Speaker 1: Gielda.
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
Speaker 2: daily podcast presented by the New Zealand Herald. The Mood
Speaker 2: of the Boardroom is back today for its twenty second year.
Speaker 2: The annual survey of the country's top CEOs and business
Speaker 2: leaders has seen a broad tick of approval for the
Speaker 2: Coalition government, with strong support for Christopher Luxen and Nikola
Speaker 2: Willis and their economic plan. But they want to see
Speaker 2: the government be bolder and set out their vision for
Speaker 2: New Zealand's future, and that could include tackling some of
Speaker 2: the most contentious economic issues in our country. Today on
Speaker 2: the front page ends at Herald, Business editorial director fran
Speaker 2: O'Sullivan is with us to digest the thoughts of our
Speaker 2: top business leaders. Fran Can you just remind us what
Speaker 2: Mood of the Boardroom actually is?
Speaker 1: Good question, Chelsea. I mean, essentially, what it is is
Speaker 1: a barometer of business sentiment and mood very much at
Speaker 1: the top end of town. A great deal of the
Speaker 1: CEOs who comprise the top twenty companies of the ZX
Speaker 1: and more, plus a spattering of chairs. And don't forget
Speaker 1: we don't have a lot of women at the top
Speaker 1: of New Zealand major companies yet so I've tended to
Speaker 1: do gender balance over the years by reaching out to
Speaker 1: prominent female chairs as well.
Speaker 2: So the twenty twenty four edition is out today. It
Speaker 2: would it be fair to say that people are generally
Speaker 2: quite positive about this government.
Speaker 1: Yeah, they're quite positive about the government and more particularly
Speaker 1: they're quite positive about the economy. I mean, essentially there
Speaker 1: are lingering concerns about a range of issues, still got
Speaker 1: some receptinary effects occurring, but essentially the confidence is where
Speaker 1: it was really back in the heyday of Bill English
Speaker 1: and we haven't seen this for a while. And so
Speaker 1: I think what you've seen from this government is it
Speaker 1: has been very deliberate about what it's doing. It does
Speaker 1: have confidence in the key members of the cabinet, particularly
Speaker 1: when it comes to those that are across the economy
Speaker 1: and issues which are important to business. So there's a
Speaker 1: good balance there. But it's also reached the stage where
Speaker 1: essentially business wants the government to pivot and focus on
Speaker 1: the road ahead and not looking through the rearview mirror.
Speaker 1: And I guess when you think about it, as it's
Speaker 1: been coined, much of the last almost year has been
Speaker 1: about the Great unwind. It's been about replacing policies and
Speaker 1: projects that its predecessors had done and starting to put
Speaker 1: in place its own agenda. But in essence, senior Business
Speaker 1: would like the government and ministers really to focus on
Speaker 1: the future and start to think about the growth agenda
Speaker 1: rather than getting the platform for growth.
Speaker 2: Well, I was about to say, actually, while the business
Speaker 2: leaders are happy with the government, I see that they
Speaker 2: also do want to see more of that bold ambition
Speaker 2: rather than just do it undoing Labour's plans and complaining
Speaker 2: about what they've inherited and such. How could that ambition
Speaker 2: come to fruition do you think?
Speaker 1: I mean, there's plenty of advocacy from business about what
Speaker 1: they'd like to see about the major issues facing New
Speaker 1: Zealand and some steps that could be taken. But essentially
Speaker 1: it's the government been very focused now on what are
Speaker 1: those agender items that really will drive the economy and
Speaker 1: will particularly inspire investment as well.
Speaker 2: In their ratings of the cabinet, Ericus Stanford has come
Speaker 2: out on top, the only minister with a rating of four.
Speaker 2: Are you surprised by that?
Speaker 3: Now?
