October 2021 - Tim McCready

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

October 7, 2021

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.

“We’re committed to doing our part in training and investing in our employees in these areas, and in creating pathways for entry level talent and in some cases for internships,” she says.

“But these are long and medium-term solutions, and we have some significant recruitment challenges in the immediate term.”

MinterEllisonRuddWatts chair Sarah Sinclair, says “current preferred candidates for roles remain offshore.”

Similar challenges were shared by others in the tech sector.

“Twenty per cent of open roles are currently unstaffed,” says the CEO of a major IT firm.

But this issue isn’t restricted to any particular sector.

Tim Myers, chief executive of farm machinery firm Norwood says there is a desperate shortage of skilled technicians and mechanics.

“One, there aren’t enough, and two, they’re being incentivised to move to Australia with more competitive wages and more affordable housing”.

Federated Farmers CEO Terry Copeland shares a similar story.

“Many of our members are reliant on skilled migrant labour and seasonal workers on farms, vineyards, orchards and processing facilities,” he says.

“Around 7000 full-time roles are currently vacant and not being filled by New Zealanders.”

Almost all CEO respondents — a considerable 94 per cent — say New Zealand should be doing more in the short term to bring in skilled migrants to ensure firms can support economic growth.

An independent director says there is an immediate and very serious labour market shortage that will see New Zealand lose jobs overseas and its relevance as an employment option. “Developing our own skills needs to be done — but it will take time.

“The opportunity/threat is here right now.

“Companies will not wait for the government and many are now setting up hubs overseas so that they can continue to execute their strategy.”

The CEO of an agribusiness firm says the widespread business impacts that the lack of workers is having on the industry requires urgent attention.

“If we are going to become less reliant on migrant workers, it will take time — years.

“Just pulling the pin as has been the case is poor judgement, commercially naïve and certainly not representing a just transition.”

Employing more Kiwis is not the answer,” underscores OfficeMax NZ managing director Kevin Obern.

“We have skilled people desperate to move here, there has never been a better time to access those skills.”

Adds EMA’s Brett O’Riley: “The current approach is inhumane, ignores wellbeing and wellness for those involves, and does not represent New Zealand’s values of manaakitanga.”

Why a tax on wealth is not seen as the answer

October 7, 2021

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.”

A property boss observed wealth taxes are extraordinarily complex — “the people with good lawyers and trust structures will avoid it, it’ll be the middle-class who end up paying it”.

Beca’s Greg Lowe also questioned how retired Kiwis would find the income to pay an annual tax on the assets they spent their lives building up. A high-profile director put the issue this way, “forcing asset sales to fund wealth taxes undermines the productive efficiency of asset portfolios and investment structures. The vast majority of other nations have solved the problem with capital gains taxes that kick in when gains are realised. This will tax the ‘mom and pop’ households who do not have access to financial advisors to structure their wealth in a way that escapes the net. It would also be an administrative nightmare, and will consequently have extremely high collection cost.”

A number of CEOs — unprompted — also suggested a capital gains tax was the more sensible route.

What can we learn from business?

October 7, 2021

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.

New Zealand’s scores for Year 5 students (9-year-olds) also fell in both subjects since the last time the test was conducted in 2014/15.

Similarly, last year’s OECD’s Programme for International Student Assessment (PISA) tests, which tests reading, maths and science, saw New Zealand’s 15-year-olds recorded their lowest scores ever. Of the 79 participating countries in PISA, New Zealand was 11th equal for reading, 12th for science, and 27th for maths.

“Literacy and numeracy are at an all-time low, the system is letting down far too many young people and their families,” says EMA chief executive Brett O’Riley.

We have some outstanding educational achievement results in some parts of our education system, but weaker results in other parts which represent a big lost opportunity both for our people and our country,” says Beca CEO Greg Lowe. “No New Zealander should be left behind in the journey to better skills.”

“It feels like standards continue to slip and that mediocre is now okay,” says a food producer. “A drift to the lowest common denominator.”

From an investment firm boss: “A big worry — with an annual deterioration in standards and achievements wrapped in a cloak of wokeism and irrelevance.”

Federated Farmers CEO Terry Copeland says our fall in international rankings is down to a “combination of low literacy and numeracy skills, and less common sense due to reliance on computers”.

