Mood of the Boardroom II

The Boardroom CEOs also rate the Government:

The New Zealand Herald’s Mood of the Boardroom 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 economy 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

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