Politics Archives - Page 11 of 22 - Tim McCready

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.”

Business confidence on the rebound

October 7, 2021

Business confidence on the rebound

Confidence has rebounded in the 2021 Mood of the Boardroom after record low levels in last year’s election survey.

Cumulatively, respondents to the Herald survey rated their optimism in the New Zealand economy at 2.70/5 — up significantly from last year’s score of 1.36/5.

A professional director notes that 12 months ago, the forecasts of unemployment, debt and GDP were completely at odds with what has since unfolded: “The outlook is substantially more positive, and this will continue, assuming we complete our vaccine rollout by year end and start relaxing border restrictions in the first quarter of next year.”

But Cathy Quinn, a director of Fletcher Building and Fonterra, says she is less optimistic about the New Zealand economy, as she cannot yet see the game plan for New Zealand to open up to the world again.

“The rest of the world is already opening up borders again — albeit with conditions as to which countries. Evidence of Covid-19 vaccination, pre-departure and arrival tests etc.,” she says. “I fear if New Zealand does not do so similarly in 2022, our economy will suffer as well as the wellbeing of Kiwis.”

Auckland Business Chamber CEO Michael Barnett says prior to Covid-19 there were some sectors that were driving the New Zealand economy. “If we are smart, we will relaunch our economy on those sectors that were doing well and be creative about reinventing those sectors that were not.

“Internationally, we need to be wary of small economies protecting themselves and introducing non-tariff barriers to do so.”

Says New Zealand Initiative chair Roger Partridge, “For the New Zealand economy there are risks in both directions — of business confidence being harmed by a Covid strategy that raises the prospect of never-ending lockdowns.

“If this risk does not eventuate, then we will see a continuation of asset, wage and consumer price inflation, which also presents a long-term threat to business confidence, growth and jobs.”

Global economy optimism has rebounded even further. Last year’s survey respondents scored it at 1.16/5, at a time when many of our major trading partners were being ravaged by the pandemic. This year it scored 3.15/5, showing that despite the Covid-19 numbers remaining significantly high around the world, the international vaccine rollout has clearly helped buoy confidence.

A banker says: “It is easy to be more optimistic than this time last year with vaccines in sight, but that doesn’t mean there are some massive structural concerns around how we make the most of the more buoyant economy we find ourselves in.”

Beca’s CEO Greg Lowe says: “Locally and globally, the pandemic economic impacts are more manageable than we feared, but ongoing disruptions (supply chains, recruitment, lockdowns) mean uncertainty around investment and potential delays to projects and plans.”

As is typical for this survey, executives rated optimism in their own industry the highest of the three optimism scores — 3.20/5, compared to 1.90/5 in last year’s survey.

But delving a little deeper into industry optimism scores shows that these vary considerably.

Industries that scored particularly high include insurance, airlines and aerospace, technology, finance, and entertainment.

“The 2021 financial year was a huge year in markets, reflected in a record return for the NZ Super Fund,” says NZ Super Fund CEO Matt Whineray. “Driven by strong fiscal stimulus, aggressive monetary policy and the pandemic response, markets have rallied strongly since late March 2020. Markets are pricing in continued earnings growth and low interest rates, so it’s hard to see these moves being repeated this year, with continued uncertainty around the course of the pandemic and the spectre of inflation”.

At the other end of the scale, executives that gave the lowest scores are working in education, manufacturing, utilities, and construction.

“The pandemic has gone on much longer than I anticipated, and it still isn’t clear as to how it ends (if it ever does),” says a utilities executive, an industry that scored an average of 2.5/5 for optimism.

“We are in this quagmire in New Zealand of not being able to solve for a protracted and slow vaccination rollout compounded by inadequate tracing and testing speed and capability and the need to open the borders to enable tourism to restart — I am particularly depressed at the moment,” says a director in retail, a sector which scored an average of 3.38/5 for optimism.

The construction sector scored optimism for its industry 2.67/5. Says Fulton Hogan managing director Cos Bruyn: “The latest Covid lockdown in New Zealand and ongoing issues in Australia may constrain capital spend, dependant on ongoing duration of business disruptions. There is also the issue of international supply chain and shipping disruptions that will impact on our ability to spend to consider.”

Sanford CEO Peter Reidie says Covid has made a significant impact on Sanford’s revenue lines: “As a heavily export focused business, we were hit early by the impact of Covid-19 globally on food service and supply chains. We are now seeing different parts of our business begin to recover from that at different speeds.

“We need and expect to see further global recovery from Covid.”

The food and beverage sector scored optimism for its industry at 2.8/5.

