Mood of the boardroom: Seymour a single-handed success (NZ Herald)

CEOs say Act leader David Seymour has been a standout in Parliament and a de facto leader of the opposition, writes Tim McCready

David Seymour has come a long way  since  Dancing With the Stars.

When asked whether Act leader David Seymour has been an effective leader of Act over the past three years, 91 per cent responded, Yes. Just 3 per cent said No, with 6 per cent unsure.

“No matter what your political persuasion it would be hard to go past Seymour as the most effective minor party leader,” says a transport boss.

A telecommunications CEO says: “I have never rated him, but he has come from nowhere to be the most impressive MP — after the Prime Minister.”

“The surprise this year has been the development of David Seymour who can look back on this last term with a degree of satisfaction around achieving some tangible outcomes from an unenviable position in the House,” says Deloitte CEO Thomas Pippos.

CEOs were asked to rate Seymour’s political performance over the past three years on a scale where 1= not impressive and 5= very impressive. He received a score of 4.03/5 — the highest of all minority political party leaders.

“David Seymour has been most impressive over the last year,” reckons Precinct Properties chair Craig Stobo.

“David Seymour continues to impress on a regular basis. He is not afraid to take a stand on controversial matters,” says an IT service provider. Though another says they disapprove of his “unfortunate association with NZ’s version of the NRA”.

A strength  that came through repeatedly from respondents in the 2020 Mood of the Boardroom survey was his ability to communicate effectively. “He can deliver a crisp soundbite with authority (and sometimes humour) reflecting the views of his voter base,” says the head of a Crown entity.

His  abilities were demonstrated during the lockdown. He impressed during the epidemic response committee hearings, praising   Prime Minister Jacinda Ardern for the initial response but also forensically examining aspects of the  response — including the management of data, issues with PPE, testing rates and contact tracing capabilities. Though  he was supportive of the lockdown, he opposed certain aspects — including the shutdown of Parliament —  and called for the allowance of safe activities. “David was magnificent on the epidemic response committee during lockdown,” says professional director and former minister of finance Ruth Richardson.

“He represents the finest political leadership — lucky us that a person of his calibre, especially as a one-man band, is so dedicated to his mission to make New Zealand a better country.”

De facto leader of the Opposition

The tone he struck during lockdown has been praised — in contrast to that of then-Opposition leader Simon Bridges — and led to some executives suggesting Seymour has become the de facto leader of the Opposition.

“David Seymour has really developed and thrived in this environment,” says a top winemaker. “He is concise, clear and asks questions that the Nats should.”

A real estate CEO reckons he “is a one-man leader of the Opposition.”

“He has shown up the Opposition Party,” says a leader in the healthcare industry.

Adds another: “He is growing in his effectiveness to present alternative arguments. We need that for good government.”

“David Seymour is beginning to act like a real alternative with  sound and pragmatic policy and comment,” says Mainfreight CEO Don Braid.

A professional director says “Seymour comes across as someone who does the hard work, thinks about issues and is willing to challenge. We need Opposition parties to do exactly that. ”

A bolstered party

The recent 1 NEWS Colmar Brunton poll puts Act at 7 per cent (compared to the 2017 election result of 0.5 per cent), and indicates Seymour will return to Parliament with  an additional eight MPs.

“He is measured, constructive and principled and the voting public notice and appreciate — look for a 10 per cent vote for Act,” predicts  Richardson.

A fund manager says: “Seymour has hung in there but will do well this election only because of the protest votes against National where centre/right voters have little else to go.”

One respondent suggests “Life will be different for Seymour next term if he has a caucus to lead and unite, and he has some interesting characters in there.  He will need to work hard to ensure he doesn’t have the same experience as Peter Dunne.”

End of Life Choice

Seymour’s major success has been the introduction of the End of Life Choice Bill. The bill — which will give people with a terminal illness the option of requesting assisted dying — passed its final reading in Parliament last year, four years after Seymour put it into the ballot box. The binding referendum will take place this month in conjunction with the general election.

CEOs credit the ability of Seymour to get the bill through the hurdles of Parliament and say it speaks to his hard work, tenacity, and willingness to tackle the important issues as he seems them — and not “yoyo for political gain”.

“It has been an impressive outcome for the euthanasia bill,” says The Icehouse CEO Gavin Lennox.

“He has been willing to take a position when convinced that it was the correct position to take,” says a professional director. “This allowed him to successfully get the End of Life Choice Bill through Parliament — despite being only a single MP.”

Mood of the Boardroom: Top-rankers suffer from a spell of invisibility

CEOs say the majority of National’s top 10 need to raise their profile.

“I don’t know them,” says the CEO of an IT company. “Hardly heard of most of these people,” says another. An agricultural boss reckons “many of them are not visible.” From a winemaker: “It is not appropriate to comment — I am unfamiliar with their efforts.”

For this reason,  a high proportion of respondents gave “Unsure” votes to National’s highest ranked MPs.

For example, MPs including Shane Reti, Chris Bishop, Louise Upston and Scott Simpson all received “Unsure” responses from over 20 per cent of respondents.

