CEO respondents were concerned about New Zealand’s ability to achieve this; 16 per cent are not. Just 3 per cent are unsure. “Growth in GDP per capital has been challenging pre-Covid. I can’t see any change mid-Covid,” says Precinct Properties chair Craig Stobo.

A Crown entity head noted, “to do this requires significant investment and transformation by our business sector who are struggling to do this at the speed required. The Government don’t produce a sustainable economy, businesses do.”

A real estate chief executive adds, “free up some of the restrictions — but not to the detriment of our health and risk of spread of coronavirus — and I think he would have greater chance of success.”

“Great soundbite, but we just haven’t seen the plan,” says a banking chief executive.

Others are less sceptical. A food industry executive says New Zealand has the ability to add much more value through its natural resources and services. “The challenge will be to act with speed!”

Weak support for tax increase

Respondents were asked if as part of the economic response to Covid-19, the Government should look to raise additional tax revenue through an expansion of the tax base or an increase in current rates (in any form).

The Labour Party has proposed increasing tax on the country’s highest two per cent of earners, with a new top tax rate of 39 per cent on earnings over $180,000.

Almost two-thirds — 65 per cent — oppose an increase in tax. But 25 per cent responded positively and 10 per cent are unsure. Of all the taxation questions, this one garnered the most responses from survey respondents, with most choosing to explain why they chose a “No” response: “Investment in growth is the only long-term answer and the opportunities are substantial,” says a food producer chief executive.

“We are going through a once-in-a-lifetime event, and should be prepared for a temporary increase in deficits to stimulate economic growth and then we have to transition to normalised settings of a balanced budget,” says a fund manager. “Tax should not be on the agenda for this year or next.”

Suggested a transport boss: “They should first look to cut wasteful spending, reapply those funds to grow and then if that doesn’t work look to reshape the tax base.”

The chief executive of a healthcare provider was more open to the idea. “I am happy to pay a little more.” A food distributor CEO was not adverse to a temporary increase in tax  to meet specific goals around the reduction of debt — “similar to how Germany raised money post-unification to pay the cost of creating one Germany”.

“The taxing of highest income earners is clearly necessary,” says independent director Anne Walsh. “In Europe I was on a 48 per cent tax rate to match my high income which allowed for this. In NZ there are high incomes with too low tax rates.”

“There should be probably be some form of increased tax take for those that can afford it!,” adds non-executive chair and director Joanna Perry.

Executives were asked where additional revenue should be spent if the Government were to raise tax. Some 62 per cent said it should be used to pay down debt, 55 per cent  to increase government spending to stimulate the economy, 6 per cent said it should go toward funding other government expenditure.

“It depends where we are in the crisis response — debt should be paid down after that response not during it,” says Chapman Tripp’s chief executive partner Nick Wells.

Not a time for tax reduction

The National Party has abandoned its original debt target and proposed a temporary reduction of tax rates which it say will help to stimulate the economy.

Executives were asked whether they support the Government reducing taxes (in any form), as part of an economic response to Covid-19.

The majority — 64 per cent — said no. One quarter, 25 per cent, said yes, and 11 per cent were unsure. “We are not in a position to reduce tax revenue,” says Mainfreight CEO Don Braid. Adds an investment fund boss: “Current tax settings are largely conducive to fostering a growth mindset.”

A banking chair suggested there could be a temporary reduction in GST,  to encourage consumer spending in the short-term. Anne Walsh says “removing GST on fresh meat, fruit and vegetables may be a fast way to improve nutrition and decrease health inequities in New Zealand.”

No to capital gains, no to wealth tax

The Labour party has campaigned on implementing a capital gains tax  for three elections, and last year the Tax Working Group’s final report included a recommendation for one. But after failing to reach a consensus in Cabinet, Prime Minister Jacinda Ardern ruled out a CGT while she is Prime Minister.

“Under my leadership, we will no longer campaign for, or implement a capital gains tax — not because I don’t believe in it, but because I don’t believe New Zealand does,” she said.

