Fraser Whineray, chief executive of Mercury Energy. Photo / Dean Purcell
Taking the far-sighted approach will pay dividends, Mercury's Fraser Whineray tells Gill South.
Long term thinking from the Government is what Fraser Whineray, the new chair of the Prime Minister's Business Advisory Council (BAC), would like to see and is something he will be pushing in his extra advisory role.
Whineray, who was already a member of the BAC, chairs his first meeting in December.
"My view is to make sure that they've got some really decent long-term stuff which will make a difference to multiple forms of capital," he says.
The Prime Minister established the council last year to:
• Provide high-level free and frank advice on policies that directly affect business.
• Harness the expertise of the private sector to inform government policy.
• Build closer relationships between government and business.
Whineray, chief executive of Mercury, took over as chair last week from Christopher Luxon — who finishes up as Air New Zealand chief executive tomorrow after eight years with the airline.
He will be chair until March next year, when the council will be paused in the run-up to the next general election.
Others on the now 12-strong council include: Rocket Lab's Peter Beck, Genesis chair Barbara Chapman, Jacqui Coombes (Bunnings), Anna Curzon (Xero), Andrew Grant (McKinsey & Company), Miles Hurrell (Fonterra), Bailey Mackey (Pango Productions), David McLean (Westpac), Joc O'Donnell (HW Richardson), Gretta Stephens (Bluescope/NZ Steel) and Rachel Taulelei (Kono).
10-year plan for KiwiSaver
Whineray said he would like to see a bipartisan 10-year plan for KiwiSaver, an "unscrewing of the value on KiwiSaver", as he puts it.
The idea would be to get to 10 per cent gross savings compulsorily in a decade.
If people had that backup, it would ultimately take pressure off those pension decisions ahead, says Whineray.
It would be a basic example of savings reducing people's cost of capital, giving them more resilience and building New Zealand's capital markets at the same time, he argues.
This KiwiSaver pool could be used for important policies. Denmark, for instance, has used some of its pension savings on flexicurity.
Flexicurity
Whineray led a New Zealand Initiative mission of CEOs and directors to Denmark this year where he learned more about the Danish flexicurity system. The initiative is about ensuring flexibility and security for citizens.
"For me, flexicurity is really important for people not being put in desperate situations which just grossly elevates the cost of capital risk," says Whineray.
One of the pillars of flexicurity is that employees have income support during employment transitions.
"I think they do need some time to find the right job. Better employers will get better employees so that's really important for the market competition to work for people. And they're not forced to take the next thing that's put in front of them," says Whineray. They can retrain in that period.
If they don't have this buffer, people are vulnerable, to everything from bullying to loan-sharking, says Whineray. "All of the stuff is preying on people with very limited choices because of the cost of capital," he says.
Education and Future of Work
Education is another key element Whineray will be looking at in his role at the BAC, in the context of the Future of Work report.
There needs to be better understanding about the integration between immigration, future of work, but also the "original skilling" rather than the re-skilling that goes on, he argues.
Employers and organisations are going to have to get much better at providing a five to 10-year view of the skills they want, says the BAC chair.
This will help parents and school students with their subject choices, he says.
How universities decide on courses can be based on funding drivers, not actually what the market needs, says Whineray.
"So getting the match-up five to 10 years out, so children coming through will feel happy that they've trained in something that there'll be a strong demand for, I'm really keen to see that," he says.
New Zealand can lead the way on decarbonisation
Meanwhile the Mercury chief executive is well aware of his responsibilities ahead at the energy company.
"We need it well known domestically that New Zealand is absolutely in the box seat for decarbonisation," says Whineray, who said his company's biggest achievement in the past 12 months was announcing the Turitea wind farm after 14 years of planning.
But this process needs to win the energy trifecta — it needs to be simultaneously cost-effective, it has to be a secure energy supply, and over time, it has to be renewable.
"We are decades and trillions ahead of all of our trading partners," says Whineray, and this message should be conveyed to them in trade discussions.
When trade partners are worrying about trade miles, New Zealand negotiators can point to the country's electricity system and — thanks to its efficiency — "all those goodies which are being shipped overseas and still, end to end, our carbon is better", he says.
"That is a huge competitive advantage and I want to make sure, on a bipartisan basis, that just how good New Zealand's electricity sector is, isn't being forgotten."
Regulatory challenges and the impact of policy uncertainty on his business are the concerns most likely to keep Whineray up at night, he says, in this year's Mood of the Boardroom survey.
His priorities for his energy business in the next 12 months, meanwhile, are for a quality execution of growth capital expenditure, followed by digitisation of the customer experience with associated cost reductions.
The need for a smooth 2020 election especially as far as energy, climate and water settings are concerned, is number three on his priority list.
Nearly 20 per cent of respondents have signed up the Prime Minister's Business Advisory Council (BAC) Aotearoa New Zealand Skills Pledge or are intending to, the Mood of the Boardroom survey found.
The pledge asks companies to publicly disclose their investment in on-the-job training and re-skilling hours annually and to double the number of on-the-job training and re-skilling hours provided by 2025.
Twenty-eight companies are named on the BAC's website as having signed up the pledge. They are: Spark, Meridian, Lewis Road Creamery, Air New Zealand, Bunnings Warehouse, Westpac, Xero, Mercury, Whitecliffe, DB, Flux Capacity, Straker Translations, Fonterra, New Zealand Steel, McKinsey & Company, H.W. Richardson, Foodstuffs, Auckland Airport, Watercare, YoungShand, The IceHouse, Ngati Porou Holding Company and Capo, Tourism Industry Aotearoa and Pango Productions.
Some 15 per cent of survey respondents were unsure they would join.
Foodstuffs North Island CEO, Chris Quin said the company was an early signatory while Greg Lowe, Beca Group CEO said the engineering company was considering it.
"As we continue the journey to adapt to a more automated world, we see a clear need to increase that investment and make sure that our people can not only adapt, but embrace and lead change in our sector," he said.
The Prime Minister has also asked State Services Commission to see which government departments are best placed to sign up.
The pledge was the first recommendation from the A Future that Works: Harnessing Automation for a More Productive and Skilled New Zealand report, developed by the BAC and consulting firm McKinsey & Company.
"The report is unique in that you can see automation's impacts from a task, job, sector and region perspective which is invaluable knowledge for policy makers and businesses," former BAC chair Christopher Luxon told the launch function.
But Mark Franklin, director of Stevenson Group, saw the pledge as a time-wasting exercise. "There are fora like this, the Zero Harm initiative etc, which are props for executives and government rather than decisions and outcomes," he said.
The outgoing chief executive of Chorus, Kate McKenzie said it was not yet clear what it required companies to do.
Mark Cairns, CEO of Ports of Tauranga, did not think it was relevant to his business. "We don't see the job losses through automation as being significant in our industry," he commented in the survey.
Others didn't take kindly to the idea of a pledge but backed the idea in principal. Said one agribusiness boss: "Pledges are stupid. It's like the Boy Scouts chasing a new badge. The Business Advisory Council has raised awareness of the issue which is great, and companies should then assess their position."
A number of respondents indicated they were planning on doing it. A boss from the waste industry commented: "It is under consideration but we need to be sure it is more than virtue-signalling or tokenism."
Another logistics industry head said they would prefer "an outcome-based goal rather than an input based one".
COP29 is an opportunity to help steer us toward a more sustainable, low-emissions future.