But another respondent, from the education sector, comments: “Working closely with education, I think the attainment metrics aren’t everything. We have a system that teaches great critical thinking and inquiry-based learning which help foster innovation.”

One director says the education system is failing too many and not supporting enough young New Zealanders into stimulating vocational opportunities; however they note the solution requires “the whole community — especially businesses — to become much more engaged in the educational process”.

Time to consider a Swiss model?

Building on this sentiment, respondents were asked whether there is a role for business to play in the education of equipping young New Zealanders for the future workforce — such as Switzerland’s Vocational Education Training (VET) system — where they are seconded to firms while still at school to learn vocational and life skills. A significant 73 per cent responded yes. Just 6 per cent say no, and 21 per cent are unsure.

“Business has a large role to play in teaching young New Zealanders about what they do and why,” adds Mainfreight’s Don Braid.

“The education system must support this through the examination process — pass rates alongside apprenticeships and other vocational training.”

Beca’s Greg Lowe acknowledges business already plays a big part in the training and development of its workforce, which is an area of significant investment for most businesses in NZ. “Models like Australia where secondary students complete formal workplace secondments do help students to with potential career choices.”

But some worry this shifts too much responsibility on to business.

“Businesses are already taking on much of the training directly — but there is always potential to expand this,” said a professional director.

A respondent in the education sector says they have seen this model work really well in Israel as well, “but I’m not sure we have enough talent or large organisations to support it here, particularly in our regions.”

And a food producer cautions: “This shifts the burden to already overburdened firms.”

The only certain thing is uncertainty

October 7, 2021

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'

October 7, 2021

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.

Of the regions, Waikato saw the biggest jump in prices over the quarter, with its average property value up 6.1 per cent from $821,000 to $871,000.

Auckland and Wellington regions remain the most expensive for property, with quarterly growth of around 4.5 per cent pushing their average property value to $1.395m and $1.037m respectively.

“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,” says ICBC (NZ) chair Don Brash.

Another banker observes that an increase in share values is certainly contributing to that growing wealth inequality,” but the main contributor is the utterly inexcusable escalation in house prices, or more accurately, residential land prices.”

“This needs to be addressed or there will be anarchy in the next 20 years,” says a professional director.

Respondents were also asked what the Government’s role in wealth inequality should be. This question resulted in many suggestions from business leaders — with housing and education a major focus area.

“Freeing up residential land in a meaningful way would quite quickly reduce the wealth of those who have borrowed heavily to invest in residential real estate, while vastly helping those who currently don’t own a home,” suggests a banker. “If this were done, there would be no need for a ‘heightened safety net’.”

Capital gains taxes?

“New Zealanders are rewarded for investing in housing and driving up prices due to under supply vs demand,” says a media boss. “The Government needs to tax capital gains and remove the incentive to invest in housing.”

While this year’s Herald survey did not directly address capital gains taxes, many echoed the call by the media boss. “Get on with some form of capital gains tax… it is simply wrong to get taxed on the likes of shares and not investment properties,” says a food manufacturer.

From another director: “We have to fight this growing wealth divide with a capital gains tax — or whatever it needs to be called politically — or we will see the divisiveness emerge in New Zealand that is already prevalent in many other nations around the world.”

Others suggest that education must remain a key focus of the Government to help close the gap.

“Education for those in poverty to help them come up the curve — the hand up not the hand out,” says one director.

A similar sentiment from a food producer: “Bring the bottom towards the middle, don’t drag the top down.”

“Ensuring excellent and broad opportunities for education and work (which may be coupled with living wage/ sustainable wage system),” says Schenone. “This gives everyone the opportunity and incentive to earn a decent living and see the effect of effort and reward as a truth available to them.”

Another independent director says training more students for STEM (science, technology, engineering and mathematics) capabilities will “get more of our people into higher paid and more relevant roles”.

But others suggest responding to wealth inequality is not the role of the government at all — and some say intervention is aggravating the problem: “Government interference seems to keep making the situation worse,” says Devon Funds Management chair Paul Glass.

“I think that relatively speaking there is less inequality now than there has been in the past 200 years,” says a director. “Welfare is important, but not to the detriment of signalling the importance of being employed.”