Some of this will likely be due to the fact that the leader inevitably overshadows the rest of the caucus — Judith Collins received the top score with an average rating of 3.55/5.

“She is more decisive and articulate than her two immediate predecessors,” says a top lawyer.

“Her leadership qualities were immediately obvious from her first press conference as leader, and from the way in which she ranked her front bench, incorporating both Simon Bridges and Todd Muller,” says a director.

Recently appointed health spokesperson Shane Reti has clearly benefited from the ongoing Covid-19 health and border response coverage. Those who know who he is have given him the second highest score of 3.29/5 — almost eclipsing Collins.

Meanwhile National’s deputy leader Gerry Brownlee received a score of 2.79/5 — taking a hit due to the comments he made around the Government’s Covid-19 response.

In a press conference last month alongside Collins, Brownlee outlined several events and said they were an “interesting series of facts”. They included the Government’s plea to the public to prepare for a possible outbreak, Prime Minister Jacinda Ardern’s visit to a mask factory, and Director General of Health Ashley Bloomfield’s public Covid-19 test just hours before announcing the community outbreak in Auckland.

“Gerry Brownlee didn’t do himself any favours by coming across as a conspiracy theorist,” says the head of a commercial law firm. “There is enough of that sort of nonsense around and an apparent endorsement from the deputy leader of the opposition is unhelpful.”

Heading into the 2017 election, Bill English’s top 10 combined received an average rating of 3.34/5 in the Mood of the Boardroom survey. This year, the combined average is 2.99/5.

Some of National’s most high-profile talent have departed politics this term — including Anne Tolley, Paula Bennett, Nikki Kaye and Amy Adams — and comments from some respondents suggest that this may have contributed to the lower score for the top 10 this time around. “This weakened team hardly fills me with confidence,” says a fund manager. “I see no depth in this party and no ability to sing from the same song sheet. I have no idea what they stand for, other than negativity and dirty politics,” says an IT CEO.

“There are pockets of ability and lots of some who haven’t quite worked out where they are going at the moment,” says a lobbyist. “They are a party in transition who — like Labour numerous times in the Key era — panicked over leadership when confronted with a PM with charisma and talent.”

Suggests one professional director: “We need to see the energetic young Nats coming through — Nicola Willis, etc.”

Mood of the Boardroom: Hi-tech contact-tracing in favour (NZ Herald)

More can be done to minimise the economic impact of Covid, writes Tim McCready

Some 91 per cent of executives responding to the Herald’s CEOs survey want greater emphasis on intensive contact tracing using best-in-class technological capabilities.

The CEOs also want New Zealand to establish secure airbridges with other nations such as China, Taiwan and Australia — so long as we their response is also under control.

“Air bridges should be considered only when Covid-19 is truly under control and contact tracing technology is truly best in class and traces beyond the border,” says a dairy chief executive.

An experienced chairperson reckons that many — particularly older people — will want to resume international travel as soon as possible. “It should be possible on a user pays basis to allow technology-enabled devices (such as ankle bracelets) to allow returning residents and citizens to quarantine in their own homes on return from overseas.”

Public-private partnerships

There is high support — 78 per cent — for public-private partnerships (PPP) for quarantine facilities where essential workers can be quarantined at their company’s cost. PPP isolation facilities for international education students were backed by 75 per cent of respondents; a much higher level of support than PPP isolation facilities for international tourists — only 48 per cent of respondents said that should be a focus.

“The tourist isolation facility idea is similarly impracticable because tourists are unlikely to want to come to NZ and stay in such a facility for 14 days at their expense (not much of a holiday),” says a legal firm boss. “Isolation facilities for students sound good in theory but the numbers involved would make this impracticable.”

Some questioned NZ’s reliance on export education as an economic driver.

“How much was international education just a feeder to the incredibly high immigration levels over the past ten years?,” asks a property boss.

“I really think we have to critically examine this sector’s contribution — painful as that might be.”

A lobbyist believes PPPs would alleviate some of the constraints around capacity.

“Our Ministry of Health isn’t up to handling this pandemic, they have dropped the ball so many times and are very economical with the truth. A future inquiry will not be pretty for some who we rate very highly now.”

Beca Group CEO Greg Lowe emphasised the pandemic is not a short-term problem, calling for a “smart” approach to a safe border. “The Prime Minister called for ‘the smartest border in the world’ early in the crisis but we are not seeing much progress towards this,” he says.

“We have three problems currently: getting an effective system of border control robustly in place, getting a contact tracing system in place that uses technology not people to capture contact data, and developing a plan that increases safe border processing capacity.”

“Maybe we can build world-class Covid management businesses out of this,” suggests Precinct Properties chair Craig Stobo.

Others differ.

“Government-run facilities have had their challenges, and they’re just the issues you get when you need tens of thousands of people to follow processes where, if it goes wrong, people die,” says a real estate boss. “Add the inherent risk of lots of people and processes to a profit motive and I just can’t see the Melbourne situation not happening again.”

