Gielda.
I'm Chelsea Daniels and this is the Front Page, a daily podcast presented by the New Zealand Herald. The Mood of the Boardroom is back today for its twenty second year. The annual survey of the country's top CEOs and business leaders has seen a broad tick of approval for the Coalition government, with strong support for Christopher Luxen and Nikola
Willis and their economic plan. But they want to see the government be bolder and set out their vision for New Zealand's future, and that could include tackling some of the most contentious economic issues in our country. Today on the front page ends at Herald, Business editorial director fran O'Sullivan is with us to digest the thoughts of our top business leaders. Fran Can you just remind us what Mood of the Boardroom actually is?
Good question, Chelsea. I mean, essentially, what it is is a barometer of business sentiment and mood very much at the top end of town. A great deal of the CEOs who comprise the top twenty companies of the ZX and more, plus a spattering of chairs. And don't forget we don't have a lot of women at the top of New Zealand major companies yet so I've tended to do gender balance over the years by reaching out to prominent female chairs as well.
So the twenty twenty four edition is out today. It would it be fair to say that people are generally quite positive about this government.
Yeah, they're quite positive about the government and more particularly they're quite positive about the economy. I mean, essentially there are lingering concerns about a range of issues, still got some receptinary effects occurring, but essentially the confidence is where it was really back in the heyday of Bill English and we haven't seen this for a while. And so I think what you've seen from this government is it
has been very deliberate about what it's doing. It does have confidence in the key members of the cabinet, particularly when it comes to those that are across the economy and issues which are important to business. So there's a good balance there. But it's also reached the stage where essentially business wants the government to pivot and focus on the road ahead and not looking through the rearview mirror.
And I guess when you think about it, as it's been coined, much of the last almost year has been about the Great unwind. It's been about replacing policies and projects that its predecessors had done and starting to put in place its own agenda. But in essence, senior Business would like the government and ministers really to focus on the future and start to think about the growth agenda rather than getting the platform for growth.
Well, I was about to say, actually, while the business leaders are happy with the government, I see that they also do want to see more of that bold ambition rather than just do it undoing Labour's plans and complaining about what they've inherited and such. How could that ambition come to fruition do you think?
I mean, there's plenty of advocacy from business about what they'd like to see about the major issues facing New Zealand and some steps that could be taken. But essentially it's the government been very focused now on what are those agender items that really will drive the economy and will particularly inspire investment as well.
In their ratings of the cabinet, Ericus Stanford has come out on top, the only minister with a rating of four. Are you surprised by that?
Now?
I'm not bear in mind this has actually been quite a difficult period for ministers and they have been winding much of their predecessor's policies and so, for instance, her focus on back to basics resonates with business that are looking for people to come out of the education system, raring to go and with the right competencies to be
able to thrive. I mean, there's been quite a lot of concern about young talented New Zealanders leaving New Zealand and going elsewhere in the world, and that will continue, but really the opportunity to have well qualified young people working here is also pretty important.
We used to be one of the best countries in the world when it came to reading and writing. I mean we were in the top ten and piece and where were the envy of the world. But on the last twenty or thirty years things have taken a turn for the worse and we've seen literacy rates dropping year on year on year and nothing really has changed.
Working down the cabinet list, you then come to Simeon Brown, who's also got a range of major portfolios. He's got transport, you know, that includes being Minister for Auckland, it includes energy and he's one of Christopher Luxen's kitchen cabinets, so he's pretty important. And then you come down a step to both Chris Bishop and Nichola Willis, and these are just you know, these are ratings really at the margin of era for these top three, they're both rated equal.
And you know, Nikola Willis has got a tough job there and she's not only got to keep fiscal discipline there, but she's also got to change public sector reforms. She's going to do a social investment, which is pretty important when you look at the transformation of the economy and helping young people be focused. So that's major. And Chris Bishop is a cross a range of things as well. I mean he's commonly known for the infrastructure portfolio, but
he's also got housing, he's got RMA reform. When you go down a bump to Judith Collins and again she's got seven major portfolios. And then the Prime Minister himself
again pretty much equal with Judith Collins. And the Prime Minister is really interesting and he doesn't top the cabinet pack in that respect, but he's so critical to the performance of this particular administration and when you look at it, where CEOs rate him strongly is how he's kept the cabinet focused on delivery, and so if you're looking at the KPIs that he would have on his plate, he's coming in at four point three out of five and
more particularly also some forty odd percent forty three percent marking him as very impressive on this measure. So you can see he's raptor's hands around his cabinet. He's focused on deliverables, but he's also got a range of other factors he has to deal with. He has to leverage his brand for New Zealand and we've seen that with the way he's taken missions offshore with business. But he's also got to keep the coalition together and he's not
writing too bad on that. But the one weakness he still has, and he acknowledges this is his own political performance, and he will just say, he's, hey, you give me a break. I've just been in politics three years and you know, just over three years, nearly four years, and he became you know, from ZIP to within three years he was PM and he had melded together a quite unified caucus in that time.