Act leader David Seymour rises to the challenge

October 7, 2021

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.”

Respondents expressed their surprise that Seymour has managed to keep himself front and centre of the party.

Following last year’s election, nine new ACT MPs were swept into Parliament after the party’s popularity soared.

For a party that has had only a single MP since 2011, many were concerned about whether Seymour would be able to keep his new caucus — made up of some people that didn’t necessarily expect to find themselves in Parliament — in line.

Seymour too was aware of this challenge.

Following the election result, he said: “There’s a challenge of course for me leading that team and I want to meld our caucus into a very high performing organisation and of course for them, Parliament is a bit of a weird place sometimes, and there’ll be a few ropes to learn but I’m very confident they can do it.”

But CEOs say it is a testament to his leadership that his caucus has been disciplined in their public messaging, and is one of the reasons contributing to many respondents suggesting Seymour is the “de facto Leader of the Opposition”.

When asked whether Act provides a more credible opposition to the government than other parties, 62 per cent of respondents said Yes.

Some 21 per cent said No, and 17 per cent responded Unsure.

Recent preferred prime minister rankings have seen Seymour pull ahead of National leader Judith Collins, and this notion has been supported by the survey results.

But some respondents caution that people seek out a credible alternative governments, which Seymour alone cannot fill.

“The only visible part of the Act Party has been Seymour,” says Dentons Kensington Swan chair Hayden Wilson.

“He has been doing very well, but you need more than one person for a credible Opposition.”

“David Seymour has been able to project in an above average manner for a minor party leader and draw a following accordingly,” says Deloitte chair Thomas Pippos.

“The nature of the Act partner doesn’t lend itself to being the main opposition party.”

Many business leaders say that it is the clarity and focus on key issues that is giving Act an edge over National.

When the Delta outbreak hit in Auckland last month, Seymour was quick to respond with calls for the Government to bring back the Epidemic Response Committee, questions about infrequent wastewater testing, and why saliva testing isn’t a more widespread approach by the Ministry of Health for Covid-19 testing.

Other Act policies garnering attention include wanting electronic income checks for gang members to prevent them from spending welfare money on alcohol, gambling or tobacco; a teaching excellence reward fund to reward teachers who have demonstrated excellence in their role; and a range of housing policies including GST sharing, build-to-rent, and a public-private partnership for building houses.

“Irrespective of agreement with their policy or otherwise, they regularly present well-constructed arguments that the general population understands,” says Norwood CEO Tim Myers.

“David Seymour seems to be voicing genuine concerns of Kiwis,” says NZ Local Government Funding Agency chair Craig Stobo.

“David Seymour is making himself visible and crucially, choosing which issues to make a fuss about and which to let go through to the keeper,” says the CEO of a real estate firm.

Others applaud Seymour for being in a better position than National to hold the Government to account: “The Nats can’t do that at the moment because the public is tired of them.”

Another chief executive says that Act is disciplined, focused, policy-orientated, and “makes National look like a party of political amateurs, which is even more impressive considering they are parliamentary rookies with little experience”.

“Still think they are better as a minor party pushing an agenda and provoking thought,” says the head of a food producer.

“Don’t think they could run the country.”

Judith Collins has 'lost sight' of issues

October 7, 2021

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.

Prior to entering politics she was a commercial lawyer serving as Auckland District Law Society president and as a Housing New Zealand director.

Some say she is in an unenviable position with a tough job. “She has been handed a hospital pass and is trying her best,” says independent director Carol Campbell. “But she has no support from her party.”

Says another chair: “Being leader of the Opposition is a bloody tough job — particularly when the media is aggressively hostile.”

Others suggest Collins’ lack of strong leadership and negativity is giving the Government an easy ride.

“Hopeless,” says Devon Funds Management principal Paul Glass. “Labour’s best asset.”

“I am yet to see Judith do anything other than complain,” says a leading entrepreneur. “I’d much rather see her lead her opposition by offering smart solutions.”

“Always bitter and negative. Rarely constructive,” says an IT boss.

“She has lost the confidence of her caucus, which has made National unelectable. There needs to be a change,” says Datacom chair Tony Carter.

