Westpac chief executive Brian Hartzer has a message for businesspeople in both New Zealand and Australia: "Get out and speak about the importance of trade".

If there is one thing that unsettles Hartzer about the presidential election in the United States, it is the resurgence of anti-trade rhetoric.

Republican Donald Trump was quick to leverage anti-globalisation sentiment to garner votes by demonising the Trans-Pacific Partnership (TPP).

But when Democrat Hillary Clinton - who formerly championed TPP while US Secretary of State - performed her own pirouette, this led Hartzer to agree with the proposition that the world could be heading towards a more insular age.


"People seem to forget the reason the Great Depression lasted so long as it did and was as bad as it was, was largely because of the 'Smoot Hawley' Tariff Act which put up trade barriers among nations," said Hartzer. "I think it is really important to speak out.

"I have said to customers, 'We have to be out there explaining to people that trade is good. Trade is important. Globalisation is really important for everybody's benefit, not just for individual companies'."

Hartzer puts the current presidential campaign's anti-trade rhetoric in the context of the United States' "long history of flirting with isolationism".

"You see it as a thread that runs through hundreds of years in the US. Unfortunately in an environment where middle-income people are feeling anxiety about their jobs and where you see some of the old traditional manufacturing areas having a hard time, there is this resurgence.

"I think it all comes from an element of fear and unfortunately politicians sometimes respond to the mood rather than lead the mood."

The problem is that the compass is still stuck when it comes to climbing out of the post-GFC environment.

Central banks have pumped money into economies to drive down interest rates in order to try to stimulate investment and lower their exchange rates, so they can boost their exports.

But, says Hartzer, for the most part it isn't really working. "Yes, it has staved off a further financial crisis. But they are still using the same settings that they had eight years ago."


Hartzer shared his insights in private meetings in New Zealand recently, including with the Reserve Bank, at a customer luncheon addressed by the Prime Minister and with this columnist.

Three issues stood out: keeping trade doors open; his belief that low interest rates have run their course; and his confidence in New Zealand's direction.

Hartzer makes the point that central banks are basically running out of steam when it come to stimulating growth.

His expectation is that Federal Reserve chairwoman Janet Yellen will announce a reversal in direction this year -- probably in December. "There is a tremendous amount of anticipation and hope in the international markets that interest rates will rise because we are in a very unusual situation," he said.

"We think the signs look pretty good that there will be a rise in interest rates in the US ... on balance, I think it will be a positive thing because as interest rates get really low it puts real pressure on the profitability of banks and the ability of banks to lend to support the economy.

"One of the things that we feel very deeply is for our older customers who are reliant on bank deposits for their income; rates are getting really low.

"Our estimate in NZ is people probably need interest rates around 4 per cent to live on and that's getting really hard."

He expects firming interest rates will also take pressure off Australasian currencies, which will support exports and growth.

Hartzer's perspective on the New Zealand economy is positive: "While there are some challenges, most of them are good problems to have."

Unlike Australia, which shares some similar metrics, such as economic growth at 3.3 per cent compared to NZ's 3.6 per cent, he sees the sentiment across the Tasman as more pessimistic.

At the customers' luncheon, Hartzer said the changes made here had put New Zealand on a very strong footing. "Although it is slightly pandering, it is absolutely true that New Zealand is the envy of your cousins across the ditch in terms of the quality of leadership that you have had here from both a political and a business perspective.

"Many of us in Australia would reflect that Australia missed a bit of an opportunity in the last decade when things were really roaring to make some of the more difficult decisions and some of the more important investments that would have sustained the economy now.

"There are short term pressures to be managed but the key for us now is not to waste the opportunity that we have and to think about the fact that in a world that is growing very slowly, we have the economies of New Zealand and Australia that are growing pretty well."

Some of Australia's pessimism is "driven by an aspiration gap. Think about what people were aspiring to 10 years ago -- their incomes were rising 7 per cent a year; the value of their house ... You roll the camera forward to today and income is still growing but at a much lower rate. House prices are growing but at a lower rate. People still have a significant amount of debt; seeing their children have a difficult time buying a home; retirement is getting closer; stock markets are going sideways at best; people are feeling 'gee I am not so far ahead as I thought I would be by now' and that plays into the psyche."

But he remains confident about the future of this part of the world. Hartzer cites the megatrends, including the rise of the Asian middle class.

Then there are the ageing baby boomers. "Over the next decade millions of people are going to pass that milestone. They are going to want new forms of housing. They are going to want to eat out. They are going to want to be entertained, new services. All those things will create new jobs and new business opportunities."

Finally, there is the impact of technology, which is creating all sorts of new business in both countries.

As long as those trade doors stay open.