Chief executive Kim Campbell signs off from the EMA saying the organisation and the country's economy is in good heart but regulatory change needs to speed up, writes Graham Skellern.
Kim Campbell leaves the Employers and Manufacturers Association (EMA) after seven years believing the country is in a strong economic position but he is looking forward to seeing some clear-cut and prudent public policy from the Government.
He says there's "a bit of disconnect" between government policy and the economy.
"The underlying (economic) fundamentals are strong. We have the best terms of trade for a generation.
"We are getting more for the stuff we are selling and the prices for our imports haven't risen too much. The only way it can be screwed up is bad public policy.
"People see ambiguity and that doesn't help business confidence."
Campbell, who has led manufacturing and exporting businesses in New Zealand, Australia and Philippines, is stepping down from the EMA at its annual meeting on November 22.
He joined the EMA when New Zealand was coming to grips with a new economic future following the global financial crisis — the worst recession since the Great Depression of the 1930s.
"The country was in deep melancholy, John Key was finding his feet and kids were leaving New Zealand. It was a gloomy outlook and I wanted to be part of raising the mood — such as investing in infrastructure, building a technology base and getting entrepreneurs inspired."
Campbell says New Zealand came out of the recession quicker than most. "John Key and his team, especially Bill English, were fiscally prudent and made us match-fit.
"We had a high dollar and strong exports and that was a real achievement."
He says New Zealand has a phenomenal future. "We have a wonderful combination of a well-educated, smart population and a great place to live and work. And we have a lot of friends (internationally).
"We have public servants and politicians who have New Zealand's interest at heart, and we have got a lot of core values right. It's only at the margins where we argue. It's a good spirited place and we can have a good healthy debate over it."
Campbell says one worry is that disposable wages are not high enough. The answer is not increasing the headline rate but rather making it more affordable to live.
"The percentage of earnings going into accommodation costs is too high."
He says the proposed employment law changes have created uncertainty. "If they are enshrined in law, we will return to the stagflation and industrial unrest of the 1980s.
"An uncertain employment law landscape also makes the prospect of hiring anyone a nightmare."
Campbell says the Government needs to carefully and prudently develop important public policy changes such as wage setting mechanisms and industrial relations framework — "or else we may become uncompetitive."
He says the country needs a regime of regulatory reform that deals with new technology — "we need to cope with developments like artificial intelligence and deal with climate change so we don't have a bunch of stranded assets.
"We need to see a road map and we are not quite there yet."
Post-EMA, Campbell is planning to do a bit more fishing but he will also focus on increasing his directorships and helping businesses. "I can't do more of that when I'm still here (at EMA)."
He is happy that he will be leaving EMA in good heart.
"We are respected as an organisation that provides good services to it members — a responsible, moderate but progressive voice for business."
Kim Campbell's big issues
• Top three issues facing the nation Uncertain policy future Infrastructure needed everywhere but no appetite to fix the systems (such as RMA, Land Transport and Local Government Acts) which hold things up Poor capital allocation leading to poor productivity growth
• Biggest achievement past 12 months Making meaningful progress on bipartisan support for planning systems reform
• Biggest regret past 12 months Failed to make much headway in profit growth
• Top three business priorities next 12 months Reduce debt in anticipation of a government meltdown Figure out what government policy change is most likely to come first Find new opportunities for investment outside New Zealand
• The gap between rich and poor leading to instability
• Trade terms internationally
Anne Callinan.
New Zealand is currently experiencing a disconnect between economic performance and people's confidence — a dynamic that hasn't been played out before, says Anne Callinan, chair of law firm Simpson Grierson.
The underlying economy is strong, shown by the increase in GDP to 1 per cent for the second quarter, yet business and consumer confidence has gone down, says Callinan.
"I guess it's partly to do with a new Government and leading a true coalition for the first time. Our clients are still doing what they planned but the uncertainty in the broader economy is making them think twice.
Any new government will always create a degree of uncertainty with business as they develop and implement new policies. Good communication is key, and I'm more optimistic than pessimistic," she says.
"The abrupt manner in which new offshore oil and gas exploration was ended is a good example of the new Government creating uncertainty for an industry sector. And the proposed employment law changes have certainly affected overall business confidence, especially amongst our country's large pool of SMEs."
Callinan says Government ministers have met Simpson Grierson staff and key clients and "they are good communicators. We had good discussions and they have been well-received."
She says employers are rightly concerned about implications of several of the proposed changes in employment law but this debate needs balance — the proposed changes aren't all bad for business.
Her firm's survey showed New Zealand employers are generally supportive of increased employee protection — they'd simply like to see a commonsense approach to several of the proposed changes, such as unions accessing workplaces without employer consent, their ability to offer an Individual Employment Agreement alongside a Collective Agreement, and a discontinuation of a 90-day trial for all employers. "We don't see the 90-day trial period being used very often, and I don't think there's a problem. We are happy that the Holidays Act will be reviewed — it's an anachronistic, overly complex, extremely difficult piece of legislation to apply."
In her business, Callinan says "we are seeing strong demand this year across most parts of the firm. There is strong commercial activity and strong (commercial and regulatory) litigation."
"So it's a case where, when the infrastructure exists, we can make different decisions."
McLean's stance is in line with the 87 per cent of survey respondents who agreed there was a role for larger businesses to work with Government to help sustain the economy of provincial New Zealand.
McLean said Westpac would "certainly be willing" to take part in a discussion with Regional Economic Development Minister Shane Jones, the Prime Minister and others. "It is a three-way thing. It's Government, business and, in particular, it's the regional communities.
"An important thing that we can all help push the regions to do, is to agree what their own priorities are. I don't know them all, but some of them have really good local organisations that are doing that.
"In the Manawatu, Malcolm Bailey, who's on our board, chairs one. There's one in the West Coast of the South Island which is pretty impressive.
"But I'm not sure that's consistent around the country."
McLean favours building deeper capability within a region — because "they know best what's needed, but then business and government coming together I think would be good."
He says it is a deeper issue than just airline flights or branch closures where Air New Zealand and the banks have come under fire from Jones.
"It's about how we grow these regions and make them viable for the future, not for some past model.
Other issues concerning McLean are the Future of Work, where the banking industry itself is preparing to automate a lot of manual clerical-type work in operations areas in a relatively short period.