Speaker 1: I'm not bear in mind this has actually been quite
Speaker 1: a difficult period for ministers and they have been winding
Speaker 1: much of their predecessor's policies and so, for instance, her
Speaker 1: focus on back to basics resonates with business that are
Speaker 1: looking for people to come out of the education system,
Speaker 1: raring to go and with the right competencies to be
Speaker 1: able to thrive. I mean, there's been quite a lot
Speaker 1: of concern about young talented New Zealanders leaving New Zealand
Speaker 1: and going elsewhere in the world, and that will continue,
Speaker 1: but really the opportunity to have well qualified young people
Speaker 1: working here is also pretty important.
Speaker 3: We used to be one of the best countries in
Speaker 3: the world when it came to reading and writing. I
Speaker 3: mean we were in the top ten and piece and
Speaker 3: where were the envy of the world. But on the
Speaker 3: last twenty or thirty years things have taken a turn
Speaker 3: for the worse and we've seen literacy rates dropping year
Speaker 3: on year on year and nothing really has changed.
Speaker 1: Working down the cabinet list, you then come to Simeon Brown,
Speaker 1: who's also got a range of major portfolios. He's got transport,
Speaker 1: you know, that includes being Minister for Auckland, it includes
Speaker 1: energy and he's one of Christopher Luxen's kitchen cabinets, so
Speaker 1: he's pretty important. And then you come down a step
Speaker 1: to both Chris Bishop and Nichola Willis, and these are
Speaker 1: just you know, these are ratings really at the margin
Speaker 1: of era for these top three, they're both rated equal.
Speaker 1: And you know, Nikola Willis has got a tough job
Speaker 1: there and she's not only got to keep fiscal discipline there,
Speaker 1: but she's also got to change public sector reforms. She's
Speaker 1: going to do a social investment, which is pretty important
Speaker 1: when you look at the transformation of the economy and
Speaker 1: helping young people be focused. So that's major. And Chris
Speaker 1: Bishop is a cross a range of things as well.
Speaker 1: I mean he's commonly known for the infrastructure portfolio, but
Speaker 1: he's also got housing, he's got RMA reform. When you
Speaker 1: go down a bump to Judith Collins and again she's
Speaker 1: got seven major portfolios. And then the Prime Minister himself
Speaker 1: again pretty much equal with Judith Collins. And the Prime
Speaker 1: Minister is really interesting and he doesn't top the cabinet
Speaker 1: pack in that respect, but he's so critical to the
Speaker 1: performance of this particular administration and when you look at it,
Speaker 1: where CEOs rate him strongly is how he's kept the
Speaker 1: cabinet focused on delivery, and so if you're looking at
Speaker 1: the KPIs that he would have on his plate, he's
Speaker 1: coming in at four point three out of five and
Speaker 1: more particularly also some forty odd percent forty three percent
Speaker 1: marking him as very impressive on this measure. So you
Speaker 1: can see he's raptor's hands around his cabinet. He's focused
Speaker 1: on deliverables, but he's also got a range of other
Speaker 1: factors he has to deal with. He has to leverage
Speaker 1: his brand for New Zealand and we've seen that with
Speaker 1: the way he's taken missions offshore with business. But he's
Speaker 1: also got to keep the coalition together and he's not
Speaker 1: writing too bad on that. But the one weakness he
Speaker 1: still has, and he acknowledges this is his own political performance,
Speaker 1: and he will just say, he's, hey, you give me
Speaker 1: a break. I've just been in politics three years and
Speaker 1: you know, just over three years, nearly four years, and
Speaker 1: he became you know, from ZIP to within three years
Speaker 1: he was PM and he had melded together a quite
Speaker 1: unified caucus in that time.
Speaker 2: Barbara Edmunds has taken over as Labour's finance spokesperson this year.
Speaker 2: She's still only a few months into the job. But
Speaker 2: has she resonated with the financial sector yet.
