Capital Markets report: Three business leaders on the Government's wealthy investor proposals (NZ Herald)

Capital Markets report: Three business leaders on the Government’s wealthy investor proposals (NZ Herald)

Anna Kominik

Wisk’s Asia-Pacific regional director Anna Kominik leads a multinational team bringing the world’s first all-electric, self-flying air taxi to market.

On the government’s recent announcement about changes to immigration policy she says anything that supports greater investment in New Zealand is useful.

“But we need to do more to amplify New Zealand’s capability and capacity to scale businesses,” she says.

Kominik says we also need people, like current and former chief technical officers and chief operating officers — those people not just with the funds, but also the skills and experience in growing companies and taking them global.

“We need to be really ambitious for the start-ups that have been nurtured over the past decade and who are ready and wanting to take on the world.”

While the announcement came with little detail, Kominik says rather than letting in random high net worth individuals, we must identify the gaps in the New Zealand companies that are scaling fast and/or who need the capital most acutely along with the ability to have the biggest impact both economically and socially.

“This is the perfect time to be focused on building high-value jobs,” she says. “But our Covid advantage won’t last for long and we need to seize it more aggressively.”

Kominik says we need an overarching strategy for how we are planning to grow our trending industries, including digital, creative, gaming, medtech, food and aerospace.

“These are industries that are growing quickly in New Zealand and have the potential to deliver high quality returns — both socially and economically.

“It would be good to see how this scheme was feeding into supporting these sectors and companies to scale up and become even more ambitious.”

At the Auckland’s Future, Now Summit held earlier this month, Kominik told attendees that she is aware of companies with amazing technologies that would love to come to New Zealand right now.

“They want to do due diligence, they want to come through the border.”

She says New Zealand has the opportunity to define what our vision is and attract companies that support it to come and locate themselves here.

“These are billion-dollar companies already that are going to create high-value jobs,” she says. “We could take any kid who likes an engine, and we could turn them into an electric aircraft maintenance engineer — it’s a very, very high-value job right now.”

Early last year, the NZ Government signed a memorandum of understanding with Wisk to support a world-first passenger transport trial of its air taxi.

At the time of the announcement, Kominik said: “New Zealand’s focus on decarbonising its economy as part of the electric transport evolution directly aligns with Wisk’s mission to deliver safe, everyday flight for everyone through effective, accessible and sustainable urban air mobility solutions.”

Caroline Rainsford

Country Director for Google New Zealand, Caroline Rainsford, is pleased to see the Government’s announcement to support targeted, high-quality investment in New Zealand.

“This will lead us in a positive direction toward bringing skills and new technology here,” she says.

Rainsford says the targeted investment, coupled with the investment of $44 million to support small businesses through the extension of the Digital Boost Training Programme announced in the Budget — which Google has pledged to support — is critical to ensure the benefits of the growing digital economy are shared widely and equitably.

The Government says the programme will provide up to 60,000 small businesses with digital skills training to aid in “the transition to future ways of working”.

Speaking at the Auckland’s Future, Now Summit earlier this month, Rainsford said she has always believed in the role of digital transformation to support Auckland’s economy — but more so now than ever, and what is important is the uptake of skills.

“We can have all this technology and we can invest in ICT infrastructure in New Zealand, but if we don’t have the digital skills and capability, we can’t realise the benefit of it.”

She says whilst we are not doing a bad job in Auckland of embracing some of these, there is so much more opportunity.

“Every day I get first-hand experience of seeing businesses in New Zealand that over the last year have grappled with the impacts of Covid,” she says.

“I have seen companies embracing technology to reach customers digitally online both here in New Zealand and overseas. I have seen people using AI to really sort out the impacts on supply chain during Covid — but we need to do so much more.”

A report commissioned by Google New Zealand that was released last month calculates that if leveraged fully in the economy, digital technologies could create an annual economic value of $46.6 billion by 2030.

“To put this in perspective, this is equivalent to about 14 per cent of New Zealand’s GDP, or the combined GDP supported by Canterbury and Hawke’s Bay,” it says.

To fully capture the digital economy, the report has identified three main pillars of action the country could take.

This includes supporting the adoption of technologies in key industries, digitally upskilling the current workforce and future talent, as well as promoting digital export opportunities.

Across these areas, Google says it has made significant contributions in advancing New Zealand’s digital transformation journey.