Opening the door to new industries

The Covid-19 crisis has had a severe impact on two of New Zealand’s leading service export industries: international tourism and education.

Professional director Pip Greenwood says “now is the time to leverage NZ’s attractiveness as a place to live and work to attract investment.”

CEOs were asked what alternate areas New Zealand should look to increase investment in.

Agritech is the most promising area say NZ’s top executives. A fund manager says Covid could allow New Zealand to “double down” on its premium food producing status. “Move up the quality/pricing curve to drive greater yields from our premium products and sell direct to consumers via digital gateways.

Technologically-led businesses were also supported.

Spark CEO Jolie Hodson says rather than making big bets behind a small few we should be investing in building the capability, productivity and effectiveness of all businesses. “Particularly small and medium-sized businesses who would benefit significantly from going digital,” she says.

Decarbonisation of the economy and the development of a green hydrogen industry received 3.62/5 and 3.54/5, respectively. New forms of public transport such as electric planes, received a score of 3.07/5.

The latter was the top pick for Green co-leader James Shaw at the recent BusinessNZ election conference.

He said there were NZ companies doing this, including those involved with the America’s Cup.

“We do have a niche industry that is starting to emerge here, which I would like to see grow.”

“Our biggest opportunity for decarbonisation is electric vehicles. We have enough consented and existing generation to power the nation’s vehicular fleet at circa 30c per litre,” says one professional director.

“What has happened to Helen Clark’s ‘knowledge economy’?” asks Beca Group’s CEO Greg Lowe.

“Development of alternative transport solutions, the potential of alternative fuels like hydrogen to provide a new export market, export of digital solutions and services — we should be working to build a stronger national plan to advance all of them.”

But respondents caution New Zealand not be too quick to write off our traditional export earners.

One said that realism is important in this situation, noting that tourism and export education will return.

“There is no real strategy to transform the economy either from a production perspective or around decarbonisation — it’s all hopes and dreams stuff currently.”

Mood of the Boardroom 2020 breakfast event MC (video)

China Business Summit 2020: Hu Shuli address discussion (video)

China Business Summit 2020: event MC (video)

 

APEC 2021: A look back at what could have been. (LinkedIn)

With the recent announcement that New Zealand will no longer host world leaders for APEC Leaders’ Week next year, but will instead take the Summit digital, I took a look through the news archives to see what we are going to miss out on.

When NZ hosted APEC last in 1999:

👮🏻‍♂️ NZ security guards mistook Hillary Clinton’s mother for part of the public crowd and pushed her aside – twice.

🏉 Clinton told Sir Edmund Hillary – then aged 80 – that he might be ready for a new challenge: “I hear the All Blacks may need a new fullback.”

🛍️ Suburban shopping centres were busier than ever as the public were encouraged to avoid the city centre.

📰 International media published some bizarre stories about New Zealand and our culture.

THE POWER OF APEC

As Auckland was preparing to host APEC in 1999, the news was dominated by East Timor and its recent vote in favour of independence. The aftermath of the referendum saw mass violence, killings and destruction targeted at the East Timorese.

APEC 1999 was due to be held just days later, with Indonesia present. This introduced a challenge for New Zealand: APEC has strict rules around it that govern what can and cannot be discussed – APEC is about the economy and not about foreign policy.

At the time, New Zealand Prime Minister Jenny Shipley said: “You only get leaders of economies to come if they know that their foreign policy won’t be objected to scrutiny or interfered with. But having said that, the power of APEC, where you’ve got leaders and foreign ministers together physically in a country was always potentially going to be useful.”

Making a tough call

It was decided that an emergency meeting of foreign minister would take place in Auckland before APEC officially began. Shipley had to phone Indonesian President B.J. Habibie to let him know the plan, and said it was a difficult phone call.

“I had a number of officials in the room with me and I held the phone out at one stage where I was being yelled at. But the thing that changed was that not only Western-aligned economies within APEC but also Singapore and others in the region felt that this was something that had to be progressed.”

As Foreign Minister Don McKinnon noted, bringing leaders to one location forced them to take a position on Indonesia’s behaviour they could otherwise have simply avoided.

As a result, after lobbying from Australian Prime Minister John Howard, the United States announced it would no longer support the IMF bailout of Indonesia unless their army withdrew and allowed peacekeepers in. Within hours Indonesia changed their stance, and an Australian-led peacekeeping force left for East Timor just eight days later along with support from New Zealand troops.

THE STAR OF THE SUMMIT

US President Bill Clinton’s appearance at APEC 1999 marked just the second time a US President visited New Zealand (Lyndon B. Johnson visited in 1966 and met with Prime Minister Keith Holyoake). Clinton was warmly received by the public, using his innate ability to charm the crowds during walkabouts.

It was reported Clinton was so fascinated by Māori culture at Auckland Museum that he asked Shipley if she would arrange for the museum’s shop to open for business because he wanted to “buy it out”. With shop staff off duty for the gathering of leaders, it fell on the museum director to open the store for the President. Clinton and the United States National Security Adviser, Sandy Berger, were reputed to have spent “a lot of money” during their 25-minute unscheduled shopping spree, with Clinton sporting one of his purchases – a circular greenstone pendant – around his neck during his time in Auckland.

