New Zealand’s border controls have become a major handbrake on business across most sectors and must be addressed, writes Tim McCready
Chief executives agree that New Zealand business needs to do everything possible to support economic recovery in the wake of Covid-19.
But hindering this is the capacity constraints at the border, preventing many overseas workers with essential skills and expertise from entering the country.
Some 48 per cent of respondents to Herald’s Mood of the Boardroom 2020 Election survey said that border restrictions have slowed business operations due to the inability to bring essential skilled executives, investors and workers into the country.
Companies can request to bring critical workers into New Zealand through Immigration New Zealand (INZ), with applications considered on a case-by-case basis. INZ says the bar for exemptions is set high to help contain the disease and protect the health of people already in New Zealand — but some of our top executives describe these exemptions as a “bit of a lottery”.
In early August — just prior to the re-emergence of Covid-19 in the community, Prime Minister Jacinda Ardern said the Government was looking at loosening the strict visa regime.
Since then there has been little change, although Ardern said at the recent BusinessNZ election conference that Labour would look to allocate a 10 per cent quota at managed isolation facilities to allow critical workers into the country, and would “keep looking at our ability to grow capacity” for a greater number of people to enter the country.
Executives agree that water-tight borders are critical, but they say this allowance for critical workers must be urgently addressed or there will be a very real risk to key projects, businesses and to the economy.
The lack of transparency in the process to determine whether an exemption will be granted or not is troubling to many executives who also raised questions on prioritisation following exemptions granted to America’s Cup syndicates, the Avatar film crew and to workers for a synthetic horse-racing track in Waikato.
Says one director: “It has taken weeks of negotiations and significant cost for the company (which is an essential industry). Perhaps most frustrating is the sense that those with the ears of the Ministers or those with PR value or high net worth can jump the queue — as we have seen on a number of occasions.”
There seems to be some merit in this claim, with some respondents saying they prefer to not go on the record in this story as they are using “back channels” to facilitate visas.
Workers in limbo
Ross Taylor, chief executive of Fletcher Building, says that businesses have a growing number of key people who would normally be able to come into the country, now stuck in limbo with no timeline of when or if they will be let in.
“These are not low skilled people, but people that bring key skills that are either not available here or are in short supply,” he says. “As such they do not displace potential jobs for Kiwis — they in fact allow us to keep growing and providing employment and development for Kiwis.”
The restriction on movement is acutely challenging for some of New Zealand’s leading professional services firms. KPMG relies on internal international hires to augment the lateral and graduate recruitment of its New Zealand staff.
Godfrey Boyce, KPMG chief executive, says overseas hires in 2018 and 2019 accounted for about 28 per cent of KPMG’s total lateral intake, but so far this year overseas hires are just 15 per cent of total recruitment — and none of these people have been able to enter the country due to the border.
“These overseas hires augment our significant domestic recruitment and are pivotal to us being able to service our clients and train and develop the significant number of New Zealand university graduates we recruit each year.”
He says this situation is impacting the two largest parts of KPMG’s business — audit and consulting.
“As a result of the economic consequences of the global pandemic our audit division is responding to the most challenging financial reporting season in decades and the vast majority of audits are taking considerably more time than prior years and our audit teams are working significantly longer hours,” says Boyce.
The inability to bring in overseas hires into the consulting division has put constraints on undertaking work in key industry sectors for New Zealand’s recovery, including financial services, government and infrastructure.
Deloitte chief executive Thomas Pippos says his firm has sought to bring 23 internationally-based people into the firm since the border restrictions began, and has now stopped progressing any more.
“Of these, a small number have been able to join our firm while still overseas and have been able work from international locations,” he says. “Slightly more roles are now having to be being reconsidered, but the vast majority of these roles are sitting in limbo until we have a clearer steer as to the way forward.”
Another CEO in the property sector gives an example of a recently appointed chief technology officer who is based offshore. “He is making it work and will continue to do so but not an easy situation to assess differing market needs without a visit — he only recognises his team from Zoom!”
