In the lead-up to the 2023 election, this 10-part political series hosted by Mark Leishman shines the spotlight on the big issues facing rural communities around New Zealand. Tim McCready provides commentary for today’s guest, the National Party’s Todd McClay.
In the lead-up to the 2023 election, this 10-part political series hosted by Mark Leishman shines the spotlight on the big issues facing rural communities around New Zealand. Tim McCready provides commentary for today’s guest, the Green Party’s Teanau Tuiono.
In the lead-up to the 2023 election, this 10-part political series hosted by Mark Leishman shines the spotlight on the big issues facing rural communities around New Zealand. Tim McCready provides commentary for today’s guest, NZ First’s Shane Jones.
In the lead-up to the 2023 election, this 10-part political series hosted by Mark Leishman shines the spotlight on the big issues facing rural communities around New Zealand. Tim McCready provides commentary for today’s guest, ACT Leader David Seymour.
In the lead-up to the 2023 election, this 10-part political series hosted by Mark Leishman shines the spotlight on the big issues facing rural communities around New Zealand. Tim McCready provides commentary for today’s guest, Environment Minister David Parker.
Mood of the Boardroom: Where are the inspirational ideas? (NZ Herald)
Leading up to October’s election, there is a prevailing sense of disillusionment among New Zealanders about the way things are.
Hayden Wilson, chair and partner at Dentons, says that this sentiment is the product of a multifaceted set of issues, including the state of the economy, the residual response to the challenges of Covid, and a general sense of hardship.
He says that elections typically fall into two categories: stability elections or change elections, and in this instance it appears to be the latter, with many New Zealanders feeling that something must be done despite not being sure quite what that is.
“It is particularly acute in Auckland,” he says.
“I feel it when I go to Auckland and talk to clients and businesses there. And it’s not that there is an identified alternative that they want, but they just want something different, and a break from what has felt over the last three years to be quite relentless.”
In the 2020 election, the Labour Party won a landslide victory, with enough seats for a rare outright parliamentary majority.
Yet Wilson points out that a substantial portion of the electorate feels disappointed and believe the government did not capitalise on the majority that it had.
“They would say they’ve big changes which have yet to pay off and they’ve got us through Covid.
“The problem is that the New Zealand electorate looks forward, not back.
“People don’t feel like they’ve made a difference to their lives in the immediate future. That is a real challenge for this government.”
Wilson, who is also a member of Dentons’ global board and was recently recognised as one of New Zealand’s most influential lawyers, says while the negative sentiment of New Zealanders has no doubt been heightened by the economic situation, New Zealand is not much different from the rest of the world in terms of economic management.
“My theory has always been that New Zealand basically tracks about three to six months behind Australia and about six to 12 months behind the United States and Europe,” he says.
“The US and Europe were in a pretty dire position about a year ago, and talking to my colleagues in the UK, Europe, the US and in Africa, they are starting to feel like they’ve turned a corner.”
He notes that economic conditions in those regions are getting better, and inflation is coming under control in most places.
“There is a feeling of revival. New Zealand is not there yet, but you hope in an economic sense that the shift in the global mood becoming more buoyant will perhaps pull us out of our funk a bit faster than we would otherwise.
“At the start of the year everyone went to a risk-off position, but we are now starting to see a few more transactions coming through.
“We are also starting to see increases in the number of liquidations and receiverships at the moment.”
As the October 14 election approaches, Wilson says politicians have not provided clear answers to make the change that the electorate is seeking, which places the incoming government in a precarious position.
“The real challenge, and one of the reasons I do despair a little bit, is that because this is an election that everyone is trying not to lose rather than people are trying to win, we are going through another electoral cycle where people are not grappling with the challenges that New Zealand faces and business faces.”
He highlights the absence of debate on critical issues and inspirational ideas on areas including intergenerational income inequality, climate change, and our taxation system.
“On one hand, we have got Labour taking GST off fresh fruit and vegetables, and on the other hand we have got National releasing a tax policy that Michael Cullen could have released with the straight face.”