This includes supporting the development of digital skills through programmes like the Google Certification Programme, Digital Fluency Intensive for teachers, and its partnership with Spark to run workshops to support New Zealand businesses in using digital tools by delivering digital skills training for small and medium-sized enterprises (SMEs) at no cost.

Rob Fyfe

The Government has foreshadowed opening the door to some 200 foreign investors through a reset of its immigration settings.

The announcement, made earlier this month by Tourism Minister Stuart Nash, was described by the government as a “once-in-a-generation reset” of the immigration system.

As part of the announcement, Nash — standing in for Immigration Minister Kris Faafoi — said new border exemptions would allow those representing high-value international investment interests to come to New Zealand over the next 12 months to conduct due diligence and transact the sort of deals that will play an important role in supporting New Zealand’s economic recovery from Covid-19.

“We want targeted, high-quality investment that establishes frontier firms, brings skills and technology to New Zealand,” he said.

“We have also created border exceptions for the Innovative Partnerships Programme and New Zealand Trade and Enterprise’s Investor Programme to enable representatives from global companies to come to New Zealand to conduct on-the-ground negotiations with companies that they wish to invest in.”

In making the announcement, Nash said the investment through these programmes will create highly-skilled jobs, enable the valuable transfer of knowledge and technology, and increase international connectivity for New Zealand firms as they allow us to position ourselves globally.

Rob Fyfe, who has been working as business liaison for the government, says he has been highlighting this opportunity since July last year, and the announcement took longer to arrive than he had hoped for.

“In the intervening period, some of the comparative advantage that existed in the back half of 2020 that was motivating interest in New Zealand as a significant destination for investment has probably dissipated,” he says.

That said, he says the opportunity is still significant and New Zealand continues to be an attractive destination for international investment.

“In principle I am encouraged by the announcement.

“As to whether 200 is enough — I have got no idea — a heck of a lot could be achieved by allowing 200 pre-qualified, validated investors into the country.

“I would hope if we exhaust that quota, because there is so much demand and opportunity, the Government would extend the quota.”

There is still little detail so far in the announcement, but Fyfe says it is important we move at speed to get the pipeline flowing.

He says we should be prioritising investment that stimulates either demand or supply of high value jobs in the economy and/or investment in technologies and capabilities that will enhance our global competitiveness and the advancement of our green economy and sustainability ambitions.

Competition, IP, and confidentiality issues mean that officials will need to be the decision-making authority to determine which investment interests are allowed to proceed, but Fyfe hopes they will consult with business leaders and academics to identify areas of focus and opportunities.

But he notes that any international investment needs to be supported by domestic investment in education and skills, and skilled migration to ensure we can provide the workforce to support inbound investment and the relocation of high-value businesses to New Zealand.

Green Building: Interview with Minister James Shaw (NZ Herald)

Green Building: Interview with Minister James Shaw (NZ Herald)

“When the Climate Change Commission released its draft advice in January 1, I said that I had never felt more confident that a climate-friendly, prosperous future for New Zealand was within reach,” says James Shaw. “But that will only possible if we take action to cut emissions right across the economy — including buildings.

“Right now, our homes and buildings are currently responsible for around 20 per cent of New Zealand’s carbon footprint.

“Emissions from the construction sector have increased by two thirds over the past decade. If we continue on this path and don’t change the way we build, the risk is that we lock in higher emissions for decades to come. That will only make it harder to meet our emission reduction targets and take us further away from fulfilling our commitment to future generations that we will pass on a cleaner, more stable, and less polluted planet.

“So what we need to be doing is rethinking the way we design, build and use our homes and workplaces so they have a positive impact on our climate and natural environment.

“Our Government has made a great start on this. For example, we are making sure all new Kāinga Ora public homes are energy efficient.

“We have also launched the Building for Climate Change programme to improve how we build while reducing carbon emissions.

“As my colleague the Minister for Building and Construction, Poto Williams, said in her piece for this business report, the change “envisaged by the programme is significant.” But it’s not only climate outcomes: the programme will also improve the energy efficiency of housing, meaning lower electricity bills, warmer, drier and better ventilated homes, and improved health outcomes for New Zealanders.”

The Herald asked Shaw, What is your vision for new builds?

