Latest / The SME Stream / Mood of the Boardroom: The surprising policies business leaders want to see from the Government

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Mood of the Boardroom: The surprising policies business leaders want to see from the Government · The SME Stream

• 0:05
  Speaker 1: Gielda.
• 0:06
  Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
• 0:09
  Speaker 2: daily podcast presented by the New Zealand Herald. The Mood
• 0:18
  Speaker 2: of the Boardroom is back today for its twenty second year.
• 0:23
  Speaker 2: The annual survey of the country's top CEOs and business
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  Speaker 2: leaders has seen a broad tick of approval for the
• 0:30
  Speaker 2: Coalition government, with strong support for Christopher Luxen and Nikola
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  Speaker 2: Willis and their economic plan. But they want to see
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  Speaker 2: the government be bolder and set out their vision for
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  Speaker 2: New Zealand's future, and that could include tackling some of
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  Speaker 2: the most contentious economic issues in our country. Today on
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  Speaker 2: the front page ends at Herald, Business editorial director fran
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  Speaker 2: O'Sullivan is with us to digest the thoughts of our
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  Speaker 2: top business leaders. Fran Can you just remind us what
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  Speaker 2: Mood of the Boardroom actually is?
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  Speaker 1: Good question, Chelsea. I mean, essentially, what it is is
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  Speaker 1: a barometer of business sentiment and mood very much at
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  Speaker 1: the top end of town. A great deal of the
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  Speaker 1: CEOs who comprise the top twenty companies of the ZX
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  Speaker 1: and more, plus a spattering of chairs. And don't forget
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  Speaker 1: we don't have a lot of women at the top
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  Speaker 1: of New Zealand major companies yet so I've tended to
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  Speaker 1: do gender balance over the years by reaching out to
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  Speaker 1: prominent female chairs as well.
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  Speaker 2: So the twenty twenty four edition is out today. And
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  Speaker 2: would it be fair to say that people are generally
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  Speaker 2: quite positive about this government.
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  Speaker 1: Yeah, they're quite positive about the government and more particularly
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  Speaker 1: they're quite positive about the economy. I mean, essentially there
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  Speaker 1: are lingering concerns about a range of issues, still got
• 1:59
  Speaker 1: some receptinary effects occurring, but essentially the confidence is where
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  Speaker 1: it was really back in the heyday of Bill English
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  Speaker 1: and we haven't seen this for a while. And so
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  Speaker 1: I think what you've seen from this government is it
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  Speaker 1: has been very deliberate about what it's doing. It does
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  Speaker 1: have confidence in the key members of the cabinet, particularly
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  Speaker 1: when it comes to those that are across the economy
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  Speaker 1: and issues which are important to business. So there's a
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  Speaker 1: good balance there. But it's also reached the stage where
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  Speaker 1: essentially business wants the government to pivot and focus on
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  Speaker 1: the road ahead and not looking through the rearview mirror.
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  Speaker 1: And I guess when you think about it, as it's
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  Speaker 1: been coined, much of the last almost year has been
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  Speaker 1: about the Great unwind. It's been about replacing policies and
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  Speaker 1: projects that its predecessors had done and starting to put
• 2:54
  Speaker 1: in place its own agenda. But in essence, senior Business
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  Speaker 1: would like the government and ministers really to focus on
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  Speaker 1: the future and start to think about the growth agenda
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  Speaker 1: rather than getting the platform for growth.
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  Speaker 2: Well, I was about to say, actually, while the business
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  Speaker 2: leaders are happy with the government, I see that they
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  Speaker 2: also do want to see more of that bold ambition
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  Speaker 2: rather than just do it undoing Labour's plans and complaining
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  Speaker 2: about what they've inherited and such. How could that ambition
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  Speaker 2: come to fruition do you think?
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  Speaker 1: I mean, there's plenty of advocacy from business about what
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  Speaker 1: they'd like to see about the major issues facing New
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  Speaker 1: Zealand and some steps that could be taken. But essentially
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  Speaker 1: it's the government been very focused now on what are
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  Speaker 1: those agender items that really will drive the economy and
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  Speaker 1: what particularly inspire investment as well.
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  Speaker 2: In their ratings of the cabinet, Ericus Stanford has come
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  Speaker 2: out on top, the only minister with a rating of four.
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  Speaker 2: Are you surprised by that?