On another shopping trip, he took daughter Chelsea Clinton on a two-hour trip to Parnell and Queen Street where they bought a handmade clay ocarina (wind instrument), a black pottery cat, a $400 crystal vase, two $49 oil bottles and a $27 vanilla-scented candle.

 

Clinton attracted thousands to the streets to catch a glimpse of him – and not just in Auckland. A crowd of 5000 came to the International Antarctic Centre in Christchurch; hundreds

waited for three hours outside a lakefront Queenstown restaurant to spot the popular president.

For one of his appearances, Clinton shared the stage with Sir Edmund Hillary. He told the audience he was thrilled to share the stage with the adventurer and said he was “referred to in our family as my second-favourite Hillary.” He suggested that Sir Edmund – then aged 80 – might be ready for a new challenge: “I hear the All Blacks may need a new fullback.”

Speaking about the upcoming America’s Cup challenge, Clinton remarked: “We even let you borrow the America’s Cup from time to time. We hope to reverse our generosity shortly.”

SUPERPOWERS MEET

New Zealand’s hosting of APEC also marked the start of a thawing rela

tionship between the US and China – with both superpowers reopening talks while in Auckland after the US bombed China’s Embassy in Belgrade.

Another big meeting was between Clinton and Russian Prime Minister Vladimir Putin – it was the first time they had met as leaders.

In a briefing to reporters following the meeting, it was said Clinton warned Putin that corruption could “eat the heart out of Russian society.” Those comments followed reports that Russian mobsters siphoned millions of dollars out of Moscow and laundered it through the Bank of New York. It was said Putin agreed that Russia had problems and suggested a cooperative approach.

Throughout the summit, many large offices in the city centre were operating on skeleton staff, heeding pleas for the public to stay out of the city if possible. Streets and schools in Auckland, Manukau and North Shore cities were closed and many city workers were given a day off. For those that needed to come into the city centre, many travelled earlier than normal resulting in lower than usual peak traffic volumes.

This resulted in the outer suburbs of Auckland being busier than usual, while the city centre ground to a halt – impeded by presidents, protests and police.

“They should have APEC every day,” Lynnmall Deka store manager Struan Abernethy told the media – standing in the toy department and surrounded by the buzz of family shoppers. “It’s the busiest Monday we’ve had for a long time!”

A FORUM FOR FREE TRADE

One of the key themes of New Zealand’s 1999 year of hosting was lifting the support from the public for free trade – although the success of this was limited.

US Trade Representative Charlene Barshefsky outlined the problem with a warning that public opposition was the greatest threat to the world’s multilateral trading system.

“Unless that public support is regenerated, I think the World Trade Organisation is going to face tough sledding in the years ahead,” she said.

Clinton also warned of the need to put “a human face” on the global economy.

Trade Minister Lockwood Smith said the commitment to a new global round was the meeting’s biggest achievement, but export subsidies were the single biggest trade issue for NZ. While the benefits were some years off, it was important to get the world to put the abolition of the subsidies on the agenda.

United States

Shipley joked during the Summit that she had fed President Clinton as much lamb as possible during lunches and dinners – including Manawatu lamb loins and Canterbury lamb noisettes. “I’ve eaten it all,” he joked when asked about lamb tariffs.

Clinton said the United States was the “champion of free trade,” despite his decision to impose tariffs on New Zealand lamb. He said these were “appropriate” given that the recommendation from the International Trade Commission had been made under United States law.

But he said he would study the “very interesting idea” of a free trade agreement between Australia, New Zealand, Chile, Singapore and the United States.

Singapore & Chile

In bilateral conversations, New Zealand announced a free trade agreement with Singapore and a scoping study of a similar deal with Chile.

Business leaders from Chile and New Zealand also met during the APEC summit to discuss the prospect of a free trade agreement between the two countries.

One of those leaders was Carter Holt Harvey chief executive Chris Liddell (now assistant to President Trump and deputy chief of staff for policy coordination in the White House). He and other leaders cautioned at the time that business deals between New Zealand and Chile have had hiccups – including an investment dispute between Carter Holt Harvey and Chilean conglomerate Copec.

CEO SUMMIT

250 executives attended the CEO Summit, including around 60 of New Zealand’s most eminent businesspeople. International delegates included General Motors chairman Jack Smith and Raymond Cesca – who was responsible for handling world trade for McDonald’s.

New Zealand’s delegates to the CEO Summit included just four women – Wilson & Horton corporate affairs manager Fran O’Sullivan (who was also the CEO Summit’s deputy chair), professional director Rosanne Meo, Wellington Regional Chamber of Commerce CEO Claire Johnstone and education publisher Wendy Pye.

The chair of the Summit, John Maasland, said businesspeople were keen to work closely with APEC political leaders to increase the pace of reform and make sure a gap between developed and developing countries did not widen.