With respect to New Zealand’s response to climate change and adaptation, Wilson says recent events like the Auckland floods and Cyclone Gabrielle serve as stark reminders of the challenges our country faces.
“The impact that these have had on regional New Zealand will require significant investment to ensure we are resilient as a country — which is what business needs,” Wilson says.
“But how will we do that if we are still locked into a very old-fashioned approach to how we fund government and what government does?”
Mood of the Boardroom: Our next Finance Minister (NZ Herald)
CEOs continue to back Grant Robertson as a credible Minister of Finance. Some 58 per cent say he has been credible in the position, acknowledging his adeptness and confidence in handling economic matters.
A high-profile director says Robertson is “across the detail, and rarely screws up.” The CEO of a dairy firm commends him for being “outstanding and trustworthy”.
But 35 per cent of respondents say otherwise, and 7 per cent are unsure.
The decline in Robertson’s credibility score from the boardroom since 2020 is noteworthy, representing a distinct shift from the high levels he received during the peak of the Covid-19 pandemic. In that election year, CEOs awarded him an impressive credibility score of 91 per cent.
During his time as finance minister, Robertson has navigated New Zealand through significant crises, many of which were outside his control.
There is still wide recognition from business leaders over Robertson’s adeptness in managing economic affairs amid the challenging period of the pandemic. Other crises have included Russia’s invasion of Ukraine, which significantly disrupted supply chains and escalated inflation. This year, New Zealand has grappled with the aftermath of the Auckland Anniversary floods and the devastation wrought by Cyclone Gabrielle.
Robertson will have been buoyed by latest GDP figures, which show the economy exceeding expectations and growing 0.9 per cent in the second quarter. He said this demonstrates the economy’s resilience and strength amidst a challenging global environment and the impact of extreme weather events.
Treasury’s Pre-Election Economic and Fiscal Update (Prefu) also defied expectations, projecting the economy to grow by an average of 2.6 per cent over the next four years and returning to surplus by 2027.
However, CEOs express concern regarding the scale of borrowing and “reckless government spending” during and post-lockdowns. Critics argue this approach not only failed to yield results, but also played a role in fuelling inflation, accumulating excessive debt, and contributing to an economic downturn.
“Robertson was a very credible and admired minister of finance up to Covid,” comments an investment firm boss. “He should have said ‘no’ to most of the borrowing for the Covid effort. He may have been dismissed, but he probably should have made that stand.”
A director says Robertson has displayed “terrible fiscal performance, with poorly targeted payments that have made inflation worse”.
Another concern CEOs point to is Robertson’s recent policy inconsistencies that have emerged over the campaign period. He had previously criticised the notion of eliminating GST from specific food products, referring to it as a “boondoggle”. As part of its cost-of-living policy, Labour has announced it will remove the tax off fresh fruit and vegetables.
This has required Robertson to reconcile his past statement with Labour’s election pledge.
Business leaders say this has given the appearance that he is being pulled in numerous different directions by interests in his own party and has placed politics and staying in power above rational policy.
“It is hard to judge or understand Grant’s personal preferences versus party-influenced actions and decisions,” says one corporate director.
Cooper and Company CEO Matthew Cockram contends that the “recent statements and dissembling of obvious facts and circumstances, including the budget blowout and GST, have destroyed any credibility he had in my mind”.
There are comments from several business leaders that suggest Robertson has been missing in action lately and has lacked the support of the Prime Minister.
“Maybe he has some personal disappointment about Jacinda Ardern’s departure,” says one. “But whatever the reason, he needs to stay focused on his role and on guiding the economy to the best of his ability.”
The business community is concerned about Labour’s strategy for ensuring NZ’s sustainable economic performance, with a resounding 85 per cent of CEOs expressing scepticism that it has a co-ordinated plan of action focused on bolstering the country’s economic stability.
One banker expressed a lack of confidence, stating they haven’t observed or heard anything indicating a well-coordinated plan. Similarly, a CEO in the hospitality sector mentions the ambiguity surrounding Labour’s primary policies, emphasising the need for clearer direction.