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  Speaker 1: No, I'm not. Bear in mind this has actually been
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  Speaker 1: quite a difficult period for ministers and they have been
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  Speaker 1: winding much of their predecessor's policies and so, for instance,
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  Speaker 1: her focus on back to basics resonates with business that
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  Speaker 1: are looking for people to come out of the education system,
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  Speaker 1: raring to go and with the right competencies to be
• 4:15
  Speaker 1: able to thrive. I mean, there's been quite a lot
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  Speaker 1: of concern about young talented New Zealanders leaving New Zealand
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  Speaker 1: and going elsewhere in the world, and that will continue,
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  Speaker 1: but really the opportunity to have well qualified young people
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  Speaker 1: working here is also pretty important.
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  Speaker 3: We used to be one of the best countries in
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  Speaker 3: the world when it came to reading and writing. I
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  Speaker 3: mean we were in the top ten and piece and
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  Speaker 3: where were the envy of the world. But on the
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  Speaker 3: last twenty or thirty years things have taken a turn
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  Speaker 3: for the worse and we've seen literacy rates dropping year
• 4:53
  Speaker 3: on year on year and nothing really has changed.
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  Speaker 1: Working down the cabinet list, you then come to Simeon Brown,
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  Speaker 1: who's also got a range of major portfolios. He's got transport,
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  Speaker 1: you know, that includes being Minister for Auckland, it includes
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  Speaker 1: energy and he's one of Christopher Luxen's kitchen cabinets, so
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  Speaker 1: he's pretty important. And then you come down a step
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  Speaker 1: to both Chris Bishop and Nichola Willis, and these are
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  Speaker 1: just you know, these are ratings really at the margin
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  Speaker 1: of era for these top three, they're both rated equal,
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  Speaker 1: and you know, Nikola Willis has got a tough job
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  Speaker 1: there and she's not only got to keep fiscal discipline there,
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  Speaker 1: but she's also got to change public sector reforms. She's
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  Speaker 1: going to do a social investment, which is pretty important
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  Speaker 1: when you look at the transformation of the economy and
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  Speaker 1: helping young people be focused. So that's major. And Chris
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  Speaker 1: Bishop is a cross a range of things as well.
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  Speaker 1: I mean he's commonly known for the infrastructure portfolio, but
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  Speaker 1: he's also got housing, he's got RMA reform. Then you
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  Speaker 1: go down a bump to Judith Collins and again she's
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  Speaker 1: got seven major portfolios. And then the Prime Minister himself
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  Speaker 1: again pretty much equal with Judith Collins. And the Prime
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  Speaker 1: Minister is really interesting and he doesn't top the cabinet
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  Speaker 1: pack in that respect, but he's so critical to the
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  Speaker 1: performance of this particular administration and when you look at it,
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  Speaker 1: where CEOs rate him strongly is how he's kept the
• 6:27
  Speaker 1: cabinet focused on delivery, and so if you're looking at
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  Speaker 1: the KPIs that he would have on his plate, he's
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  Speaker 1: coming in at four point three out of five and
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  Speaker 1: more particularly also some forty odd percent forty three percent
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  Speaker 1: marking him as very impressive on this measure. So you
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  Speaker 1: can see he's raptor's hands around his cabinet. He's focused
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  Speaker 1: on deliverables, but he's also got a range of other
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  Speaker 1: factors he has to deal with. He has to leverage
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  Speaker 1: his brand for New Zealand and we've seen that with
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  Speaker 1: the way he's taken missions offshore with business. But he's
• 7:02
  Speaker 1: also got to keep the coalition together and he's not
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  Speaker 1: writing too bad on that. But the one weakness he
• 7:08
  Speaker 1: still has, and he acknowledges this is his own political performance,
• 7:13
  Speaker 1: and he will just say, he's, hey, you give me
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  Speaker 1: a break. I've just been in politics three years and
• 7:19
  Speaker 1: you know, just over three years, nearly four years, and
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  Speaker 1: he became you know, from ZIP to within three years
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  Speaker 1: he was PM and he had melded together a quite
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  Speaker 1: unified caucus in that time.
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  Speaker 2: Barbara Edmunds has taken over as Labour's finance spokesperson this year.
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  Speaker 2: She's still only a few months into the job. But
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  Speaker 2: has she resonated with the financial sector yet.
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  Speaker 1: Yeah, she's resonating with those who have had a chance
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  Speaker 1: to meet her. And bear in mind, I mean she's
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  Speaker 1: only been in this role since February, I believe, and
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  Speaker 1: she's pretty pragmatic. Before she was herself a cabinet minister
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  Speaker 1: and she was Minister of Revenue. Before she was appointed
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  Speaker 1: to that, she did chair the and it's an expenditure
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  Speaker 1: committee in Parliament, so she was well known to both
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  Speaker 1: sides of Parliament. But more particularly she also when she
• 8:08
  Speaker 1: was a seconde from the Inland Revenue she worked for
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  Speaker 1: Judith Collins when Judith was a Revenue minister, so you
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  Speaker 1: know she's highly respected. She got on well in her office.
