Business leaders applaud Waters' attack

Outgoing Fletcher Building chief executive Ralph Waters

Business leaders have backed criticism by outgoing Fletcher Building chief executive Ralph Waters, saying he was right to take a swipe at the New Zealand financial and political system.

Waters told business leaders at his farewell that the country was not facing up to major economic problems and the political system made it difficult for the Government to make tough decisions.

Michael Barnett, chief executive of the Auckland Chamber of Commerce and chairman of the Auckland Regional Economic Development Forum, said tiers of central and local government constrained business and were not "growth enablers".

But Waters' criticism of the country's economic path was too harsh, he added.

Business Roundtable executive director Roger Kerr agreed with Waters, saying Australia had succeeded where New Zealand had failed. Waters' political criticism was aimed at MMP, which had paralysed and compromised policies, created a poor democratic system, inflated Government spending and encouraged politicians to do deals to implement their plans.

"I've heard Ralph remark on these things before, but at this speech he was clearer and stronger on these issues than he has ever been. But you'd expect that in a valedictory speech."

Nick Main - who chairs Deloitte, is a member of the Committee for Auckland and on the New Zealand Institute's board - also agreed with Waters about the political system, problems with MMP and the worrying current account deficit.

Singapore and Australia had moved ahead with compulsory superannuation and become wealthy nations, he said.

"Yet New Zealand has this terrible problem, thinking big business can't be trusted and is acting against the average person. But if the average person has investments and is getting returns, that changes and people might see the connection between wealth creation and business."

Lack of a stable electricity supply and compliance costs - particularly with the Resource Management Act - were holding the country back, Main said. Fletcher Building chairman Rod Deane also backed Waters' comments.

More than 100 people attended Waters' farewell, including Warehouse founder Stephen Tindall, Telecom chief executive Theresa Gattung, Securities Commissioner Jane Diplock, Vector chief executive Mark Franklin, former Montana chief Peter Masfen, John Bongard and Gary Paykel of Fisher & Paykel and Employment and Manufacturers' Association chief executive Alasdair Thompson.

WHAT WATERS SAID:

An excerpt from Ralph Waters' speech at his farewell.

".... Looking at the broader picture, I think New Zealand will have some hard decisions ahead.

The political system here is not conducive to making important decisions [if they may prove] unpopular. Strong economic activity that is consumption driven is also a bit misleading as to how we are really travelling.

The current account deficit is a reminder, but in the main , the country seems oblivious to the large structural imbalances.

We need more Fonterras and Fisher & Paykels exporting and we need more Fletcher Buildings investing successfully overseas. The country must always remember that, if the business is not processing New Zealand resources like grass or timber, then there are not many compelling reasons to be based here.

Building one's plants closer to export markets makes much more sense. Yet as a country we do all we can to discourage major manufacturing investment here, with the lack of certainty of power for example, its uncompetitive pricing relative to external options and the success vested interests have in making meaningful new investments very difficult, if not near impossible. There are false luxuries that the country cannot afford.

I also think there is much to be gained from a much closer economic relationship with Australia. Those who matter acknowledge this, but frankly give it little impetus. It has ever been thus and New Zealand - not Australia - is the loser.

Sir Robert Menzies, that long time Australian PM, wrote in his book The Measures Of The Years, "The world interests of Australia and New Zealand are, when properly viewed, not identical, but inseparable".

However he also added in regret that there was "a paradox of two peoples genuinely anxious to help each other, but unable to find simple ways and means of doing so".

CER was a very meaningful advance and showed what benefits there were to be had, but I suspect little real further progress will be made.

More's the pity as I have firmly come to the view that a single Australian financial market, including a common currency, would be strongly beneficial to New Zealand - but enough of that line of thought before we start a debate...."