National is still languishing in the polls. The most recent polls by 1 News-Colmar Brunton, Newshub-Reid Research and Roy Morgan put National at 26, 28.7 and 25 per cent, respectively.

Under Collins’ leadership, the National Party launched its campaign to “demand the debate”. The party says: “New Zealanders are being left out of important decisions as Labour continues to make policy announcements that were never campaigned on and will have a significant impact on New Zealanders”.

Some of the issues National has called out as part of this campaign include the Government’s 2019 He Puapua report, the Government’s “feebate” policy, gangs and crime, and homelessness. But the survey has seen business leaders express serious concern over the issues Collins is focused on. “Her instincts are all wrong,” says an investment banker.

“She seems disconnected to most New Zealanders,” says Federated Farmers CEO Terry Copeland.

A company director: “I’d love to see her focusing on the issues that will really matter for New Zealanders and especially the next generation of New Zealanders, so that she and National have some renewed relevance.”

NATIONAL NEEDS TO HOLD GOVERNMENT TO ACCOUNT

National needs a refresh and to concentrate on the issues that matter. That’s the clear message from New Zealand’s business leaders in this year’s Mood of the Boardroom survey.

When asked whether the party has sufficiently renewed its personnel at both party and political levels as well as policies since the election, an overwhelming majority — some 90 per cent — say no. Just 2 per cent say yes, while 8 per cent are unsure.

The election saw 23 MPs lose their seats. At the party’s annual conference held in August, National party president Peter Goodfellow was under pressure since the disastrous election result — particularly due to his involvement in several troubling candidate selections. But despite a challenge from former speaker David Carter, Goodfellow was re-elected to the position and Carter resigned from the board, despite only joining last year.

“Goodfellow should have stepped down and commenced renewal from the top down,” says a media executive.

A lot of experience has left since the election which is unfortunate — some had to go, but the volume of talent leaving was concerning,” says Federated Farmers chief executive Terry Copeland. “On the flipside, they haven’t replaced the party president which is perhaps stopping change and regeneration which is desperately needed.”

MinterEllisonRuddWatts partner and SkyCity Entertainment director Silvana Schenone says “they desperately need to show new leadership.”

“It is still very much in a rebuild mode,” says Deloitte chair Thomas Pippos.

But a professional director says that is not to say the potential isn’t there — “but it’s certainly not publicly visible at the moment, with a couple of exceptions.”

Focus on the issues that matter

Business leaders were asked to comment on where National should be making more inroads in its role as the prime Opposition party.

This prompted several chief executives to respond with just a single word: “Everywhere!”, and one banker to joke: “This is a trick question. It’s not the Opposition, Act is!”

Many of the criticisms lobbed at the party are due to its failure to focus on the issues that matter to the electorate. Several CEOs expressed concern that side issues like the painting of Winston Churchill in Parliament seemed to receive more attention than the economy and holding the government to account on key priorities — namely poverty, health, housing, education, infrastructure, crime, and the country’s route out of the pandemic; although MP Chris Bishop’s work in this area was acknowledged.

Dentons Kensington Swan chair Hayden Wilson says the reality for National is that they are at the point the Labour party was at in 2013/2014:
“They had a really tough election, they had some quite significant divisions within their caucus, and that led to a complete lack of message discipline.”

He points to the debate around whether or not the country should be called Aotearoa.

“I do not think they are focusing on the things that New Zealanders are worried about, or the things that New Zealanders don’t presently vote for them worry about,” he says. “That does a disservice to the people in the National party caucus who are doing sterling work on the issues that matter.”

“What New Zealanders want to see in an Opposition is someone that they would be comfortable running the country. That means having ideas about things that matter.

“We haven’t seen that from the Opposition since the election.”

A professional director shares a similar view: “National has not focused its airtime on the issues that matter most to the business community. Coming out with clear policy on issues where the Government is falling short would help, also calling for more Government accountability.”

“They have lost touch with the emerging voting base,” says Norwood CEO Tim Myers.

“National used to stand for intelligent conversation and fiscal responsibility,” suggests a technology entrepreneur. “All I hear now are cheap shots and complaints, I have no idea what they even stand for anymore.”

Says a property executive: “The immigration policy was an excellent one, released without fanfare or PR support… and was almost immediately lost in the noise around the Aotearoa referendum.”