The Tax Working Group projected revenue from a CGT would increase tax revenue by $400 million in the first year to $5.9 billion by 2030/31.

Executives were asked whether the current fiscal situation warrants the decision by the Prime Minister being revisited. The majority — 59 per cent said no, 30 per cent said yes, and 11 per cent were unsure.

“As I recall, most of the positive revenue projected for the CGT arose from the assumption property prices would continue to increase faster than general inflation,” says a banking chair. “Because of that I am dubious about the projected revenue gain.”

A banking chief executive said  capital gains taxes made sense from a pure economic perspective, but “the cost of compliance and the actual outcomes make them pointless.”

A fund manager acknowledged that at some point  the need to balance   taxation of land versus other assets would need to be aligned. “But whether that is the tax working group’s proposal or another is not clear,” they say.

A similar rebuff was seen in relation to  a wealth tax. The Greens have proposed taxing those with net assets over $1 million at 1 per cent, and using  revenue to help  fund a  new welfare policy that would guarantee weekly income of at least $325.

An overwhelming 76 per cent of CEOs do not support it, saying it would drive talent away from New Zealand and would be  difficult   to measure and implement. The remainder, some 24 per cent, would support a wealth tax, but many would want to see changes to the Greens’ proposal — such as materially higher thresholds than that proposed or a Covid sunset clause.

NZ First moderation unlikely?

CEOs were asked if they believe NZ  First would moderate the tax rates if a Labour-Greens coalition government sought to raise them. A clear majority — 74 per cent — said Yes, 12 per cent said No, and 14 per cent said they were Unsure. But there was strong scepticism from respondents over whether that would eventuate:

“They need to hold the balance of power first,” says Stobo.

Mood of the Boardroom: Business call to action (NZ Herald)

Tim McCready examines what company leaders are prioritising  in a Government response  to Covid-19

A reduction of regulatory burdens, a focus on infrastructure and a reversal of the current ban on offshore oil and gas are among the top areas the business community are calling out for Government action in response to the Covid-19 impact on the economy.

BusinessNZ put questions to its membership for the Deloitte/Chapman Tripp election survey which was in the market through June.

There were 1193 responses from a wide range of companies — spanning the construction, tourism, manufacturing, agriculture and tech sectors. The survey provides a snapshot across the full gamut of New Zealand business — from those employing less than nine staff (47 per cent of respondents) to those employing more than 100 staff (15 per cent of respondents).

The survey provides a snapshot across the full gamut of New Zealand business — from those employing less than nine staff (47 per cent of respondents) to those employing more than 100 staff (15 per cent of respondents).

Company heads were surveyed across six topics: economic environment; investment, innovation and sustainability; infrastructure; trade; skills and human capital; and employment environment.

Economic environment

Of the six topics surveyed, the economic environment was by far considered the most important (55 per cent) to achieving sustained economic growth — significantly up from 29 per cent in the 2017 election survey. The second most important topic for sustained economic growth was investment, innovation and sustainability at 21 per cent, down from 23 per cent in 2017.

When asked to choose the top three Government Covid-19 initiatives in relation to their effectiveness for the business community, the highest scoring was the wage subsidy and leave schemes (78 per cent). The subsidy scheme, which began in March, could be accessed by businesses if they could demonstrate a 30 per cent decline in revenue or projected revenue compared to the year before. There were over 780,000 applications received with some $13 billion paid out.

The next most popular initiatives were: the small business cashflow scheme (55 per cent), fast-tracking of RMA consents for shovel ready projects (41 per cent) and the redirection of Provincial Growth Fund funding (30 per cent).

Infrastructure

Infrastructure has been a key battleground in the lead-up to the election. National has announced huge transport infrastructure projects with a $31 billion spend-up including $17b for the upper north and $4b for Wellington and the formation of a National Infrastructure Bank. Labour has announced $6.8b in transport projects as part of its NZ Upgrade Programme and over $700m for shovel-ready transport projects to help with the post-Covid rebuild.