The Warehouse Group chairman Joan Withers was less optimistic. “Probably because we are in this quagmire in NZ of not being able to solve for a protracted and slow vaccination rollout compounded by inadequate tracing and testing speed and capability and the need to open the borders to enable tourism to restart I am particularly depressed at the moment.”

Domestic concerns

The top five domestic issues of concern for executives are unsurprisingly Covid-related.

They are particularly concerned about skills and labour shortages, which they rated at 9.18/10 on a scale where 1 = no concern and 10 = extremely concerned.

Throughout the survey chief executives have raised many contributing reasons for the skills and labour shortage, including a huge increase in infrastructure and technology projects requiring significantly more staff than in the past, border restrictions preventing skilled immigrants entering the country, poaching of talent from international firms and recruiters, and salary costs being driven up by employees that are role-hopping between companies.

Susan Peterson, a director in the technology and digital sectors, says the New Zealand economy performed very well through Covid, largely due to the success of the Government’s elimination strategy and support provided, but is concerned that the rest of the world is now “kicking back into life” and New Zealand is being left behind:

“The border restrictions are having a real impact on NZ’s tech sector,” she says. “The jobs we are creating, and could locate here in NZ, are now being recruited in overseas hubs as we don’t have sufficient locally trained New Zealand talent and are not permitted to bring it in through the border. It is concerning to see the potential long term damage being done to New Zealand.”

Says Fulton Hogan managing director Cos Bruyn: “It is becoming an increasing challenge to hold staff, let alone grow staff numbers. Labour costs are rapidly escalating, the costs of which will need to be passed on.”

The next highest scoring domestic concerns are: the potential for community transmission of the Covid-19 delta variant (8.69/10), immigration restrictions (8.53/10), quality border protection against Covid (8.22/10) and transport and logistics costs (8.09/10).

“Supply chain issues and rising building costs is putting pressure on our costs which we are working hard to manage while also offering competitive pricing,” say Tower Insurance chief executive Blair Turnbull.

“If these inflationary trends continue the costs unfortunately will ultimately also flow through to higher premiums for customers.”

Local Government Funding Agency chair Craig Stobo says we are in the midst of a wartime economy: “Wage controls are in place, we cannot travel overseas and return easily, families are divided by cumbersome border restrictions.

“Migrant labour is not allowed to assist our food producers, businesses cannot find labour. Small businesses are closing, supply chains are disrupted, and materials are in short supply.

“Meanwhile, long-term structural issues of poverty, inequality and housing affordability have deteriorated significantly.”

Other more traditional issues that have a heightened level of concern among executives include the level and quality of government spending (7.95/10), the increase of cyber attacks (7.92/10), general uncertainty around direction of government policies (7.61/10) and infrastructure constraints (7.55/10).

Newshub Nation panel discussion (video)

August 14, 2021

It was nice to be back on the Newshub Nation panel this weekend with Ella Henry and Dileepa Fonseka, talking about opening the border, climate change, and a few laughs about the Winston Churchill painting controversy!
As New Zealand starts its journey to open to the rest of the world world, it was interesting to reflect on technologies being implemented globally that could play a part in NZ’s response:
🎤 The increased use of micro-influencers, particularly in the United States, to reach out to small pockets of communities that are vaccine-hesitant and allay concerns.
📌Wristbands (Singapore, South Korea, Hong Kong) and geotagged facial recognition (Western Australia) for ensuring home quarantine.
📱 Linking the Covid tracer app to vaccine status so that entry requirements can be varied based on risk and are validated when you scan into a venue (such as in Singapore, which requires double vaccination to enter restaurants, but a lesser requirement for office spaces).

New shifts in sustainability trends continue at pace

July 30, 2021

New shifts in sustainability trends continue at pace

The final leaders’ communique from the G7 states: “2021 should be a turning point for our planet as we commit to a green transition”.

Many of the sustainability trends in business that were on the rise last year are continuing at pace.

The pandemic highlighted the interconnectedness between social, environmental and economic challenges. It reinforced that an approach, centred around strong environmental, social and governance (ESG) principles is important for a sustainable future and that companies with strong track records in these areas tend to do well in the long-term.

But there are distinct new shifts in sustainability that have emerged over the past year that will shape the agenda and have a major impact on business in the months and years ahead.

Increased data and disclosure to counter greenwashing

The demand from consumers for sustainable business practices brings with it a growing concern that greenwashing is being used to obfuscate environmental credentials.

Recent audits have shown this concern has substance. A study of 12 of the biggest British and European fashion brands found 60 per cent of environmental claims could be classed as “unsubstantiated” and “misleading”. In another study, a sweep of company websites across a range of sectors by the European Commission found that green claims in 42 per cent of cases were exaggerated, false or deceptive under EU rules.