For corporates with offices in other parts of the world, the border restrictions have brought additional challenges. ICBC — which opened its New Zealand office in 2016 — has key personnel seconded to New Zealand from its China-based head office that can’t get into the country.
ICBC NZ chair Don Brash says the deputy general manager position is one example: “The previous person in this role was transferred to another position in China at the beginning of the year. Her replacement was appointed months ago but of course can’t get into the country.”
The border restrictions have also been tough on the bank’s New Zealand-based expatriate staff who have had to get used to long periods of separation from their China-based families.
“Their China-based families can no longer visit New Zealand,” says Brash. “And when family members in China become seriously ill, the expatriate staff in New Zealand cannot visit them, since they would be unable to get back into the country.”
This is a growing concern for many survey respondents. They say employees who are citizens of other countries and cannot visit family members may instead choose to return home overseas. This will leave critical roles vacant, with no suitable skilled workers to recruit from within New Zealand.
Major projects and infrastructure at risk
New Zealand’s top CEOs are concerned that this lack of skilled workers will put at risk high-profile infrastructure projects and other critical services.
The City Rail Link — the largest transport infrastructure project ever undertaken in New Zealand — is one of those major projects heavily reliant on skilled overseas workers. Chief executive Sean Sweeney says border restrictions will be a big issue for the project:
“We have a large number of specialist overseas workers who we need to get into the country, and the project also has a large fly-in fly-out (FIFO) cohort which has been effectively grounded, as well as a large group of overseas specialists who have relocated here for the project but do need to get home every so often to see family.”
This sentiment is echoed by another boss in the construction industry, who says the construction market relies heavily on skilled labour from offshore and the lack of skilled workers has impacted all of their major projects.
Vince Hawksworth, Mercury CEO, uses the current construction of the Turitea Windfarm and medium-term hydro generation upgrade programme as examples.
“These projects rely on access to multinational companies with key personnel required on site at critical times,” he says.
“The situation is further complicated where such resources are required for an extended period and there is a need to bring family through the border. This is relevant for projects with long duration. We are currently experiencing challenges in this regard.”
Beca CEO Greg Lowe says Beca is an NZ headquartered regional multinational, which means its people often travel widely across the Asia-Pacific region in support of projects and clients to make sure the right people are in the right place. “Some of this can be done remotely in the short term, but not all of it,” he says.
Transpower chief executive Alison Andrew says her company is facing similar challenges and it simply isn’t possible to acquire all the skills needed in the New Zealand market.
“For example, we need people with highly sought-after skills in lines engineering, operations planning engineering and other specialist skills. We need to be able to recruit from overseas,” she says.
Andrew says Transpower also has specialised equipment provided by large international companies, and relies on their specialist resources to come in from overseas to install and commission, repair and maintain the equipment.
Some executives say they have been able to use technology to help mitigate this skill shortage in some instances. Said one construction sector CEO: “We’ve recently had instances where works are being completed while instructions are forthcoming via Facetime!”
Critical skills needed
The need for skilled workers is far reaching across nearly all industries. Agricultural companies’ huge demand for seasonal workers is expected to challenge the sector in the coming months.
Turner and Growers director Carol Campbell says these workers — many from the Pacific Islands — are highly skilled in performing vital technical and sometimes physically demanding work such as thinning, harvesting and plant training.
“While some of these workers have been unable to return home given border restrictions, right now New Zealand is facing a serious shortage of trained agricultural workers for the forthcoming harvest,” she says. “This is a major concern and could result in produce being left on trees and reduced exports.”
Campbell says businesses are actively recruiting to fill this gap but the reality is that the loss of deep expertise and knowledge will significantly affect the sector this year.
Mavis Mullens, who chairs the massive Māori farming company Ātihau Whanganui Incorporation, says sheep shearing will be impacted by this loss of expertise too. Her business has relied on overseas shearers for the past three decades. She says that roughly 20 per cent of the nation’s shearers through the main shearing season come to New Zealand from overseas.
