MOOD OF THE BOARDROOM - Too close to call? - 2017 Chief Executives' Survey - Our experts analyse the responses - Deloitte
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Tuesday September 12, 2017 MOOD OF THE BOARDROOM 2017 Chief Executives’ Survey Too close to call? Our experts analyse the responses Hamish Fletcher Fran O’Sullivan Liam Dann Thomas Pippos
D2 nzherald.co.nz | The New Zealand Herald | Tuesday, September 12, 2017 MOOD OF THE BOARDROOM Mood of the Boardroom 2017 What’s Inside Executive Editor: Fran O’Sullivan Writers: Francis Cook, Liam Dann, Hamish Fletcher, Anne Gibson, Tim McCready, Tamsyn Parker, James Penn, Thomas Pippos, Holly Ryan, Graham Skellern. Subeditor: Isobel Marriner Cover: Rod Emmerson Graphics: Isobel Marriner Online: Sophie Ryan, Francis Cook Advertising: Neil Cording; Megan Shaw Survey Co-ordination:Tim McCready, James Penn Event Stage Management: Rebecca Widdison The Herald’s Mood of the Boardroom 2017 Election Survey attracted participation from 118 respondents. This year there were more than 90 chief executives including CEOs of most of NZ’s biggest companies, some significant publicly owned institutions, a handful of company chairs and the Wheels fall off the What now for The fight for finance: CEOs weigh heads of seven influential business Green machine, D8 Winston? D9 up Robertson and Joyce, D10-11 organisations. The Herald survey is conducted in association with BusinessNZ. Chief executives are drawn from the Deloitte Top 200 list which spans private and public-sector companies, Business NZ’s major companies group and major professional advisory firms. The survey is now in its 16th year having been launched in December 2002 within a Herald State of the Nation report. Watch the debate Shadow finance spokesman Grant Robertson and National’s Finance Minister Steven Joyce will debate the results of the Herald survey at a breakfast at the Langham hotel in Auckland this morning. The debate will be chaired by Herald Managing Editor Shayne Currie. nzherald.co.nz will feature video from The Trump The growing Education for What to do about the debate and interviews with leading factor, D14 cyber threat, D16 the future, D17 our water, D25 CEOs attending the breakfast. Growing prosperity and potential
D3 MOOD OF THE BOARDROOM A strong mood for change A n overwhelming majority of chief executives see Jacinda Ardern’s confirma- 88% of CEOs view Jacinda Ardern a gamechanger for the election, writes Fran O’Sullivan tion as leader of the Labour Party as an election game-changer. There is a strong mood for change among the 118 respondents to the Herald’s Mood of the Boardroom Elec- tion Survey. Some 88 per cent see Ardern as the lightning rod which could cata- pult Labour to power at the Septem- ber 23 election. But their appetite for regime change is tempered by Labour’s failure to be upfront about its intentions on major polices affect- ing business, like capital gains. With less than a fortnight to run before final polls close, chief execu- tives remain divided on whether to “call time” on the third term National Government. “I think the National Government has been a very credible and stable manager that deserves respect for its approach in managing the country,” said a tourism boss. “However, it is arguable that they have come late to issues such as water management, local infrastructure and transport in- been slow. “On the other hand, it takes are bringing to the table,” said The election comes after a lengthy Tourism boss: “Paula or Steven vestment with a piecemeal, below par time to turn a super-tanker . . . and the Mainfreight group managing director period of economic growth. But there would be a good stopgap, but it approach. tolerance for change in the popula- Don Braid. “As long as that’s not are tensions. ultimately needs someone to come “They need to get ahead of these tion is slow.” thought up on the fly and has had “The Key Government was negli- from outside the system.” issues and signal a strong intent as If National was to get a fourth term some decent thought behind it before gent with the house price outcomes There was a clear sentiment it was these are real issues that affect it needed to abandon its “steady as they release it, then she’s definitely which is a very difficult, inter- time for generational change. voters.” she goes” approach and be more got this current Government on the generational issue now to resolve,” Chief executives once again put The survey — which is taken in aspirational in its approach to the big run in my view. said an energy sector boss. “English English at the top of the Cabinet association with BusinessNZ — has ticket items including water, climate, “She’s got youth and she’s got was Deputy Prime Minister and Min- rankings on his performance over the been in the field during one of the homelessness and poverty. energy, and she’s almost — without ister of Finance during that time so past year. The Prime Minister rated most volatile elections in New Zea- English presided over New Zea- blaspheming — the John Key effect has to shoulder some of that blame, 4.13/5 on a 1-5 scale where 1 = not land’s recent history. for the Labour Party, isn’t she? And and therefore putting the party’s in- impressive and 5 = very impressive. The Herald delayed surveying un- The result will turn on perhaps that’s what the younger vote terest ahead of New Zealand.” His rating was down on prior years til August 14, so as to more accurately is looking for, perhaps that’s what the An energy chief cautioned that when he held the finance portfolio. capture the mood in the nation’s Bill English’s ability to sell non-voter has been looking for; some- though New Zealand was enjoying English’s successor as finance min- boardrooms after a period in which Ardern took over Labour’s’s leader- his dream for the future one to hang their hat on.” Deloitte CEO Thomas Pippos good returns for dairy exports, export education and tourism, all had ister, Steven Joyce, was rated 3.71/5. Nikki Kaye was next on 3.62/5 fol- ship from Andrew Little, and Greens vis a vis Jacinda Ardern. counters that “this next period the vulnerabilities which could wipe the lowed by Amy Adams (3.58/5); co-leader Metiria Turei was forced to In both cases using the result will turn on Bill’s ability to sell smile from our country’s face pretty Bennett (3.56/5); Chris Finlayson resign following an admission of his dream for the future vis a vis quickly. (3.49/5); Simon Bridges (3.18/5); Anne benefit fraud. canvas he has helped others (Jacinda) — in both cases using “I think many of these risks con- Tolley (3.11/5); Todd McClay (3.05/5). “They finally have a charismatic the canvas he has helped materially cern business — not just for ourselves The remaining ministers all rated less leader,” said an investment banker. materially shape and shape and build as Minister of but more broadly for the wellbeing than 3/5 when it came to their per- “People these days vote with their build as Minister of Finance. of our society. I think currently we formance. eyes — she is much more appealing “A risk is that his focus will be on are all marching on hoping that When it came to ranking the minor that Andrew Little!” Finance. A risk is that his the canvas that now exists when the Trump does not pull the trigger and party leaders, they placed Act’s David There is a clear perception that the focus will be on the general populous has banked that, that the Chinese (with all the levers Seymour top of their list with 2.85/5 National Government — driven by its and are now looking for what will be available to them) manage their econ- with NZ First’s Winston Peters nar- own fiscal focus — left it too late to canvas that now exists painted on it.” omy to avoid a crisis of the kind some rowly behind at 