There is a growing expectation that companies will substantiate claims made.

Going a step further, some consumers and investors are expecting companies to disclose a plan for how their business model will be compatible with a net-zero economy — including detail on how that plan is incorporated into a long-term strategy that it is reviewed by the board of directors.

Earlier this month, former US Vice-President Al Gore told the Bloomberg Green Summit: “we must be vigilant about the rising threat of greenwashing or risk derailing the hard-won progress” that has been made in recognising the climate crisis.

He also noted that sustainable investing has “entered the mainstream,” providing even more openings for potential greenwashing.

Gore is right — sustainable investment opportunities have begun flooding the market to meet demand from investors looking to make decisions aligned with their ESG values. Of the S&P 500, about 90 per cent of companies publish sustainability reports, yet only 16 per cent have any reference to ESG factors in their filings — clearly demonstrating the gap between what companies voluntarily publish and regulatory disclosure.

To counter this, a broad range of requirements are being swept in to standardise the current patchwork of regulations and disclosure frameworks.

In March, Wall Street’s top regulator the Securities and Exchange Commission (SEC), announced the creation of a Climate and ESG task force to develop initiatives that will “proactively identify ESG-related misconduct”.

“Climate risks and sustainability are critical issues for the investing public and our capital markets,” said SEC acting Chair Allison Lee.

The task force will use sophisticated data analysis to identify potential violations, and evaluate and pursue tips, referrals and whistle-blower complaints on ESG-related issues.

The CFA Institute, a global association of investment professionals, is developing ESG standards for investment funds and other products, aiming to “provide greater product transparency and comparability for investors by enabling asset managers to clearly communicate the ESG-related features of their investment products”. Draft guidance was released earlier this year that the CFA Institute hopes will be adopted by fund companies around the world.

Global action to build back better and provide a green alternative to Belt and Road

One of the most dramatic turnarounds from the Trump administration has been the pace at which President Biden has thrown the weight of the United States behind global efforts to address global ESG issues.

Many of the Biden administration’s key people have been brought in with a strong environmental focus. Alongside this, the US quickly re-joined the Paris Climate Agreement, a new White House office of climate policy was established, and former Secretary of State John Kerry was appointed as international envoy on climate change.

In May, the White House issued an Executive Order that lays out a whole-of-government approach to addressing climate risks.

The recent Group of Seven (G7) meeting in Cornwall, United Kingdom, saw leaders announce the “Build Back Better World” (B3W) partnership. B3W is a “climate-friendly” initiative to mobilise private capital to help narrow the US$40+ trillion infrastructure need in the developing world which has been exacerbated by the Covid-19 pandemic — and has been described by some as a green counter to China’s Belt and Road Initiative.

Alongside this, the G7 leaders put forward ambitious targets for climate action. One of these targets saw a commitment to long-term strategies to net-zero greenhouse emissions by 2050 as soon as possible, “making utmost efforts to do so by COP26 (the UN Climate Change Conference COP26 in Glasgow in November).”

They also committed to set net-zero targets for energy generation in the 2030s and end direct government support for new thermal coal generation capacity without co-located carbon capture and storage technologies by the end of this year.

All other inefficient fossil fuel subsidies will be phased out by 2025. There was also a commitment made to stop direct funding for coal-fired power stations in OECD nations by the end of this year.

Other commitments made during the G7 that will impact the sustainable finance sector include the mandating of climate disclosures; a commitment to “intensify efforts in enhancing the offer of more sustainable transport modes” including encouraging the phase-out of traditional passenger vehicles in favour of electric vehicles by 2040; and a goal to jointly mobilise US$100 billion per year from public and private sources through to 2025 for developing countries.

These sweeping changes will have wide-ranging implications for governments, business, innovation, and financing.

The final leaders’ communiqué from the G7 states:

“2021 should be a turning point for our planet as we commit to a green transition” and accelerate efforts to cut greenhouse gas emissions, and “we acknowledge our duty to safeguard the planet for future generations” — although some have criticised the G7 for not being more ambitious in financial commitments to developing countries and for not being detailed in the plans to promote a green industrial revolution.

Threats to nature and biodiversity taking centre stage

In 2019, the UK was the first major government to commission a review into the economics of declining biodiversity.

The final report, the 600-page Dasgupta review, was released this year, and clearly links economic success to biodiversity.

It notes that our economies, livelihoods and wellbeing all depend on nature, and considers nature as an asset in the same way as produced capital (roads, buildings and factories) and human health (health, knowledge and skills) are assets:

“We rely on nature to provide us with food, water and shelter; regulate our climate and disease; maintain nutrient cycles and oxygen production; and provide us with spiritual fulfilment and opportunities for recreation and recuperation, which can enhance our health and wellbeing.