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  Speaker 1: She also got on well in Michael Woodhouse's office and
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  Speaker 1: he was the immediate predecessor in Revenue and then of
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  Speaker 1: course she switched to labour side and then became an MP.
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  Speaker 1: I mean, there's a great quote here that I like,
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  Speaker 1: which has come from a banking sector head and it
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  Speaker 1: basically says Barbara Edmonds is an absolute class act. She
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  Speaker 1: possesses an equal balance of smarts and empathy. She will
• 8:44
  Speaker 1: be forced to sell their tax reform idealism and could
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  Speaker 1: be completely distracted by that. But she knows tax inside
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  Speaker 1: out and sroduce her skills to being pragmatism to the
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  Speaker 1: discussion rather than sell an ideological fantasy. And that's all
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  Speaker 1: very well, but one of the interesting things in this
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  Speaker 1: survey is that the ground does appear to be shifting
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  Speaker 1: under the issue of capital gains taxes and also changes,
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  Speaker 1: for instance, to the superannuation settings. That parting shot from
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  Speaker 1: the Treasury Secretary caroly McLeish, who's gone back to Australia
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  Speaker 1: to head up the Audit office there. She basically said
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  Speaker 1: we have structural reform issues and pointed to these areas,
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  Speaker 1: and a large number of CEOs in this report agree.
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  Speaker 1: More than seventy percent in fact, are on song with that,
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  Speaker 1: and those who commented for that part that particular question,
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  Speaker 1: more than fifty percent came up with CGT as an option.
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  Speaker 1: And we've got people like Mainfreight CEO Don Braid, and
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  Speaker 1: he was essentially saying, to this question, and it is
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  Speaker 1: a big question for this government. He was basically saying
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  Speaker 1: that some of the things that could be considered will
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  Speaker 1: be capital gains tax, public, private partnerships, lessons Australian super
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  Speaker 1: and its success and these wouldn't go amiss. I mean,
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  Speaker 1: the government's a bit tunnel vision on this one, I think,
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  Speaker 1: and we saw that recently with the swipe at Antonia Watson,
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  Speaker 1: the CEO of A and Z, who made some comments
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  Speaker 1: suggesting CGT should be looked at. And so it's actually
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  Speaker 1: a lot of commonality out there in business. And I
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  Speaker 1: guess what people forget is a lot of these business
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  Speaker 1: people are running companies that are also active in other
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  Speaker 1: parts of the globe which do have capital gains tax,
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  Speaker 1: do have different superannuation settings. This is not foreign to them.
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  Speaker 1: So all those angsteam from the OECD and IOMF is
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  Speaker 1: kind of on a ground where it's a bit fertile
• 10:43
  Speaker 1: at the moment. However, there are others who say that yes,
• 10:47
  Speaker 1: economically it makes sense, but politically it's difficult. And Deloitte
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  Speaker 1: chair Thomas Pippos, who's written a lengthy analysis in the report,
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  Speaker 1: basically says it's a red herring and to his view
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  Speaker 1: the issue was Treasury hadn't had the visibility it should
• 11:03
  Speaker 1: have had during this last period. In other words, parting
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  Speaker 1: shots on the way out perhaps should have been made
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  Speaker 1: more vocally earlier.
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  Speaker 2: Well, Nicola Willis lashed out at suggestions of a capital
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  Speaker 2: gains tax just the other week. Hey, And the survey,
• 11:26
  Speaker 2: like you said, show's opinion is shifting on CGT and
• 11:30
  Speaker 2: on implementing a more efficient superannuation scheme like that of Australia.
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  Speaker 2: Is the government actually likely to look at either of
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  Speaker 2: those issues anytime soon?
