Mood of the Boardroom

July 2nd, 2010 at 2:27 pm by David Farrar

Attended the annual Herald’s breakfast yesterday. A big crowd gather to hear the results of the survey by Fran O’Sullivan, plus speeches and Q&A with the Finance Minister and normally the Opposition Spokesperson. For some reason David Cunliffe couldn’t attend this year, which was a pity.

Around 350 CEOs took part in the survey. Now before anyone states the obvious, no of course they are not a representative sample of New Zealanders. But as a group they manage a greater share of the economy than the Government does, and their view on business conditions determines whether or not billions of dollars of investments and purchases occur. So I regard it as a very good group to get views from.

Some of the findings were:

  • 79% support there being a Regulatory Responsibility Act
  • 70% support mining on the conservation estate, so long as conservation values are retained or restored
  • 62% are focused on reducing energy costs
  • 60% support foreshore & seabed reform
  • 76% want ACC opened up to competition
  • 58% want the NZ company tax rate to be below Australia’s
  • 57% support partial listings of some SOEs on the NZX

I found it interesting that partial sales of SOES had the least support, even though still a majority.

The budget was rated 3.63/5 (think 73%) as a solid foundation for future growth, 3.8 (76%) as business friendly and 3.92 (78%) as making the taxt system fairer.

The eight top ranked Ministers were:

  • John Key 4.58
  • Steve Joyce 4.50
  • Chris Finlayson 4.47
  • Tony Ryall 4.09
  • Simon Power 4.08
  • Judith Collins 4.08
  • bill English 4.06
  • Jonathan Coleman 4.03

Individual Labour spokesperson were not ranked but 98% of CEOs said Labour’s leadership has yet to begin carving out a credible alternative to the Government.

The top ten domestic issues of concern (out of 10) were:

  1. Labour productivity 7.2
  2. Regulation 6.9
  3. Skills and labour shortages 6.9
  4. Level of govt spending 6.9
  5. Adequacy of infrastructure 6.8
  6. NZ dollar level 6.7
  7. Wage increases 6.4
  8. ETS 6.2
  9. Level of NZ Govt borrowing 6.1
  10. Access to capital 5.9

The top ten international issues affecting confidence are:

  1. Instability in capital markets 8.5
  2. Protracted global recession 8.4
  3. Level of borrowing by govts 8.0
  4. Strength of US recovery 7.7
  5. Exchange rate volatility 7.7
  6. US dollar value 7.2
  7. Competition for global talent 6.5
  8. Protectionism 6.3
  9. Commodity prices 6.2
  10. Global inflation 6.2

They also ranked the two leading candidate for Mayor on several attributes on a 1 to 5 scale

  • Leadership skills – Banks 3.47 v Brown 3.06
  • Puts interest of Auckland over political alignment – Banks 3.33 v Brown 2.74
  • Vision and strategy – Banks 3.33 v Brown 2.99
  • Management – Banks 3.27 v Brown 2.63
  • Experience – Banks 4.11 v brown 2.84
  • Judgement – Banks 3.26 v Brown 2.51
  • Trustworthiness – Banks 3.37 v Brown 2.86
  • Ability to form support within Council – Banks 2.98 v Brown 3.15
  • Economic management – Banks 3.65 v Brown 2.56
  • Courage – Banks 4.30 v Brown 3.46

But 50% of CEOs want a new candidate to also enter the race.

Also 85% of CEOs support compulsory superannuation, as in Australia.

And ratings of various aspects of the budget:

  • Closing loopholes for Working for Families 4.73
  • Increase in GST 4.44
  • Personal tax cuts 4.24
  • Corporate tax rate cut 4.21
  • Aligning top personal and trust rates 4.09
  • Change tax treatment for LACQ’s 4.06
  • Axe depreciation for residential housing 4.01
  • Cuts to savings vehicle tax rates 3.95
  • Reduction in thin cap threshold from 75% to 60% 3.63
  • Ace depreciation on commercial buildings 3.17
  • Axe 20% depreciation loading on new assets 3.16
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19 Responses to “Mood of the Boardroom”

  1. toad (3,670 comments) says:

    The should provide some balance by doing a “Mood of the Dolequeue” survey.

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  2. Manolo (13,396 comments) says:

    “The should provide some balance by doing a “Mood of the Dolequeue” survey.
    No need. Just ask whoar, the bludger.

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  3. Whafe (652 comments) says:

    Interesting that the ETS ranked 8th out of the top 10 domestic concerns…… That is very concerning indeed….. Makes me think of the mix of these CEO’s

    DPF, was there much discussion on the ETS?

    [DPF: No questions on it I recall. Worth remembering that for many businesses they appreciate policy certainity, even if not one they espeically like]

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  4. Pete George (22,866 comments) says:

    No major surprises. Maybe the noise on ETS here is out of synch with the wider world.

    “50% of CEOs” may agree with the mayoral race so far…

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  5. Whafe (652 comments) says:

    and you would have that opinion PG, I am so surprised, NOT…

    Do you actually have anything to do with primary production?