Others suggest national needs to focus on credible, workable alternative policy — not just discussion documents filled with questions and “demanding the debate”.

“They need to outline what they would do, how and why,” says the head of an investment firm. “At present it comes across as quibbling and bleating.”

Says the head of a bank: “Detailed alternative policy agenda which reflects the things that matter outside the beltway. Having a view is more important than criticising.”

The party needs to focus on its values and what it stands for — connecting with New Zealanders on issues that matter and not the ones that don’t,” says BusinessNZ CEO Kirk Hope. “Stay off Twitter!”

There's a new mountain to climb

October 7, 2021

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.

He told Dann that he’s comfortable with the cost of the Government’s pandemic response, which has risen to close to $120 billion.

“Except where in the Covid fund — $62 billion set aside for Covid — $12 billion has been put into a whole host of projects that have had nothing to do with Covid,” he said.

“I think that’s wrong. I would have kept that $12 billion to do rent support packages for businesses.”

Bayly says he’d stop the non-Covid programmes and keep more money to deal with the prospect of Covid disruption going on well into next year.

He says the other big global issues are the squeeze on labour movement and the supply chain for goods.

“I think we should expect we’re going to have supply chain disruption until the end of 2022,” he says.

“A 40ft container was roughly US$1500 — now it’s $10,000 to $12,000.

“There’s a huge additional cost on our exports. Those are the big international issues that will be affecting our economy.”

Bayly also argues that the way Labour is treating business doesn’t match the rhetoric. He wants worker shortages addressed urgently — and that means a focus on immigration.

He is worried New Zealand has trashed its reputation as a desirable destination for skilled immigrants.
Judging by the responses to the Mood of the Boardroom survey, he is now concentrating on areas that concern chief executives.

Others to give him an uptick include Federated farmers Terry Copeland: “Too unknown. He is capable.”

“I’ve been reasonably impressed,” adds Datacom’s Tony Carter.

“His resume suggests he has the credentials,” says a food producer. “But he continues to come across as very green and inexperienced.”

“Andrew’s a very nice chap, but he seems to go down obscure rabbit holes that don’t help his party’s wider economic narrative”.

The former New Zealand Territorial Army officer, British Parachute Regiment member and merchant banker entered Parliament as the Hunua MP in 2014 and retained the seat in 2017. At last year’s election he contested the new Port Waikato electorate and was re-elected with a margin of more than 4200 votes.

He has taken strong stances on Government “interference” in Air New Zealand’s affairs and scoped a compelling capital markets agenda.

Some of his ideas in this area include having a closer strategic alignment between companies, entrepreneurs, financiers and government institutions, including research and development institutions.

He says the role of Government needs to be as an active participant, working alongside and facilitating change as and when required and ensuring there is a process to match public funding alongside the public sector so that high value IP can be commercialised.

He also wants to see more done to encourage multinational firms to undertake R&D in New Zealand, alongside encouraging large NZ corporates to support exciting start-ups in their sectors.

However, one of the challenges that has always come with the Opposition finance post has been the ability get cut-through — it is a position where, often, credibility comes once in the role of finance minister.

This is a challenge that the current Finance Minister Grant Robertson himself faced for many years while in opposition against then-Finance Minister Bill English.

This hurdle is even higher for Bayly given he is the fourth opposition spokesperson since Labour came into power four years ago, following in the footsteps of his predecessors Steven Joyce, Amy Adams and Paul Goldsmith.

On top of this, the role has been carved into two by National Leader Judith Collins to follow an Australian model with both a treasurer and a finance spokesperson.

In the Australian system, the main responsibility of the treasurer is to deliver the Budget each year and oversee the taxation system, whereas finance — a role held by National’s Michael Woodhouse — is more focused on the detail of costing and financial reporting.

This lack of visibility was heard from many of the business leaders responding to the Herald’s survey.

Despite Bayly being National’s third-ranked MP, many say they have not heard of him.

“Never see or hear from him,” says Devon Funds founder and executive chair Paul Glass.

“I had to Google him,” said an exporter. Said a director: “I have not seen or heard enough from him to know.”

This lack of visibility comes despite a series of boardroom presentations he has been delivering recently in the business community.

