BusinessNZ’s Katherine Rich calls for bold investments to tackle New Zealand’s economic woes

Katherine Rich.

Companies need to regain the confidence and courage to take risks, make investments and help get the economy cracking, says new BusinessNZ chief executive Katherine Rich.

The economic downturn has gone on for so long and made business people far more conservative. They are putting off projects and not investing in certain areas, Rich says.

“Business entrepreneurship is about the ability to take on risk and new ideas. For New Zealand’s future, business has to lean in and play its part. Business has a leadership role.

“The Government can’t solve the problems on its own – it’s a case of all hands on deck to turn around the really poor financial statistics.”

Rich says she’s old enough to have watched and lived through other downturns. “I do think this one is the worst. My experience is more from the food, grocery and manufacturing sector, and the downturn that came off the back of Covid.

“Businesses took their financial nest eggs and spent them as a buffer [during the Covid pandemic]. The wage bills were mostly covered but the other costs of doing business were impacted. That’s why there’s been a lag – we got through Covid and then we faced a recessionary environment.

“There’s been high inflation, high interest rates and rising costs for inputs such as wages and energy, and in many cases, businesses could not pass on costs and are squeezing margins.”

She says BusinessNZ asked its members about capital expenditure intentions for the next 12 months. “In the past they’ve said they are going to do well but in the last one, they said they were doing the same or less. We felt that was significant.”

Rich says going into business is not for the faint-hearted and some businesses have failed through no fault of their own. There have been a number of closures in the hospitality and retail sectors. “There’s a short block of retail in Dunedin. It was vibrant, and now there are 11 front-facing stores that have closed.”

Rich, the former three-term National MP and chief executive of the New Zealand Food and Grocery Council, has been in her new role for three weeks, and says she is very much in listening mode and looking forward to hearing what members think. She says the Herald’s Mood of the Boardroom survey is like gold. “You have a group of informed people answering questions that don’t get asked by anyone else, and they are thinking not just about New Zealand but globally as well.”

Rich wants BusinessNZ to increase the amount of advocacy it does and become a stronger, powerful voice. “I will make sure the policy work is evidence-based and completely reflects the members’ views.

“I have enjoyed over the years working on ideas to support business projects and I’m interested in expanding the small business discussion by feeding their concerns into advocacy and policy.

“They make up most of the businesspeople in New Zealand and they have been the ones hammered by the latest economic conditions – the tradespeople and other small businesses. They have to think twice about buying a new ute or whatever.”

Rich says “we want to put ambitious plans to [the] Government – we have to play our part in helping to improve economic indicators.”

One of the plans is to promote a reduction in the corporate tax rate (presently 28%) to at least match Australia’s 25% for small- and medium-sized businesses. “We aren’t competitive with Australia and business is always looking at the best place to put investment,” Rich says.

She says the recent high electricity prices and spikes in costs rattled some heavy energy users and the country needs to maintain good access and certainty to the energy supply.

“When multinationals are looking at different locations around the globe to locate their factories, it would be disappointing if the concerns of electricity costs [in New Zealand] are putting them off investing here.”

Reducing red tape is also in the sights of BusinessNZ.

Rich says so many regulatory processes are not fit for purpose for a population of five million. “Take an agribusiness that wants to launch a crop protection solution. It comes to New Zealand with a product that is registered everywhere else and the company faces a two-year registration period and increased costs just to put it on the shelf.

“We need to look at streamlining regulation while maintaining safety and good processes. But we don’t have to pretend we are the European Union and redo assessments that have already been made.

“I’m looking forward to continuing the detailed policy work using the best sources and contributing to decisions being made by the public service and Government.”

BusinessNZ is a sponsor of the Herald’s Mood of the Boardroom project.