2.76/5. The other make major investments in housing and infrastructure to underpin the when the general But Ardern’s propensity to make “Captain’s calls” on important matters consistently predict.” National’s future leaders: James Shaw (Greens), Te Ururoa Flavell and Marama Fox (Ma- massive uptick in immigration num- populous has banked like capital gains taxes are a major CEOs were split on who they ori Party), Gareth Morgan (The Oppor- bers in recent years. that and are now looking negative. “Now is not a time for thought would make the best Oppo- tunities Party) and Peter Dunne ICBC chairman and former Re- experimenting with a Labour Party sition leader if National should lose (United Future, who bowed out be- serve Bank Governor Don Brash said for what will be painted coalition whose policies are un- the election — which is a clear possi- fore the survey was completed) all the Government has failed to adopt changed and its leadership has bility on its current poll ratings. rated at less than 2.5/5. policies designed to increase per on it.” devolved on a doctrinaire and inex- Some 27 per cent thought Deputy Spark managing director Simon capita growth, and many of the other Thomas Pippos, Deloitte perienced political activist with no Prime Minister Paula Bennett had the Moutter says whoever wins, restoring problems (increasing wealth inequal- real world experience,” said a law firm right attributes to make the most stable and consistent Government ity, poverty and homelessness) are a land’s finances for eight years before boss. vigorous leader; others opted for post-election will be a priority. “Who- direct result of the Government’s fail- becoming prime minister. There was Beca’s Greg Lowe noted however Steven Joyce (20 per cent) and Judith ever leads needs to move quickly to ure to deal with the unaffordability the GFC. Pike River. Three that, “Jacinda is quickly learning to Collins (17 per cent). maintain momentum by establishing of housing. earthquakes. present a more moderate approach “Paula has the guts and determina- a stable team in Government.” Vector director and former But nothing prepared him for the than when she first became Deputy tion to make a fine opposition leader ● The Mood of the Boardroom CEOs Deloitte Chairman of the Year, Dame political quake that is Jacinda Ardern. Leader. “It remains to be seen if she — she has time, energy and Election Survey was in the field from Alison Paterson said Government ac- “Labour’s got to seriously think can modernise entrenched Labour whakapapa on her side,” said an Monday August 14 to Friday Septem- tion on some important issues had about some of the policy that they policy.” agribusiness chair. ber 8, 2017. Business leaders are The US presidency is The next five years will Social cohesion helps CEOs apprehensive optimistic: if there’s a spoiling an optimistic see business move business to over arrival of global threat, it’s global, outlook, writes Tim even faster, writes prosper, writes behemoths, writes writes Liam Dann D13 McCready D14 James Penn D15 Thomas Pippos D22 Hamish Fletcher D20
D4 nzherald.co.nz | The New Zealand Herald | Tuesday, September 12, 2017 MOOD OF THE BOARDROOM HOW DO THE CHIEFS Jacinda Ardern Courage 3.63 integrity 3.51 Trustworthiness 3.34 Leadership 3.29 Political management 3.25 Ability to form a coalition 3.01 Puts NZ’s interest over party’s 2.92 Vision and strategy for NZ 2.92 Economic management 2.08 The ‘game-changer’ J acinda Ardern’s charisma, her on water use for farmers will be 1 cent Recent polling shows this is the case ability to appeal to a younger or 2 (a difference of 100 per cent). with Labour — jumping from 24 per generation, and her much Many consider this unacceptable for cent to 43 per cent in the latest 1 News sought after ‘cut-through’ that a party that has been nine years in Colmar Brunton poll; its highest former leader Andrew Little just opposition. polling in 12 years. couldn’t seem to muster are some of “We have not seen Jacinda Ardern Port of Tauranga chief executive her most admired attributes by chief in a leadership role for long but the Mark Cairns says: “An intelligent poli- executives. initial signs appear impressive — not tician with clearly a freshening of the “It is refreshing to have an Oppo- least in galvanising the Labour Oppo- Labour brand. Early days though to sition leader with a more positive sition into campaigning hard to win judge Jacinda on producing sound outlook on life, rather than one that the election and creating some self- policies (economic as well as social) is stuck in the past or in a negative belief,” says Forsyth Barr managing and her skills at political manage- loop,” said a transport head. director Neil Paviour-Smith. ment.” Says Mainfreight’s Don Braid: Adds EMA’s Kim Campbell: “It’s too Adds Beca’s Greg Lowe: “Jacinda “There is clearly a level of enthusi- early to tell how good an administra- Ardern is putting on a polished per- asm, energy and commitment to tor she will be. formance but as she has no track what is lacking in New Zealand at the “We need to see more substance record her ability to lead effectively, moment. in policy development. manage the economy and put for- “An injection of youthful energy “She is a superb communicator ward policy that moves New Zealand and vision is sorely needed.” with a very engaging social style. We forward is unproven.” “Much is unknown, but perhaps have yet to see her perform under “I really don’t know… and nor do that’s the best way to be going into pressure.” most voters,” explained non- an election when she has the ‘X’ “I don’t know enough about her executive director Joanna Perry. factor,” says Simplicity’s Sam Stubbs. capabilities to be useful but give her “The trouble is a lot of people will Although CEOs respect Ardern’s 10/10 for courage taking over as forget that she is unproven and make courage — stepping into the Labour leadership role less than two months out from the election — most are worried she lacks experience and her unusually short job interview for Prime Minister won’t give the public the chance to see her tested for the leader with eight weeks to go to a general election,” says a banking boss. “But she has been very fluffy on tax policy and how we are going to pay for all the election promises. “It feels like a tax hike for the 12 per cent of New Zealanders who assumptions (in their gut!) about these things.” A legal boss summed up the gen- eral sentiment from CEOs: “Jacinda is a very likable person. She is politically very savvy. “She seems to care greatly about ,, I give her 10/10 for courage taking over as top job. “An impressive start as leader already pay 75 per cent of tax in New issues many Kiwis care about — social leader with of the Labour Party but untested Zealand.” injustice and our environment, for under pressure in her national lead- A law firm boss said in any event, example. eight weeks to ership,” observed Rob Cameron of she is likely to persuade many voters “She is a game-changer in this Cameron Partners. to ‘give her go’ without having to election. go to a general There is significant concern prove her credentials as potential “However, she is very young, and among chief executives that Ardern Prime Minister. while that appeals to many, for others election. has failed to articulate the detail of “She is in the right place at the right in an uncertain world we may feel some of her policies. In particular, tax time.” safer with the more experienced Banking leader policies including the expected capi- Speaking publicly for the first time hands of Bill English. tal gains tax and a failure to provide as leader, Ardern said: “We are about “Some may not see him as exciting, detail on whether the proposed levy to run the campaign of our lives”. but experienced.”