Executives were asked to rank various types of infrastructure as to which has the most potential to contribute to New Zealand’s business growth on a scale of 1-5, where 1=least potential and 5=most potential.

On average, transport infrastructure (encompassing roads, rail and ports) received the highest score with 4.19/5 in terms of potential to contribute to New Zealand’s future economic prosperity. This was also the case for the survey done in 2017. Telecommunications/broadband received a score of 4.14/5, water scored 3.84/5 and energy (encompassing electricity and gas) scored 3.69/5.

This research found that the current emphasis on infrastructure is strongly supported by business leaders, with 80 per cent agreeing that a focus on infrastructure spend is a useful mechanism to help the economy recover from economic shock. Just 10 per cent said it would not be useful, and another 10 per cent responded that they were unsure.

The BusinessNZ survey also asked respondents to consider the Government’s current infrastructure plans —  including “shovel ready” projects — and assess whether they will deliver long-lasting economic benefit to New Zealand.

Some 37 per cent said that they will, 20 per cent said they wouldn’t. But perhaps most notably, the majority —  43 per cent —  said they were unsure whether there would be a long-lasting economic benefit.

RMA reform

The Resource Management Act (RMA) looks to be gone under the next government whichever major party is in power. A government-appointed working group has delivered a report on how to simplify the 29-year-old RMA, recommending it is repealed and replaced with two separate pieces of legislation: a Natural and Built Environments Act and a Strategic Planning Act.

National Leader Judith Collins said the group came up with “almost exactly what National has been saying for three years”, although instead of National’s suggestion to have one law addressing the environment and the other urban planning and development, the panel has maintained the laws should each cover both areas.

In response to the coronavirus pandemic’s impact on the economy, Cabinet approved a law change in May to bypass part of the RMA process which will see consent decisions for eligible development and infrastructure projects temporarily fast-tracked. Instead of going to council with public input, a panel of experts chaired by an Environmental Court judge would determine whether a project can go ahead.

Some 80 per cent of company heads said that this rapid change in the RMA highlights the need for a full overhaul of the Act. Nine per cent said it doesn’t, and 11 per cent said they were unsure.

Wellbeing

Last year, the Labour-led coalition government brought the four aspects of community well-being —  cultural, social, environmental and economic —  back into the Local Government Act. This change means that councils now have a legislative responsibility to promote all four well-beings.

Business leaders were asked which of these four well-beings should receive the highest priority over the next period. The overwhelming majority (86 per cent) said economic. The next most popular was social (7 per cent), followed by environmental (6 per cent). Cultural received just 0.3 per cent.

Sustainable business practice

Colmar Brunton’s 2020 Better  Futures Report revealed that 76 per cent of New Zealanders don’t think business is doing enough to reduce its environmental impact, and 72 per cent of youth say it’s important their future employer is socially and environmentally responsible. Forty-eight per cent of Kiwis say they have deliberately switched over to a brand that is more sustainable.

BusinessNZ asked their membership whether these consumer demands for evidence of sustainable business practices have impacted how their business operates. Over half (53 per cent) of company chiefs said they haven’t impacted their operations —  but most likely will in the future. This is up from 45 per cent from the survey results from the last election year in 2017. Interestingly, only 21 per cent responded yes, which was down from 35 per cent from 2017 and 27 per cent in 2014.

Despite this reduction in sustainable practices impacting business operations, the survey showed that sustainability issues are recognised by executives as important to their business. When asked why, the most popular response —  chosen by 65 per cent of respondents —  was down to customer expectations. Sixty per cent said sustainability issues are important because of reputation, and 53 per cent said for future proofing their business. Just 12 per cent of respondents said that sustainability issues are not at all important to their business.

