Kim Campbell. Photo / Steven McNicholl
Chief executive Kim Campbell signs off from the EMA saying the organisation and the country's economy is in good heart but regulatory change needs to speed up, writes Graham Skellern.
Kim Campbell leaves the Employers and Manufacturers Association (EMA) after seven years believing the country is in a strong economic position but he is looking forward to seeing some clear-cut and prudent public policy from the Government.
He says there's "a bit of disconnect" between government policy and the economy.
"The underlying (economic) fundamentals are strong. We have the best terms of trade for a generation.
"We are getting more for the stuff we are selling and the prices for our imports haven't risen too much. The only way it can be screwed up is bad public policy.
"We are in a world with rapid change and we need our institutions to change accordingly," Campbell says.
"We need to increase the pace of regulatory reform so our institutions are in step with changes in technology and our trading partners.
"There are 150-odd reviews and nobody knows where they will land. Then, there will be lots of argument about priority and spending.
"People see ambiguity and that doesn't help business confidence."
Campbell, who has led manufacturing and exporting businesses in New Zealand, Australia and Philippines, is stepping down from the EMA at its annual meeting on November 22.
He joined the EMA when New Zealand was coming to grips with a new economic future following the global financial crisis — the worst recession since the Great Depression of the 1930s.
"The country was in deep melancholy, John Key was finding his feet and kids were leaving New Zealand. It was a gloomy outlook and I wanted to be part of raising the mood — such as investing in infrastructure, building a technology base and getting entrepreneurs inspired."
Campbell says New Zealand came out of the recession quicker than most. "John Key and his team, especially Bill English, were fiscally prudent and made us match-fit.
"We had a high dollar and strong exports and that was a real achievement."
He says New Zealand has a phenomenal future. "We have a wonderful combination of a well-educated, smart population and a great place to live and work. And we have a lot of friends (internationally).
"We have public servants and politicians who have New Zealand's interest at heart, and we have got a lot of core values right. It's only at the margins where we argue. It's a good spirited place and we can have a good healthy debate over it."
Campbell says one worry is that disposable wages are not high enough. The answer is not increasing the headline rate but rather making it more affordable to live.
"The percentage of earnings going into accommodation costs is too high."
He says the proposed employment law changes have created uncertainty. "If they are enshrined in law, we will return to the stagflation and industrial unrest of the 1980s.
"An uncertain employment law landscape also makes the prospect of hiring anyone a nightmare."
Campbell says the Government needs to carefully and prudently develop important public policy changes such as wage setting mechanisms and industrial relations framework — "or else we may become uncompetitive."
He says the country needs a regime of regulatory reform that deals with new technology — "we need to cope with developments like artificial intelligence and deal with climate change so we don't have a bunch of stranded assets.
"We need to see a road map and we are not quite there yet."
Post-EMA, Campbell is planning to do a bit more fishing but he will also focus on increasing his directorships and helping businesses. "I can't do more of that when I'm still here (at EMA)."
He is happy that he will be leaving EMA in good heart.
"We are respected as an organisation that provides good services to it members — a responsible, moderate but progressive voice for business."
• Top three issues facing the nation
Uncertain policy future
Infrastructure needed everywhere but no appetite to fix the systems (such as RMA, Land Transport and Local Government Acts) which hold things up
Poor capital allocation leading to poor productivity growth
• Biggest achievement past 12 months
Making meaningful progress on bipartisan support for planning systems reform
• Biggest regret past 12 months
Failed to make much headway in profit growth
• Top three business priorities next 12 months
Reduce debt in anticipation of a government meltdown
Figure out what government policy change is most likely to come first
Find new opportunities for investment outside New Zealand
• Funding infrastructure
• The gap between rich and poor leading to instability
• Trade terms internationally
New Zealand is currently experiencing a disconnect between economic performance and people's confidence — a dynamic that hasn't been played out before, says Anne Callinan, chair of law firm Simpson Grierson.