D5 MOOD OF THE BOARDROOM RATE THE LEADERS? Bill English Economic management 4.70 Integrity 4.20 Trustworthiness 4.17 Puts NZ’s interest over party’s 3.83 Courage 3.62 Ability to form a coalition 3.50 Vision and strategy for NZ 3.46 Leadership 3.37 Political management 3.31 ‘Political horsepower’ B ill English is admired by chief Cairns, “Bill has done a fantastic job as “He is a solid performer but vulner- executives for his financial finance minister in getting the country able to a charismatic opponent be- prowess. But they feel a lack through the GFC and two earthquakes cause the electorate in general prob- of boldness and political with the books in reasonable shape.” ably seeks a bit of excitement,” said a chutzpah hold him back. On the personal front, English is lawyer. “The missing attribute is English became Prime Minister in seen as variously as a “nice man and appeal,” added a manufacturing chief. December 2016 after John Key’s unex- good family man”. “I’m a big English fan as Minister of pected resignation. “Bill is a fabulous servant of NZ who Finance,” said an exporter. “He’s a “It is challenging replacing one of in private settings is a funny, warm and brilliant second in charge and a safe NZ’s most popular Prime Ministers less relaxed individual who has done a pair of hands. than a year out from the election, said tremendous job for New Zealand “But he doesn’t have the political Forsyth Barr managing director Neil economically,” said a leading invest- management or delivery required by Paviour-Smith. ment banker. “He has trouble a good PM. A longtime National MP, English was connecting or conveying these “The party looks and feels staid and briefly Finance Minister in the 1990s qualities in the mass media format.” flat-footed under his leadership even Bolger Government. EMA chief Kim Campbell was per- though not much has changed in term He reclaimed the finance portfolio ceptive.” His self-effacing Southern re- of economic management.” in 2008 when the Key Government serve is misconstrued as blandness. Ironically some of the most cutting took office in the midst of the Global “Sadly we live in an the age of criticism comes from the financial Financial Crisis. celebrity and infotainment where im- community. CEOs rate his focus on getting the age dominates substance,” explained “Mr English was a reasonably com- Government’s books back into the Campbell. “He has shown an astute petent ‘status quo Minister of Finance’, black as the most significant achieve- hand at managing the economy and holding the line on government spend- ment of the National Government been an innovator on social issues.” ing against the usual pressures from since the 2014 election. English — a former Treasury official spending ministers,” said a senior Investment banker Rob Cameron, himself — has introduced significant banker. “But he failed to do nearly ,, He has shown an astute hand who was himself one of Treasury’s architects of the major 1980s economic reforms during the Lange/Douglas era, describes English as “an outstanding and hardworking Minister of Finance”. “He is still being tested in the PM’s role in relation to political manage- Government-led social reforms which have won international praise particu- larly from the Australian Liberal Gov- ernment, Said AIA chair Theresa Gattung, “Bill is completely genuine in his focus on social investment and putting in place enough to solve the Auckland housing crisis (though clearly understanding what needed to be done), or to make the structural changes which might have improved our productivity per- formance.” English’s brand was tarnished by the at managing ment and ability to form a coalition.” game changing solutions to inter- “Todd Barclay affair” which saw the Others laud him as the economic generational poverty and some of New young MP forced to resign after his the architect” and the “political horse- Zealand’s most entrenched social prob- former electorate secretary revealed power” of much of New Zealand’s lems.” he had made secret tapes of conver- economy success. Adds Paviour-Smith,“The Prime sations. “We are lucky to have him,” says Minister has championed the social The prime minister — who repre- and been an Chorus boss Kate MeKenzie. “I often investment approach, being prepared sented the electorate before Barclay — hear him described as the ‘brains of the to admit that previous approaches was well across the former MP’s innovator on outfit’”. haven’t worked and holding agencies actions. “He deserves to be rewarded for his to account to know what the problems “He has taken a hit with the Todd social issues. outstanding economic stewardship,” are and seek alternative solutions.” Barclay stuff,” said a legal firm chief. affirmed an agribusiness boss. But CEOs feel English is being held “But it is a tough challenge to show the Kim Campbell, EMA Said Port of Tauranga boss Mark back by a lack of charisma. vibrancy of a three-term Government.”