Executives were also asked what the Government should do to support sustainable business practice in New Zealand. Of the options provided, almost half (49 per cent) said it should look at providing incentives for cleaner production and resource efficiency. The next most popular responses were building stronger links between New Zealand regional economics, services and products (44 per cent) and providing better services for commercial and industry waste management (40 per cent). Also proving popular with over a third of support from respondents were suggestions that the Government engage with business on how to transition to a low carbon economy (36 per cent) and that it commits to purchasing products and services from businesses that integrate sustainability (35 per cent).

Oil and gas exploration

In 2018, the Coalition Government passed the Crown Minerals Amendment Bill, putting an end to new offshore oil and gas exploration. While strongly supported by environmentalists, the ban was widely criticised for being done with limited consultation and without respect for proper standards of due process.

This criticism was supported in a report done earlier this year by the Parliamentary Commissioner for the Environment Simon Upton, who wrote: “When the ban was announced, limited analysis was offered and the stakeholder consultation process was truncated.” The National Party has pledged to reverse the ban if returned to government.

When asked whether the ban should be reversed in light of current events, some 59 per cent of respondents said the ban should be reversed, while 34 per cent said it shouldn’t. Seven per cent were unsure.

Support for free trade

Business leaders were asked to rate Government policies and programmes provided to New Zealand businesses in regards to international trade on a scale of 1-5, where 1=poor and 5=excellent.

Trade agreements delivered by the Ministry of Foreign Affairs and Trade (Mfat)  received the highest score of 3.82/5, which was on par with the average score given in 2017. Other policies and programmes rated highly include non-trade barriers (via Mfat and the Ministry of Primary Industries) at 3.58/5 and information, advice and guidance (via NZ Trade and Enterprise) which scored 3.39/5.

Asked whether the Government should devote any resources toward achieving a free trade agreement with the United States given the Trump administration’s sentiments towards free trade, just under half of respondents – 49 per cent – said yes. Thirty-two percent said no, and 19 per cent were unsure.

A follow-up question asked which other countries New Zealand should pursue a free trade agreement with.

The majority said the United Kingdom (83 per cent), followed by the European Union (78 per cent) and India (58 per cent).

Unsurprisingly, in response to whether New Zealand should continue to seek international trade where possible or instead be more domestically focused, some 82 per cent of company heads were in favour. Only 16 per cent said New Zealand should be more domestically focused, and 2 per cent were unsure.

Skills and human capital

Earlier in its first parliamentary term, the Coalition Government announced reforms of the vocational education sector and the merger of 16 of the country’s institutes of technology and polytechs into one national body.

Education Minister Chris Hipkins has said the reform will lead to better outcomes for students, industry and the regions, whereas National’s then-tertiary education spokesperson, Dr Shane Reti, said the reforms will gut New Zealand’s regional education.

Executives were asked whether the Government’s reform of vocational education will result in better skills pipelines for business. They had mixed feelings — the majority, some 37 per cent, said they were unsure. A similar number, 34 per cent, said they would result in a better skills pipeline, and 29 per cent said no.

Supply of labour was another key concern highlighted by the BusinessNZ survey.

A majority, 51 per cent, said that the Government is not doing enough to support businesses with their changing staffing needs.

Just 17 per cent said enough is being done, while 32 per cent said they were unsure.

Expanding on this, the business leaders were also asked which skills and human capital issues the Government should be focusing on.

Of the options provided, the most popular said incentivising business to take on apprentices and/or provide more training (44 per cent).

The next most popular responses were: focus on science, technology, engineering and maths (STEM) at all learning levels (32 per cent), stimulating the economy to get people into jobs quicker (31 per cent) and taking a more company and industry-oriented approach towards developing solutions to skill gaps and labour market constraints (29 per cent). Lowest scoring options included focusing on the aging workforce  (10 per cent) and increasing support for speakers of English as a second language (2 per cent).

Backing the 90-day trial

The 90-day trial period was introduced under the National government, which allowed employers to dismiss new employees within the first three months if they didn’t work out.

A Treasury study published in 2016 found no evidence that the trial periods had an impact on the number of people hired and the trials were subsequently watered down by the current government in 2018, so that only those firms with fewer than 20 employees could hire new workers on trial periods.