Business leaders were asked how well he has connected with business in his role as a shadow treasurer on a scale where 1 = not impressive and 5 = very impressive.

Bayly scored 2.86/5, suggesting his efforts still have a way to go to win over the country’s top boardrooms.

“Haven’t seen him in action,” says Suncorp NZ chief executive Jimmy Higgins.

How effective is the Covid-19 Recovery Fund?

October 7, 2021

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.

“There seems to be little control over where this is targeted, or oversight on its effectiveness,” says Federated Farmers chief executive Terry Copeland. Professional director Craig Stobo shares similar concerns, asking: “Do we really have good, measured information on the status of this spending?”

Another director suggests there should be a complete recase of the numbers to reflect the actual reality, since “the fund was set when Treasury’s projections for the economy were significantly different than what has unfolded”.

More than $4.5b was given out to various recipients in the 2021 Budget announcement: $3.8b was given to the Housing Acceleration Fund, designed to increase the supply of houses by accelerating the pace and scale of construction to ease the struggle of first-home buyers to enter the market.

Immigration received $173m to enable the continuation of core immigration services that have been impacted by Covid-19.

Other projects awarded funding include on-board cameras on commercial fishing boats, and a $500m towards an extension of the school lunches programme — which was a project of particular concern to CEOs.

“Far too many stories of wasted food, an initiative that I believe was a backward step to socialism’s need to have populations reliant on government,” says a serial entrepreneur. “There are better ways to address this that don’t load the taxpayer with a UK operation devised during WWII for vastly different reasons.”

Says a logistics boss: “It is wasteful — there is no such thing as a free lunch”.

But others are less concerned. “Yes, I do think it is being used more widely, but I don’t think at this stage that I have a concern about its use.”

This view was supported by some 20 per cent of survey respondents who said they are not concerned; 17 per cent say they are unsure.

Covid Fund replenished

Three weeks ago, Finance Minister Grant Robertson announced that the impact of a stronger economy — reflected in the Government’s books, with lower deficits and debt position than had been predicted — has given sufficient fiscal headroom to top up the fund.

“Ministers have decided to use the greater fiscal headroom to top up the Covid-19 Response and Recovery Fund (CRRF) by an extra $7b,” Robertson said.

That is on top of $3b that remains unspent.

“We have already boosted support to business in this lockdown and the extra funding will be targeted at further economic support as well as building resilience in our health system, supporting the vaccination rollout and border and MIQ provision,” said Robertson.

“We are in a strong economic position to protect lives and livelihoods and plan for the gradual and careful opening up of New Zealand to the rest of the world to secure the recovery.

“Our focus remains on keeping New Zealanders safe, accelerating the recovery and dealing with long-standing issues such as climate change, housing and child wellbeing, despite the uncertainty and volatility globally around the ongoing impact of Covid-19.”

Covid Recovery Fund

In 2020, the Government allocated a total of $62b to support the Covid recovery through an initial $12.1b support package in March and the $50b Covid-19 response and recovery fund unveiled in May.
This funding was to pay for pandemic-related expenditure, including the wage subsidy scheme to help employers recover from the effects of Covid-19.

The fund also gave a $1.6b to boost apprenticeships and industry training, $1.1 billion to get New Zealanders into jobs focused on restoring the environment, and $3.3b for infrastructure, on top of the $12b infrastructure package announced earlier in 2020.

Workplace vaccination, the carrot or the stick?

October 7, 2021

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.

“We already require compliance with our health policy for international travellers, and this will be just one more vaccine.”

A professional director says we need the Government to change the current law that does not allow it: “While there will always be an exception for those that for medical reasons cannot be vaccinated, employers should have the right to require current workers and not just new workers to get vaccinated.”

Federated Farmers CEO Terry Copeland says he “doesn’t think this can or should be enforced by employers”. Another CEO working in the energy sector shares a similar sentiment, saying they “don’t think this is possible under the employment laws, and I would be loath to do that to my workforce”.

A CEO in the utilities industry recognises that this would be challenging from a privacy perspective — “we don’t require any other mandatory vaccination, for example for the flu”.

A property boss adds “the possibility of presiding over the ‘your business name here’ cluster gives me nightmares!”

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.”