“We also use the planet as a sink for our waste products, such as carbon dioxide, plastics and other forms of waste, including pollution.”

The World Economic Forum estimates that $US44 trillion of economic value generation representing more than half of world GDP is moderately or highly dependent on nature. Yet the world’s biodiversity is declining faster than it has at any other time in human history, with the current rate of extinction tens to hundreds of times higher than the average over the past 10 million years — and accelerating.
We can expect to hear more about this and see it impact business decision making. The UK government has published an amendment to its Environmental Bill, requiring new “nationally significant” infrastructure projects — including for transport and energy — to provide a net gain in biodiversity and habitats for wildlife.

Protecting and enhancing nature will need concerted, coordinated action and will be major topics at this year’s upcoming COP15 (UN convention on biological diversity) in China and COP26 (UN climate change conference) in Glasgow.

“This year is critical in determining whether we can stop and reverse the concerning trend of fast-declining biodiversity,” says UK Prime Minister Boris Johnson.

“As co-host of COP26 and president of this year’s G7, we are going to make sure the natural world stays right at the top of the global agenda,” he said. “And we will be leading by example here at home as we build back greener from the pandemic.”

Sustainable Business: Climate Change Commission lays out roadmap

July 30, 2021

Sustainable Business: Climate Change Commission lays out roadmap

Last month, the Climate Change Commission released its final report: Ināia tonu nei: a low emissions future for Aotearoa, which lays out the roadmap for New Zealand to meet its greenhouse gas reduction obligations of reaching net zero emissions of long-lived greenhouse gases and reducing biogenic methane emissions between 24-47 per cent by 2050.

The 418-page report calls for transformation across almost all facets of the economy and sets out large-scale changes that will need to be taken by central government, local government, individuals, and business.

These changes will result in a hit to New Zealand’s GDP.

The Commission assessed that the level of GDP could be around 0.5 per cent lower in 2035 and 1.2 per cent lower in 2050 than it would be otherwise. Significantly, it says that not acting and delaying key actions could result in the level of GDP in 2050 falling by around 2.3 per cent.

Transport

Transport makes up almost 33 per cent of New Zealand’s total long-lived gas emissions and is the fastest-growing source of emissions.

The report says there is an opportunity to decarbonise transport by 2050 by investing in the right infrastructure and systems, encouraging changes to behaviour, and adopting technologies that are available now and improving fast.

It recommends the Government set targets by 2022 and implement a plan (including substantially increasing the share of central government funding) to increase walking, cycling, public and shared transport to displace vehicle use.

Increased numbers of people working from home and a switch to low emissions vehicles will help, but the report notes the latter will require a “rapid increase” in electric vehicle sales, with nearly all light vehicles entering NZ electric by 2035.

The report also assumes from 2030, short-haul aviation (such as Wellington to Nelson) would take place in new generation planes.

This was modelled with electric planes, but biofuels or hydrogen could also be used to make sustainable aviation fuel for longer distance flights.

Forestry

Around 380,000ha of new exotic forestry (particularly pine) will need to be established from 2021 to 2035. These absorb carbon quickly, reaching their average carbon stock after around 20 years. The Commission recommends a comprehensive plan for new native forests on less productive land.

These absorb carbon more slowly than exotic production forests but will continue to do so for centuries until they reach maturity. This will help offset long-lived greenhouse gas emissions in sectors with limited options to reduce emissions from 2050 and deliver wider benefits for erosion, soil health, water quality and biodiversity.

Agriculture

For agriculture, the Commission says New Zealand needs to reduce its livestock numbers 13.6 per cent by 2030.

It predicts that while New Zealand will still produce roughly the same amount of milk and meat, it will do so with fewer animals, and expects some farms to replace animals with horticulture.

It says low-methane sheep will play an important role (and will help cut methane by 10 per cent by 2030), along with a reduction in the use of fertiliser, and new technologies will need to come on board, such as vaccines that can help reduce emissions from livestock.

Energy

The report says replacing fossil fuels with low-emissions electricity will play an essential part in New Zealand’s transition, requiring a major expansion in the electricity system which should start immediately.

It recommends the installation of new coal boilers is stopped immediately, and a timetable set to phase out fossil fuel use in existing boilers.

New Zealand Institute of International Affairs 2021: Prime Minister Jacinda Ardern interview (video)

July 14, 2021

Interview with Prime Minister Jacinda Ardern at the New Zealand Institute of International Affairs 2021 conference, ‘Standing in the Future: New Zealand and the Indo-Pacific region’ with co-hosts Tim McCready and Ziena Jalil.