Mood of the Boardroom: Skills, tax and policy changes top concerns

Economic uncertainty remains a key challenge for New Zealand businesses, yet they are planning more investment than last year. The 2025 Business Sentiment Survey of 130 BusinessNZ members found 68% expect to invest the same or more capital expenditure than last year. That figure is up from 61% in 2024. The number expecting to invest less has fallen to 25% from 33%.

BusinessNZ Chief Executive Katherine Rich says investment intentions are a good indicator of business confidence and the 2025 results pointed to gradual improvement in the economy.

When asked about their top concerns, the largest number of the 130 Business NZ members who responded to the organisation’s 2025 Business Sentiment Survey named the uncertainty stemming from reversals of government policies following elections. That’s a change from a year ago when members’ top concerns revolved around financial matters: interest rates, inflation and input prices or profitability.

Other top areas of concern are a lack of demand, with more than half the respondents (52%) naming it as an issue and the lack of economic growth (38%).

New Zealand’s corporate tax rate remains contentious in business circles. The current rate is 28%, which is the eighth highest rate of the 38 OECD countries. Close to two-thirds of respondents (61%) believe that it is either too high or not competitive enough to attract foreign investment.

Last month, Prime Minister Christopher Luxon and Education Minister Erica Stanford announced proposed changes to NCEA qualifications that aim to improve the skills levels of school leavers. Under the new system, NCEA level 1 would be replaced with literacy and numeracy tests, while levels 2 and 3 would be replaced with a New Zealand Certificate of Education and an Advanced Certificate.

BusinessNZ asked members to rank their experience with the skill levels of school leavers entering the workforce on a scale of one to five, with one meaning leavers are highly skilled and five indicating they were poorly skilled. The results were balanced. Nearly a third of respondents gave a median score, with a quarter (25%) saying there were skilled or highly skilled, while 28% said they were unskilled or poorly skilled.

Wayne Scott, the CEO of the Aggregate and Quarry Association, is critical of the existing system. He says: “The focus of NCEA has been getting the number of credits, not quality learning that prepares the student for potential employment. Accordingly, young people are applying for jobs with very few of the skills potential employers are looking for. There has been a disconnect between the school curriculum and industry.”

Early next year, the Government plans to return 10 polytechnics to regional governance in a move that undoes the Labour Government merger. Vocational Education Minister Penny Simmonds says they will be locally led, regionally responsive and future-focused. The aim is to better equip learners with skills that are workplace relevant.

Asked to rank the skill level of employees who have been through the polytechnic system on a scale of one (highly relevant) to five (not relevant), one in five respondents said they were highly skilled or skilled, 22% gave a median score and 17% said they were unskilled or poorly skilled.

Mt Cook Alpine Salmon CEO David Cole answered the question with a score of two. He says the system works for his sector. “We’re in the aquaculture industry and the salmon sector falls within that. We have a narrow skill requirement and we can employ someone with a diploma or degree in aquaculture with confidence.

“Judging by the specific skills they are studying, the certificates are a good grounding and a starting point when we first bring people on board.”

Mike Craig, who runs a business specialising in architectural builds, is less enthusiastic. He answered the survey question with a score of four. “The skills people are leaving education with are not up to scratch. It used to be that you needed 8000 hours of on-the-job training to qualify; now they are pushed through a course in two years. There’s a shortage of skills in the industry, but we’re pushing builders out too fast. We don’t have the right system in place.” Craig says he has to up-skill staff, including qualified carpenters, before they have the relevant skills for our work.

Grayson Engineering’s Kurt Hatchard has not been impressed with the school students arriving at his workshop for work experience. He says it is too easy for them to pass their unit standards to get qualifications and they are often not ready for real work. His criticisms of polytechnic students echo Craig’s words about the lack of hands-on experience: “They are taught multiple welding techniques with different consumables, but I feel they need to spend more time practising.”

Scott says the teaching programmes in polytechnics have not kept up with advances in technology and new ways of doing things: “So often, the skills taught are not those currently used or required. Work-based learning delivery has become more flexible with online tutorials, virtual classrooms and work-based assessment. This has benefitted learners who can’t attend traditional classroom-based learning.”

Recruiting suitably skilled and qualified staff has been a major challenge in recent years; it is now less the case. Members were asked to rank the ease of finding people on a scale of one to five, with one being very easy and five being very hard. 43% of respondents said it was either easy or very easy, while 21% said it was hard and just 9% found it very hard.

Shamubeel Eaqub is an economist who is head of policy for Simplicity. He answers as both a business leader and an economist when he says labour shortages plague New Zealand and are structural, so even during a recession it is not as easy as it was to find skilled employees.

Economist Shamubeel Eaqub. Photo / Supplied

One issue is what he describes as understandable “labour hoarding”.

He says, “Businesses are less likely to fire people in a downturn. We have seen much greater use of reducing overtime and usual hours than firing this recession. So, we haven’t increased the pool of available workers as before.”

This is a reaction to the difficulty of finding workers and the attendant costs after hiring, Eaqub says.

The other problem is that there is “limited capability inside organisations to hire people with the right attributes but not necessarily the right experience to train them up to fill roles. There is a tendency to try and hire match-fit candidates. This makes the training and skilling someone else’s problem, but not everyone can pass the buck. It creates a lingering skills shortfall.”

Eaqub says our education and training organisations are better at qualifications than skills — not all; apprenticeships, for example, are very hands-on and industry-relevant. We then rely on immigration to fill our skills shortages, further atrophying the ability of our education sectors and businesses to upskill our workers.

Hiring workers from overseas is far from easy. BusinessNZ asked those members who had attempted to hire migrant workers about the experience on a scale of one to five, where one is very easy and five is very hard. Fewer than half of the respondents were able to answer the question; of those who did, almost no one said they found it easy, while well over half (60% of those answering) said it was hard or very hard.

Tim Robinson, of Robinson Bowmaker Paul, a Wellington-based energy consulting business, says his firm always gets international interest when advertising for staff, but there are few suitable candidates. “One recent hiring round, we were lucky enough to find someone who was a perfect skill fit overseas, and went through the process of bringing him over from India. It took about eight months from the first advertisement to having him in the office in New Zealand.”

Robinson says the process seemed pretty efficient and he didn’t need to use an adviser. “From our side, most of the process seemed to be geared towards making sure we didn’t exploit anyone, rather than making us jump through hoops, which was a pleasant surprise. Once we found a good candidate, it wasn’t that much harder than hiring a Kiwi. Just a lot slower. I’d have no hesitation doing it again next time.”

Earlier this year, the United States imposed a 15% tariff on New Zealand goods. This was up from the previously advised 10%. Despite this, exporters appear to remain relatively confident about their prospects. The survey found 73% of exporters are either confident or neutral about their ability to continue exporting at the same rate as recent years, while 27% say they are not confident.

Cole says his Mt Cook Alpine Salmon business is not concerned about the tariffs, even though the US is the company’s largest export market. He says: “It’s not our problem, we don’t have to pay the tariff.” Cole says there has been no effect on demand; if anything, it is growing rather than slowing down. He says the company continues to sell in China and elsewhere in Asia.