“No ideas left except borrow and spend,” says a public sector CEO.
Only 4 per cent believe it has a co-ordinated plan of action, and a further 11 per cent are unsure.
Many of those who commented on this question suggest the party is making political manoeuvres, rather than formulating policies driven by genuine economic concerns.
“They treat the electorate with contempt with their politically motivated announcements,” says an advertising executive.
“For example, the spending cuts announced recently — it seems like they think we were born yesterday!”
Others bemoan a perceived lack of ambition and ability within the party, suggesting their ideas have stagnated to the point where borrowing and spending were the only strategies left.
CEOs emphasise the critical need for effective policies that incentivise rather than burden business.
“Regrettably, Labour seems to think business will keep on keeping on, regardless of the policies imposed on them,” says one.
“Listening and implementing good policies for business would make New Zealand more successful economically, there is no doubt about it.”
New Zealand’s top chief executives are impressed with National’s finance spokesperson Nicola Willis. Significantly, 83 per cent of respondents to the Herald’s Mood of the Boardroom survey believe that she has effectively portrayed herself as a credible future finance minister, should she have the opportunity following the election.
Business leaders commend Willis for her adept political acumen, impressive debating prowess, and her overall effectiveness as a politician.
A top banker commends her, saying, “Nicola appears to be over the detail and does inspire some confidence”.
These sentiments were echoed by another executive in the energy sector who noted “she has been impressive and is getting more so.”
Only 4 per cent of respondents say Willis hasn’t presented herself as a credible future minister of finance, with 13 per cent unsure.
“She does tend to be schoolmarmish, and falls into Luxon’s trap of talking platitudinously, without any actual answers around what will change,” says one CEO.
“If we want a Whitney Houston song we will listen to it — we want more than that from the alternative finance minister.”
Despite the praise, some respondents raised questions about the depth of Willis’ experience in comparison to past finance ministers, particularly in managing the economic complexities of the role effectively.
Willis took on the finance portfolio just over 18 months ago when Simon Bridges vacated the position upon leaving politics.
There are reservations about her relatively untested finance and economic skills, but acknowledgement that her true capabilities will only be fully realised if and when she is in charge of the country’s books.
As Mainfreight chief executive Don Braid aptly puts it, “The proof will be in the performance.”
Deloitte chair Thomas Pippos acknowledged that while Willis is still very new in this domain, she is starting to project herself effectively for such a pivotal role.
“It will be critical that she surrounds herself with the right people,” he says.
Respondents highlight that Willis will need to concentrate on navigating the “Treasury morass” and translate party and third-party ideas into actionable policies.
Several CEOs suggest that Willis would make a superior leader for the National Party compared to Christopher Luxon. One observes that “she has been polished, and more so than Chris”. “She would be a fabulous leader,” says another.
Business leaders were asked to assess whether the National Party has presented a co-ordinated plan of action for the upcoming election focused on ensuring New Zealand’s sustainable economic performance.
Just over half of respondents — some 55 per cent — believe it has presented a co-ordinated plan of action, highlighting National’s emphasis on disciplined public expenditure and advocacy for public-private partnerships in critical areas like infrastructure and climate transition.
Roger Partridge, chair of The New Zealand Initiative, commends National’s dedication to restoring discipline to government spending, the reintroduction of public service targets, and a narrowing of the Reserve Bank’s focus.
“But fundamental regulatory reform is also needed,” Partridge says. “Form foreign direct investment, the labour market, immigration settings, and, of course, to the Resource Management Act (RMA). National has signalled clear changes in some of these areas but, in others, its positions are less clear.”
Another 14 per cent of business leaders say National hasn’t presented a clear and co-ordinated plan of action, and a significant 31 per cent are uncertain. “I haven’t seen a plan that would evidence it,” says a finance executive. “However, they are making the right noises.”
Another CEO pointed out the lack of significant economic policies from National that could enhance New Zealand’s productivity and performance, indicating room for improvement.
A prevailing issue among respondents is the palpable absence of transparency and in-depth policy details from National during the campaign. Some note that a disappointing aspect of the election has been the populist tone of policy announcements and the absence of meaningful debate on crucial strategic matters.
