Dynamic Business: We don't know how competitive we are

Westpac New Zealand Acting CEO David McLean.

Westpac's David McLean tells Bill Bennett we need fresh ideas.

Westpac acting CEO David McLean says his experience working as managing director of the bank's New York branch gave him a unique insight into New Zealand's international competitiveness.

"Some of the first things you notice when you go and work offshore are the gains we made when we restructured our economy. When you deal with government agencies in the US, it feels like you have gone through a time warp.

"Their practices are an inefficient drag on the American economy. It is something that we just don't have. We need to be proud of what we achieved. We need to recognise the advantage it gives us and stiffen our resolve not to let the old ways of working creep back in." he says.

The irony of talking this way about the US isn't lost on McLean.

"When I first went to America I had this idea that it was the land of the free and the brave. Listening to the way they talk you'd think it was all about laissez-faire economics. However it just isn't like that."

He says in the US he ran up against layers and layers of government, regulations and bureaucracies. "It's like a hardening of the arteries. Much of it is structural and stems from America's dysfunctional political system. Often all those strange regulations are the result of political trade offs that don't make sense when taken in isolation."

McLean says American politics has structural issues. Short political cycles mean they are almost never not campaigning. They have gerrymandered electorates, which means politicians on both sides tend to pander to the more extreme elements. That leads to polarisation and political deadlock.

This is something we don't think to use to our advantage. Often we think governments and countries need to make tax concessions or pay subsidies to attract overseas business and investment. McLean thinks we could get more traction if we learnt how to sell the business advantages of our political and economic structure.

Another insight he got from working in the US was being able to look at New Zealand culture from outside. He says there's been a noticeable change since the days of rough, hardy farmers making do with few resources. That number eight fence wire way of thinking was a strength in its day, but now it's gone.

The good news is that something just as useful has stepped into the space. New Zealand's new national strength is diversity. McLean says it is something we've become good at: "Auckland is one of the world's most diverse cities. There's also a trend here of women working and getting into positions of responsibility."

The All Blacks are a metaphor for this. McLean says a generation or so ago the team was largely made up of farmers or people who came from the meatworks. Now the team is made up of people from a range of backgrounds, it actually looks like New Zealand's diversity.

Since they first arrived, the people who emigrated here from non-traditional sources have had children and grandchildren. Many of the next generation have been well educated here - taking the opportunities the immigrants came looking for.

Now they are going into business and into the commercial world. McLean says they are bringing their fresh ideas and diverse perspectives with them and that's a real strength for our economy.

McLean says New Zealand needs to set objective, aspirational targets for international trade and worry less about what our neighbours are doing. "We need to concentrate on our strengths. At the same time, we need to benchmark our performance."

That's where we do need to start worrying about what others are up to. He says to benchmark properly we need to compare ourselves with the nation that is most like us, that means the Australians.

"We have some real strengths when compared to Australia. Lower tax rates, less red tape - New Zealand is the second best place in the world to start a business."

McLean doesn't want the Government to subsidise businesses to invest in New Zealand. He says that model is counterproductive and works against our advantages.

On the other hand, he thinks there are worthwhile things our Government can do. That mainly comes down to selling those advantages.