Attendees called for critical trade issues to be tackled quickly, including speeding up planned moves to achieve free and open trade and investment throughout the world by 2010 for developed countries and by 2020 in developing economies. They also called for economic governance, development of greater transparency and accountability in the financial sector and a regional approach to building infrastructure in APEC economies.

The attendees recognised that APEC politicians would need a lot of courage if they were to deliver the policies that corporations want – but if that courage was not shown, then free trade would flounder, economies would contract and people would suffer.

“We are certain that the benefits to all APEC communities will become increasingly evident if these specific actions are taken speedily and forcefully,” Maasland said.

The chief executives said their near-term challenge was to make sure the things they had talked about in Auckland over the past two days were turned into some firm policies that could be delivered in the following year’s APEC meeting in Brunei.

UNEXPECTED GLOBAL HEADLINES

There was some disappointment that New Zealand didn’t get the level of promotion that it had hoped for in international media – it was the East Timor developments that dominated the headlines. But some of the international media mentions New Zealand received included:

  • The Los Angeles Times told its readers that New Zealand was “an island nation”
  • The Los Angeles Times also ran a piece on its website explaining what a hongi is – alongside a photo of Clinton greeting Sir Hugh Kawharu: “the gesture is called a hongi, a native welcoming gesture”
  • The Newsweek website mentioned plans for the leaders’ banquet: “In New Zealand, where sheep outnumber people 15 to 1, folks know how to party. Five top chefs have been dispatched across fjords and throughout the forests to find the best ingredients for a massive feast”
  • The Boston Globe reported on New Zealand security guards mistaking Clinton’s mother-in-law, Dorothy Rodham, for part of the public crowd – twice pushing her aside during the President’s shopping walkabout. “The confusion didn’t stop Clinton from going on a buying binge. At one point he stopped in a store called Out Of New Zealand and bought an ocarina, a small traditional flute made of clay.”
  • The Boston Globe also reported that New Zealand would be the first country in the world to celebrate the millennium.

SHIPLEY OUT, CLARK IN

Following the APEC Summit, a TV3/CM Research poll saw her rise from 14 per cent to 20 per cent as preferred Prime Minister – two points ahead of then-Labour leader Helen Clark.

In the same poll, 38% said they had a better opinion of Shipley after APEC, with 8% saying they now had a worse opinion of her.

However, the National party’s support didn’t shift significantly post-APEC. The poll saw its support rise only one percentage point to 33 per cent. Labour polled 39 per cent (compared to 40 per cent one month earlier). Support for Alliance was down one to 6 per cent, support for New Zealand First remained at 7 per cent, Act’s support lifted one to 7 per cent, support for the Greens fell from 2.6 per cent to 2.4 per cent.

The 1999 New Zealand general election was held on 27 November 1999 – two months following APEC. The National party, led by Shipley, was defeated, replaced by a coalition of Helen Clark’s Labour party and Alliance – who led New Zealand until 2008.

Budget 2020: Business leaders say which way the Government got it right (NZ Herald)

Business leaders have welcomed the cornerstone of the Government’s “once in a generation” Budget – the unprecedented $50 billion Covid-19 Response and Recovery Fund – rating it at 3.75/5 on an effectiveness scale.

The 52 respondents to the Herald’s business leaders post-Budget survey were asked to rate some big spending initiatives – such as the Covid-19 fund, health and education spend-ups, and investments in tourism, environmental and home building programmes on a scale of 1=5 where 1 equalled very poor and 5 equalled very effective.

The $50b fund was set up by Cabinet on April 6 and some $14b of initiatives, including the massive wage subsidy scheme, had already been spent before Finance Minister Grant Robertson unveiled last Thursday’s Budget.

The Budget included a further $16b from the fund to extend the wage subsidy, provide free trades training and boost infrastructure among other initiatives.

A further $20.2 left unallocated drew the ire of the National Opposition, who have called it an election bribe. “My only concern is the $20 billion slush fund,” Simplicity CEO Sam Stubbs said. “Unless this is spent quickly, it should more rightly belong in next year’s Budget and be the subject of better-costed policy announcements going into the election.”

A key part of the Government’s Covid response has been the wage subsidy scheme which provided companies $585.80 weekly for fulltime employees for 12 weeks, and, $350 weekly for part-timers. This was extended in the Budget for a further eight weeks at a cost of $3.2b. But conditions have been tightened so it is only available to businesses who have lost at least 50 per cent of revenue in the month preceding application.

A large fashion retailer boss said the 50 per cent loss threshold is too low, noting: “many businesses will perform better than that, but will still have significantly impaired performance and have to lose staff as a result.”

Spark CEO Jolie Hodson said it was positive to see $1.6 billion earmarked for trades and training and part of this should be directed to digital skills.

“It is important that we are thinking about the future of work in New Zealand and recognizing the need to build the capability of New Zealanders to be able to participate and thrive in an increasingly digital world,” said Hodson. “Covid has highlighted how critical this is, and we already know the productivity benefits it brings.”

