Mood of the Boardroom II

July 14th, 2009 at 8:57 am by David Farrar

The Boardroom CEOs also rate the Government:

The New Zealand Herald’s survey shows the Key Government has won wide support from leading NZ business leaders with 76 per cent saying it is “providing sufficient economic leadership for New Zealand.” That view is reinforced by the adjoining survey of Business New Zealand’s membership which found 73 per cent of SME respondents agreed.

Not too bad considering the recession.

“Key has the political standing to take the country into his confidence and chart a sure-footed strategy to break out of our lacklustre and declining performance,” said a company chair. “But the Government is too timid and needs to take a strong lead.”

EMA (Northern) chief executive Alasdair Thompson believes the Government is not yet showing enough economic leadership. “The y need to build a constituency for change and sell it”.

I would agree with some of that. I think the response to the recession has been sound with am improved credit rating, and a path back to surpluses.

But there is still a lot of work to be done around increasing productivity growth, which is the key to closing the gap with Australia.

Others like Solid Energy’s Don Elder are more optimistic. Elder accompanied Key to China on his first State Visit as Prime Minister. “The US and Europe are still in the doldrums,” says Elder. “But we’re now seeing demand [from China] pick up – which will spark confidence in investing.”

I met my financial advisor yesterday and we one of the things that struck me was the performance of investments in China compared to elsewhere – it has had amazing performance. And I think the US is not through the worst, so Asia-Pacific is going to be vitally important to us.

But many believe English’s first Budget should have set out a more robust deficit reduction path. This concern that the Government is “slipping into cruise control” mode is borne out by the fact that 63 per cent want the Government to take a “more aggressive approach to getting expenditure (and the Budget deficit) down quicker.”

I would not be averse to that either.

Thirty per cent of CEOs responding to the Herald survey rank the level and effectiveness of Government expenditure as the most important single Government-related issue. Other issues include: Infrastructure – ranked highest by 18 per cent; Auckland (16 per cent), regulation (14 per cent, tax rates (7 per cent), savings (5 per cent) and the ownership of major central Government assets (6 per cent).

I could not agree more on the level and effectiveness of Government expenditure being of vital importance.

The Key Cabinet’s hesitance to take tough decisions on spending issues plays into how some CEOs rate individual Ministers in the economic team. “English is held back by his conservatism, which apparently also applies to cutting Government expenditure,” says the EMA’s Thompson. “(Gerry) Brownlee likewise. (Simon) Power is good but is restricted by National’s ‘do nothing ‘policy on state-owned enterprises. (Steven) Joyce is excellent. A great solution for Waterview.” Joyce is clearly a rising star within the Key Government, ranking just below English in CEOs’ eyes.

Nick Smith was criticised over the Resource Management Act reforms (“there was very limited thought on how they might work in practice, they went through a very poor select committee process and then have stalled as Smith tries to work out how fix all the stuff-ups he has made … a classic case of more haste, less speed”).

I’ve also heard pretty major criticism of the RMA reforms – and not from greenie groups but from business and sector groups. It sounds like there is a lot of work still to be done there.

“The Prime Minister currently appears to be carrying too much of the load himself,” cautions a tourism boss.

“There is a perception that if something is going to get done, and if the bureaucratic barriers are to be overcome it needs the PM’s personal engagement.”

This is often correct. A response to the s92A issue only happened when it hit has radar.

Also of interest are the survey results on the economic team:

  1. Bill English – 74% above average and 4% below average = 70% net approval
  2. Steven Joyce – 67% positive, 5% negative = 62% net approval
  3. Tim Groser – 51% positive, 12% negative = 39% net approval
  4. Simon Power – 51% positive, 13% negative = 38% net approval
  5. Gerry Brownlee – 16% positive, 24% negative = 8% net disapproval
  6. Nick Smith – 22% positive, 31% negative = 9% net disapproval
Tags: , ,

18 Responses to “Mood of the Boardroom II”

  1. mickysavage (786 comments) says:

    I thought the comment about the Jobs summit was pertinent and appropriate. This from the Herald …

    “Just one in three respondents to the Herald’s annual Mood of the Boardroom survey believe the February summit created real outcomes”.

    Any sign of a real job creation policy?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. Cerium (21,830 comments) says:

    But at least that is better than 0/3.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. petal (698 comments) says:

    With Worth gone, Smith continues to be a potential headache. Too much sense of entitlement I fear. Apart from that, he’s also got the wrong end of the stick on some things.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. Tom Semmens (79 comments) says:

    More bleating and special pleading from the fat cats I see. I can’t imagine they’ve had a fresh idea since 1984, it seems all they ever want is to make coded demands for the privatisation of monopoly utilities, so they can continue never to have original thoughts whilst clipping the ticket as parasitical rentiers.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. Chthoniid (1,967 comments) says:

    Sigh,

    NZ’s unemployment rate is tracking below most other Western countries that have gone on larger debt binges.