D6 nzherald.co.nz | The New Zealand Herald | Tuesday, September 12, 2017 MOOD OF THE BOARDROOM We’ve lost the vision: Mainfreight boss Don Braid We’ve forgotten about what we do about investing for the future. The infrastructure of the country both in transportation, education, ,, We’re sort of being run by a couple of accountants, rather than visionaries, and I think the country needs some number of houses that are needed. A lot of nations around the world are coming up with innovative ways to get around that problem. If we were to look at some of the things they’re doing in London. How the loan structure is housing, water — all those things, have placed. Whether the local government been forgotten about in our view. And visionaries. will take a portion of the loan if a person now we need to have an intense look can find 40 per cent. Easing the rules at where the country sits to fund the as they’ve done in Stockholm or growth of the population, to fund the money, and dish it out when they think period of time the voter would’ve to think bigger and we need to think Copenhagen, where they’re not so strict tourism that the country has found — it’s ready, or, when they think they need understood that they’re the more offshore. We need to with the RMA-type rule, to allow which is all good for us, but we’ll lose it for perhaps political gain rather than government for the next term. internationalise our businesses. We cheaper, more affordable homes to be it if we don’t look after it. for economic gain for the country, I’m worried about whether the have a great labour force here that can built. You know, with all due respect, we’re might well be some of the problem. Government are thinking longer term; compete with any other labour force Many countries are educating their sort of being run by a couple of The indictment comes when you and perhaps that comes also to the in the world. We just need both the children a lot better than we are here. accountants, rather than visionaries, have a current Government who have political term that we allow these government and the businesses of New We need to think about those trends. and I think the country needs some been in power for three terms, who then governments. Is three years far too Zealand to think about those We need an educated workforce. I think visionaries. on the basis of electioneering suddenly short? We would say that it is. Four opportunities that are offshore. the Government has to listen to what I think we need to rethink our find money available for certain years plus might well be a far better We need to find a way to have business is saying and has to listen to political landscape for the future. projects to actually tick the political term of government and allow them to affordable housing and we need to the people. And I think this current This old style of sending all our tax landscape box. Whereas perhaps it think more strategically about the invest in that affordable housing sooner Government isn’t listening enough.” money to Wellington for them to decide might well have been better, that if future. rather than later. I just don’t think that Source: Mood of the Boardroom what they do with it as if it’s their they’d continued to invest over a longer Fom a business perspective we need there is enough energy around the leaders series video interview. Target those who need cuts Tim McCready and James Penn “We can achieve our social and our the right time to bring in a new New Zealand tax burden is paid by T environmental objectives at the same progressive tax rate on high earners. a small number of supposedly high- he Government’s election time as having a strong economy,” A large majority — 79 per cent — income salary earners,” says an year Budget contained $2 said English during the recent TVNZ1 responded no. Just 13 per cent re- agribusiness boss. “A new progressive billion worth of tax cuts from leaders debate. sponded yes; 8 per cent were unsure. tax would make this burden worse.” April next year — on the “We can have a strong economy Many chief executives were con- Others suggested a wealth tax or proviso National gets elected on Sep- with reasonable taxes, give hard cerned this would discourage growth capital gains tax might be more pro- tember 23. working families $1000 a year on the and could make it difficult to attract ductive in the long-term. When the Mood of the Boardroom average wage, that they can make and retain skilled workers in New The other major form of tax paid asked CEOs whether now is the right some choices about.” Zealand. “We don’t want to drive by individuals is GST. Executives time to apply personal income tax talent offshore,” says Mai Chen, Man- were keen to see a movement to- cuts, the majority of chief executives (56 per cent) responded no, 38 per Tax cuts? aging Partner of Chen Palmer. Most of those who responded in wards a regime where GST (as well as regional petrol taxes) was returned 56% cent said yes, and a further 6 per cent favour to raising taxes for high to the regions in which it was col- were unsure. earners had a caveat: “it is subject to lected, with the purpose of applying “Tax at the current level is work- where reinvestment goes,” said a me- that revenue to local economic de- Thomas Song’s Top able, there is no urgency,” says No dia boss. “As long as the proceeds are velopment. Indeed, 76 per cent of Three Issues 38% Thomas Song, Oregon Group manag- targeted towards eliminating inequal- respondents supported such a policy. ● Productivity: Every factor of ing director, while a recruitment head ity,” said another. Don Braid, group managing direc- input is expensive due to the suggests tax cuts are a good idea “if There was scepticism among tor at Mainfreight, was one of those political insistence on New you want to buy votes”. Yes respondents that increasing the tax in favour. “It is so important this Zealand labour. If we buy 6% Many responded that any tax cuts burden on high income earners debate is had,” said Braid. “Having infrastructure, we should buy should be targeted to low and mid- would help contribute to long-term Wellington think they have the “quality and speed at cheapest income earners. “Target those that productivity and societal gains, and answers for how much is spent on price”. How the supplier delivers really need it,” says the managing Unsure would be against global trends. infrastructure in the regions is yester- shouldn’t be our concern except, director of a public relations firm. “Higher earners will generally still day’s answer. We need to be thinking of course, slave labour excluded. “Give cuts to lower and middle- “There is still too much to do in spend a high proportion of their dis- about a bottom up approach to re- income earners as a matter of ur- New Zealand,” says a major banking posable income,” explains a printing gional tax investment.” ● Ignorance of world affairs: gency,” said a wine industry execu- boss. “Infrastructure investments, boss. “The Government collects GST Enthusiasm wasn’t universal. Move to educate with diverse tive. “Giving cuts to top bracket and fixing our schools and hospitals. from