Speaker 1: Yeah, she's resonating with those who have had a chance
Speaker 1: to meet her. And bear in mind, I mean she's
Speaker 1: only been in this role since February, I believe, and
Speaker 1: she's pretty pragmatic. Before she was herself a cabinet minister
Speaker 1: and she was Minister of Revenue. Before she was appointed
Speaker 1: to that, she did chair the far and it's an
Speaker 1: expenditure committee in Parliament, so she was well known to
Speaker 1: both sides of Parliament. But more particularly she also when
Speaker 1: she was a seconde from the Inland Revenue she worked
Speaker 1: for Judith Collins when Judith was a Revenue minister, so
Speaker 1: you know she's highly respected. She got on well in
Speaker 1: her office. She also got on well in Michael Woodhouse's
Speaker 1: office and he was the immediate predecessor in Revenue and
Speaker 1: then of course she switched to labour side and then
Speaker 1: became an MP. I mean, there's a great quote here
Speaker 1: that I like, which has come from a banking sector
Speaker 1: head and it basically says Barbara Edmonds is an absolute
Speaker 1: class act. She possesses an equal balance of smarts and empathy.
Speaker 1: She will be forced to sell their tax reform idealism
Speaker 1: and could be completely distracted by that. But she knows
Speaker 1: tax inside out and sroduce her skills to being pragmatism
Speaker 1: to the discussion rather than sell an ideological fantasy very well.
Speaker 1: But one of the interesting things in this survey is
Speaker 1: that the ground does appear to be shifting under the
Speaker 1: issue of capital gains taxes and also changes, for instance,
Speaker 1: to the superannuation settings. That parting shot from the Treasury
Speaker 1: Secretary Carolyn McLeish, who's gone back to Australia to head
Speaker 1: up the Audit office there. She basically said, we have
Speaker 1: structural reform issues and pointed to these areas and a
Speaker 1: large number of CEOs in this report agree. More than
Speaker 1: seventy percent in fact, are on song with that, and
Speaker 1: those who commented for that part that particular question, more
Speaker 1: than fifty percent came up with CGT as an option.
Speaker 1: And we've got people like Mainfreight CEO Don Braid, and
Speaker 1: he was essentially saying, to this question, and it is
Speaker 1: a big question for this government. He was basically saying
Speaker 1: that some of the things that could be considered will
Speaker 1: be capital gains tax, public private partnerships, lessons for Australian
Speaker 1: super and its success, and these wouldn't go amiss. I mean,
Speaker 1: government's a bit tunnel vision on this one, I think,
Speaker 1: and we saw that recently with the swipe at Antonia Watson,
Speaker 1: the CEO of A and Z, who made some comments
Speaker 1: suggesting CGT should be looked at. And so it's actually
Speaker 1: a lot of commonality out there in business. And I
Speaker 1: guess what people forget is a lot of these business
Speaker 1: people are running companies that are also active in other
Speaker 1: parts of the globe which do have capital gains tax,
Speaker 1: do have different superannuation settings. This is not foreign to them.
Speaker 1: So all those angsteam from the OECD and IOMF is
Speaker 1: kind of on a ground where it's a bit fertile
Speaker 1: at the moment. However, there are others who say that yes,
Speaker 1: economically it makes sense, but politically it's difficult. And Deloitte
Speaker 1: chair Thomas Pippos, who's written a lengthy analysis in the report,
Speaker 1: basically says it's a red herring and to his view,
Speaker 1: the big issue was Treasury hadn't had the visibility it
Speaker 1: should have had during this last period. In other words,
Speaker 1: parting shots on the way out perhaps should have been
Speaker 1: made more vocally earlier.
Speaker 2: Well, Nicola Willis lashed out at suggestions of a capital
Speaker 2: gains tax just the other week. Hey, And the survey,
Speaker 2: like you said, show's opinion is shifting on CGT and
Speaker 2: on implementing a more efficient superannuation scheme like that of Australia.
Speaker 2: Is the government actually likely to look at either of
Speaker 2: those issues anytime soon?