Chapman Tripp Nick Wells said all the initiatives were stimulus of one sort or another. “We need to recover in a way that is fit for the future, learning from all of the benefits we have seen from the lockdown such as being more environmentally friendly, increased flexibility and ability to work from home being more digitised and having a much more weightless economy.”

The $400m domestic tourism sector relief package announced in the Budget was panned by many from a sector that directly employs over 229,000 people. Auckland Business Chamber CEO Michael Barnett said tourism was a $40b contributor.

“It deserved more and would have created employment.”

An agriculture boss added, “the investment in tourism needs to be seen for what it is – a start. This is one area where some reimaging would be good for the industry and New Zealand.”

The Government also revealed it would borrow $5b over the next four to five years to build 8000 state and transitional houses in partnership with housing providers. Business leaders scored the initiative 3.4/5.

“As long as (Phil) Twyford stays very far away from the project,” cautioned a wine exporter. A retail chief added: “Unsure on state house builds – there has been no tangible evidence of having good execution with KiwiBuild etc.”

The $1.1b package to create 11,000 jobs in the environment sector – from pest control to wetland restoration – received a score of 3.27/5, with some sceptical of its merits: “It is worthy but unlikely to attract the numbers of unemployed workers to make a difference,” suggested a food producer boss.

The $1b allocated to support education services received a score of 3.83/5 from respondents.

An executive in the transport industry says the package is worthy, but is missing “any mention of digital technology, which seems a missed opportunity following the recent experience of remote learning.”

Perhaps unsurprisingly, the $6.3b investment in health received the highest score from executives of all the Budget areas surveyed with 3.98/5.

“Covid-19 showed that our health system was not up to responding which was one of the reasons for the severe lockdown,” said independent director Cathy Quinn. “The money needs to be spent wisely so that in another pandemic our system is better able to respond.”

“Health needs much more than money, without a complete review and overhaul how much of the $6.3b will be wasted?,” asked a banking boss.

Auckland’s infrastructure projects must go on: Phil Goff Q&A (NZ INC.)

Phil Goff speaks with Tim McCready about the impact of Covid-19 on Auckland’s infrastructure plans.

In February this year, Auckland Council was focused on the challenges ahead of a city enjoying relentless growth: building transport infrastructure to relieve traffic congestion, coping with the highest ever level of building consents, and dealing with environmental issues including water quality and climate change.

Just two months on, those issues haven’t gone away, but Auckland Council is now facing additional challenges in the wake of Covid-19.

Financially, there will be an unprecedented loss of revenue in the coming financial year of between $250m and $450m. Much of the lost revenue is not through rates, but from the loss of its dividend from Auckland International Airport, reduced fare revenue from Auckland Transport, lower regional fuel tax and less development contributions.

Auckland Mayor Phil Goff says the depression in the 1930s saw the Government pull spending back so much that while it balanced its books, “the cure killed the patient”. He is determined to keep Auckland’s infrastructure projects going as much as possible:

“There will likely be a reduction of infrastructure projects in the coming year, maybe $300m worth, but we will still be spending a whole lot more than we have on average over the last five years on an annual basis,” he says.

“We want to make sure that we’re still creating that infrastructure that the city has been waiting so long for, that it so desperately needs, and which is going to be a core part of actually stimulating the economy, getting jobs going, getting income going and helping to secure recovery.”

Here’s what Goff had to say on a few big issues facing New Zealand’s biggest city:

Work has started back on the City Rail Link now, but we’ve heard that the cost is likely to blow out – do you know what the scale of that will be?

The month-long closure of the CRL is likely to cost probably around, or something in excess of $30m. That’s never welcome, but we had no choice in the matter.

We have a new challenge now – getting some of the specialist staff that we need to do the work internationally, at a time when our borders are closed. I’ll be making submissions to Ministers – obviously we’d need to follow a quarantine process, but we really need that international staff in to not further delay the project.

There is an opportunity here to potentially speed up the CRL project by starting work at multiple sites. We are already doing that to a certain extent now – working on Aotea Centre, working on Karangahape Road, Mt Eden and continuing with the tunnel. If the Government is able to bring some of its capital from its shovel-ready project into CRL, then rather than this being a setback, it could be a chance to advance our programmes.

Auckland Council has submitted 73 priority ‘shovel-ready’ infrastructure projects to the Government’s Infrastructure Industry Reference Group. What do you hope they will achieve for Auckland?

It enables us to create the infrastructure that we desperately need as a city, so that’s something that’s worthwhile in its own right. But we have premised these projects around projects that are ready to go, we’ve consented them, we’ve often done the procurement for them, and we can get them up and going as quickly as possible to create jobs, generate income and help stimulate the recovery that our city and our country desperately needs.

Auckland is uniquely well-placed to assist the recovery of New Zealand in that regard. We’ve been professional in the way that we’ve put the projects up, there are 73 projects, we’ve said 30 are priorities. We know that we can expect a fair share of the money, we are ready to go and we can assist the Government with its recovery objective.

There has been some criticism that the projects put forward haven’t been transformational enough and don’t represent the once-in-a-generation opportunity that this situation has provided. What would you say to that?

