Mood of the Boardroom: Time to refresh growth agenda

Joanna Perry of JMGP.
Joanna Perry of JMGP.


The Government's Business Growth Agenda has produced short term results but some CEOs are questioning whether it will be successful in the long term.

The CEOs suspect the Government may have an eye on retaining power (next year) rather than promoting sustainable economic measures.

Joanna Perry of JMGP Ltd says there is some good co-ordination but too much of it is "bitsy" and not big enough to have a big hit. "The National-led Government is still too politically focused on staying in power rather than always thinking about the best thing for the economy in the long run."

Hawkins CEO Geoff Hunt says "My concern is that there doesn't appear to be thinking which will produce an enduring improvement during the next 10-20 years".

The Government appears more focused on near-term tactics to retain popularity in the lead-up to the general election, according to a media boss.

EMA CEO Kim Campbell says the agenda has many excellent elements, "but much of the execution is too slow. It is difficult to get investors to respond when there is so much low hanging fruit in domestic real estate."

An investment banker believes the agenda is "a really good piece of work", while a public sector boss says it is now operating on version four and a fifth version is being designed -- "but it works".

The agenda, launched in 2012, is a series of microeconomic initiatives that will build a more productive and competitive economy and assist business to succeed. The agenda has a high-level goal of increasing the ratio of exports to GDP from 28 per cent in 2014 to 40 per cent by 2025.

The agenda has six main work streams to drive productivity and growth:

• Building innovation work stream to grow New Zealand's economy by encouraging and enabling investment in research and development, and lifting the value of public investments in science and research.

• Increase exports by businesses, which is necessary to lift New Zealand's economic growth and living standards.

• Building infrastructure to provide the physical platform that will support sustained economic growth.

• Making better use of New Zealand's abundant natural resources, so we can continue to grow our economy and look after our environment.

• Ensuring New Zealand has high-performing capital markets that support investment, growth.

• Improving the safety of the workforce and building sustained economic growth through a skilled and responsive labour market.

The agenda was refreshed last year with the release of the Towards 2025 report. The six initiatives, outlined above, remained but were joined by three important cross-cutting themes -- Maori economic development, regional economic development and regulation.

New priorities were: an ambitious free trade strategy to minimise barriers for New Zealand exporters; developing the world's most efficient, cost-effective border management system to support trade and people flows; growing New Zealand Trade and Enterprise's portfolio of export-active companies; growing international education; increasing the value to New Zealand from tourism; and developing and growing New Zealand's international marketing brand.

This is not politically easy given the multiple demands on government funds, but current trajectory will have deep, and hard to recover from, outcomes.

An exporter says that just as in business, investment needs to be made in country economic innovation -- this requires upfront input and committing to resource.

"It requires thinking ahead. Failure to address the environmental issues, especially water and the deep rooted problems around this, is akin to selling off the family silver to keep the profits and cash up -- or reporting a good profit because you have dropped your research and development spend.

"This is not politically easy given the multiple demands on government funds, but current trajectory will have deep, and hard to recover from, outcomes."

An energy sector CEO says the distortion to the Auckland property market is akin to a cancer on the economy, with far-reaching social, economic and environmental issues. "And the oncologists can't agree on the solution whilst the patient just gets worse."

Craig Stobo, chairman of Precinct Properties, says it is really important for businesses with long investment horizons that the Government's macro settings are relatively stable and predictable. "Increased uncertainty creates costs for businesses and ultimately communities. National's steady hand on the tiller is valuable," he says.

Staying in power

"The Government gives every impression of being primarily focused on staying in power, and has taken no steps to accelerate economic growth.

"After promising to make the FDI regime more welcoming, they reviewed the regime and made it even more restrictive (now one of the most restrictive in the developed world, according to the OECD).

"They cut the corporate tax rate slightly but adjusted the depreciation rates to leave the total revenue from the tax essentially unchanged.

"Their moves to sell out of commercial businesses have been timid at best.

"Their attempt to reform the RMA was slow to get under way and is now a poor shadow of what is needed.

" Only now are they looking at the possibility of making the GMO regime slightly less restrictive."

- Don Brash, Chairman, ICBC (NZ).

How do you rate the Government's current economic management?

• 44 per cent - Good for business

• 48 per cent - Good, but needs more targeted programmes

• 7 per cent - Not good, needs substantial change

• 2 per cent - Not sure

- NZ Herald

What are your thoughts? Tweet us @nzherald using the hashtag: #Boardroom2016

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