In the midst of the Covid-crisis, the National Party called on the Government to “urgently restore” the 90-day trial period for new employees, saying that it would help those who have lost their jobs during the pandemic get back into work.

The majority of those surveyed agree, with 73 per cent saying reintroducing the trial period would be of benefit to their business operations.

Some 20 per cent said no, while the remaining 7 per cent were unsure.

The survey also asked business leaders to indicate from a range of employment issues which are currently of greatest importance to them. The top-rated issue is access to skills and talent, with 31 per cent of respondents choosing this option. The next most popular responses were: managing employee costs/cost cutting (18 per cent) and employment relations legislation such as minimum wages (13 per cent).

The lowest scoring issues at the moment for respondents are emerging technology such as increased artificial intelligence and automation (7 per cent), the Holidays Act (3 per cent) and pay equity claims from employees (1 per cent).

Emerging technology

There was scepticism from respondents on whether there will be significant impacts on the size and composition of their workforce as a result of emerging technology.

Just over half, 51 per cent, said there will not be a significant impact from the likes of artificial intelligence and robotics — which is a near identical response to the same question in 2017.

Some 40 per cent said there would be, and 9 per cent were unsure.

Mood of the Boardroom: Greens’ wealth tax ‘too difficult to implement’ (NZ Herald)

An overwhelming number of CEOs — 76 per cent — in the Herald election survey — do not support a wealth tax.

Green co-leader James Shaw has not made a wealth tax a “bottom line” for post-election negotiations, but he has called it a “top priority”.

The Greens’ proposed tax would see those with net assets over $1 million face a 1 per cent annual wealth tax. This would be used to fund a sweeping new welfare policy that would guarantee a weekly income of at least $325. Shaw has said the Greens are prepared to forgo a coalition or confidence and supply arrangement and sit on the cross-benches if post-election talks do not go their way. However Labour Finance Minister Grant Robertson has categorically ruled out  adoption of the Greens’ tax policy.

Nearly a quarter of survey respondents said they would support a wealth tax — with eight per cent saying Yes to the Green policy as proposed; 3 per cent saying Yes but with a five-year sunset clause (as part of the Covid-19 response), and 13 per cent saying Yes, but only at materially higher levels than  proposed. They say the wealth tax seems to be poorly thought through and would be difficult to measure and implement.

“If it is not linked to income or a transaction, where will the money come from to pay the tax?” asks Beca CEO Greg Lowe. “This is an unworkable burden on anybody who owns an asset, including  family homes.”

A similar view from an agricultural boss: “It is a tax on the elderly who have worked to build an asset base but who in retirement may have little cash flow — will they sell their assets to pay the tax?”

Others say it will drive people away from New Zealand and lead to behaviour that will reduce an individual’s tax burden. “It will lead to a flight of capital needed to promote economic growth and prosperity and at the same time reduce the incentives to work,” says one CEO. An infrastructure executive: “All it will do is drive talent and to Australia and discourage wealth creation.”

A food distributor reckons a wealth tax is too difficult to measure and implement. “In reality, wealthier individuals would find ways of protecting their wealth from such taxes, leaving the bulk of the tax burden on middle class taxpayers.”

Mood of the boardroom: The Green Party – A tale of two leaders (NZ Herald)

CEOs struggle with the Green Party’s co-leader model and the differing styles of their two leaders James Shaw and Marama Davidson.

Shaw’s centrist, corporate style is representative of the modern climate activist and is well received in the business community. He was rated at 3.21/5 for his individual performance — although his recent missteps with funding the Green School did not go unnoticed.

He was forced to apologise for an “error of judgment” over funding for the privately-run environmentally-focused school in Taranaki where he signed off an $11.7m grant — despite the Green party’s exclusion on funding for private schools.

Says an agri sector boss: “James Shaw is impressive, with the exception of the Green School decision.” A real estate CEO counters, Shaw “has been unfairly thrown under a bus on the recent Green School row. Madness. How much are we talking about $70m for race tracks?”