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  6. Gooner (995 comments) says:

    The should provide some balance by doing a “Mood of the Dolequeue” survey.

    Toad, without a boardroom there is no dole, neither is there a dolequeue.

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  7. bhudson (4,734 comments) says:

    @toad

    Given the dolequeue is a group of wealth takers, their opinions in these areas are worth about the same amount as the wealth they create (as opposed to take)

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  8. BlairM (2,288 comments) says:

    It’s amazing how well many people rate Steven Joyce as a Minister because he is so good at getting things done. I rate him poorly for precisely the same reason :-D

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  9. trout (904 comments) says:

    Nick Smith does not make it into the top 8 despite his exposure on ETS and environment issues. There are signs he is being increasingly isolated from his caucus colleagues. Is he being set up to take the fall on ETS and the environment Canterbury debacle?

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  10. Whafe (652 comments) says:

    [DPF: No questions on it I recall. Worth remembering that for many businesses they appreciate policy certainity, even if not one they espeically like]

    Thanks for that DPF, however I agree that businesses in general, including mine like certainty in policy, the ETS is not just a typical run of the mill policy DPF…. It is going to send NZ further down the toilet than we already are…

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  11. Viking2 (11,147 comments) says:

    The ratings on the budget tell us more about their particular barrows and their understanding of things.

    Change tax treatment for LACQ’s 4.06
    As far as I am aware nothing has changed for LAQC’s.

    Reduction in thin cap threshold from 75% to 60% 3.63
    Didn’t like that much. I wonder why?

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  12. Mike Readman (358 comments) says:

    It’s funny how the biggest support was for the Regulatory Responsibility Act and regulation was the second biggest domestic concern, yet the Regulatory Responsiblity Minister (who created that role) didn’t even get ranked in the top eight Ministers.

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  13. peterwn (3,168 comments) says:

    My three Boardroom moods:
    1. Tell the CEO to pay his or her Business Round Table sub out of his or her own pocket.
    2. Stop treating mom and pop shareholders as dispensible fodder in takeover games etc.
    3. Stop using mom and pop investors as a source of cheap finance for high risk investments.

    Abide by 2 and 3 then perhaps more will be invested in productive enterprises and less in rental houses.

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  14. Adolf Fiinkensein (2,798 comments) says:

    Fortunately, three hundred CEOs have only 300 votes.

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  15. lastmanstanding (1,210 comments) says:

    This is where the real power lies. Our Pollies and Civil Servants pretend they have the power but in a free market economy like NZ the Boards and CEOs of our biggest enterprises have the real power.

    Fact is the Pollies and the CS cant control the markets unless they go back to the Soviet State controlled economy. For good or bad the market will decide.

    And arent governments across the globe so pissed off that they cant control their economies.

    Central banks are last century. B(w)ankers still dictate the movement of funds and the pollies and CS havent got to grips with this.

    For all his huffing and puffing Barry still hasnt made a dent in controlling the funds flow.

    JK and BE are bit players They are point 3 of 1 percent of the globally market. Even OZ is only 1 percent of the global market.

    Time we woke up and realised where we are and concerntrated on pissing off as few as possible so we dont get squashed.

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  16. lastmanstanding (1,210 comments) says:

    BTW having been involved with international corporates in the 1980s NZ was punished to the extent of 10% of potential GDP as regards our pissing off the US and OZ over the nuke issue. We could have been punished more but the international community took pity on us coming out of the Muldoon era and that the Lange government was moving to a free market and they wanted to send a message to the Eastern European economies where of course Roger D did very well in the 90s offering well paid advise on how to do it.

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  17. calendar girl (1,177 comments) says:

    “It’s amazing how well many people rate Steven Joyce as a Minister because he is so good at getting things done. I rate him poorly for precisely the same reason.”

    I disagree strongly with you, Blair. He’s a bit of fresh air in terms of getting infrastructure things done without endless delay; the latest example is his encouragement of the Transport Board to call tenders now for Auckland’s Waterview motorway extension before all the planning consents are in place. That move will expedite the never-ending Resource Management processes by putting some overdue pressure on the prevaricators and obstructionists.

    If Joyce has a weakness it’s his tendency to pander to the social engineers and their proposals for legislative bans and restrictions. Examples are banning cellphones while driving and his willingness to even entertain the proposal to lower the breath-alcohol limit. The first is a sledge-hammer to crack a walnut, while the latter is a populist measure that has no firm evidence as to its likely efficacy.

    Joyce is a first-class minister of infrastructure, in my view, but a minister too inclined to seek simplistic popularity on the other stuff without paying due regard to the inexorable erosion of people’s freedoms.

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  18. jks (30 comments) says:

    Well the 58% wanting a company tax lower than Australia’s are going to get their wish. Ours is being lowered to 28% while Australia’s will be 29% by 2013.

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  19. Clint Heine (1,563 comments) says:

    @ Mike Readman… yes that did seem peculiar that many of the good policies being pushed are by Rodney who failed to get a mention on that list. Low taxes, less regulation etc, all hallmarks of ACTs policy agenda since its inception.

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