Mood of the Boardroom: Time for more boldness on the Govt front

Don Braid. Photo / Glenn Jeffrey

Most chief executives - 72 per cent - believe John Key's Government is providing sufficient economic leadership for New Zealand.

"The Government is showing good vision in targeting a significant improvement in New Zealand's economic wellbeing over a long term," said Fonterra chief executive Andrew Ferrier.

But many of the 95 CEOs who responded to the Mood of the Boardroom annual survey have already banked transformational policies like the major tax changes in Finance Minister Bill English's second Budget, and, the move to form eight Auckland councils into a Super City.

The want the Government to step up the pace instead of being "poll-driven". In particular, they want John Key to take a few bold risks to affect a real transformation of the NZ economy. "Make the hard decisions - you may be surprised at the support they would get."

Among the recommendations: Provide an environment that creates a behavioural change by business toward investment in R&D, training, exporting and innovation and deal with some of the longer term issues such as demographics and the need to raise our pension age.

Fletcher Building chief executive Jonathan Ling nominated compulsory superannuation and privatisation.

Another noted the unfinished business lay in three areas: encouraging greater investment in research and innovation, asset sales to boost capital markets and savings, and controlling government spending. "The last of these is potentially the most difficult as it will need to deal with entitlements like superannuation and the welfare to work wedge."

One finance chief executive produced his own template:

Reform the SOE sector with partial listings, and give some of those at-scale businesses the ability to access equity capital to grow offshore if they have the capability (which it looks like quite a few do). NZ needs more global champions, and Kiwisavers need more quality investments to put their money into.

Provide some certainty around Broadband - the lack of clarity is hurting the market, and hurting Telecom unnecessarily at this point;

Deal with the whole savings/superannuation/loans issue. Across the NZ Super Fund, Kiwisaver, pensions and student loans we have a polyglot of approaches, which, together, do not make sense.

Fix Kiwisaver - make it compulsory at low levels.

Mainfreight managing director Don Braid said the Government could have displayed better and stronger leadership" had they focused their attention on achieving more in this first term." "The Government could have been enablers of change and success and traded some popularity percentage points for some urgency in reform but chose not to," added Auckland Regional Chamber of Commerce chief executive Michael Barnett.

But others pointed out the Government had inherited a shocking fiscal situation in the wake of the Global Financial Crisis.

They want to see more clarity of vision or strategy rather than just a conventional political mix of "populism and patronage. We'll not grow by perpetuating incrementalism and mediocrity, yet that seems to predominate the policy agenda.

"Flying kites' is all very well but that becomes predictable and tedious. It is important to understand realpolitic - focus on achieving the important things. Avoid the noise and nonsense."

Among policy bugbears are the state of NZ's capital markets, the emissions trading scheme and the failure to politically sell-in proposals to mine on the Conservation estate.

"The state of the New Zealand capital market is a major issue crying for Government leadership," warned Westpac Institutional Bank CEO David Mclean.

"If we extrapolate the current trends till recently, you will have no capital markets here in few years - they will be in Sydney. That's fine if you are big enough to afford to go over there - but it's going to be a challenge for small to medium enterprises if there's just a flow of funds away from New Zealand.

EMA Northern's Alasdair Thompson said the approach to privatisation was a "wasted opportunity."

"The Government doesn't have plans and when it does it fails to sell them ... On a positive note its latest Budget was a good re-alignment of taxes to reward earning and saving."

Thompson also slammed the ETS scheme as a disaster for NZ business. "We are completely stupid to introduce it when our major competitors are not."

Most CEOs thought Key should not reshuffle his Cabinet. But they were critical of the political salesmanship skills of some ministers.

"Gerry Brownlee seems to have really missed the boat on his opportunities to advance NZ Inc with his approach to mining and energy reform which should have mandated a market in New Zealand like Australia," said NZX chairman Andrew Harmos.

But Chris Finlayson came in for praise for his handling of the foreshore and seabed issue.

The chief executives' robust criticism is not limited to the Government. An overwhelming majority, 98 per cent, say Labour's leadership has yet to begin carving out a credible alternative.

"It is difficult as National has taken the centre," said Ferrier. Among the many criticisms, Labour was stuck in a left/right mindset, was a "woeful recidivist", was "boring, irrelevant to business and lacked vision". But the more worrying takeout was that Labour's economic policies had "regressed" with its opposition to the GST increase and change of emphasis on the Reserve Bank's approach to monetary policy.

"They said they would increase the top income tax rate (obviously still believing in over taxing "rich pricks)," said one boss. Another cautioned Labour was still in a policy-making phase at this stage in the electoral cycle.

"However, the challenge for them in 2011 is to convincingly communicate an alternative economic plan that would generate more wealth for NZ Inc.

"At this stage all we know is that it won't include more mining."

Labour leader Phil Goff was praised as an "above average" minister throughout his nine years in Helen Clark's former Cabinet, who had struggled to make the transition to leader.

But said Braid, Labour needed a new leader. "They need a wholesale change and leadership focused on the things that matter rather than class distinction."

There is "no inspirational leader there" added infrastructure specialist Stephen Selwood.

Others suggested Goff should rise about petty political point-scoring and negative clobbering.

But said South Pacific Pictures' John Barnett, Goff had been in an impossible situation that he has managed fairly well.

Some felt he needed to rebuild his front bench, acknowledge mistakes by the past Government and put forward positive ideas "not all the negative stuff".

Deloitte's Murray Jack suggested it was crucial to Labour's long-term survival that it take heed of the business community's views and position itself as a centrist party if it did not want National to re-cement itself as the "natural party of government" in this country.

Some, like NZX chairman Andrew Harmos (see story below) believed Labour could make quick headway with the business community if it embraced the capital markets taskforce report and stopped being ideological.