Shaw: I think most people around the country want to know that their homes, and the places they work and spend time in at the weekends are part of the solution to climate change. Put simply, that’s my vision. I want people all over Aotearoa living, going to work, or socialising with friends in highly energy-efficient buildings powered by clean energy.

Changing the way we build to be more climate-friendly will be a huge part of this, but the truth is, most of the buildings that will be in place in 2050 — the date by which Aotearoa will need to be net-zero carbon — have already been built. So we also need to be thinking about how we reduce emissions from existing buildings.

In their draft advice the Climate Change Commission said that we need to improve the energy efficiency of buildings, alongside decarbonising the energy used for heating, hot water and cooking.

Once the Commission’s final advice is released at the end of May we will start work on an Emissions Reduction Plan setting out how we intend to meet our targets. That plan will need to cover every part of the economy — including, but not limited to, new and existing buildings.

Herald: What do you see as the biggest challenge for the industry to transform the built environment?

Shaw: I might not be the best person to explain the challenges of cutting emissions from buildings. What I’d most like is for the industry to share those challenges with us so that we can look at possible solutions.

I would imagine though that one of the main challenges is integrating low-carbon design principles right from the start. In other words, getting the engineering, technology, and design experts around the table right from the start.

Building emissions are primarily due to heating, cooling, and lighting, though the embodied emissions in materials are also significant. Decisions about all of these aspects of a building tend to be made fairly early in the process. If they could be made from the point of view of thinking about what can be done to reduce emissions, then that would make a huge difference. The Building and Climate Change Programme that I mentioned earlier will help with this, as it does set targets for new buildings to reduce embodied and operational emissions.

Herald: Building companies, real estate firms and others in the industry have urged the Government to speed up action on fulfilling its pledge on environmental standards in government buildings. Why are you not moving faster?

Shaw: The first thing to say is that I welcome the fact the building and construction sector want us to speed up action. It’s a positive sign of the part the sector sees itself playing in helping to meet our climate change targets.

There is no question that Aotearoa New Zealand’s future is low carbon. How quickly we get there will, of course, depend a great deal on the decisions we take over the next few years. And so if the sector does want us to move more quickly, I would encourage them to keep demanding more of us,

particularly as we start to think about what goes in the Emissions Reduction Plan. I would also encourage the sector to share their journey with New Zealanders more broadly so that everyone can see just how important this sector is to the future of Aotearoa New Zealand.

But that’s not all. The sector can also go further themselves. As I have said, the low carbon direction we are heading in is clear. And so, there is much the sector can do to generate new ideas, set industry ambition, and establish New Zealand’s building and construction sector as a global leader.

The Government does have a role to play in this and can lead by example.

As part of the recent commitment we made to require the public sector to achieve carbon neutrality by 2025, a new energy efficiency rating standard is being applied to government offices. Work is also under way on reducing embodied carbon in Government buildings and I have been leading an initiative to transition schools and hospitals up and down the country to clean energy. By making these changes we can harness the power of government procurement to lead by example and create opportunities for new skills and technologies to emerge.

Herald: Finally, what role do you hope the Government’s Emissions Reduction Plan will have in decarbonising buildings?

Shaw: The building and construction sector can, and should, play a key role in helping create a low carbon future for Aotearoa New Zealand.

Draft advice from the Independent Climate Change Commission says the same. In their report they identified some of the opportunities in this area, particularly around energy efficiency and construction materials.

Action to reduce emissions from all buildings will form a key part of the Emissions Reduction Plan which will be published later this year, after the Commission publishes its final advice.

Getting the Emission Reduction Plan right will be crucial. It is going to determine the direction of climate change policy for at least the next 15 years, so I would encourage the building and construction sector to input to that process.

China Business Summit 2021: event MC conference close (video)

China Business Summit 2021: Mark Tanner with Tim McCready (video)

China Business Summit 2021: event MC conference opening (video)

 

Can the team of five million now apply its mind to the economy it wants to become in the future?

Tim McCready

Professor Sir Peter Gluckman told attendees at this morning’s ‘Kickstarting the New Zealand Economy’ session from the Trans-Tasman Business Circle that we won’t go back to ‘business as usual’ following the pandemic:

“New Zealand needs to grow its R&D strategy, which is still designed for the 1980s and not for the 21st century.” He said our two biggest industries – tourism and agriculture – won’t be the same in the future due to the impact of Covid, along with climate change and other factors.