    Currently the programme of bringing forward (and actually funding) infra-structure projects is responsible for sustaining a lot of jobs, that would otherwise have been lost.

    The more moderate fiscal stance has also meant that a credit downgrade has been avoided, and the flow on effect of lower interest rates is also going to help sustain jobs. It also frees up the Government accounts, because now, less money will be spent on debt-servicing.

    The job summit was always at best, going to have a marginal effect on jobs- but the real impact on employment rates is occurring at the macro and trade levels. The Govt has adopted a strategy that is succeeding (cf lower u/e rates than many of our trading partners) at a macro level. At the trade level, there is very little that we can do to jump-start the global economy.

    Labour does not have an alternative strategy.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. BlairM (2,266 comments) says:

    Any sign of a real job creation policy?

    I hope not. The best job creation policy from any government is no policy at all. That is because governments do not create jobs – the private sector does.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Owen McShane (1,226 comments) says:

    On the evidence from where I sit the Government does not seem to believe there is a real recession/depression looming or already here.

    Last week the Rodney District Council declined an application to build a luxury resort at Te Arai. The surrounding retirees are delighted – so much for caring about future (ie current) generations. That is the third luxury resort in the Mangawhai area to be knocked off by RMA. That’s about 1,000 jobs gone for construction and of course hundreds for the ongoing operations. Also they were needed to meet the accommodation requirements of the World Cup.
    Then last week Kate Wilkinson endorsed the DOC staff recommendation to deny access to a Gold Exploration Licence owned by Mr Gardner. She endorsed the staff decision, made under her delegated authority, even though the staff member is on record as being “Implacably opposed to mining in this area.” So what happened to the principle of natural justice that the decision make should not be guilty of predetermination or bias?
    The field is estimated to contain about $300 million dollars worth of gold in a small area.
    I recommended that such areas should be managed under teh RMA not under the Conservation act. This has been ignored.
    But who cares about the opportunities to export hundreds of millions of dollars worth of gold.
    Also Nick Smith should immediately pass a law including in section 6 of the RMA “the creation of employment and stimulating of economic growth and development” as “a matter of national importance.” At present such matters are not even mentioned so the snails or rocks will always trump the jobs.
    Section 6 should also include “the provision of infrastructure” as “a matter of national importance.”
    But Nick has promised the Environmental Defence Society that he will not change part 2 of the Act which includes sections 5,6,7 and 8 which set out the purpose and principles of the RMA.

    Without changes to Part 2 he is simply fiddling.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. Owen McShane (1,226 comments) says:

    I wrote to ask for an invitation to attend the Job Summit arguing that these changes and others at the coal face are vital to allow the private sector to get on with development and job creation.
    Never even got a reply.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Offshore_Kiwi (557 comments) says:

    Key taking on everything could just be a first-term thing while he sorts the wheat from the chaff in his cabinet. Remember also the election was really more presidential than a traditional NZ election. It was about Key vs Klerk (& Kullen), not Nats (and friends) vs Labour (and friend). It seems clear he’s got to get rid of Smith, and there are questions over Brownlee. It looks as though Crusher & Power have the right direction on law and order and should be trusted to do the right thing. English appears to be doing pretty much everything he can within the confines of election promises. So, I think as the term progresses Key will change tack slightly and go from “managing” to “leading”. Remember that during her first (3) term(s), the Dear Leader was also known as the Minister of Everything (although if I had her team I would have played every position as well).

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. RKBee (1,344 comments) says:

    Survey results on the economic team:

    1. Bill English – 74% above average and 4% below average = 70% net approval
    2. Steven Joyce – 67% positive, 5% negative = 62% net approval
    3. Tim Groser – 51% positive, 12% negative = 39% net approval
    4. Simon Power – 51% positive, 13% negative = 38% net approval
    5. Gerry Brownlee – 16% positive, 24% negative = 8% net disapproval
    6. Nick Smith – 22% positive, 31% negative = 9% net disapproval

    Yet only Steven Joyce along with John Key can make something from nothing and add real value..
    The rest are just career civil servants.. happy to have a job.

    Which makes you wonder why John Key and Steven Joyce even want to be MPs when they could do more and make more in the private sector as does Graham Hart. Creating real jobs with real economic success, instead of pissing in the wind like they do now. Protecting jobs for jobs sake. Thats just uneconomic socialism… more inline with the Labour left.