Speaker 1: Well, it would have to quite a big segue from
Speaker 1: where they are now. But you know, as this survey
Speaker 1: the thrust of us, it is time to pivot. They're
Speaker 1: not going to want to do this in a hurry though,
Speaker 1: because this is one of the areas that labor is
Speaker 1: looking at, and they'll be quite hopeful at the next
Speaker 1: election that Labor will go hard on wealth and capital
Speaker 1: games taxes and the government will be National will be
Speaker 1: able to fight against that. I mean, already you've had
Speaker 1: the lines about you know, more taking more money out
Speaker 1: of people's pockets in New Zealand, which actually isn't really
Speaker 1: the case. It only happens when you sell. But you know,
Speaker 1: there's still got to be a debate about how we
Speaker 1: bridge the structural deficit. National would hope that it could
Speaker 1: grow the way out of these issues and then get
Speaker 1: more tax revenue that way through more successful companies. But
Speaker 1: you know, it's still quite a difficult task. But I
Speaker 1: think where national has to be a little bit careful
Speaker 1: is you know, if there is openness to thinking about
Speaker 1: and talking about potential remedies for some of the big
Speaker 1: issues that face the economy, that they don't close off
Speaker 1: those options too soon. One of the things coming through
Speaker 1: is the need to see a little bit of a
Speaker 1: shift in tone from senior ministers and how they deal
Speaker 1: with business. A number of people commented about the way
Speaker 1: the Kiwi railboard was slapped down on the Board of
Speaker 1: Health New Zealand in quite brutal ways actually, and you
Speaker 1: know it doesn't resonate well, particularly when you're trying to
Speaker 1: attract other you know, well healed and because you have
Speaker 1: to be to go into these roles because they don't
Speaker 1: pay very much, you know, to get on well qualified
Speaker 1: people to come and take part in governing major Crown
Speaker 1: entities and soees. So business would like to see a
Speaker 1: shift in tone there.
Speaker 2: There are still some economic challenges in the community, hey,
Speaker 2: particularly around electricity prices. That's seeing increased bills and even
Speaker 2: forced some businesses to close that issue has leaders worried
Speaker 2: the most, followed by the US China tentions and international
Speaker 2: cyber attacks. How seriously should the government be taking these
Speaker 2: power price worries?
Speaker 1: Well, I think the more interesting one in the report,
Speaker 1: and we've done a three page splash on it, is
Speaker 1: probably when you drill down and you look at the
Speaker 1: issue of energy security. These energy prices have had an effect,
Speaker 1: and quite clearly we've seen Winston pull out of its
Speaker 1: mill and we've seen a degree of de industrialization happening.
Speaker 1: It's a mixture of issues there that have contributed to that,
Speaker 1: but I think the more interesting one is there isn't
Speaker 1: much confidence that we actually have sufficient security of supply
Speaker 1: to deal with some fairly major demand issues coming up.
Speaker 1: I mean, we're having the switch to utilize mevs, we're
Speaker 1: having the switch to more AI, we're having more data
Speaker 1: centers and all of this is a big drawer on electricity.
Speaker 1: So talk to government ministers. They will take the view
Speaker 1: that now you've got a long term contract twenty year
Speaker 1: contract with Typoint for instance, that gives some certainty to
Speaker 1: the market. In other words, there's not going to be
Speaker 1: a huge chunk of power come back on to the
Speaker 1: market if, for instance, they couldn't get a deal on ty.
Speaker 1: But also we've seen the fact that they're not going
Speaker 1: to go ahead with the Onslow project in the South Island.
Speaker 1: So the government's view is this of certainty, but coming
Speaker 1: through from businesses, actually the government's got to get a
Speaker 1: lot more organized on this. You know, people want to
Speaker 1: have some certainty. Obviously there has to be a big
Speaker 1: range of renewable projects consented and built, and the government
Speaker 1: has clearing the wave for that with fast Track, but
Speaker 1: there's still issues. Some people are concerned about whether you
Speaker 1: know the structure of the Gen Taylor's as to whether
Speaker 1: they should split out their generating and lines capacity. So
Speaker 1: there's a big conversation that still needs to occur.