We followed the Government criteria – the Government provides the money, they set the criteria. But I reject the criticism anyway – there is a whole lot in our submission which is about mode shift. It’s about bringing forward projects that will assist public transport, that will assist walking and cycling, that will get busways underway. Those are projects that meet our environmental and our transport objectives – reducing traffic congestion, reducing carbon emissions. These are the sort of things that we need to do for the long-term future, as well as needing to deal with the immediate ramifications of Covid-19 and the recession it’s causing.

Will Council be looking at ways to speed up projects – expediting things like resource consent?

There are things we have changed already. For example, noise controls have been lifted – maybe to the detriment of people who live in hearing distance of some of these construction projects, but it means they can work a slightly longer day and a longer working week. We will all have to give up something in order to achieve the wider objective. That is an example of how we have already changed the resource consent requirement to try to facilitate the construction industry getting back on its feet more quickly. The noise might go on a bit longer, but it means the project will be done more quickly, and that disruption will end more quickly, so there is a benefit there as well.

Compulsory water restrictions for Auckland are almost certain with the region’s storage dams dropping below 50 per cent. Around $2.3 billion is due to be spent over two decades on capital works to accommodate Auckland’s growing water consumption – should Council be doing more now to future-proof Auckland’s water supply?

The potential necessity for water restrictions in Auckland is due to the significant lack of rainfall we have experienced since summer. Rainfall levels in January and February have been the lowest on record. Coupled with the very long hot summer and higher demand, the water supply lakes have fallen below 50 per cent full compared with an historical average of around 75 per cent. In addition to this, the long-range weather forecasts do not predict any significant rainfall. Watercare is running a public media campaign to encourage people to reduce usage and are maximising the take from the Waikato River.

In terms of infrastructure, Watercare is continuing to upgrade the Waikato water treatment plant so it can process an additional 25 million litres per day —this work is deemed an essential activity and is due to be complete in around three months. Watercare has also submitted a project through the “shovel-ready” process which proposes the construction of a second water treatment plant and new boost pump station that will increase water treatment capacity by 75 million cubic metres a day and increase pipeline conveyance capacity from 150 to 225 million cubic metres per day.

This project is worth around $300 million to $350 million and will be critical in addressing long-term water resilience in Auckland.

2021 was shaping up to be a banner year for Auckland – with the America’s Cup, Apec, and many other international events. What impact will Covid-19 have on this?

I’m not sure yet what impact this will have on Auckland 2021 – we don’t know yet when our borders will be opened up. We’re hopeful that with the success of New Zealand and Australia, maybe we can open a trans-Tasman border, maybe we can get those tourists back in at least from Australia and maybe the Pacific.

But you take something like the America’s Cup, it’s due to start with the Christmas race in December of this year – will we be ready to have an influx of tourists from around the world? I don’t know the answer to that.

We are keen to see the race and we do want those superyachts here – they bring a lot of money to the country. But we’re also keen to get the economic benefit that covers the cost of the infrastructure that we’ve built to enable to race to take place. We want the tourists to come and enjoy the race and enjoy New Zealand. At the same time, there will still be the benefit that we will be projecting our city and country to the world if the race takes place. That is important as well.

I’m not pushing the Government to do anything that is against health advice. The health and wellbeing of us as New Zealanders comes first. But when we can reopen those borders, having those events in our city, and in New Zealand will give the boost that the tourism and the accommodation sectors need to recover from what has been a bruising period for them.

It feels a little like Apec has been doomed from the start – with the convention centre fire and now Covid-19. What do you think the appetite will be for people to travel – particularly for the Leaders’ Week in November next year? Will we see a mass delegation of world leaders emerge in Auckland?

The leaders won’t want to put themselves at risk. Covid-19 makes no exceptions – we’ve seen prime ministers – Russian and British – come down with the disease. We don’t want people coming to the country to put us at risk if Covid-19 has not been properly dealt with by that time.

Apec in Chile was put off last year, I suspect it’s in real doubt for this year in Malaysia. I think the leaders, if it’s safe to do so – for them and for us – will be ready to come together and have that interaction face-to-face which has been an important aspect of Apec.

Is there anything you’ve seen from the alert level four restrictions that you might like to retain? Personally, I have enjoyed the fact that Cornwall Park has closed its gates to traffic – there has been plenty of space to spread out.

Can we learn things from it? Of course. In every crisis, there is a threat and there’s an opportunity. I think we will see opportunities out of this, things that we can do better.

One of the things we saw was that when you get cars off the road, the air quality is probably the best that Auckland has seen in a generation. And the quietness of the city – we won’t get back to that, but people are saying, gosh, I can hear the birdsong again.

One of the things we can keep is the flexibility around working. If it is possible for people to work effectively from home, why not give them the chance to do that, maybe several days a week? People want to have the social interaction, but they can spend time at home, as well. They can work more flexibly, and that more flexible working I think will be great for things like traffic congestion, efficiency, and people being able to enjoy their working week more.