The panel, moderated by Fran O’Sullivan, all had a part to play in New Zealand’s success over the past year: former PM Helen Clark, Sir Peter Gluckman, and Rob Fyfe. They suggested there is a risk that New Zealand’s success in responding to the pandemic could very easily become an Achilles heel for the next phase of the recovery. “That safety can deal complacency and result in us being slow to move,” said Rob Fyfe. “That is a risk and a real challenge to move the mindset of the population to look to the future and will need a different risk profile.”

Engaging New Zealanders in a conversation about the future will be an important part of this, said former Prime Minister Helen Clark, in a similar way that New Zealanders pulled together to eliminate Covid and keep it out.

“Can the team of five million now apply its mind to that? This is what needs to happen now – engage New Zealanders in this conversation with as much as can be put on the table on what the scenarios are and confront the future.”

Said Gluckman: “We need to get beyond New Zealand’s traditional ‘she’ll be right’ approach – where we live off traditional sectors – to the point where we start to live more off our brains and innovation skills. That needs a fundamental shift.

It is the tenth anniversary of Sir Paul Callaghan’s keynote address at ‘StrategyNZ: Mapping our future’, where he challenged New Zealanders to think about the type of country we might like New Zealand to become. From today’s session, it is clear that more than ever there is a strong desire to rise to that challenge and ensure New Zealand has its say in planning for the economy it wants to become in the future.

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Project Auckland: Construction bosses upbeat about the state of the industry (NZ Herald)

Project Auckland: Construction bosses upbeat about the state of the industry (NZ Herald)

When surveyed in September for the Herald’s Mood of the Boardroom, the country’s leading construction and infrastructure companies said they were scrambling to reset their businesses in the new world created by Covid-19.

There was huge uncertainty in project pipelines, with works significantly down due to the cancellation of jobs. CEOs told the Herald that the priority over the next six months would be to ensure specialist skills could be secured despite the border restriction constraints, and re-setting a “forward cost base within an uncertain demand profile”.

Six months on, CEOs are upbeat about the state of the industry, noting it has recovered well following the initial lockdown last March.

This is critical to Auckland’s future where the lion’s share of the infrastructure and construction build is taking place.

Peter Reidy, Fletcher Construction chief executive and co-chair of the Construction Sector Accord says it is was pleasing to see how well the industry adapted to Covid-19 protocols, noting that Fletcher’s biggest projects continued throughout Covid-19 alert level 3 and essential workers adapted to new ways of working safely in level 4.

“That speaks volumes to the emphasis we are all putting on safety in the workplace,” he says. But he raises concerns with local council infrastructure investment, with pressure on rates and a decline in developer contributions and local council investment returns pointing to big gaps in infrastructure capital investment to meet expected demand.

Reidy says it is pleasing to see that the Minister of Finance, Grant Robertson, is now also the Infrastructure Minister: “We look forward to continued investment to plug New Zealand’s considerable infrastructure deficit,” he says.

Downer chief executive Steve Killeen says the remarkable recovery from what could have been an 80s-style recession speaks to the resilience of the sector and the actions taken by the Government to ensure workload, liquidity and confidence remained intact. He says it was particularly reassuring that Downer’s clients — public and private — maintained dialogue about their project intentions and opted for simple, effective procurement mechanisms.

“I’m pleased to say the commercial building market recovered quicker than expected and we have now secured wins in education, health and defence that will see our revenues recover in the FY22 financial year.” However, he notes that the past year of uncertainty has reinforced the tendency of the sector and its client base to think short term, slowing down the focus and investment needed to resolve intergenerational issues that stand to negatively impact both the sector and the quality of life in the communities it serves.

Beca CEO Greg Lowe says that large infrastructure projects have started to build up momentum again following the Government’s commitment to the New Zealand Upgrade Programme, the investment in “shovel-ready projects”, and some urgent work needed around water supply and water treatment.

However, he says many private sector projects — particularly the vertical construction market (construction of high rise commercial and residential buildings, as compared to horizontal construction which relates to infrastructure and related construction) — have slowed right down.

“This is an area where small contractors and tradespeople are employed,” says Lowe. “However, more hospital and university projects are helping to fill this gap, and vertical projects driven by local councils are also helping to keep contract work and employment up.”

Fulton Hogan managing director Cos Bruyn says though he is seeing signs of improvement in the private sector now, it will still be some time before activity matches the level that existed pre-Covid. He says that short-term the workload is a good, but describes the medium- to long-term outlook as “murky”.