An example cited by respondents is the party’s proposition for tax cuts, which are partially funded by reopening the housing market to foreign buyers for properties exceeding $2 million, with a 15 per cent tax imposed on transactions.
The boardroom acknowledges National’s tax cut plan “sounds attractive, provided the funding formulas are accurate”, but they raise concerns about the revenue generation that will be necessary to sustain it.
“It is surprising Nicola Willis did not critique the tax plan more,” says executive director of the NZ International Business Forum Stephen Jacobi.
Cameron Bagrie, managing director at Bagrie Economics, expressed surprise at Willis’ stance of: ‘your tax relief is coming no matter how badly Labour has wrecked the joint’. “Finance ministers need to be stewards,” he says.
A business services CEO suggests that National’s favoured approach to policies — including its tax plan — is to point out the things that aren’t good enough, and then conclude without anything to back it up that they would do better.
“The business community and New Zealanders deserve much more of a plan from them in advance of the election. Otherwise, we can reasonably conclude they won’t do things much better than Labour has.”
Suggests another: “This announcement is simply political in nature aimed at attracting votes from their so-called ‘squeezed middle’.”
Mood of the Boardroom: Is this as low as we will go? (NZ Herald)
Senior business leaders’ optimism in the outlook for the New Zealand economy has waned.
But they remain relatively sanguine about the outlook for the global economy and within their own industries.
Respondents to the Herald’s Mood of the Boardroom survey rated their optimism in the New Zealand economy at 1.82/5 on a scale of 1-5, where 1 signifies “much less optimistic” and 5 equals “much more optimistic”.
This year’s score compares to 1.86/5 in 2022 and a far greater level of optimism in 2021 at 2.70/5.
Despite the lower level of confidence, it still stands above the record low experienced during the Covid-19 pandemic in 2020, where the score plummeted to 1.36/5.
A prevailing sentiment is that we are at the nadir of the economic cycle.
Simplicity founder and CEO Sam Stubbs says that while New Zealand’s economy is in a relatively poor position right now, the long-term outlook is more positive.
“We are where Australia was in the early 1980s — about to get slowly more capital rich via KiwiSaver.”
A professional director agrees.
“We will likely stay here for a while and then things will improve”.
Chair and co-founder of The New Zealand Initiative, Roger Partridge, says the score is reflective of a combination of excessive public spending, inflationary monetary policy and anti-growth regulatory settings including immigration, foreign investment, the labour market and Covid.
“This has battered the New Zealand economy, and left it cruelly exposed to global forces,” he says. “The next government will inherit a perfect storm of economic challenges.”
More encouraging is CEO optimism in the global economy, at 2.23/5. This is a notable increase from last year’s rating of 1.83/5, underscoring a modest upswing in confidence in the global economic landscape.
As is typical in this survey, chief executives rated optimism in their own industry higher than that for the New Zealand economy or the global economy, with a weighted average of 2.47/5. This is slightly down from last year’s score of 2.70/5.
As expected, optimism varies across different industries.
The highest confidence was exhibited in the entertainment and leisure sector — an average score of 3.7/5.
The utilities, energy and extraction industry also reflected notable optimism — 3.1/5.
Cordis managing director Franz Mascarenhas is upbeat about the hotel industry’s improving circumstances in the coming year. “With all international markets — including China — opening up, and with some rationalising of airline fares overall travel should improve,” he says.
At the other end of the scale, transportation and delivery was among the lowest scoring — 2.1/5.
Both the construction sector and the education sector received a score of 2.3/5.
Real estate scored 2.6/5, reflecting the cyclical nature of the industry.
Cooper and Company CEO Matthew Cockram, notes “a downward cycle combined with the acceleration of trends such as flexible working — and high interest rates and inflation are an unwelcome confluence of negativity”.
Domestic concerns Executives were asked to gauge their concern on various domestic issues.
Unusually for the Herald’s CEOs survey, the top five concerns all stemmed from matters related to government and its policies.