Barbara Edmunds has taken over as Labour's finance spokesperson this year. She's still only a few months into the job. But has she resonated with the financial sector yet.
Yeah, she's resonating with those who have had a chance to meet her. And bear in mind, I mean she's only been in this role since February, I believe, and she's pretty pragmatic. Before she was herself a cabinet minister and she was Minister of Revenue. Before she was appointed to that, she did chair the far and it's an expenditure committee in Parliament, so she was well known to
both sides of Parliament. But more particularly she also when she was a seconde from the Inland Revenue she worked for Judith Collins when Judith was a Revenue minister, so you know she's highly respected. She got on well in her office. She also got on well in Michael Woodhouse's office and he was the immediate predecessor in Revenue and then of course she switched to labour side and then
became an MP. I mean, there's a great quote here that I like, which has come from a banking sector head and it basically says Barbara Edmonds is an absolute class act. She possesses an equal balance of smarts and empathy. She will be forced to sell their tax reform idealism and could be completely distracted by that. But she knows tax inside out and sroduce her skills to being pragmatism to the discussion rather than sell an ideological fantasy very well.
But one of the interesting things in this survey is that the ground does appear to be shifting under the issue of capital gains taxes and also changes, for instance, to the superannuation settings. That parting shot from the Treasury Secretary Carolyn McLeish, who's gone back to Australia to head up the Audit office there. She basically said, we have structural reform issues and pointed to these areas and a
large number of CEOs in this report agree. More than seventy percent in fact, are on song with that, and those who commented for that part that particular question, more than fifty percent came up with CGT as an option. And we've got people like Mainfreight CEO Don Braid, and he was essentially saying, to this question, and it is
a big question for this government. He was basically saying that some of the things that could be considered will be capital gains tax, public private partnerships, lessons for Australian super and its success, and these wouldn't go amiss. I mean, government's a bit tunnel vision on this one, I think, and we saw that recently with the swipe at Antonia Watson, the CEO of A and Z, who made some comments suggesting CGT should be looked at. And so it's actually
a lot of commonality out there in business. And I guess what people forget is a lot of these business people are running companies that are also active in other parts of the globe which do have capital gains tax, do have different superannuation settings. This is not foreign to them. So all those angsteam from the OECD and IOMF is kind of on a ground where it's a bit fertile at the moment. However, there are others who say that yes,
economically it makes sense, but politically it's difficult. And Deloitte chair Thomas Pippos, who's written a lengthy analysis in the report, basically says it's a red herring and to his view, the big issue was Treasury hadn't had the visibility it should have had during this last period. In other words, parting shots on the way out perhaps should have been made more vocally earlier.
Well, Nicola Willis lashed out at suggestions of a capital gains tax just the other week. Hey, And the survey, like you said, show's opinion is shifting on CGT and on implementing a more efficient superannuation scheme like that of Australia. Is the government actually likely to look at either of those issues anytime soon?
Well, it would have to quite a big segue from where they are now. But you know, as this survey the thrust of us, it is time to pivot. They're not going to want to do this in a hurry though, because this is one of the areas that labor is looking at, and they'll be quite hopeful at the next election that Labor will go hard on wealth and capital games taxes and the government will be National will be
able to fight against that. I mean, already you've had the lines about you know, more taking more money out of people's pockets in New Zealand, which actually isn't really the case. It only happens when you sell. But you know, there's still got to be a debate about how we bridge the structural deficit. National would hope that it could grow the way out of these issues and then get more tax revenue that way through more successful companies. But
you know, it's still quite a difficult task. But I think where national has to be a little bit careful is you know, if there is openness to thinking about and talking about potential remedies for some of the big issues that face the economy, that they don't close off those options too soon. One of the things coming through is the need to see a little bit of a shift in tone from senior ministers and how they deal
with business. A number of people commented about the way the Kiwi railboard was slapped down on the Board of Health New Zealand in quite brutal ways actually, and you know it doesn't resonate well, particularly when you're trying to attract other you know, well healed and because you have to be to go into these roles because they don't pay very much, you know, to get on well qualified people to come and take part in governing major Crown
entities and soees. So business would like to see a shift in tone there.
