CEO plea - 'Open border so we can source staff'

CEO plea – ‘Open border so we can source staff’

The tight New Zealand labour market threatens to undermine our post-pandemic economic recovery as skills shortages increase.

It is such a headache for CEOs that a considerable 71 cent of respondents to the Herald survey say sourcing and retaining skilled staff is one of the key issues keeping them awake at night.

Stats NZ data shows the unemployment rate fell from a recent peak of 5.3 per cent in the September 2020 quarter to 4 per cent in the June 2021 quarter.

The situation is exacerbated by the current Covid-related border restrictions.

Some 72 per cent of survey respondents say their business operations have been hindered by the inability to bring essential skilled executives, investors, or workers across the border.

A further 25 per cent have not been affected.

Spark CEO Jolie Hodson says she sees pressure on skills in areas like cyber security, data automation and AI.

Why a tax on wealth is not seen as the answer

Why a tax on wealth is not seen as the answer

The Green party has suggested a wealth tax as a solution to help close the inequality gap between people who own and people who earn. This has been proposed at 1 per cent on net wealth over $1 million and 2 per cent on net wealth over $2m (applying at an individual rather than household level).

The Greens estimate this is likely to raise around $7.9 billion in its first year. Business leaders are not in favour, with a combined 82 per cent of survey respondents saying they do not support the consideration of a wealth tax.

“If we had a properly functioning housing market, the whole question of extremely large increases in personal wealth would largely go away,” said ICBC (NZ) chair Don Brash, a former Reserve Bank Governor. “What is so offensive in the current situation is that most of the huge increases in wealth are not the result of hard work, or of inventing something new, or of building a business but just the result of buying lots of land with borrowed money and waiting.”

Many suggested this form of tax would fail.

Said SkyCity Entertainment director Silvana Schenone, “people who will be caught by this will also be able to restructure their affairs or seek advice to not trigger the wealth tax. Also, wealth inequality should be addressed at the root of the problem, not as a punishment to the wealthier end.

“Wealthy New Zealanders would leave or restructure their affairs,” agreed Devon Funds Management’s Paul Glass.

“All a wealth tax will do is result in people shifting their assets to more desirable jurisdictions,” says an investment company CEO. “We want to attract capital, not send it offshore.”


What can we learn from business?

What can we learn from business?

Education is an issue CEOs care passionately about. “Educating young New Zealanders can have a very positive effect in reducing crime and improving their future and that of New Zealand,” says Mainfreight boss Don Braid.

Over recent years, educational attainment levels at both primary and secondary schools in New Zealand has come under increased scrutiny.

The Herald’s Mood of the Boardroom survey asked business leaders to rate the overall educational fitness of young New Zealanders to play a role in the workforce, on a scale of 1-5 where 1 = not impressive and 5 = very impressive. They gave this a score of 2.76/5.

“The young people that I meet who have been educated at schools across our socio-economic community really impress me,” says a director. “Smart, articulate, world and socially aware. They give me much hope for our country.”

A technology boss shares a similar sentiment: “We can only judge by the people we see in job interviews and the interns we take over summer, and their calibre, enthusiasm and drive to learn and succeed is strong.”

However, multiple international assessments have shown New Zealand students slipping in global educational rankings. “The recent PISA score from testing our 15-year-olds in reading, maths and science was the lowest ever in the OECD, and a similar story occurs in the 2020 TIMSS global comparison,” says chair Craig Stobo. “To then hear the Minister of Education say this year that we should celebrate the achievements of pupils in other countries left me speechless.”

The most recent Trends in International Mathematics and Science Study (TIMSS) saw New Zealand Year 9 students’ scores fall by the largest margins since the study began in 1994. Their maths score fell 11 points to 482 and their science score fell 14 points to 499, on a scale where 500 is the midpoint.

The only certain thing is uncertainty

The only certain thing is uncertainty

Influential law firm boss Hayden Wilson says New Zealand has as a country been very good at adapting to the crisis response to the coronavirus pandemic.