every additional dollar spent, “Having seen the standard we cur- sources of teachers from offshore. achieves nothing.” After that, maybe.” and they are more likely to spend in rently have a local government level, ● Complacency. The average Kiwi Most respondents felt that Vector Director Dame Alison areas such as medical insurance and further devolution of power would has very little idea about our investing into other areas — particu- Paterson agrees: “I think the majority private education, resulting in a lesser need to be coupled with a major largest trade partner — China. Most larly housing, infrastructure, educa- of New Zealanders believe that while load on government services.” rethink on how to attract talent and still believe China is still in the tion, health and climate change — is there are children living below the Several CEOs worry that increas- experience to move into that space.” Mao era with cheap labour. Again more important. poverty line, there should be no per- ing tax on higher earners could lead “Daft idea,” said one executive. make knowledge of our trading But Bill English disputes that you sonal income tax cuts.” to an increase in tax avoidance “Local government would just waste partners a priority. can’t have both. CEOs were asked whether now is measures. “A huge proportion of the the money.” Regions should grab share of tax revenue Investment needs to go into regional New Zealand to support economic growth, says Simpson Grierson’s Kevin Jaffe Central and local government politi- cians need “take it by the teeth and get stuck in to” relieving the strain on housing and infrastructure, says Kevin Jaffe, chairman of the law firm Simpson Grierson. Kevin Jaffe’s Top Three Issues ● Revenue growth areas. “Our market is very competitive and we have to find ways of doing ,, Rating only goes so far and local and central governments must work together to develop He says though the economy is things better and engage deeper strong, the population growth and with our clients.” funding mechanisms (for the rise in tourism has placed pressures on infrastructure and housing. ● Staff retention. “The labour market is good and we are finding regions) In a survey completed by Simpson Grierson, 80 per cent of the Local good people including attracting Government mayors and chairs said some back from overseas.” local economies to be strong. But it will make a real difference to infra- their key issues were funding of infra- ● Technology development. “We investment needs to go into the structure or is it just another tax?” structure and housing affordability. are looking at how we work and regions to support their growth.” Jaffe does not favour any further “There is an appetite for a more what technology can do for us. Jaffe believes the government tax impost on the residential property certain flow of regional funding. We can change our services and should be open to sharing tax sector. “A capital gains and/or other Rating only goes so far and local and have staff working offsite at a revenue (such as GST or regional property taxes such as stamp duty central governments must work client’s place. That’s where we are petrol taxes) with the regions in could be the tipping point for the together to develop funding mechan- heading — to deliver a point of which the revenue is collected — and sector. isms,” says Jaffe. difference and keep our talent.” those proceeds directed towards lo- “The demand side has softened Take Auckland. “People have cal economic development. and that could be the result of the woken up to the fact that the city is “Central and local government loan-to-value ratio restrictions. straining and it needs new infra- around the Unitary Plan to enable an local government to keep working need to find alternative funding. “Maybe they have done the trick structure. The City Rail Link project, increase in the housing supply. That together to increase targeted invest- Whether regional fuel tax is the smart and taken the heat out of the overseas for example, required a number (of process was quick and it made a ment into infrastructure and housing. way to go, I’m not sure. The figures investment,” says Jaffe. “Further taxes people) to work together. difference.” “It’s a good thing people are mov- I saw for fuel tax in Auckland wasn’t may be a step too far.” “A lot of good work was done Jaffe says the key is for central and ing into the regions, as we want the a real winner. The issue is whether — Graham Skellern
D7 MOOD OF THE BOARDROOM The tale of two report cards Tim McCready CEOs rated the National-led Government on rating of 2.43/5. “New Zealand’s per- W formance on a global scale has been hen asked to consider their performance in key areas since the 2014 impressive in comparison to most the National-led Gov- ernment on its perform- election on a 1-5 scale, where 1= not impressive economies and National deserve credit for that,” says a director of two ance in key areas since and 5= very impressive. prominent companies. “But there are the 2014 election, CEOs rated the some notable underachievements, Budget surplus focus at 4.55/5 s most highly, followed closely by economic The Top Five The Bottom Five including the rise of homelessness — just walk along Queen St.” 4.55 2.43 growth at 4.21/5. When asked “should we be doing This is perhaps unsurprising given more to help the homeless popula- this year’s Budget showing the Gov- tion?” 85 per cent of CEOs said yes, ernment recording a stronger oper- Budget surplus focus Tackling housing issues 5 per cent no, and 10 per cent were Cathy Quinn’s Top 4.21 2.43 ating surplus than was forecast, and unsure. the recently released Pre-Election Fis- “Homelessness is simply not the Three Issues cal Economic Update showing a ro- New Zealand way. We fail ourselves ● Retreat to protectionism around bust economy growing at an average Economic growth Mental health (including suicide) as a society by condoning it in any the world: All we can do is to keep 4.19 2.43 of around 3 per cent over the next form,” says Simplicity managing advocating for open trade and four years. director Sam Stubbs. opening doors with others. “The country has benefited on Stubbs was not alone with this many fronts from stable and skilled International trade Poverty and homelessness sentiment. “Everyone needs a home,” ● Trump commencing war with 4.10 2.50 economic policy making,” says Beca and “there is always more to be done North Korea: Bill English openly Group chief executive Greg Lowe. in this space,” and “surely this prob- warning US against it took moral But survey respondents cautioned lem is solvable” were comments courage. I think it is a position though National can be proud of the Strengthening China relationship Environmental / water quality peppered throughout this year’s sur- every Kiwi would agree with. 4.06 2.56 economic health of the country, there vey responses. ● The divide between the haves are significant social issues that need But how to tackle poverty and and have nots: I would support a tackling. homelessness was much harder for programme that provides housing “National’s steady as she