Of most concern was the level and quality of government spending, at 8.17/10 (on a scale where 1 reflects “no concern” and 10 “extremely concerned”).
While the Treasury’s pre-election economic and fiscal update (Prefu) showed economic growth forecasts to be more upbeat than the May Budget, it also noted that Crown expenses remained elevated this fiscal year, due to “decisions at Budget 2023, the rephasing of unused spending from the 2022/23 fiscal year, the response to the North Island weather events, and the increasing costs of debt servicing”.
Craigs Investment Partners chair Sir Ralph Norris, a former leading Australasian banker, predicts “government borrowing, coupled with falling terms of trade, will see New Zealand underperform the global economy”.
Inflation was the second highest domestic concern — CEOs rating it at 7.82/10.
This worry is closely linked to interest rates, which emerged as the fifth-ranked concern at 7.26/10.
Treasury’s short-term forecasts, as outlined in Prefu, forecast inflation was proving to be more stubborn than originally expected, with the prospect of interest rates remaining higher for longer until the end of 2024 — including the possibility of further hikes to get inflation under control.
“The resulting impact on economies as governments rightly seek to bring down inflation is uncertain,” says Beca executive chair David Carter.
“This uncertainty, combined with inflation pressures and increases in cost of capital, is understandably causing clients to review their capital commitments”.
A leading real estate boss adds: “Until inflation rates come under control and reduce around the world, we are going to see hardship in many businesses as they have had extra costs added to them over the past year and with sale numbers slow, so are profits”.
Rounding out the top five domestic concerns are infrastructure constraints (7.72/10) and crime (7.34/10).
A potential shift in government, as noted by some, raises expectations among business for an improved outlook in the New Zealand economy.
“The economy is not in a good place right now and the Government has hindered, not helped it,” says an advertising executive.
Sharing this perspective is a professional director, who expresses hope that there is “light at the end of the tunnel from the likelihood of a more business-aware government that understands the importance of wealth creation on our medium-term prospects”.
Echoing this sentiment, the CEO of an energy exploration firm reckons “a change in government to National/Act will improve my optimism around NZ economy but I believe we are in for a difficult global environment.”
Such concerns relating to government and the looming election have notably shifted downwards the traditional business concerns typically seen headlining this survey.
Last year, the most pressing domestic concern was skills and labour shortages, receiving a score of 9.0/10. This year, however, it has fallen to tenth position, at a lower score of 6.81/10. Similarly, immigration restrictions were a significant worry last year. They have now declined to 6.13/10 from 8.52/10.
Survey respondents were encouraged to put forward any other pressing concerns they have regarding domestic issues beyond those specifically polled.
Education emerged as an area several executives are deeply concerned about.
“Education, more broadly than just skills, is a key concern of mine,” says the CEO of a professional services firm.
“The state of our education — both in syllabus and attendance,” says social entrepreneur Anne Gaze.
“An entire cohort, a generation of children need engagement and relevant curriculum.”
Mood of the Boardroom: Getting down to business (NZ Herald)
The politicians battling it out to be New Zealand’s next finance minister got their practice runs in early at this month’s BusinessNZ election conference.
There have been plenty of head-to-head debates since – and more to come – including at today’s Mood of the Boardroom breakfast.
Finance Minister Grant Robertson threw down the opening salvo, emphasising how Labour had supported New Zealanders and New Zealand business during challenging times while fostering economic growth. “We now need to invest in our future — our infrastructure, our people, our external relationships and trade deals.”
He acknowledged that the Government had borrowed significantly to get New Zealand through Covid, but noted that “virtually all political parties were saying that’s what we needed to do”.
“There are a couple of professors of hindsight economics in Parliament, who keep coming back time and time again saying how much of our spend we shouldn’t have spent.”
National’s Finance Spokesperson Nicola Willis argued it is time for a government that champions growth, job creation, entrepreneurship, innovation and allows individuals to retain more of what they earn.
“I am carrying on in the proud tradition of a party that keeps the books in order, that spends with discipline, and that understands that every dollar of tax paid by New Zealanders should be treated with respect,” she said.
