The role of business in driving New Zealand's growth
On Monday, 12 August 2024, MinterEllisonRuddWatts held its 21st annual Corporate Governance Symposium for directors and senior executives at the Cordis in Auckland.
The Symposium began with a welcome from MinterEllisonRuddWatts Partner Mark Stuart who introduced the topic for discussion at this year’s symposium: The role of business in driving New Zealand’s growth.
The Prime Minister, Rt Hon Christopher Luxon (the symposium’s keynote speaker) shared his thoughts on the topic, including his observations on the current state of the economy, the work that the Government has been focused on since the 2023 election, and the regulatory and policy changes that he sees as being critical to boost growth and productivity in New Zealand.
The Prime Minister highlighted five key areas that the Government is focused on to drive productivity and economic growth:
- Ensuring that New Zealand has a world class education system;
- Encouraging and embracing science and innovation;
- Improving core infrastructure;
- Making doing business easier; and
- Making sure that our overseas investment laws and regulations are working to attract (and not discourage) foreign investment into New Zealand.
The Prime Minister’s clear message is that he sees the Government, business and community organisations (including iwi) as being in partnership with each other. Each partner has different (but complementary) opportunities, responsibilities and challenges which all contribute to New Zealand’s economic prosperity. The Government is willing to do what it can to set business up for success, but also wants business to do its bit and bring its best ideas to government to help drive New Zealand’s growth.
Then followed a panel discussion moderated by MinterEllisonRuddWatts Partner Lloyd Kavanagh and featuring four highly regarded governors:
- Cathy Quinn, ONZM (Chair of Tourism Holdings and Fertility Associates, Director of Fonterra, Fletcher Building and Rangatira Investments, Pro-Chancellor of Auckland University, and former Partner and Chair of MinterEllisonRuddWatts);
- Sir Robert McLeod, KNZM (Chair of Sanford and Ngati Growth, and Director of Port of Tauranga and China Construction Bank (New Zealand) Limited);
- Carrie Hurihanganui (CEO of Auckland Airport and former COO of Air New Zealand); and
- Peter McBride (Chair of Fonterra, Sydney Markets and Sequal Holdings, Director of Trinity Lands, member of the New Zealand China Council and member of the Global Supply Advisory Board for Zespri International).
In addressing the question ‘what role does business play in driving New Zealand’s growth?’ in the context of New Zealand’s current economic climate, several themes emerged from the panel discussion, including:
If governors execute their core role well, economic growth should follow
The primary role (and goal) of governors is to create long-term, sustainable returns to shareholders whilst taking account of the interests of their organisation’s wider stakeholders (such as employees and the communities their organisation operates in). If governors are successful in performing their primary role and delivering on their objectives to deliver to shareholders and their wider stakeholders, then that will contribute to driving New Zealand’s economic growth.
Ultimately, New Zealand’s economic growth and prosperity is measured by increasing GDP. Businesses are the primary producers of GDP and the source of jobs, skills and income for New Zealanders.
Effective engagement with central and local government
Boards govern within the political (and broader) context both in New Zealand and globally. Government has an important role to play in supporting business confidence, by implementing the right fiscal, monetary and regulatory policies. This does not mean corporate welfare, but rather implementing policies aimed at increasing productivity and avoiding wasteful spending and incurring of costs.
Governors and business leaders have an obligation to engage with central and local government to encourage policy settings that achieve a balance between ensuring that the extent of regulation is appropriate while not unnecessarily increasing the burden/cost of regulatory compliance and administration imposed on business. Striking the right balance willcontribute to businesses being able to operate successfully domestically and compete against their global counterparts.
Building consensus among the business community and presenting a clearer message to the Government on what the broader business community needs would support the Government to make faster and better decisions. The partnership between government and business needs to be based on trust and mutual respect for the different roles that each plays. Neither side has a monopoly on good ideas, or can deliver them on their own.
Embrace new technology
Governors need to balance dealing with the challenges and pressures that they face today with working to ensure that the business strategy is forward-looking and setting the organisation up for future success. The Board’s job is to support and push senior management to operate the business to be as efficient as possible to drive profitability and competitiveness. Sometimes that may involve investing in new technologies that will remove some jobs as well as creating new ones.
There is a place for governors to keep abreast of developments overseas which may provide opportunities for (or threats to) the way their businesses operate. Seeing new technologies or processes in action on the ground can be more powerful than reading about them or hearing people describe them over video conferencing. Of course, the business case for investigating and investing in new technology needs to stack up.
The role of tourism and high value trade
Tourism remains key to New Zealand’s growth story. The value of international airline routes and services to the tourism industry is significant, with every new widebody aircraft that flies to New Zealand bringing with it substantial tourism spend.
Passenger planes do not just benefit the tourism industry, they also enable trade and the movement of high value New Zealand exports – a significant proportion of air freight entering and leaving New Zealand currently does so in the hold of passenger aircraft.
Encouraging new passenger airline connections to New Zealand will be an important contributor to driving the country’s growth and future economic prosperity.
The importance of timely and transparent communication
Timely and transparent communication is in everyone’s interest, particularly when plans or expectations change quickly in response to the dynamic world that governors and businesses, and the Government, operate in.
Uncertainty is the biggest barrier to business investment, and so the more open and transparent the lines of communication (both within an organisation, and between business and Government) the better.
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