goes ap- New Zealand’s place in the world The wealth gap business leaders to agree upon. for the homeless and support for proach needs to change up if they get “Give tax breaks to low and mid- children in deprived families. The another term,” says an agribusiness constituency: farmers and home deal with the unaffordability of hous- income people and stop the merry go challenge is getting the money chairman. “They must be more owners.” ing.” round of money,” says Erica Craw- spent where we want it to be. For aspirational in their approach to the New Zealand’s growing inequality A legal boss gave National a ruth- ford, Loveblock Wine chief executive. example, on kids in deprived big-ticket items including water, clim- gave National another poor score, less assessment: “They have not lis- “Our people are struggling and kids circumstances and not diverted ate, homelessness and poverty.” with the wealth gap receiving 2.56/5. tened on housing ideas; allowed con- struggling to learn. Too many home- off elsewhere. It is in no one’s This tale of two very different Research released by Oxfam tinued Chinese money launderers a less and hungry. Do something.” interest to simply provide dollars report cards is obvious in the survey, earlier this year showed the richest free pass via housing access; missed The challenge now for National is without a degree of confidence with National’s performance tackling 1 per cent hold 20 per cent of the opportunities to intervene in the mar- to clarify what their vision for the that it ends up helping those who housing issues (2.43/5), environmen- wealth in New Zealand, while 90 per ket as Australia, Hong Kong and future is — for both New Zealand and are most in need. Fundamentally, tal/water quality (2.50/5) and poverty cent of the population owns less than Singapore have done; messed up citi- New Zealanders, explains Deloitte as a society I believe the majority and homelessness (2.43/5) among the half of the nation’s wealth. zenship and residency revenue and chief executive Thomas Pippos. want to see the vulnerable looked five lowest scoring areas. ICBC chairman Don Brash says allowed Auckland Council to con- “They need to capture the hearts, after appropriately. We find it “There are plenty of gaps starting many of these issues are interlinked, tinue to mess up the city.” souls and minds of the voting public abhorrent — for whatever reason to appear,” says an automotive chief with housing the crux of the problem: Poverty and homelessness was around it — not straightforward for — that kids have no home, damp executive. “They have not addressed “increasing wealth inequality, pov- rated by CEOs as one of the Govern- anyone given the shallow decision- homes, insufficient food, no shoes. environment and housing that well erty and homelessness are all a direct ment’s poorest performing areas making criteria it seems the average That is not the NZ most of us want. as they don’t want to offend their result of the Government’s failure to since the 2014 election, receiving a voter adopts.” Perspective matters The future asks more of business. A need for wider knowledge, swifter actions and more agile capability. A demand to look at the world from a whole new viewpoint. Deloitte helps you identify new perspectives that will drive decisions; to build confidence in shaping the solutions that matter. For a fresh view on ways to answer your business challenges, get in touch with us at deloitte.co.nz © 2017. For information, contact Deloitte Touche Tohmatsu Limited.
D8 nzherald.co.nz | The New Zealand Herald | Tuesday, September 12, 2017 MOOD OF THE BOARDROOM James Shaw on the back foot Turei affair has caused too much damage, and Labour has forged ahead, say CEOs C hief executives have party’s sole leader. strongly marked down “It has become a joke,” says a Greens leader James Shaw’s banker. “The Greens were clearly out leadership abilities in the to steal votes from Labour with their wake of the Metiria Turei scandal announcement of a no-questions- which claimed the career of his for- asked welfare policy, and Labour mer co-leader. have clearly done their best to steal Whereas last year, CEOs ranked those votes back again, helped by Ms Shaw second in their performance Turei’s extraordinary performance.” rankings for Opposition MPs, this year Chief executives had to this point he has slumped to ninth place just considered Shaw an asset to the behind fellow Green MP Julie-Anne Green Party. He has an impressive Genter. background, with a pre-politics career It is a stunning turnabout for the in management consulting, working MP last year’s Mood of the Boardroom offshore with multinationals to de- had billed as part of a “dream team velop their sustainable business prac- for the future” along with first-ranked tices. James Shaw has Opposition MP Jacinda Ardern. Stick to the environment been criticised “James disappointingly has been CEOs believe the Greens should for his handling damaged by the Metiria issue and now “stick to their knitting” and of the Metiria undone all the good work securing refocus on environmental policies Turei affair. new urban Green voters. He lacked instead of standing by while Labour decisiveness on an issue that was black and white,” says a transport and National grab terrritory. A banking boss says: “If James Blue Greens ticular was in the polls,” says Deloitte CEO Thomas Pippos. “In terms of parties of change. “If you want a progressive, Labour- 78% CEO. Shaw can make the Greens a truly today, I would have thought the led government, the Green Party has A professional director agrees: “I environmental party — rather than a Greens would be better placed out of to be at the heart of that government would have rated James a five six party of social justice activists and it and more focused on Green issues because they won’t be able to govern weeks ago, but his handling of the protests — that will be good. of respondents think Labour should in and around the centre; as they without us.” Turei affair was appalling and the “It will push Labour and National scrap its Memorandum of could naturally, under an MMP en- But many CEOs disagree, saying Greens are damaged almost to the to up their game around New Zea- Understanding with the Green Party vironment, be within successive Gov- that a blue-green government is one point of extinction as a result.” land’s pressing environmental ernments for extended periods of they could get behind. Chief executives believe Shaw issues.” understanding (MoU) that Labour time.” “Greens should work with National should have called time on Turei after “The Greens need to provide the and the Greens forged in May 2016 During Three’s recent The Nation to form a government” says Onno her admission she had intentionally necessary environmental platform should be scrapped. debate, Shaw was asked why the Mulder, City Care Group CEO. misled authorities about her living and stand strongly on that platform,” Others think it had its merits when Green Party did not transcend left Mainfreight group managing direc- costs while on the DPB. says a wine industry boss. “Sadly, the Opposition needed