He puts this down to the challenges of getting work consented being as problematic as ever, the legislative reform being considered by the Government including RMA, and the implementation of National Environmental Standard for Freshwater 2020 — which he says is a big issue for the Auckland region and has the potential to sterilise new residential and commercial development land and quarry reserves.

The industry’s leading chief executives were asked about the biggest challenges they are now facing:

Peter Reidy, Fletcher Construction

The technical skills capacity shortage, particularly in core, frontline project delivery roles is a major challenge.

We are starting to see the real impact of border closures on labour and skilled technical capability. There is competition for these skills domestically and labour costs are increasing in the infrastructure and commercial construction sector.

There is a lot of time and effort going into apprenticeship and graduate programmes in the industry, which is great to see, but you just can’t train in a short space of time for roles which require very specialist skills or international experience.

As an industry we need a much greater focus on inclusion and diversity in our workforce. The number of women attracted to and entering construction is still far too low and we have to do something about that. It’s great to see a real focus on apprenticeships and graduates and what we can do there but ensuring our workplaces are genuinely inclusive for everyone — culture, gender, age and sexuality — is still a priority.

Plenty of challenges today.

The challenge for tomorrow is attracting the new skills needed for the future of the industry, including a more digitally-enabled construction eco-system.

Steve Killeen, Downer

I guess my biggest personal challenge is facing the reality that I may finish my career in a sector that is no better, and in some cases worse, than when I started in the 80s. A sector typified by a lack of sufficient skilled resource, failure to adopt technology, mixed quality and efficiency and very alpha male in the way it goes about business.

I’m still committed to making a difference and have given a lot of thought to the root cause of the sector’s challenges – I believe there are three nuts we need to crack:

• How do we provide confidence in the pipeline of work and ultimately level the workload?
• How do we get the best creative, technical and practical minds around our immediate and future social and economic infrastructure needs?
• How do we focus on long term cost-efficiency rather than price?

Covid and the restrictions it imposes could well be described as the greatest current challenge to the construction industry. However, it is my view that it purely magnifies immediate issues and reduces our focus on the long-term challenges in the sector.

Cos Bruyn, Fulton Hogan

Availability of skilled labour is of growing concern and this is being felt now in the Auckland market. This is a big issue in Australia presently with high demand in a number of states given the strong infrastructure build materialising now. NZ will be targeted as a labour resource pool adding to the challenge.

There is a distinct lack of major project work in the South Island and this will have long term ramifications in retaining resources and key skills.

Overall, the sector along with the rest of NZ will have to contend with the ongoing uncertainty the Covid response brings; recent decisions to lock down have been made with little notice and reduce our ability to plan or mitigate the impacts. This is impacting on the mental wellbeing of our staff and all New Zealanders.

We are also starting to see significant cost increases in imported materials and availability. We have yet to see the worst of this.

Bitumen is a high-volume and high-cost input in the roading sector. Production of domestic bitumen at the Marsden Point Refinery has closed, so the NZ market is 100 per cent reliant on imported bitumen. This may lead to supply chain resilience issues and cost increases.

Greg Lowe, Beca

Predicting start times for design work on large projects is an ongoing challenge. Across many sectors there is a long delay from being advised of bidding success, to then getting contracts in place and work starting. This can leave people intended for projects sitting “on the bench” for longer than needed.

With low unemployment and a need to bring more resources into the sector to ensure projects get to construction as early as possible, staff capability growth is key. We focus heavily on graduate recruitment, staff development and attracting Kiwis back to New Zealand, but longer term this won’t be enough. We will need more skilled labour from offshore to augment staff development here.

Border restrictions are still a challenge with high demand on managed isolation and quarantine. We have three main challenges — getting overseas Kiwis we have recruited a confirmed place in MIQ, getting critical workers needed for projects who are not Kiwis through MIQ, and getting a plan in place for our people who are needed on site on our overseas projects.

Overseas sites have considerable restrictions in place and it’s tough work, meaning people want to know they can get home for a break. This is important because this is export services revenue for NZ — we do work here on overseasprojects, then need to send Kiwis overseas to the site for implementation. This generates export revenue, which is currently on hold. We need a way to book people into MIQ say six months out so our staff have the confidence to go on overseas assignments.