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  Speaker 1: Well, it would have to quite a big segue from
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  Speaker 1: where they are now. But you know, as this survey
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  Speaker 1: the thrust of us, it is time to pivot. They're
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  Speaker 1: not going to want to do this in a hurry though,
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  Speaker 1: because this is one of the areas that labor is
• 11:54
  Speaker 1: looking at, and they'll be quite hopeful at the next
• 11:56
  Speaker 1: election that Labor will go hard on wealth and capital
• 12:00
  Speaker 1: games taxes and the government will be National will be
• 12:03
  Speaker 1: able to fight against that. I mean, already you've had
• 12:06
  Speaker 1: the lines about you know, more taking more money out
• 12:10
  Speaker 1: of people's pockets in New Zealand, which actually isn't really
• 12:14
  Speaker 1: the case. It only happens when you sell. But you know,
• 12:17
  Speaker 1: there's still got to be a debate about how we
• 12:19
  Speaker 1: bridge the structural deficit. National would hope that it could
• 12:22
  Speaker 1: grow the way out of these issues and then get
• 12:26
  Speaker 1: more tax revenue that way through more successful companies. But
• 12:31
  Speaker 1: you know, it's still quite a difficult task. But I
• 12:35
  Speaker 1: think where national has to be a little bit careful
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  Speaker 1: is you know, if there is openness to thinking about
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  Speaker 1: and talking about potential remedies for some of the big
• 12:44
  Speaker 1: issues that face the economy, that they don't close off
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  Speaker 1: those options too soon. One of the things coming through
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  Speaker 1: is the need to see a little bit of a
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  Speaker 1: shift in tone from senior ministers and how they deal
• 12:56
  Speaker 1: with business. A number of people commented about the way
• 12:59
  Speaker 1: the Kiwi railboard was slapped down and the Board of
• 13:02
  Speaker 1: Health New Zealand in quite brutal ways actually, and you
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  Speaker 1: know it doesn't resonate well, particularly when you're trying to
• 13:10
  Speaker 1: attract other you know, well healed and because you have
• 13:15
  Speaker 1: to be to go into these roles because they don't
• 13:17
  Speaker 1: pay very much, you know, to get on well qualified
• 13:20
  Speaker 1: people to come and take part in governing major Crown
• 13:24
  Speaker 1: entities and soees. So business would like to see a
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  Speaker 1: shift in tone there.
• 13:29
  Speaker 2: There are still some economic challenges in the community, hey,
• 13:32
  Speaker 2: particularly around electricity prices. That's seeing increased bills and even
• 13:37
  Speaker 2: forced some businesses to close that issue has leaders worried
• 13:41
  Speaker 2: the most, followed by the US China tentions and international
• 13:45
  Speaker 2: cyber attacks. How seriously should the government be taking these
• 13:50
  Speaker 2: power price worries.
• 13:51
  Speaker 1: Well, I think the more interesting one in the report,
• 13:54
  Speaker 1: and we've done a three page splash on it, is
• 13:57
  Speaker 1: probably when you drill down and you look at the
• 13:59
  Speaker 1: issue energy security. These energy prices have had an effect,
• 14:04
  Speaker 1: and quite clearly we've seen Winston pull out of its
• 14:07
  Speaker 1: mill and we've seen a degree of de industrialization happening.
• 14:11
  Speaker 1: It's a mixture of issues there that have contributed to that,
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  Speaker 1: but I think the more interesting one is there isn't
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  Speaker 1: much confidence that we actually have sufficient security of supply
• 14:23
  Speaker 1: to deal with some fairly major demand issues coming up.
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  Speaker 1: I mean, we're having the switch to utilize mevs, we're
• 14:31
  Speaker 1: having the switch to more AI, we're having more data
• 14:35
  Speaker 1: centers and all of this is a big drawer on electricity.
• 14:38
  Speaker 1: So talk to government ministers. They will take the view
• 14:41
  Speaker 1: that now you've got a long term contract twenty year
• 14:45
  Speaker 1: contract with Typoint for instance, that gives some certainty to
• 14:50
  Speaker 1: the market. In other words, there's not going to be
• 14:52
  Speaker 1: a huge chunk of power come back on to the
• 14:55
  Speaker 1: market if, for instance, they couldn't get a deal on ty.
• 14:58
  Speaker 1: But also we've seen the fact that they're not going
• 15:01
  Speaker 1: to go ahead with the Onslow project in the South Island.
• 15:04
  Speaker 1: So the government's view is this of certainty, but coming
• 15:08
  Speaker 1: through from businesses, actually the government's got to get a
• 15:11
  Speaker 1: lot more organized on this. You know, people want to
• 15:14
  Speaker 1: have some certainty. Obviously there has to be a big
• 15:17
  Speaker 1: range of renewable projects consented and built and the government
• 15:22
  Speaker 1: has clearing the wave for that with fast Track, but
• 15:26
  Speaker 1: there's still issues. Some people are concerned about whether you
• 15:29
  Speaker 1: know the structure of the gen Taylors as to whether
• 15:33
  Speaker 1: they should split out their generating and lines capacity. So
• 15:37
  Speaker 1: there's a big conversation that still needs to occur.