“It normally takes three to four years for shearers to become skilled economic units,” she says. “As their competency lifts, they will often travel the world shearing where their ability to earn can be doubled.”
Sirma Karapeeva, chief executive of the Meat Industry Association says we have a major issue heading our way. “Eighty out of the 103 migrant halal workers currently in New Zealand on visas will have to leave with no certainty that companies will be able to recruit into those roles in the near future,” she says.
“Halal Certified exports account for $3 billion of export revenue. We cannot recruit sufficient numbers from a small pool of a tiny minority in our local community — we need to look to migrants to fill those roles.”
Pernod Ricard Winemakers says its top challenge will be finding the people to take on seasonal vintage workers due to the current border controls, but operations director Tony Robb is taking a pragmatic approach:
“Whilst these roles have historically come from all over the world and brought people to New Zealand, we are always keen to attract New Zealanders to these roles, and particularly for the coming season,” he says.
Responses to the survey show the demand for critical workers is also evident in the tech sector. Xero director Susan Peterson (who chairs Xero’s people and remuneration committee) says that while there is a strong pipeline of candidates in the New Zealand market for entry level and intermediate roles, it becomes difficult at a senior level.
“We struggle finding the critical skills required for these roles in the New Zealand market alone and have actively spoken and hired candidates from overseas in the past to fill these roles,” she says. “As a result of Covid and the New Zealand border restrictions we have had to pause at the ‘final offer’ stage a number of highly skilled overseas-based candidates keen to join Xero in New Zealand.”
Peterson says if the restrictions remain in place, Xero may need to look to source and base those people with senior and critical skills in other locations around the world.
Border rethink essential
What’s clear from the responses to the survey is that we must think of solutions to the current capacity constraints at the border, to allow in essential skills that are needed in our economic recovery.
Sir John Key told business leaders at the Covid-19 recovery summit in Auckland that there are things we can do faster, including “letting a bunch of other people come in that companies would happily pay for because they would create jobs.”
He said there was “huge accommodation” available that could be used for quarantining.
“You could use stuff that is Government-owned, like Whenuapai. I mean, there is no particular reason why we can’t scale it up… Just do more of it!”
At the same summit, Helen Clark said that major private sector partnerships are needed to scale up the quarantine system.
“If post-election the thinking can go to how to try to remove this choke point which is existing quarantine capacity that would help a lot, even on the existing two-week quarantine setting,” she said.
Sir Peter Gluckman and Rob Fyfe, who together with Helen Clark co-authored the paper ‘Re-engaging New Zealand with the world’ asked “Do we need to start exploring alternative strategies that might at the appropriate time allow increased border flow, thus allowing more of New Zealand to flourish?
“And when would that be? What would be the criteria?
“The internet and video conferencing can take us only so far. We will need face-to-face contact if we are to maintain and grow the flow of goods and services into New Zealand. This country needs its global connectivity.
“We have gained significant advantage through our stringent lockdown and early elimination of the virus allowing the domestic economy to reactivate.”
They said we will rapidly progress to a position of relative disadvantage if our trading competitors are able to engage with our customers and suppliers in ways that are not possible for us.
“The alternative would be to remain in a state of effective national isolation, which could even last into 2022 or beyond. That may be our best option now, but that won’t always be the case, and we need at least to explore alternatives.”
Clearly, CEOs agree. Fletchers boss Ross Taylor says there needs to be a parallel border entry process put in place for businesses that allows the movement of a limited number of key people.
“It should provide additional capacity above the current levels so it does not compromise the ability for New Zealanders to return home. And it should be user-pays — so at no cost to taxpayers,” he says.
This approach would resonate with most top executives. They are happy to meet the costs associated with a fast-track process and the associated health and safety requirements.
And if that’s a win for their business, that’s a win for the economy, and ultimately a win for New Zealand.