Speaker 2: We're also a little over a month away from the
Speaker 2: US election. John Keys come out saying this week that
Speaker 2: Donald Trump would be better for the economy. What do
Speaker 2: our CEOs think?
Speaker 1: Ah. I think where John Key is coming from is
Speaker 1: he's better for the US economy and that may flow
Speaker 1: out to here. I think there is considerable concern here
Speaker 1: about you know, Donald Trump essentially putting up barriers when
Speaker 1: it comes to trade, and for instance, we have some
Speaker 1: big exporters of our own into the United States these days,
Speaker 1: and he's looking to put a ten percent tarif on
Speaker 1: and that would be pretty damaging here if that occurred.
Speaker 1: And don't forget the United States is now our second
Speaker 1: largest trading partner. It's overtaken Australia in the last year
Speaker 1: or so, so you know that's a concern. It's a
Speaker 1: concern that he's putting America first outlook could have an
Speaker 1: effect here, but it's early days.
Speaker 3: But the view out.
Speaker 1: Of the bordroom is this time around is pretty solidly
Speaker 1: that they would prefer Krmela Harris to be the next
Speaker 1: president of the United States, and partially because it would
Speaker 1: mean a continuation of current settings.
Speaker 2: Fran it's been a difficult few years for the economy.
Speaker 2: Are we confident we've turned the corner or are the
Speaker 2: challenges set to continue?
Speaker 1: Do you think, Oh, there's definitely challenges. But I think
Speaker 1: there's two factors playing into this. The fact that the
Speaker 1: government has kept a strong focus on the fiscal discipline
Speaker 1: and that's rated highly by our CEOs. But also when
Speaker 1: we've seen the Reserve Bank starting to go down the
Speaker 1: interest rate lowering trail and obviously next week expectations that
Speaker 1: there will be another lowering, and I think if they
Speaker 1: dropped it by two rather than one metric, it would
Speaker 1: be a great fillip to confidence. That's what business is
Speaker 1: looking for. Dropping the OCR finally has played into confidence,
Speaker 1: but the management of the OCR and interest rate levels
Speaker 1: still are major issues for business. So you know, no
Speaker 1: one would want to see it to go the other way.
Speaker 1: But I do think what we have seen is, you know,
Speaker 1: it's hard to keep animal spirits down for too long,
Speaker 1: and New Zealand has been pretty resilient over the years,
Speaker 1: and we've seen that with issues like how we weathered
Speaker 1: the GFC, how we dealt with COVID, how we dealt
Speaker 1: with the earthquakes and so on. You know, that comes
Speaker 1: a point where we've just got to get on and
Speaker 1: make the best of it. And I think you're seeing
Speaker 1: that in confidence surveys right across the board at this moment.
Speaker 1: One of the questions we asked was was it a
Speaker 1: hard landing or a soft landing. People were confident inflation
Speaker 1: had passed its peak, but there was also a bit
Speaker 1: of pessimism there in the sense that whether it would
Speaker 1: be a hard or a soft landing. Most people sixty
Speaker 1: odd three percent said the RBN said had not managed
Speaker 1: to achieve a soft landing. One or two said up
Speaker 1: more like a hard thud. But the point being is,
Speaker 1: you know, people turned the corner in their own sentiment
Speaker 1: and it's now up to everybody to move forward.
Speaker 2: Thanks for joining us, FRAN. That said, for this episode
Speaker 2: of the Front Page, you can read more about today's
Speaker 2: stories and extensive news Coveraget and zat Harold Doz. The
Speaker 2: Front Page is produced by Ethan Siles with sound engineer
Speaker 2: Patty Fox. I'm Chelsea Daniels. Subscribe to the Front Page
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Speaker 2: in tomorrow for another look behind the headlines.