In stark contrast to Shaw, Davidson received a rating from business leaders of just 1.85/5.

“James Shaw has good leadership on climate change, little else has resonated especially from Marama Davidson,” says Federated Farmers CEO Terry Copeland.

Davidson entered Parliament in 2015 after a 10-year career at the Human Rights Commission that brought life to her activist and social justice foundations. She is reminiscent of the Green Party of old — not the slicker political machine they have become.

She became co-leader following the controversial departure of Metiria Turei just prior to the 2017 election. Her selection was strongly supported by more than 75 per cent of the Green Party membership, which demonstrated a strong desire to reinforce the party’s social priorities and have an opposing force to Shaw’s co-leadership.

Clearly the two-pronged approach  comprising social and environmental priorities, does not resonate well with New Zealand’s top business leaders. But this is a deliberate strategy by the political leadership to play to their strengths. Davidson has said the leadership split means she is able to focus on the party and ensure the full delivery of their confidence and supply agreement, while maintaining unity across party membership.

“With one leader as a Minister and one not we are able to avoid the pitfalls other parties entering Government have experienced who have seen their support fall,” she said.

A banking chair believes “Shaw has had a positive impact on how many NZ voters see the Green Party; Davidson has had a negative effect.

Green issues

Deloitte’s CEO Thomas Pippos says although he can’t see it happening, “I would expect the Green Party would be more successful if it focused primarily on Green issues for which there is a broad constituency.” An independent chair was more on the nose, suggesting: “They are not Green. They are just diehard socialists.”

Another suggests “James Shaw again demonstrates why he should quit the Greens and form a (real) Green party.”

But a real estate boss reckons the Greens are doing well to tiptoe a difficult line between Green Party members and Green Party voters. “I’m not a Green Party supporter or voter, but believe that we need their voice.”

In 2016, when John Key was Prime Minister, the Mood of the Boardroom CEOs suggested an alliance headed by Jacinda Ardern and Shaw could be a “dream team”.

Shaw as a possible  Deputy Prime Minister is a real possibility if the Greens form a coalition government with Labour following the election. His elevation would be applauded by many business leaders. But the greater visibility would undoubtedly bring its own challenges — for both the Greens and the electorate.

Leadership

Business leaders are divided over whether Shaw and Davidson have been effective leaders of the party over the past three years. Some 38 per cent of respondents to the  Mood of the Boardroom election survey said Yes; 40 per cent said No; 22 per cent were unsure.

The Green Party says in its three years as the Coalition’s support partner it has led the way in tackling climate change, reducing inequality and protecting nature.

One of its most significant policy wins was the passing of the Climate Change Response (Zero Carbon) Amendment Bill. The Greens say the landmark legislation “provides a framework to support New Zealanders to prepare for, and adapt to, the effects of climate change… and is a key part of the Government’s plan to tackle the long-term challenge of climate change.”

The party was also responsible for a $1.1 billion environmental investment in this year’s Budget, which it says will create thousands of green jobs and help jump start a sustainable recovery from the Covid-19 crisis.

Its influence in government ended new offshore oil and gas exploration and saw the banning of single-use plastic bags.

But despite these achievements, comments from New Zealand’s top business executives demonstrate the challenge minor parties have to retain distinct identities and receive credit for their successes while in coalition government.

The chief executive of a food distributor says the Green leadership “don’t appear to have been able to leverage their position in the coalition to advance too many of their causes”.

“They have not found the traction they should have,” says Mainfreight CEO Don Braid.

A Crown entity boss says, “James Shaw has been highly impressive and is right to state that his party — alongside Labour — has done more to address climate change this term than any other government in passing the Zero Carbon Act.”

The CEO of a professional services firm agrees saying the Greens “have survived the three-way coalition and got the Zero Carbon Act passed. Well-placed for just a Labour-Greens coalition at the election.”