    So what do John Keys and Steven Joyce really want.. its certainly not a better New Zealand.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. tvb (3,947 comments) says:

    The criticism of the RMA reforms is serious. Putting aside Nick Smith’s odd personality one could just tolerate him IF he can get the policy right on this important reform. But it seems he is missing out here too. John Key might need to knock this into shape. Stephen Joyce would be the obvious person here though he has a big job in transport investment but mixing the two -RMA and Transport is quite a good combination. I feel a minor reshuffle coming on here.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. Cerium (21,830 comments) says:

    “So what do John Keys and Steven Joyce really want.. its certainly not a better New Zealand.”

    Why not? Not everyone is monetary asset driven. That they will put more effort in for less dosh means they are likely to be doing it to try and make a positive difference for NZ. This isn’t a Haliburton country.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. gd (2,286 comments) says:

    Before we get too impressed with the opinions of the CEOs and Directors we need to consider that of the 160 listers on the NZX 80 have significant debt problems and of those 47 are in danger of breaching their debt covenants and 25 have already breached their debt covenants.

    Yet despite the continuous disclosure rules the mug punters dont know.

    The NZX know this The Securities Commission knows this and the PM and the Min of Fin know this.

    Their problem is that the debtors of these PLCs are the ones who will decide what action to take and when to take it,

    And being good Aussies they will ensure that Aussie companies are lined up as white knights to pick the eyes out of the leftovers after they have recovered their debts.

    IMHO in 2 to 3 years the NZX will be but a shadow of its former self. Mind you its CEO will have departed suitably enriched.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. tvb (3,947 comments) says:

    I think the CEO comments are very important. They are highly skilled men and women who are dealing with man management, policy, finance and economics. Their views count a lot. I would rate their opinions are the most informed. But State Sector Chiefs should also be included. Now that would be revealing but for obvious reasons attribution of individual’s comments would need to be kept highly confidential.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. gd (2,286 comments) says:

    Owen Geeez that dont want guys like you at the Job Summit or any Summit. What they want are the nodding heads not people who will ask the 3rd question and raise the options and alternatives that dare not speak thy name

    heaven forbid

    only the chosen few are included in these bunfights the same old same old sad cases who have no original ideas an wont rock the system.

    people like you actually want to use more than 2% of the land mass for human living space. Think how many developers and Councillors would take a fiscal bath if they were allowed to happen.

    And all that lovely rezoning of land and the brown paper bags of used notes that pass hands.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. Viking2 (10,744 comments) says:

    Well from where I sit with small businesses Key and English haven’t made much ground yet. I see companies shedding staff faster and faster More and more closed shops and commercial tenancies, with only the Fletchers of this country benefiting from the Govt. spending our money.
    No one has hauled in the [profligate councils and their spending. They are all just sitting back smiling to themselves and waiting for the initial steam to blow out the arses until they can carry on with their spending plans.
    Sorry, but if so many of these CEO’s think we are doing well then they either don’t live in NZ, have sacked all their staff or live in some funny other world.
    As for the job summit, tell me about any initiative that has been tangible enough to produce results.
    English has us condemmed to 10 years of poverty, Smith has gone troppo and doesn’t seem to understand the RMA and its consequences, Williamson doesn’t know leaky homes exist, Wilkinson plays follow the socialists with mass medication, most other Cabinet Ministers have bever been seen nor heard of since swearing in day and Key is doing what Clark duid , fronting for the dismal bastards because they seem to be invisible.
    Its time some of those reporting looked from outside the political tent and started asking hard questions. But they won’t didn’t do it for Clark and co and won’t upset Key either for fear of not getting the scoop or overseas trip.
    Kiwi’s have right to be pissed with this lot. Hopeless.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. mickysavage (786 comments) says:

    Chthoniid

    “NZ’s unemployment rate is tracking below most other Western countries that have gone on larger debt binges”

    Only because it was the lowest in the western world uner Helen. Thank god for all that she did. I really appreciate it now.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. campit (438 comments) says:

    One thing I just do not get is the ideological burping around public private partnerships.

    PPPs just have to cost more because of:

    * the increased up front legal costs of contracting the risk of failure
    * the costs of private firms having to borrow funds instead of the government borrowing at the cheapest interest rates available
    * the costs of ensuring a profit for the private partner
    * etc

    And the risk still ultimately falls back on the taxpayer if essential services collapse because the contracts weren’t drafted with enough profit for the private operator. Its all a crock designed to make money for the extra layer of PPP consultants, banks and lawyers.

    There has to be a balance between allowing businesses a share of the pie and ensuring taxpayer’s money is spent wisely. Draw the line at PPPs I say!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.