A bit more amorphous but nonetheless important – He waka eke noa – we are all in this together, and being kind to people, being considerate. We probably haven’t seen this since the war, when people said: “hey, we’re in the same battle together and we are looking after each other.” I hope that we can retain that sort of sentiment going forward.

© NZ INC.

Central-local urban growth partnerships needed for Covid-19 response (NZ INC.)

Infrastructure NZ’s Paul Blair tells Tim McCready that infrastructure investment and construction will play a major role in New Zealand’s economic recovery programme – but central and local government collaboration is required to make it happen.

Infrastructure NZ – New Zealand’s peak infrastructure body representing 140 public and private sector industry members – says the Government’s response for the infrastructure and construction sector has been quick, clear and commendable, but says now is the time for regional and central government to collaborate and tackle projects that will improve outcomes for the bulk of New Zealanders who live in major centres.

In a letter sent to infrastructure minister Shane Jones earlier this month, Infrastructure NZ chief executive Paul Blair recommends the Government establishes a $20b ‘national recovery programme’ of funding, over and above identified projects able to be accelerated by the Infrastructure Industry Reference Group.

It suggests that this programme of work – as yet undefined – could be rapidly co-designed and funded using rapid deployment techniques used post the Christchurch and Kaikoura earthquakes. The North Canterbury Transport Infrastructure Recovery (NCTIR) alliance and the Stronger Christchurch Infrastructure Rebuild Team’s (SCIRT) were award-winning, speedy and well-regarded programmes. It would allow the Government to have flexibility and co-design for the ‘new normal’, as opposed to only accelerating existing shovel-ready projects.

Blair says the priority for the national recovery programme long-term is to establish a “North Star” against which immediate and intermediate options can be assessed to ensure they align with a longer-term strategic direction. The letter outlines five components that will be critical to the strategy:

  1. A vision for where the Government sees New Zealand’s future, especially with the significant Covid-19 changes
  2. Long-term strategic planning to achieve the vision
  3. Funding and finance
  4. Regulations and incentives
  5. Delivery capability and capacity.

Partnering with councils

Blair says one of the ways this strategy could assist, is by partnering with councils which have a significant need for infrastructure investment but face substantial funding issues.

Rates provide an average of only 60 per cent of council revenues – which some councils are already choosing to freeze or cut. The rest comes from more commercial sources like developer contributions, fees for public services, or dividends from airports, ports, or stadiums. These too are being severely hit by Covid-19.

“Hard-hit councils require financial support from central government that is tied to shared priorities through urban growth partnerships,” says Blair.

To put the challenge they face into context, he explains that individually, New Zealanders pay roughly $1125 per year to council, but $15,250 to government.

“It’s easy to see that is not equitable when local government owns roughly 40 per cent of the country’s infrastructure – the same as central government – but only has about a tenth as much money to maintain and upgrade it.”

He says the growth councils – Auckland, Wellington, Tauranga, Queenstown, Hamilton – make up a majority of our population, and should be expanding their operations at this time.

“Under an all-of-government approach, councils should be the very definition of shovel-ready. But instead their revenues are going down, and unlike central government they can’t go and borrow more.”

He points to Tauranga City Council as an example, which recently announced that its revenue would be reduced by between 15-25 per cent.

The looming funding issue for Tauranga could see some $300m of housing-related infrastructure stopped. It cannot fund long-term planned capex due to cost increases, population growth and leaky building claims that would mean it would breach its debt cap without politically unachievable rates rises.

An NZIER report shows the 10-year impact of Tauranga City Council’s failure to invest in local pipes and roads could be:

  • a housing shortfall of 8,436 units
  • cumulative GDP foregone of $2,547 million
  • 1,580 – 2,320 construction jobs lost, worth an additional $118-$174 million of GDP foregone
  • house price rises of $702,082.

“If you give $1 of new income to a council, they can go and borrow $2.50. But if they lose a dollar, they also lose the ability to fund $2.50,” explains Blair.

In addition, the loss of this infrastructure would see significant lost opportunity for Crown revenues, impose further costs on the Crown (assuming accommodation supplement and other housing-related costs rise) and would lead to spiralling wellbeing losses.

Blair says the counterfactual is that if Crown gave $100m of new income to TCC, it could borrow an additional $250m, creating enough headroom for the capex to continue. The cumulative GST on $2,547m of GDP is $382m – significantly exceeding the Crown’s initial $100m investment.

He says that while central government funding is urgently required, this shouldn’t be seen as a ‘free lunch’ for councils. As with all good partnerships, both the government and councils will need to show partnership behaviours, and rapidly align on win-win national, regional and local objectives and outcomes.

“We all share a common goal to re-inflate the economy and adapt to the new normal. Urban growth partnerships are a core part of the Government’s urban growth agenda, we now call for these to be funded and delivered at pace.”

Infrastructure NZ says if the Government can replace, or even enhance, lost council revenue, then local works in local communities can restart at great speed.

“Local government is where some of the greatest need is and where the greatest leverage can be exerted,” says Blair.

“In these times partnership will be essential. Central and local government need to be working together, not at cross-purposes – he waka eke noa.”

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