But he warns the post-Covid world is not going to look like it was in 2019 before the virus emerged.

And business should step up and engage with government and support debate on NZ’s future.

Wilson, who chairs Dentons Kensington Swan, reckons we cannot continue to look back and hope for things to go back to the way they were before.

“The only thing that is really certain at the moment is that things are going to continue to be uncertain,” he says. “The real challenge for business is going to be how to adapt to a constantly changing world.”

Wilson, who plays a key role in his firm’s relationships with government agencies, says we should expect the Government to be able to manage uncertainty and communicate how it is dealing with uncertainty well.

“Take for example a date for reopening the borders,” he says. “When you are dealing with a virus that is constantly changing, that we are still learning about, the idea that we can say at this point in time we are going to open the borders defies the science.”

He says we need to be able to have a sensible discussion about what business and government needs, and what the New Zealand community needs to respond to changes — but those discussions are hard because that is not something we are particularly well-equipped to deal with as a community, in the media, or in our political environment. “We have to get comfortable with the fact that this means we’re not going to have certain dates, deadlines and pathways.

“We’ve got to have a broad understanding of what the principles are on which decisions are going to be made, and how we’re going to be engaged with that.”

But business must lean in — not to support the government — but to support that discussion. “But I don’t think we are any better than anyone else in the world at adapting to the slow burn changes that we’re all facing like climate change.”

Even putting climate change to the side, we have big tension points in the New Zealand economy that will require transformational change, and these will all impact business — even if not immediately. “It’s our infrastructure deficit, which obviously affects business directly, but it’s also the state of our education and health systems, housing and housing affordability, which will have a fundamental effect on business long term, but aren’t necessarily seen as a business issue,” says Wilson.

He says we have to take the opportunity to look at how to fix some of those longer-term tensions, especially when you consider the amount of money that’s available to government in terms of Covid recovery.

There is a role for business to engage sensibly in discussions around these tension points, and a role for government to invite that participation in ways that are nuanced and more sophisticated than what we have previously seen in our political debate.

Wilson uses the feebate scheme, designed to promote lower-emissions vehicle sales, as an example.

“The Government made a fairly orthodox change that couldn’t be seen as anything much more than a tinker around the edges, and there has been a massive pile-on, which makes it very difficult to do the incremental things that need to change.”

It will require business taking a role as thought-leaders and engaging with government. “Sensible businesses need to start thinking about how they can take responsibility for being part of the debate,” he says. Of course, for this to happen, Government will need to be receptive to business.

Wilson says that currently, government is not as receptive as it should be to feedback from business.

“Our political environment doesn’t really facilitate that risk-free engagement,” he says. “The media and other political parties treat it as a horse race.”

He says while there are some parts of government that are interested in having these discussions, government departments will need to find a way to unlock risk adverseness where it’s appropriate.

“We need to be much more willing to be open about having discussions in areas where we are looking longer term and planning New Zealand’s response.”

Wilson says the Labour-led Government is run tightly by a small group of senior ministers, in whom the Prime Minister has confidence.

“Some of them are doctrinaire, some are stubborn, some are cautious.”

But, he says we have seen things like the wage subsidy where the approach taken was revolutionary, and gave some insight into what can happen if you have different thinking — “and I think increasingly there will be a push to do that.”

Wealth inequality - 'Utterly inexcusable'

Wealth inequality – ‘Utterly inexcusable’

The Herald’s Mood of the Boardroom survey reveals heightened concern about wealth inequality in New Zealand among our top business leaders.

Respondents are worried about a rise in crime and even outright anarchy if this is not addressed.

A significant 60 per cent of those surveyed say their concern about wealth inequality is higher relative to the past, whereas 40 per cent say the level of their concern has not changed.