to project an and right as it said it would when it tor Don Braid offers the Green Party Her admission of benefit fraud they have neglected the environmen- alternative option to a popular was set up. and Shaw sage advice: “Get on and initially spiked the Greens poll ratings. tal aspect for a Labour agenda.” National-led government. Shaw explained: “We felt it was believe in yourselves rather than But outrage grew after further Labour’s eleventh-hour leadership “The context in which it was signed only fair to voters who want to know worrying about who you might need revelations that Turei had registered change to Ardern has seen her re- is more part of the past than the which way their vote is going to count at your side, or not!” at her former partner’s address in a claim the progressive agenda as her present given where Labour in par- that we would say we’re with the — Tim McCready prior election in order to vote for a party hoovers up the soft Green vote. friend. An automotive sector boss said the The fallout continued when Ken- leadership spill had demonstrated nedy Graham and David Clendon — they are not sure themselves whether two of the Greens’ most long-serving they are environmentalists, left- and respected MPs — quit in protest, wingers or a Third Way party. saying they could no longer support “Talk to James and you might the leadership. The killer blow came think the latter, but I’m no longer sure when a Newshub-Reid Research poll and Jacinda might be better without revealed a slump in support for the them.” Greens — down 4.7 points to 8.3 per Scrap the MoU with Labour cent. Turei finally admitted defeat Some 78 per cent of CEOs now and stood down leaving Shaw as the think that the memorandum of The First XV: Tell me: Who are you? How they rate “Raise your profile” is the overwhelm- ing message from CEOs when asked about Opposition MPs. While most were rated an average Jacinda Ardern (Labour Leader) 3.81 of between two and three (out of a possible five), an alarming proportion Kelvin Davis (Labour Deputy ) 2.97 of “Unsure” votes were given as well. MPs such as Labour’s Chris Hipkins Grant Robertson (Labour) 2.96 and Dr David Clark and NZ First’s Tracey Martin all received “Unsure” Stuart Nash (Labour) 2.82 responses from over 40 per cent of respondents, for example. Phil Twyford (Labour) 2.82 Martin was ranked lowest overall of 20 Opposition MPs rated by Winston Peters NZ First Leader) 2.64 respondents, with an average rating of just 1.57. David Parker (Labour) 2.54 This translated into uncertainty and pessimism about a potential Julie Anne Genter (Greens) 2.49 alternative government. “What do these people actually James Shaw (Greens Leader) 2.43 do?” asked the director of a law firm. “One hears nothing of them until Chris Hipkins Tracey Martin Dr David Clark (Labour) 2.35 election year.” “There is a lot about a Labour spokesperson Grant Robertson on an average rating of 2.64. This was a Dr Megan Woods (Labour) 2.25 government that is unknown — and 2.96. slight drop on his rating from last year thus risky,” said Rob Cameron, “The bench strength outside of any (2.90). Andrew Little (Labour) 2.06 founding partner of investment bank- Government always suffers from a “Winston gets a midway mark for ing firm Cameron Partners. concern around whether they are being Winston,” summarised one Chris Hipkins (Labour) 2.04 ‘game fit’,” said Deloitte CEO Thomas business leader. However, cause for cheer will be Pippos. “The inexperience in this case “Really!” said one investment Carmel Sepuloni (Labour) 1.98 the performance of Labour’s core exacerbated by the number that have banker, when asked his opinions on election team. never been in Government — or if in Peters’s key election policies. “Is that Gareth Hughes (Greens) 1.86 Leader Jacinda Ardern was well in Government, in lesser roles and 9 all they have got?” front, with an impressive average years ago . . . but everyone starts “Dog whistle — playing to the base,” The CEOs rated leading Opposition MPs' performance over rating of 3.81. somewhere.” said Matthew Cockram, CEO of the past year on a scale of 1-5 where 1= not impressive She was flanked — as in the election NZ First leader Winston Peters Cooper and Company. “None of these and 5= very impressive. campaign — by deputy leader Kelvin received a smattering of ratings things will add to New Zealand’s Davis on 2.97 and finance across the spectrum — culminating in productivity or wealth.”
D9 MOOD OF THE BOARDROOM Kingmaker or Queenmaker? But a growing list of negatives is damaging Winston Peters’ standing with business, finds Tim McCready N ew Zealand First leader Win- leader’s ability to exert leverage under as that is the party most New Zea- not have this level of influence. ston Peters may not be uni- the MMP political system which makes landers want to see form government,” Some of the responses were on the versally admired by the him a key player at the September 23 said Beca’s Greg Lowe. Others thought nose: “Heck no,” “FFS”, and “Winston C-suite, but chief executives election. NZ First should just support the largest doesn’t have the work ethic to be Prime rate him a shrewd politician. It is possible Peters will not be the party on confidence and supply rather Minister even for a couple of weeks.” “Winston is undoubtedly in my view sole potential kingmaker or than trying to “blackmail policy In this year’s Mood of the Boardroom, a supreme politician!” said Joanna queenmaker when coalition negotia- concessions that result in much being a majority of chief executives expected Perry, professional director and chair- tions begin after the votes come in. Or watered down”. the disillusionment with traditional woman of the IFRS Advisory Board. A at least not with the same levels of There was growing support for both politicians would spill over and affect legal firm boss added, “Peters plays the bargaining power the NZ First leader major parties to reject NZ First as a the results of the upcoming election. political game very astutely. But he is might have had eight weeks ago, before coalition partner and instead form a Brexit. Jeremy Corbyn. Donald the ultimate opportunist on the political Labour began its poll climb. grand coalition — between Labour and Trump. front.” Before Labour’s leadership change, Recent outcomes of elections and Peters, 72, has previously held the roles of Deputy Prime Minister in Jim NZ First was considered the only path to power for either National or Labour. Who should NZ First referendums around the globe have been anything but predictable and can Bolger’s National Government (sacked by Jenny Shipley) and Foreign Minister But in light of the “Ardern Effect”, there is some evidence that disillusionment form a coalition with? be largely attributed to disillusionment and rejection of immigration, 69% in Helen Clark’s Labour Government. with the status quo is spilling over to globalisation, and a loss of national NZ First currently has 12 MPs, and Labour, with recent polls showing they identities. following the election expects to have now have more than one path to form But many also believe disillusion- former