• 15:40
  Speaker 2: We're also a little over a month away from the
• 15:42
  Speaker 2: US election. John Keys come out saying this week that
• 15:46
  Speaker 2: Donald Trump would be better for the economy. What do
• 15:49
  Speaker 2: our CEOs think.
• 15:50
  Speaker 1: Ah. I think where John Key is coming from is
• 15:53
  Speaker 1: he's better for the US economy and that may flow
• 15:56
  Speaker 1: out to here. I think there is considerable concern here
• 15:59
  Speaker 1: about you know, Donald Trump essentially putting up barriers when
• 16:03
  Speaker 1: it comes to trade, and for instance, we have some
• 16:06
  Speaker 1: big exquorters of our own into the United States these days,
• 16:10
  Speaker 1: and he's looking to put a ten percent tarif on
• 16:14
  Speaker 1: and that would be pretty damaging here if that occurred.
• 16:17
  Speaker 1: And don't forget the United States is now our second
• 16:20
  Speaker 1: largest trading partner. It's overtaken Australia in the last year
• 16:25
  Speaker 1: or so, so you know that's a concern. It's a
• 16:28
  Speaker 1: concern that he's putting America first outlook could have an
• 16:33
  Speaker 1: effect here, but it's early days. But the view out
• 16:37
  Speaker 1: of the bordroom is this time around is pretty solidly
• 16:41
  Speaker 1: that they would prefer Karmela Harris to be the next
• 16:44
  Speaker 1: president of the United States, and partially because it would
• 16:47
  Speaker 1: mean a continuation of current settings.
• 16:50
  Speaker 2: Fran, it's been a difficult few years for the economy.
• 16:53
  Speaker 2: Are we confident we've turned the corner or are the
• 16:56
  Speaker 2: challenges set to continue?
• 16:58
  Speaker 1: Do you think, oh, there's challenges. But I think there's
• 17:01
  Speaker 1: two factors playing into this. The fact that the government
• 17:04
  Speaker 1: has kept a strong focus on the fiscal discipline and
• 17:07
  Speaker 1: that's rated highly by our CEOs. But also when you've
• 17:12
  Speaker 1: seen the Reserve Bank starting to go down, the interest
• 17:16
  Speaker 1: rate lowering trail and obviously next week expectations that there
• 17:21
  Speaker 1: will be another lowering, and I think if they dropped
• 17:24
  Speaker 1: it by two rather than one metric, it would be
• 17:28
  Speaker 1: a great fillip to confidence. That's what business is looking for.
• 17:32
  Speaker 1: Dropping the OCR finally has played into confidence, but the
• 17:37
  Speaker 1: management of the OCR and interest rate levels still are
• 17:41
  Speaker 1: major issues for business. So you know, no one would
• 17:44
  Speaker 1: want to see it to go the other way. But
• 17:46
  Speaker 1: I do think what we have seen is, you know,
• 17:49
  Speaker 1: it's hard to keep animal spirits down for too long,
• 17:51
  Speaker 1: and New Zealand has been pretty resilient over the years,
• 17:55
  Speaker 1: and we've seen that with issues like how we weathered
• 17:59
  Speaker 1: the GFC, how we dealt with COVID, how we dealt
• 18:02
  Speaker 1: with the earthquakes and so on. You know, that comes
• 18:06
  Speaker 1: a point where we've just got to get on and
• 18:08
  Speaker 1: make the best of it. And I think you're seeing
• 18:11
  Speaker 1: that in confidence surveys right across the board at this moment.
• 18:15
  Speaker 1: One of the questions we asked was was it a
• 18:17
  Speaker 1: hard landing or a soft landing. People were confident inflation
• 18:21
  Speaker 1: had passed its peak, but there was also a bit
• 18:24
  Speaker 1: of pessimism there in the sense that whether it would
• 18:27
  Speaker 1: be a hard or a soft landing. Most people sixty
• 18:30
  Speaker 1: odd three percent said the RBN said had not managed
• 18:33
  Speaker 1: to achieve a soft landing. One or two said up
• 18:36
  Speaker 1: more like a hard thud. But the point being is,
• 18:39
  Speaker 1: you know, people turned the corner in their own sentiment
• 18:42
  Speaker 1: and it's now up to everybody to move forward.
• 18:46
  Speaker 2: Thanks for joining us, FRAN. That said, for this episode
• 18:53
  Speaker 2: of the Front Page, you can read more about today's
• 18:56
  Speaker 2: stories and extensive news Coveraget and zat Harold Doz. The
• 19:01
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