Most CEOs surveyed for Mood of the Boardroom are expecting revenue growth and bottom line profit increases.

Three-quarters of CEO respondents to this year's Mood of the Boardroom survey are anticipating revenue growth in the next year, with all but four of those CEOs predicting an improvement to bottom line profits.

The confidence from business leaders is evident in their commitment to investing in themselves - 57 per cent said they were likely to increase staff numbers in the next 12 months and 61 per cent expected to authorise further expenditure in IT.

Only 12 per cent of CEOs said that they expected to authorise less capital expenditure. It's a strong message from our business leaders - the platform for national economic success has been laid - now it's about capitalising on it.

PwC Chief Executive Bruce Hassall said that "now is the time for the business community to back themselves and go hard for growth. If ever there was a foot-to-the-floor moment, then this is it."


Chief executives have been busy optimising their organisations and making strategic adjustments to best position themselves to benefit from growth; 69 per cent of respondents said that changes to how they manage talent within their organisations were planned in the next 12 months.

That's not surprising considering that labour productivity and skills shortages ranked among the highest of all domestic factors concerning the CEOs.

One CEO from the hospitality industry said that "Lower unemployment will intensify the competition for talent which will probably drive up labour costs."

He added that innovation will be key to adding value to what organisations can offer prospective employees, saying "otherwise you are left competing purely on price."

Other strategic changes common amongst CEOs were optimising digital infrastructure at 65 per cent, changes to organisational structure at 57 per cent and driving engagement through social media at 50 per cent.

Overall, 51 per cent of respondents are feeling more optimistic about the New Zealand economy than they were last year, and 54 per cent are more positive about the prospects for their own industry.

That served as a contrast to the global economy where the CEOs are not quite as positive, with concerns around Europe, Russia and further instability in the Middle East all cited as reasons to anticipate headwind globally.

John Roberts, Managing Director at Veda, said "New Zealand seems to be in a positive growth zone at present, very much driven by the Christchurch rebuild and the global demand for commodities that we are great at producing."

PwC Chief Executive Bruce Hassall says now is the time for the business community to back themselves and go hard for growth. Photo / Michael Craig

While the path ahead for the economy holds significant promise, business leaders remained cautious not to get ahead of themselves, with the potential for speed bumps on the road to prosperity.

The Canterbury rebuild and high export prices, particularly in the dairy sector, have delivered short-term boosts to the economy - but sustaining strong growth rates will take a concerted effort from the next government.

BusinessNZ Chief Executive Phil O'Reilly said that "John Key's big challenge if he is re-elected is to ensure that New Zealand is set on a path where 4 per cent plus growth per annum is the new normal. We are getting better at having the underlying micro and macro plan to achieve that but there is still some way to go."

One CEO from the legal sector opined that while New Zealand is progressing well, that success isn't necessarily extending across all sectors. He cautioned against a one-eyed approach to growth, saying that "over-reliance on the dairy sector and a small set of large customers is a big risk for the economy. We need to stimulate and invest in scalable growth."

Political uncertainty ranked highly for CEOs when assessing threats to the present positive business environment. Director of Ngapuhi Asset holding company, John Rae said that he was slightly less optimistic about the prospects for the New Zealand economy, explaining that "the political risk overlay is driving this dichotomy."

Over the next months, CEOs expect:

Increased profit

- Yes: 73 per cent

- No: 7 per cent

- Same: 19 per cent

Revenue growth

- Yes: 75 per cent

- No: 8 per cent

- Same: 16 per cent

Authorise capital expenditure

- More: 53 per cent

- Less: 12 per cent

- Same: 33 per cent

Authorise IT expenditure

More: 61 per cent

Less: 6 per cent

Same: 32 per cent

Hiring intentions

More: 58 per cent

Less: 14 per cent

Same: 28 per cent

One property sector CEO said that ambiguity in the political realm was already impacting upon his business, saying "a change of government could affect the real estate industry as a capital gains tax would have an impact upon the market".

Despite voicing strong concern about the existing regulatory environment in New Zealand, business leaders from the property sector were some of the most optimistic to participate. They cited strategic acquisitions, diversified income streams and improving cash flows as their biggest achievements of the last year and are preparing for further progression in the coming year.

All respondents bar one were anticipating revenue and profit growth within their businesses and planned to take on more staff to help facilitate that process.

Despite that optimism, regulatory issues continue to cause headaches with business leaders taking umbrage with the Resource Management Act in particular.

Not a single respondent supported the act in its current form - however they remained divided on whether adjustments could be made to make the act work or if legislators needed to go back to the drawing board.

Asia ties our saving grace

Craig Stobo, Chairman New Zealand Local Government Funding Agency. Photo / Mark Mitchell

"European and American economic growth prospects remain weak. Fortunately New Zealand's prospects are increasingly tied directly to the fastest growing region in the world: Asia - and not just indirectly through Australia.

"Weaker Western world growth with the associated weak inflation and the lingering effects of quantitative easing has meant global interest rates have remained low for longer. The resulting excess liquidity is finding its way into higher yielding assets like New Zealand bonds and property assets.

"The domestic factor which are most concerning for me has been the poor fiscal response to rising house prices (the solution is to increase supply, not fuel ability to buy which only raises house prices further) and progress on the Christchurch rebuild.

"The medium-term prospects for New Zealand's economy are driven by the Christchurch rebuild, strong net immigration with associated pressure on housing stock and out positive terms of trade.

"Long-term we have to continue to find ways to raise our productivity and encourage more contribution to, and participation in the benefits of economic growth."

- Craig Stobo, Chairman New Zealand Local Government Funding Agency