Labour MP Shane Jones join the a government. National ment with the status quo can be 4% ranks, listed comfortably at eighth on CEO respondents identified the explained by the curse that comes with the list. young vote — and young females in ruling for three terms: NZ First has released some favour- particular — as those who might be “We are already seeing it — sen- able policies for business — including drawn to vote for Labour this time, Labour sationalism and strong communicators cutting corporate tax rates to 25 per favouring a removal of a stale Govern- are winning votes,” adds a media indus- cent — but his negative stance on the ment in favour of a fresh one. National — as has been seen in try CEO. TPP, foreign investment and immi- When asked who NZ First should Germany, or for both parties to simply “There will be some fatigue with gration, along with his growing shop- form a coalition with, most CEOs (69 go back to the polls instead of making another National government term but ping list of bottom lines, has damaged per cent) opted for National. Just 4 per a deal with Peters. “Maybe National and not the disillusionment with political his reputation with business leaders. cent said Labour. What is notable is that Labour should form a grand coalition institutions that we have seen in the Chief executive respondents to the a considerable number said the de- to get some long-term things right,” US and Britain,” reckoned Rob Cam- Herald’s CEO Survey rated Peters’ poli- cision should be up to the voter — and recommended an automotive CEO. eron, founder of Cameron Partners. tical performance as leader at 2.76/5 on not a case of the tail wagging the dog. Both National and Labour have “We are in a very different position a scale where 1= not impressive and 5= “The party who secures the largest ruled out giving the prime ministership to the US and UK,” says a professional very impressive. But it is the NZ First portion of the vote from the electorate to Peters. Unsurprisingly, 94 per cent director. “Our economy is strong and of chief executives were also strongly we have choices as long as we make A majority of chief executives expected the opposed to the major parties conceding them wisely.” the prime ministership on an interim Others think the disillusionment disillusionment with traditional politicians would spill basis to achieve power. runs deeper. An executive in the wine over and affect the results of the upcoming election. Most thought the party with the largest share of the vote should be in industry: “People are sick of smug, self- indulgent, middle-aged white men. 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D10 nzherald.co.nz | The New Zealand Herald | Tuesday, September 12, 2017 MOOD OF THE BOARDROOM Give us the policy lowdown CEOs have expressed major scepticism over Labour’s tax policies and ,, The priority is a clear articulation of policies and how they will be paid for. No adds up. What Joyce has done is taken effectively our leftover cash at the end and then tried to accumulate that out as if we're going to spend every dollar of it every year. I've never said that. I've never said that our fiscal plan lack of details, reports more `we’ll leave it to a did that.” Kirk Hope of BusinessNZ Graham Skellern working group’. Clarity needs wants more focus on wealth-creation policies to be provided immediately N rather than increasing ew Zealand’s top chief ex- taxes. ecutives are clear. They rather than `trust us, we’ll be In its first term, a want Labour’s finance Labour Government spokesman Grant Robert- okay’. would cancel son to concentrate on wealth creation National’s tax cuts and policies, rely less on increasing taxes Media boss implement a package and provide the detail on Labour’s to boost Working for economic policies. spokesman in November 2014 in for- confidently face the changing nature Families for those In the 2017 Mood of the Boardroom mer leader Andrew Little’s shadow of work and have sustainable, fulfil- who currently re- Survey, chief executives were asked: cabinet reshuffle. He has been ling and well-paid employment in the ceive it and extend it What should be Grant Robertson’s researching international economic coming decades. to more families, in- major priority as Minister of Finance? policy and is responsible for Labour’s Policies tackling the changing troduce a Best Start They replied: Give us clarity, vision Future of Work Commission. The nature of work would be targeted to payment for costs in and investment. commission, which engaged an exter- ensure decent jobs, lower unemploy- a child's early years It is a measure of their engagement nal reference group, wants to develop ment, higher wages, greater security and introduce a Win- with this pivotal election that 87 of the vision, direction and policies for in work or out of work, and highly ter Energy Payment 118 survey respondents gave their an economic and social programme skilled, adaptable and resilient for those receiving personal view to the open-ended that will enable New Zealanders to workers. superannuation. question. Business gets that. In this year’s It would also: A media boss says the priority CEO survey, 63 per cent of chief ● Restart should be a clear articulation of poli- Five priorities for executives predict their companies contributions to the cies and how they will be paid for. Grant Robertson will change more in the next five New Zealand Super- “No more ‘we’ll leave it to a working CEOs want to see: years than the preceding five years. annuation Fund; group’. Clarity needs to be provided During the campaign, most eyes ● Begin the con- immediately rather than ‘trust us, ● More policy detail and clarity on have been on new Labour leader struction of a light we’ll be okay’.” tax changes Jacinda Ardern. rail network in Z Energy CEO Mike Bennetts wants ● Concentrate on wealth creation But the spotlight fell on Robertson Auckland, invest to know what contingencies Labour when his rival, National’s finance in passenger rail has, should income be less than pro- ● Don’t touch corporate or personal spokesman Steven Joyce, claimed for Hamilton and Tauranga, jected, and what that would mean for tax rates Labour had a $11.7b hole in its fiscal and restart commuter rail in its spend on newly announced and ● Invest in important infrastructure plan. Christchurch; yet-to-be announced policies. Robertson swept into action, say- ● Introduce a clean water Robertson, a former Labour ● Balance economic growth and the ing `”we have a fiscal plan that has deputy leader, became finance environment been independently assessed and continued on D11 THE EXPORTER’S CONFERENCE Mark Piper Fonterra Elinor Swery IBM THURSDAY 21 SEPTEMBER 2017 Nadine Higgins TVNZ Leon Grice NZ US Council Sir Graeme Harrison Michael Whitehead AUCKLAND Dr Antje Fiedler Kevin Parish EARLY BIRD PRICES ANZCO Foods Ltd WhereScape University of Auckland Primary Collaboration NZ AVAILABLE NOW Plus 15 more expert speakers you wouldn’t want to miss. Hon Todd McClay NZ Government Vic Crone Callaghan Innovation WWW.GOGLOBAL.NZ
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