“Asset-rich people have done extraordinarily well during this period,” says Datacom chair Tony Carter.
“I see with concern how crime and other society issues arise in New Zealand, similar to those in other countries that have suffered of wealth inequality problems for much longer,” says
MinterEllisonRuddWatts partner and SkyCity Entertainment Group director Silvana Schenone. “This is a big concern for New Zealand, as it can only drive more problems”.

The best way to reduce inequality in the long term is to invest in the training and education of our population so that everyone can participate in the benefits of a growing economy,” says Beca CEO Greg Lowe. “We need to ‘teach everyone how to fish’ if we want long term social equality.”

One area CEOs have expressed particular concern about is that the most significant inequality comes from those invested in and those excluded from the housing market.

Property values across the country grew 5 per cent in the three months to the end of August, pushing the national average property value to $983,000.

Act leader David Seymour rises to the challenge

Act leader David Seymour rises to the challenge

David Seymour is impressing NZ’s top business leaders, with over 50 per cent of those surveyed scoring him 5/5 for political performance.

When respondents to the Herald’s Mood of the Boardroom survey were asked to rate Seymour’s performance since the October 2020 election on a scale where 1= not impressive and 5= very impressive, he received a score of 4.36/5 — the highest rating of all political party leaders.

This is also the highest score he has received in the Herald’s annual survey. Seymour, who has been in Parliament and leader of Act since 2014, has seen increasing scores over the past three years — 2018: 2.24/5; 2019: 2.37/5; 2020: 4.03/5.

Says Federated Farmers CEO Terry Copeland: “David Seymour is the only minor party leader making any traction in serious debating the major issues.”

“David Seymour has been a standout performer with clear communication and pragmatic suggestions,” says Beca group CEO Greg Lowe. “There is room for more multi-party collaboration on solving some of the big challenges facing New Zealand.”

“Seymour is articulate, challenging, and shows common sense,” says an education provider.

A banking chair adds: “David Seymour is faster off the mark than National, and also comes up with more specific positive suggestions.”

Judith Collins has 'lost sight' of issues

Judith Collins has ‘lost sight’ of issues

New Zealand’s top chief executives say National’s Judith Collins is failing to hit the mark as Opposition leader.

Their support for Collins has waned, with concerns she has lost sight of the issues that matter to New Zealand, and that her negativity is not appealing to the wider electorate.

In this year’s Mood of the Boardroom survey, New Zealand’s top business leaders were asked to rate Collins’ performance as Opposition leader — holding the Government to account on critical national issues — on a scale where 1 = not impressive and 5 = very impressive. She received a score of 2.06/5.

This compares to 3.52/5 in last year’s survey, held one month prior to the 2020 election.

Over one-third of respondents — some 35 per cent — scored Collins 1/5 for her performance.

Former National leader Simon Bridges received a score of 2.50/5 in his last Mood of the Boardroom survey as leader in 2019.

Collins has an impressive political track record, having served as Minister of Corrections, Police, Justice and for ACC in the Sir John Key and Bill English-led governments.

There's a new mountain to climb

There’s a new mountain to climb

Andrew Bayly has scaled Antarctica’s highest mountain and is one of only an estimated 150 people who have trekked to both the North and South Poles.

But scaling political heights and making purchase with CEOs is a tough ask against a respected Finance Minister.

NZ business leaders were asked in the Herald’s Mood of the Boardroom survey whether Bayly, who was awarded the role of National’s shadow treasurer following the 2020 election, presents himself as a credible future treasurer.

Nearly half of the survey respondents — 47 per cent — are unsure. Of the remainder, 35 per cent said no and just 18 per cent responded yes.

“To date he hasn’t been able to make the inroads I suspect he would have liked with the public at large,” says Deloitte chair Thomas Pippos.

That said, he’s been described as a “clear thinker” by a logistics chief and “very impressive” by Anthem’s Jane Sweeney.

Bayly has been seen in the media a good deal more lately, which is helping to raise his profile and ideas among the public and business community. This includes a recent interview with Liam Dann for the Herald’s Economy Hub.