The underlying economy is strong, shown by the increase in GDP to 1 per cent for the second quarter, yet business and consumer confidence has gone down, says Callinan.
"I guess it's partly to do with a new Government and leading a true coalition for the first time. Our clients are still doing what they planned but the uncertainty in the broader economy is making them think twice.
Any new government will always create a degree of uncertainty with business as they develop and implement new policies. Good communication is key, and I'm more optimistic than pessimistic," she says.
"The abrupt manner in which new offshore oil and gas exploration was ended is a good example of the new Government creating uncertainty for an industry sector. And the proposed employment law changes have certainly affected overall business confidence, especially amongst our country's large pool of SMEs."
Callinan says Government ministers have met Simpson Grierson staff and key clients and "they are good communicators. We had good discussions and they have been well-received."
She says employers are rightly concerned about implications of several of the proposed changes in employment law but this debate needs balance — the proposed changes aren't all bad for business.
Her firm's survey showed New Zealand employers are generally supportive of increased employee protection — they'd simply like to see a commonsense approach to several of the proposed changes, such as unions accessing workplaces without employer consent, their ability to offer an Individual Employment Agreement alongside a Collective Agreement, and a discontinuation of a 90-day trial for all employers. "We don't see the 90-day trial period being used very often, and I don't think there's a problem. We are happy that the Holidays Act will be reviewed — it's an anachronistic, overly complex, extremely difficult piece of legislation to apply."
In her business, Callinan says "we are seeing strong demand this year across most parts of the firm. There is strong commercial activity and strong (commercial and regulatory) litigation."
One of the main constraints is finding and retaining key talent. "We are busier than we have been, and lawyers have more choices about where to work.
• Trade wars
• Environment
• Productivity
There are bigger talent pools outside Auckland that businesses aren't really tapping into, says Westpac chief executive David McLean.
The bank would certainly be willing to spread outside Auckland.
"The enabler really is infrastructure. It has often been the roadblock," says McLean.
"The best thing the Government can do is invest in infrastructure in places that need it."
He says take broadband as an example, where the roll-out in New Zealand has actually been a very successful roll-out.
"You only have to go to Australia and ask them about their NBN and you realise that we're in a much better position.
"We've got a Taihape branch, for example, taking overflow calls from the call centre because they wanted to trial that.
"That just wouldn't have been feasible in the past.
"So it's a case where, when the infrastructure exists, we can make different decisions."
McLean's stance is in line with the 87 per cent of survey respondents who agreed there was a role for larger businesses to work with Government to help sustain the economy of provincial New Zealand.
McLean said Westpac would "certainly be willing" to take part in a discussion with Regional Economic Development Minister Shane Jones, the Prime Minister and others.
"It is a three-way thing. It's Government, business and, in particular, it's the regional communities.
"An important thing that we can all help push the regions to do, is to agree what their own priorities are. I don't know them all, but some of them have really good local organisations that are doing that.
"In the Manawatu, Malcolm Bailey, who's on our board, chairs one. There's one in the West Coast of the South Island which is pretty impressive.
"But I'm not sure that's consistent around the country."
McLean favours building deeper capability within a region — because "they know best what's needed, but then business and government coming together I think would be good."
He says it is a deeper issue than just airline flights or branch closures where Air New Zealand and the banks have come under fire from Jones.
"It's about how we grow these regions and make them viable for the future, not for some past model.
Other issues concerning McLean are the Future of Work, where the banking industry itself is preparing to automate a lot of manual clerical-type work in operations areas in a relatively short period.
•
Biggest Achievement
Getting CPTPP across the line
Biggest Regret
US leaving TPP
Stephen Jacobi, NZIBF
•
Biggest Achievement
Record results
Biggest Regret
Why have regrets? A wasted emotion
Don Braid, Mainfreight
•
Biggest Achievement
A voice from business to the new Government
Biggest Regret
That the voice wasn't loud enough
Michael Barnett, Auckland Chamber
