Cover story: NZ in 2013 – The three-speed economy

In his comment on “the new norm”, Kordia NZ CEO Scott Bartlett (p32) sums up the volatility of the business environment that successful leaders have adapted to or even relish. There’s shared optimism about our opportunities, and shared will and enthusiasm to deliver on the promise.
That optimism is tempered however by concern about short-termism enshrined in our three-year election cycle, and the lack of vision and leadership to drive an ‘NZ Inc’ agenda. (See Sir Owen Glenn’s initiative on p10). Another common concern is our ability to retain talent and provide opportunities to attract the best and brightest to remain or return here.
Port of Tauranga’s chief executive and the Deloitte/Management magazine Executive of the Year for 2012, Mark Cairns, forecasts “three-speed economy” in 2013 – Christchurch, Auckland and the rest of New Zealand (p40). “Some businesses will continue to struggle as they focus on costs rather than being able to increase revenue.”
There are notable exceptions including the Port of Tauranga itself, with its slated spend of $180 million over the next three years, to increase capacity; and Ryman Healthcare, winner of the Deloitte/Management magazine Top 200 Company of the Year for 2012, with 10 years of record growth and climbing (p27).
There is agreement on the need to focus on export growth, and sharpening focus on our strategic positioning close to the expanding economies of Asia. Two key trade agreements under negotiation and jostling for supremacy in the region have the potential to impact greatly on New Zealand: the US-driven Trans-Pacific Partnership agreement (TPP) and the ASEAN-led Regional Comprehensive Economic Partnership (RCEP).
They may come into conflict due to the tension between the US and China, as each wants to shape economic cooperation in the Southeast and East Asian regions in order to secure its economic interests. Consequently, rivalry between the US and China might become the predominant factor in how the regional economic architecture develops.
All eyes are on Christchurch and the Canterbury Earthquake Recovery Authority (CERA) in 2013. CERA chief executive Roger Sutton is calling it the ‘Year of the Rebuild’, creating enormous economic opportunities for the region and NZ (p26).
At the heart of the recovery, the insurance industry – facing pivotal challenges and changes in 2013 – is well represented in the opinions reflected here. The city location of the epicentre hit the sector heavily; many earthquakes around the globe are in less developed areas. Christchurch incidentally, with high infrastructure levels, was also among the most well-insured cities ever to face such disaster. The costs of the rebuild, therefore, are disproportionately huge.
In the short-term we must hope no other great natural disaster befalls us. With the limited resources of nation of four million people we are especially vulnerable right now and not well placed at all to face another disaster, even remotely approaching the magnitude of the Christchurch earthquakes. The issue of our small population is one raised by couple of respondents who see larger population as solution for some of our challenges.
Just across the Tasman, the great, booming Australian economy looks likely to have wee hiccup this year, although remaining essentially robust, depending, to some extent on the fortunes of China and Japan.
New Zealand has no great pivotal feel-good event to look forward to this year, no Rugby World Cup, no America’s Cup at home. We will have to find our togetherness in other ways. Several leaders suggested issues of confidence and culture at the root of our under-performance; that we have the talent and resources to turn huge natural advantages to account. See passionate New Zealander and semi-expat Peter Biggs’ comments on our problem with profit and the need to get over it (p31). Biggs is chief executive of Clemenger BBDO in Melbourne.
Continuing the trend for New Zealanders to pay down debt rather than spend up large, some respondents specifically predicted that discretionary spending will increasingly go towards personal or household debt repayment. This is good thing longer term but signals ongoing constraints for much of the retail sector. The government debt however, is tougher, more intractable problem.
No look into the future can ignore the speed of technological change and its impact. 2013 will be the year the world goes mobile and social connection will continue to up the impact on how businesses engage with customers and other stakeholders. Deloitte New Zealand CEO Thomas Pippos refers to the accelerated speed of change against backdrop of an even more pronounced digital world as ‘digital disruption’ (p37).
Technology enabling the development of cloud-based and creative businesses that overcome the challenges of our geographic isolation is an opportunity for New Zealand that will continue to grow.
But perhaps the most compelling view of the future comes from Ngāi Tahu kaiwhakahaere (and, as of the New Year honours list, Knight of the NZ Order of Merit) Mark Solomon (p35).
“NZ’s best intergenerational assets are its people and its brand – let’s promote these assets, through education and managing our resources sustainably. I am passionate about developing and implementing Green Growth Agenda which will support an enduring economic pathway for NZ.”

Roger Sutton
Chief executive, Canterbury Earthquake Recovery Authority

The Christchurch rebuild is on most leaders’ lists of issues critically impacting NZ’s economy in 2013. CERA chief executive Roger Sutton addresses the two questions everyone wants answered.

What are the key issues that will impact your sector in 2013?
2013 will be the ‘Year of the Rebuild’ in Christchurch. This will of course create enormous economic opportunities for the region and NZ, and issues to deal with around the influx of workers and their families.
Progress across greater Christchurch will be vital, especially for those who have been living in damaged homes since the earthquakes struck. Indications are that this year substantial progress will be made in settling homeowners’ insurance and EQC claims.
In the central city, after two years of emergency response, planning, and consultation with the public through the Christchurch City Council’s ‘Share an Idea’ campaign, we will shift from demolition to construction as major anchor projects in the Christchurch Central Recovery Plan begin to breathe new life into the area.
The programme of replacing and repairing Christchurch’s damaged infrastructure will also ramp up to peak of $40 million of work month.
Fundamental to this is the wellbeing of the people of greater Christchurch, and CERA will continue to work to support communities to rebuild and recover from the effects of the quakes, and to build community resilience.

What can we expect from your organisation in 2013?
CERA will continue to lead the recovery and ensure there is progress, while also supporting those people living in difficult situations – such as those in damaged properties or those still living in the Residential Red Zone who are becoming increasingly isolated as their neighbours settle with the Crown and move on.
CERA is also committed, along with other agencies, to providing support and information for all those rebuilding homes, and for the owners of about 28,000 Green Zone properties who are classified as Technical Category 3 (TC3), where specific foundation design will in some cases be required so that the buildings perform better in any future earthquakes.
This year the Crown’s purchase of central city properties will accelerate to enable progress on anchor projects in the Christchurch Central Recovery Plan, including the Avon River Precinct, the Convention Centre Precinct and the Frames which will border the new CBD core. Physical work on the Avon River Precinct is scheduled to begin mid 2013.

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