How effective is the Covid-19 Recovery Fund?

How effective is the Covid-19 Recovery Fund?

Two-thirds of New Zealand business leaders say they are concerned that the $62 billion Covid response and recovery funds are being used wider than initially understood.

The Government’s latest financial update showed there was just $5.1b left unallocated for any future health and economic response needed in case of a further Covid-19 resurgence.

Criticism has been lobbed at the Government for tapping the response and recovery fund for increasingly tangential “Covid recovery” spending.

“The fund itself was a great initiative,” says Cameron Bagrie managing director of Bagrie Economics.

“The deployment to where needs questioning. A major issue is how much of that fund is now permanent spending as opposed to temporary use of fiscal policy.”

“A lot of it is very low-quality spending,” says Datacom chair Tony Carter.

Many of those who responded to the Herald’s CEOs survey expressed specific concerns that the spending is not on high-quality projects.

Workplace vaccination, the carrot or the stick?

Workplace vaccination, the carrot or the stick?

In the United States, many workplaces now require their employees to be vaccinated.

In an aggressive effort to get the pandemic under control, US President Joe Biden has directed businesses with 100 or more employees to prepare to request proof of vaccination or test employees weekly for Covid-19. By the end of October, all US government employees must be vaccinated.

A significant 74 per cent of New Zealand CEOs say they can envisage a situation where most employers will require their staff to be vaccinated against Covid-19 to protect the safety of the wider workforce.

Just 12 per cent say they can’t see this happening, and 14 per cent are unsure.

Fletcher Building chair Bruce Hassall says that “increasingly we will see New Zealand businesses rolling out vaccination policies that start with ‘we strongly encourage their people to get vaccinated’, then ‘we expect people to get vaccinated’, followed by ‘we will require their people to get vaccinated — our customers will expect nothing less!”

Says Fulton Hogan group CEO Cos Bruyn: “It cannot impinge on freedom of choice requirements, however most employers will react to customer requirements.”

Beca CEO Greg Lowe says vaccination will be required for certain activities, with travel being the first.

Vaccine incentives spurring workers to get shots

To encourage vaccine uptake, 33 per cent of respondents to the Herald’s Mood of the Boardroom survey say they either have incentives or plan to implement incentives for their staff to get vaccinated against Covid-19.

Many of those say they are giving leave for employees that get vaccinated or some other allocation of additional holiday pay. Others are providing an additional carrot with extra cash payments or vouchers for vaccination, and even a lottery for the month based on the number of vaccinations done.

Westpac is providing two half-days of leave to get shots and has also given an additional day of Covid leave for staff to use before the end of the year to help support families to get vaccinated. The Warehouse Group is offering a one-off payment of $100 to all fully vaccinated employees across its businesses.

Spark CEO Jolie Hodson says her immediate priority is to encourage all staff to get vaccinated, by making it as easy as possible for them to do so. “We will look to host vaccinations on site, as we do for the standard flu shot, and will consider if we need to do anything further than this in time.”

Z Energy chief executive Mike Bennetts says, “We will ensure that staff are able to prioritise this ahead of their work responsibilities.”

Beca’s Lowe says all staff are being encouraged to get vaccinated, and Beca is working to provide on-site vaccination as well as the use of community clinics. “Our people understand the need to get protected,” he says.

A director says one of her organisation is providing minibuses and other transport logistics to help get staff to vaccine centres during work hours.

But there is still a significant number of executives — some 59 per cent — that say they have no plans to offer incentives to staff to get vaccinated, and the rest (8 per cent) are unsure.

“They know they will be the first to be laid off if another lockdown puts strain on staff numbers,” says an education provider. “We should not be incentivising, we should be waving the stick to those who place workplace and nation at risk — drop the ‘kindness’.”

Says one investment director: “Our staff are intelligent people who are used to managing their lives without a ‘big brother’ approach.”

From a food producer: “Surely the need is compelling enough.”