During your speech you urged New Zealand business leaders to step up to the challenge and lift our game internationally. Is this realistic challenge and what are the main hurdles to increasing our economic growth?
In some ways it has to be realistic challenge. The world is competitive place and unless we lift our game we will be unable to provide people with the living standards they aspire to and be unable to retain our talented people – especially our young people. In some ways the issues for country are no different from those of business. I have no doubt that as nation and as business people we are up to it. Everywhere one goes you can find successful Kiwi business people so there is no reason why they can’t be successful at home.
One of the main hurdles to improving growth is improving productivity where we have pretty poor record. To do that we need to invest more – in technology, plant and machinery that allows labour to be more productive and in our people to enable them to deliver more value for every hour worked. There is nothing lacking in the competitiveness of the Kiwi work ethic. It is just question of making it more efficient.
You also stated that we can’t afford to sit back and wait for the Government to make conditions better for private business. What can really be achieved without legislative assistance?
In business you have to operate as effectively as you can within your environment. Settings for business here are not disastrous and some of our companies are truly globally competitive. Others seem to lack the spark to make more of success of it, or their goals and horizons seem restricted. Few New Zealand companies have an export orientation and many seem content to play out in the local market. So resetting of horizons and more confidence in our ability to compete internationally would be great start.
That doesn’t let the government off the hook. The proper role of government is providing an environment where it is possible for business to succeed. That can mean providing reliable and modern infrastructure in its widest sense – transport, energy, communications and so on – as well as one where there is minimum of legislative interference in the labour market or development. There is also role in ensuring an attractive tax regime if you want companies to be able to continue to invest. However, on its own government cannot achieve anything so business needs to step up to the mark.
In order to stand up to the world, New Zealand is going to need strong and talented workforce and you noted that other countries are doing better job at attracting talent – by offering better remuneration, more attractive benefits and superior development opportunities. So how can we compete and how can we change this?
You either go up or down this spiral. If you are more productive you can pay people more. If you retain scale business then you provide the ability for people to build meaningful careers. And retaining those people often means you are more productive with more valuable products and services.
But I suspect we also need to be more creative. We are small remote country so people will want to travel. We have to stay in touch and be able to attract them back. We also are an attractive destination for many ‘old world’ people. The higher up the valuation ladder person is the more attractive they are to countries and the less nationalities and borders matter. As nation we need to be aware of this and do what we would do as business to make ourselves attractive to this mobile talent pool.
What are the significant challenges facing New Zealand business this year as opposed to last year? Has anything really changed?
The labour shortage has become really acute this year. Our growth has been based on an increasing labour participation rate, lowering unemployment and increased hours worked. That relatively easy channel for growth has now passed and we must improve productivity.
But as each year passes the world becomes more global and we are more affected by what is happening in other countries. The impact of China on the prices of commodities would be case in point. This has hit the pocket of everyone including business through increased oil prices but it is minor demonstration of what it would be like not being able to compete for goods in resource-constrained world.
Deloitte prides itself on sponsoring the Top 200. How do these awards translate into real benefits for New Zealand business?
These awards are real celebration of business success. They are acknowledgement by your peers of job well done. If this recognition helps provide confidence and if it inspires others to do even better, then this is benefit for the whole of New Zealand not just business.