There are still some economic challenges in the community, hey, particularly around electricity prices. That's seeing increased bills and even forced some businesses to close that issue has leaders worried the most, followed by the US China tentions and international cyber attacks. How seriously should the government be taking these power price worries?
Well, I think the more interesting one in the report, and we've done a three page splash on it, is probably when you drill down and you look at the issue of energy security. These energy prices have had an effect, and quite clearly we've seen Winston pull out of its mill and we've seen a degree of de industrialization happening.
It's a mixture of issues there that have contributed to that, but I think the more interesting one is there isn't much confidence that we actually have sufficient security of supply to deal with some fairly major demand issues coming up. I mean, we're having the switch to utilize mevs, we're having the switch to more AI, we're having more data centers and all of this is a big drawer on electricity.
So talk to government ministers. They will take the view that now you've got a long term contract twenty year contract with Typoint for instance, that gives some certainty to the market. In other words, there's not going to be a huge chunk of power come back on to the market if, for instance, they couldn't get a deal on ty. But also we've seen the fact that they're not going to go ahead with the Onslow project in the South Island.
So the government's view is this of certainty, but coming through from businesses, actually the government's got to get a lot more organized on this. You know, people want to have some certainty. Obviously there has to be a big range of renewable projects consented and built, and the government has clearing the wave for that with fast Track, but there's still issues. Some people are concerned about whether you know the structure of the Gen Taylor's as to whether
they should split out their generating and lines capacity. So there's a big conversation that still needs to occur.
We're also a little over a month away from the US election. John Keys come out saying this week that Donald Trump would be better for the economy. What do our CEOs think?
Ah. I think where John Key is coming from is he's better for the US economy and that may flow out to here. I think there is considerable concern here about you know, Donald Trump essentially putting up barriers when it comes to trade, and for instance, we have some big exporters of our own into the United States these days, and he's looking to put a ten percent tarif on and that would be pretty damaging here if that occurred. And don't forget the United States is now our second
largest trading partner. It's overtaken Australia in the last year or so, so you know that's a concern. It's a concern that he's putting America first outlook could have an effect here, but it's early days.
But the view out.
Of the bordroom is this time around is pretty solidly that they would prefer Krmela Harris to be the next president of the United States, and partially because it would mean a continuation of current settings.
Fran it's been a difficult few years for the economy. Are we confident we've turned the corner or are the challenges set to continue?
Do you think, Oh, there's definitely challenges. But I think there's two factors playing into this. The fact that the government has kept a strong focus on the fiscal discipline and that's rated highly by our CEOs. But also when we've seen the Reserve Bank starting to go down the interest rate lowering trail and obviously next week expectations that there will be another lowering, and I think if they dropped it by two rather than one metric, it would
be a great fillip to confidence. That's what business is looking for. Dropping the OCR finally has played into confidence, but the management of the OCR and interest rate levels still are major issues for business. So you know, no one would want to see it to go the other way.
But I do think what we have seen is, you know, it's hard to keep animal spirits down for too long, and New Zealand has been pretty resilient over the years, and we've seen that with issues like how we weathered the GFC, how we dealt with COVID, how we dealt with the earthquakes and so on. You know, that comes a point where we've just got to get on and make the best of it. And I think you're seeing that in confidence surveys right across the board at this moment.
One of the questions we asked was was it a hard landing or a soft landing. People were confident inflation had passed its peak, but there was also a bit of pessimism there in the sense that whether it would be a hard or a soft landing. Most people sixty odd three percent said the RBN said had not managed to achieve a soft landing. One or two said up
more like a hard thud. But the point being is, you know, people turned the corner in their own sentiment and it's now up to everybody to move forward.
Thanks for joining us, FRAN. That said, for this episode of the Front Page, you can read more about today's stories and extensive news Coveraget and zat Harold Doz. The Front Page is produced by Ethan Siles with sound engineer Patty Fox. I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio or wherever you get your podcasts, and tune in tomorrow for another look behind the headlines.