With Government spending tight, where will the circuit breakers come from, asks business editor Liam Dann

The times they are a-changing ... although not nearly fast enough it seems.

Four years into the post-GFC crisis malaise and there is still plenty to worry about. And it is clear from the 2012 Mood of the Boardroom survey that concerns are becoming more specific if no less pressing.

Nearly 60 per cent of chief executives and directors polled this year identified top line revenue - or the lack of it - as one of the issues most likely to keep them awake at night. That response reflects an economy where cash is still tight.


Despite record low interest rates people just aren't spending and the economy is flatlining. Growth is marginal and what isn't clear from the GDP figure is just how lumpy that growth is.

Some sectors are still recessionary. The longer this downturn lasts the more worrying revenue becomes for businesses that have already pulled the obvious levers on cost cutting and restructuring.

At macro-economic level the lack of consumer spending isn't all bad of course.

This is the "great deleveraging" we all expected. Unfortunately it is playing out at a snail's pace as New Zealanders' capacity to pay down debt and save remains marginal.

Regardless of speed, it is hardly good news for any company reliant on discretionary spending - be it consumer or "businesses to business".

If cost reduction and shrinking budgets seems less of a worry than they have done, this is probably a symptom of the fact that most of the obvious actions that could be taken have been.

Less than a quarter of business leaders rated cost reduction as a major worry.

Though the focus on costs remains crucial it has become a daily feature of most businesses.


After years of intense scrutiny there is little room for serious axe-swinging without doing long term damage. Retention of skilled staff remains a top worry for the more than 40 per cent of respondents in the survey.

So that leaves the revenue side of the equation. Most survey respondents retain some optimism. In fact about 70 per cent believe their revenue will grow in the next year.

That's encouraging although not surprising.

You have to believe that this economic cycle will release it recessionary grip at some point.

But there are some serious headwinds still to be faced. Uncertainty in Europe continues to undermine the global economy. The US is still sliding side-ways and now China is decelerating.

Global worries have weighed on commodity prices this year and it seems likely we've seen the last of the good times on the agricultural export front for some time.

If farmers are flush with cash after three years of strong prices and good growing seasons then it does not yet appear to be flowing through to the wider economy. There is likelihood that much of their additional earning will be focused on debt reduction and core spending around their farms. They'll be watching global prices and bracing themselves.

There is still the hope of some growth driven by the Christchurch rebuild. But it is becoming apparent that this will be spread over a long timeframe and won't necessarily feel like the short sharp boost that many had hoped for.

Elsewhere, and particularly in Wellington, there is the counterweight of the Government focus on costs as it strives to hit its target of balancing the books by 2014/2015.

Business leaders are still overwhelmingly supportive of the Government's efforts on this front.

But just 40 per cent want to see the Government cut spending more aggressively - that's quite remarkable for a crowd that usually has very strong feelings about Government spending.

In this kind of environment few would turn their nose up at the prospect of some government stimulus - particularly in areas which have some direct spin-off for business.

If the Government is going to spend, then there are two areas that come out top as the preferred place for investment - infrastructure and education (with an emphasis on skills needed for business growth).

Much of that infrastructure spending has already been deployed of course, or is tied to Christchurch.

In reality business knows that there is little point in looking to Government for any major new spending in the next few years.

So what next? Where does all this leave business in 2012? Where will the circuit breakers for this economic cycle come from?

We are going to need strong and innovative leadership from the business community to turn the tide. And we are going to have to see some of that dogged optimism translate into business spending.

Teasing the public out of its recessionary mindset will be a slow process but it is a chicken and egg scenario. Business can lead the way by being proactive and trying new things. It is never easy because there are many reasons why we can't afford to do something. But if the alternative is slowing sinking in the mire of a stagnant economy - can we afford not to?