Mood of the Boardroom: Westpac CEO Catherine McGrath on the challenges and opportunities ahead

New Zealand is facing a range of challenges that will require innovative thinking to solve them, Westpac chief executive Catherine McGrath says.

“New Zealand is facing a big range of challenges that we are having to step up and tackle a bit faster than we thought.

“Whether that’s the clear impacts of climate change or the impact that that has on our infrastructure.

Westpac New Zealand chief executive Catherine McGrath. Photo / Mark Tantrum

“Housing is another big issue. But also how we get all New Zealanders, as far as possible, to walk together at the same pace and be the best of us rather than start to pull apart.”

McGrath said issues like climate change did not have an even impact on everybody.

“I’m really conscious that walking together and solving it as a country over the longer-term becomes really important.”

Facing into an election, McGrath said one issue was that tackling most of these challenges was a far longer problem than three years.

“Particularly on infrastructure and housing, how we get collaborative action that is a decision that we make as a country irrespective of who is leading it at the time, seem really important.”

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McGrath said despite the challenges New Zealand was facing there were still plenty of reasons for optimism. “There’s a real opportunity for New Zealand to work out how to do it differently than it’s done in the rest of the world, and do it well.

“If I look at infrastructure, we can see a really, really clear need for that; having a 10-year road map would be great.

“We need to think about public-private partnerships for big projects.”

She said there were iwi with quite a bit of financial resource who could be keen to look at longer-term infrastructure programmes as well.

“There’s a real opportunity to think about how we do that and to think about how we do it sustainably — that’s a reason for optimism in NZ — and that we can tackle some of these challenges differently and choose to lead the world.”

McGrath said New Zealanders often thought about housing in a very traditional way.

“Which is either that you rent or buy and buy land and house — I think there are plenty of different models like shared equity and leasehold models, and there’s great work happening with Kāinga Ora.

“Again, you can choose to step into these challenges slightly differently than other countries will, and do things in a way that is uniquely NZ, but shows the world how you can tackle infrastructure sustainability and housing together, rather than see them as separate problems that have no inter-linking.”

McGrath said households and businesses were feeling pressure but most of its customers continued to be well placed to cope with it.

McGrath said people were falling into two groups:

“[The first group] have made adjustments.

“That means...they are now in a sustainable place, they’ve learned how to cope with it and they are okay.”

But she said there was another group where they had less resilience.

“We also have a group of customers where interest rates being higher for a longer period of time might just stretch their resilience a little bit too far.”

McGrath said she was worried about how some dairy farmers would service their loans with milk prices coming down.

“A lot of our customers will be fine but if you were just evenly balanced in terms of ingoings and outgoings then one more thing can give you that shock.”

McGrath said as of today its data showed New Zealanders were doing okay in terms of low numbers of mortgagee sales and forced farm sales.

“We have done okay so far as a country and I think we will continue to do that is what the data is telling me.”

Looking at future shocks that could come there were some sectors that were more worrying than others, she noted.

“But at the moment it is happening in quite an orderly and managed way and there’s been no domino effect.”