​Kiwi bosses more bullish

New Zealand's “rock star" economy may be peaking but its chief executives remain more optimistic than Australian – and global – peers.

Here in New Zealand, 47 per cent of chief executives are more optimistic about the outlook for the global economy while in Australia the effects of the global slump in commodity prices are hurting and business confidence is at much lower levels.

"Australian CEOs are generally more concerned about potential policy threats to their organisation's growth with 95 per cent concerned about over-regulation."
Bruce Hassall, Chief Executive Officer of PwC New Zealand

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That translates to just 38 per cent of Australian chief executives who think the global economy will improve - although this is still higher than the 29 per cent of US chief executives who say they think the global economy will improve in 2015.

It's fascinating to analyse CEO attitudes based on PwC's latest New Zealand CEO Survey. (The survey builds on the 18th Annual Global CEO Survey released at the World Economic Forum at Davos and explores the challenges and opportunities CEOs in New Zealand, Australia and around the globe are seeing on the horizon and how their strategies are helping them to connect with markets and customers.)

Chief executives around the world are facing many of the same issues in their quests to drive value and confront the speed of technology change but their perceptions about the health of the global economy are vastly different.

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While confidence in the global economy has largely declined this year as a universal trend, in contrast companies around the world remain optimistic about their own growth for the year ahead.

So, why the differing views and relatively cheerful Kiwis? Post-Global Financial Crisis we're seeing a much more resilient New Zealand economy. Ten years ago it was supposedly impossible for the export sector to make any money when the dollar was above NZ80 cents to the US dollar.

Well, for a number of years it was and businesses changed their operating models and learned how to survive and prosper. There have been some fundamental changes in the New Zealand economy since and a lot of those are linked to its ability to operate in a more dynamic environment, one that changes more rapidly than it ever used to.

The Christchurch rebuild in the wake of the devastating earthquakes of 2010 and 2011 is also playing its part in driving overall growth trends.

Australia, too, is taking steps to diversify its economy with the signing of the free-trade agreement last year with China although obviously the impacts of that are yet to come.

The two countries either side of the ditch are however growing increasingly interconnected. The majority of New Zealand CEOs identified Australia as the place they consider most important for overall growth prospects, followed by China and then the US.

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Where New Zealand does lag though is in recognising or managing for the benefits of diversity. There are really two parts to the story about diversity here in New Zealand. The first is less than a third of our CEOs have a strategy for diversity and inclusion (32 per cent). This compares with Australia where 86 per cent of CEOs have a diversity strategy. Globally 64 per cent of CEOs have a diversity strategy in place.

New Zealand CEOs are well behind both Australia and global CEOs in recognising the enhanced 'bottom line' performance that a more diverse organisation brings. New Zealand organisations can clearly learn from Australia where the huge uptake in diversity strategies are delivering real benefits.

Attracting talent, enhancing business performance, strengthening companies' brand and reputation and enhancing customer satisfaction are listed as some of the top benefits by both Australian CEOs and CEOs globally.

Working with Government

I recently attended the Australia New Zealand Leadership Forum in Auckland where the governments and business communities of New Zealand and Australia met up. We discussed where there is the opportunity for mutual benefit over the next ten years.

In that context it is interesting to contrast the respective concerns of CEOs over the role of government in driving growth. According to our CEO survey findings, Australian CEOs are generally more concerned about potential policy threats to their organisation's growth with 95 per cent concerned about over-regulation, compared with 66 per cent of New Zealand CEOs.

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Government response to fiscal deficit and debt burden (79 per cent), as well as increasing tax burden (64 per cent) were also higher than New Zealand counterparts, at 40 per cent and 34 per cent respectively.

The findings show there are some greater challenges for Australian business leaders in managing these perceived policy threats and working with government. Perhaps there are some lessons to be learned from New Zealand, where Government is working alongside businesses well and instilling a higher level of confidence in business leaders.

Bruce Hassall is Chief Executive Officer of PwC New Zealand.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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