KEY POINTS:
Air New Zealand chief executive Rob Fyfe put off a scheduled offsite meeting with his senior executive team when an A320 crashed into waters off France last year.
He had hoped to reschedule the strategic review in December, but events intervened and he did not get down to business until 10 days ago.
The upshot of the 10-week delay was that the strategic environment for Air NZ had changed so much that Fyfe had to screw up the set agenda and get some new focus on whether the airline needed to fundamentally change its business model, given the different competitive dynamics confronting it: long-haul traffic down, losing money on the Tasman, more competition domestically.
The net effect for Air NZ when its long-haul capacity drops 15 per cent (in line with reduced traffic) and its profit margin is 5 per cent is that it has to fundamentally change what it does.
Air NZ cannot out-muscle its much larger competitors. To stay in the game, the smaller airline must drive radical rather than incremental solutions, innovate faster and be more nimble. As Fyfe puts it: "If we sit on the tarmac as a target for our competitors we will just be taken out."
As Infratil's acting CEO, Marko Bogoievski, said yesterday: "The first and foremost objective companies face is to make sure we are standing at the end of the crisis."
This was a stance underlined by Alison Sander, who is Boston Consulting Group's globalisation adviser, when she told Infratil's investor day that smart Fortune 1000 companies are spending a huge amount of time focusing on volatility.
Fyfe's analogy is now getting plenty of media play as he stokes expectations for Friday's Jobs Summit where he is co-chairing a workstream on workplace and employment issues.
Where his analogy gets much more challenging is when he looks at the changes in Air NZ's volatile strategic environment and underscores the fact that the National Government also faces a vastly different environment than in the heady days of the October election campaign.
To his mind the scale of the changes is so vast and the crisis is so big that "all bets are off".
"The world we are looking at today is very different to the world both parties campaigned on at the last election," he said. "This is a material enough crisis that you have to be prepared to go out with integrity and say to the NZ public that this is not the same world as when we committed to these tax cuts.
"We need to stimulate this economy and there are more effective ways than broad-brushed tax cuts."
Whether the personal tax cuts programme does in fact provide the most bang for the Government's buck is critical when Treasury figures show the overall tax take plummeted by the best part of $1 billion in just two months, and summiteers have been told there is little in the coffers to fund any projects that emerge from the one-day meeting.
It is not just hard-nosed chief executives such as Fyfe who question the Government's wisdom of applying the broad-brush rather than a more targeted approach. Though Fyfe (and others) do acknowledge John Key's predicament in that he has pledged National should make good on all its election promises.
Reserve Bank deputy governor Grant Spencer also told Australian website Business Spectator that the "risk of straight tax cuts or increases in transfers" was that they just get saved. "Confidence is so low in NZ at present that there is a risk that straight transfers have a minimal impact."
What business bosses and the central bankers worry about is the multiplier effect: which programmes and projects will deliver the most economic stimulus so that jobs are retained and consumption boosted.
This is where the Government will be urged to retain an open mind and maybe take an honest look at whether the public would in fact applaud if it needs to access the NZ Super Fund to fund investments, or sell down shares in some state-owned enterprise to fund investment in newer infrastructures rather than hitting the overseas market for an inordinate amount of debt to fund current operations.
The NZ Institute's latest report creates a much-needed "burning platform" which the Government could leverage if it had the courage to go down the radical path that many business people want.
The institute has bypassed the out-dated Treasury forecasts and come up with its own chilling forecasts of 11 per cent unemployment within two years.
But where it really scores is with its report: "Emperor has no clothes: NZ's vulnerability in the face of the global economic and financial crisis."
The think-tank wants the Government to prepare itself to backstop NZ businesses by investing in them if bank funding dries up. It has suggested a "New Zealand Growth Fund" as the special-purpose vehicle.
What is important, though, is the graphs which show the challenge NZ will face for corporate funding in coming months.
Lots of proposals have been fleshed out behind the scenes. Fyfe has already promoted one option to Cabinet ministers for a $50 million to $100 million fund to promote NZ tourism overseas. Among the suggestions is a $10 million Government pool of cash to subsidise airline seats (perhaps by as much as half) to get tourists down from the Northern Hemisphere.
Fyfe makes the point that the amount spent on an airline seat is usually only about 20 per cent of the total cost of an international holiday here. He counters the obvious charges of special pleading by saying the fund should be contestable.
When the summit was first promoted the message was that "ideologies must be left at the door". The upshot was a flurry of crowing reports in left-wing websites acclaiming as "fact" that notion that tough-speaking NZ Business Roundtable executive director Roger Kerr would not be invited. As business would expect, Kerr will be a player.
Key has established good links with Roundtable and spent two hours taking the group through his Government's policies at their annual retreat last week, reaffirming his intention to follow through with the April 1 personal tax cuts (though he did "note" this columnist's suggestion they should be deferred).
Time will tell whether Key retains the appetite for risk that he displayed in his investment banking days.
JOBS SUMMIT
THE MAIN DRIVERS
* Mark Weldon - NZX chief got the PM's call at Christmas to chair the summit.
* Air NZ boss Rob Fyfe - but John Key won't be happy. He thinks the Government should reassess broad-brush tax cuts.
* Union leader Helen Kelly - the CTU's discussion document is pragmatic.
THE BIG IDEAS
* Incentivise big firms to help vulnerable apprentices complete their training.
* Invest overseas to get tourists to New Zealand.
* New domestic "banks" for SMEs and agriculture.
* Incentives for overseas firms to establish green-fields investments here.
THE NO-BRAINERS
* Take agriculture out of the emissions trading scheme (Federated Farmers).
* Get biggest bang for taxpayer's buck - particularly with tax cuts.
STRENGTHS
* New Zealand Inc approach - 200 participants stepped up to plate.
* Fourteen Cabinet Ministers involved.
* "Can do" attitude encouraged.
WEAKNESSES
* No cash for big-spending schemes.
* Just 15 per cent of those attending are women.
* No Pacific Islanders - unless you count Adrian Orr, one-time Pacific Island Businessperson of the Year.
