Governance standards are now substantially set by international conventions. The roles and responsibilities of directors are reinforced by regulators such as the Securities Commission in New Zealand and ASIC in Australia. Sarbanes-Oxley, the requirements of the SEC in the US, governance standard guidelines from exchanges, and organisations such as the Institute of Directors here in New Zealand, all contribute to now widely understood standard of board governance requirements.
This means that differences between Australian and New Zealand boards are more consequence of scale and emphasis than any fundamental difference in the two approaches.
What have I learnt from serving on Westpac boards on both sides of the Tasman? The scale factor needs little explanation. Australia is four times larger than New Zealand, has many more large corporate entities and number of those are truly international.
In Australia emphasis was placed on:
•The process of director induction, which was extensive and without any boundaries.
•A level of open engagement that I had not experienced previously.
•Governance is seen as an essential benchmark and guides behaviours and process in all decision making and is subject to very transparent measurement through international independent ratings assessment.
•There is very high level of commitment and determination to be successful through maintaining sustainable business for the long term.
•Integrity and fair judgement are values that are imbued in the culture both organisationally and for the bank’s 27,000 employees.
•There is an externally resourced and rigorous annual review of director performance.
New Zealand and Australia value their independence and sovereignty. And while that should never be challenged, there are advantages in pursuing – with an open mind – those objectives that can be attained more quickly and to better effect by working together.
CER has worked well and the initiatives to better align the regulatory structures between the two countries must be encouraged.
The consequence of companies operating in both countries is that boards will necessarily comprise representatives from both and given that business breaks down barriers more quickly that politicians, there is strong case for directors to embrace the opportunity for all of the stakeholders they represent. The acceptance of common values and meeting international standards of good governance eases transition.
There are some factors that New Zealanders need to recognise and accommodate:
•Australians are generally more confident than New Zealanders. They believe in themselves and are very determined (as we know from their sporting achievements).
•Well considered and strong advocacy will be required for the New Zealand view to prevail. The minds are not closed but in climate of success and being the larger partner, the case must be convincing.
•Australia is much more regulated than New Zealand has experienced to date. That is changing but New Zealand may forgo material advantage if it allows the wave of regulation and taxation structures to disadvantage trade flows and investment.
•The level of superannuation funds accumulation in Australia is immense. Some of these funds are already being invested in New Zealand and much more will follow. New Zealand needs to see this as an opportunity to get scale in its businesses and to take some growth entities to the global market.
New Zealand directors have nothing to fear from their Australian counterparts. In my experience the Australasian culture is in great shape and Australians would prefer to look east to New Zealand rather than north to Asia. We have an historic and current level of assimilation that has established platform for us to work together and we must commit to optimise our similarities – not be concerned at any minor differences.
There will be many opportunities for New Zealand directors to serve on Australian company and Australian-owned New Zealand boards in the future. In my experience, there is no substitute for common sense and integrity, and I have seen nothing that would suggest that these values are not sacrosanct to boards on both sides of the Tasman.
By Peter Wilson, whose appointment to the Westpac Banking Corporation board and to the recently formed New Zealand board of Westpac follows lengthy involvement with Trust Bank including being chairman at the time of the sale to Westpac.