When Act leader David Seymour took to the microphone, he wasted no time in challenging the status quo, dismissing the prior speakers’ narratives.
He asserted that New Zealand’s deep-seated issues have been building over decades and require substantive change, not just “show up next week, business as usual but wear a blue tie this time”.
The Green Party’s Finance Spokesperson, Julie Anne Genter, kept the climate front and centre. She emphasised that the Greens have been “consistently calling for climate change for 20 years, and all the policies we have implemented in government have been sensible,” rattling through the home insulation programme, Zero Carbon Act and clean car discount.
Seymour playfully pointed out that Act has quite a number of supporters. “I have to say we are mostly going for the living voters, but not exclusively.”
He included Kate Sheppard, the founder of the women’s suffrage movement, on his list of historic figures that would have been Act voters, alongside Nelson Mandela and chiefs that were signatories to the Treaty of Waitangi:
“I have read some of Kate Sheppard’s quotes and she believed in universal human rights. She opposed racial discrimination; I suspect that she would be voting for us today.”
He left the audience in stitches and Genter with her head in her hands.
The two contenders for Prime Minister stuck to their predictable stump speeches.
National leader Christopher Luxon said that New Zealand is a fantastic country with “endless potential” but one that is heading in the wrong direction.
“If we are really honest with ourselves, we are not realising the potential we have, we’re not solving the problems we’ve got, and we certainly are not maximising the opportunities in front of us.
“What we need now is a turnaround. And I’ve done a lot of turnaround jobs in my life. The reality is you have to do two things: face the brutal reality whether you like it or not, and then actually have hope — not just in some kumbaya sense — but hope because you have a plan that you can actually get yourself into a different place, and I think that is what we need in New Zealand.”
He itemised five things he would focus on to turn New Zealand around — but notably omitted any mention of the word “climate”.
When it was Prime Minister Chris Hipkins’ turn, he maintained that New Zealand’s debt was still low relative to other nations, and that Cyclone Gabrielle had had a significant role in slowing down economic recovery.
Hipkins reiterated the significance of persisting with Labour’s social agenda.
“An economy dragged down by poverty and exposed to the ravages of extreme weather is bad for business,” he said.
“Our economic fundamentals are in good shape.”
But of all the leader addresses, it was New Zealand First’s Winston Peters who sparked the most discussion afterwards.
The short time that he spent on business was focused on the uncertain global outlook, particularly with China, and how it could impact New Zealand.
“The Chinese economy is in deep trouble, and we face circumstances almost identical or worse than 1997, when, as you know, the Thai baht fell out of bed and so did the rest of the currencies around Asia.
“As Treasurer at the time we had a real big problem trying to keep our economy going with markets dropping off everywhere. So, it pays to have something like experience — and certainly in economies like this.”
He underscored the need to incentivise wealth creation. “Our way back is to export, export, export. And to add value to everything we possibly can before we export, not after.”
The majority of Peters’ speech was dedicated to outlining his stance on a wide array of New Zealand First’s key issues and critiquing other political parties.
He took jabs at former Prime Minister Dame Jenny Shipley and her troubles with Mainzeal, Hipkins and his free dental policy and commitment to deliver tunnels under the Waitemata Harbour, National and its delays and cost blowouts building roading infrastructure and the foreign buyer tax. “These promises being made on this campaign just will not happen. They’re not going to happen because they haven’t got the money,” Peters claimed.
He also underlined his opposition to co-governance, the increased use of Maori language, and the substitution of “Aotearoa” for “New Zealand”.
“We have a whole lot of things being changed, like our health system, our education system and we’ve got a new name — Waka Kotahi — who is not concerned about potholes but more concerned about the signs that you want to read if you’re trying to get past the pothole.”
Green Party co-leader James Shaw was on stage immediately following Peters.
“Tena koutou katoa. People of Aotearoa,” he said, receiving a robust round of applause from the business audience. “I was struggling to think of a title for my speech, and I’ve decided to go with: ‘And now for something completely different’.”