The Mood of the Boardroom Survey & recent remarks by some of this nation's CEOs reflect on the (dubious) quality of New Zealand's boardrooms more than anything else. Namely that most are woke & weak. The fact that our CEOs put ACT Party Leader David Seymour outside the "top ten" of "impressive" Members of Parliament, with a rather poor score of 3.4 out of 5, reflects just one thing. That our CEOs nearly entirely vote National and lack imagination.
A bunch of them even called Seymour "divisive". How revealing. One of the most talented leaders of a political party for a generation in NZ - who studied engineering & philosophy - who's the real deal - trying to untangle the constitutional & clarity-of-property-rights mess we've landed ourselves in, is labelled "divisive". What it reveals more than anything is that NZ's Big Corporate CEOs will not themselves push productivity enhancing reforms in their own organizations, which ultimately is what the ACT leader is trying to do for NZ, should they be labelled "divisive". They'd prefer, instead, to be Mr Nice Guy or Ms Nice Girl, to keep their jobs by being woke & weak. Look at the qualifications of many folks on our Boards - the typical one being a BCom in Accounting. Other than that, its a law degree. Lawyers often get on Boards because Kiwi firms want someone to help with compliance - not a person with imagination about where the future of the company should be.
Since the Mood of the Boardroom Survey, a bunch of CEOs have come out as supporters of higher taxes, particularly capital gains taxes. Big ANZ Bank Monopoly Boss Antonia Watson, said that taxing properties at the point of sale was fair. Talk about virtue signaling. When you've made record profits out of people's mortgage misery arising from oligopoly powers to the extent your share price has risen over 50% the last several years, and you shake people down for outrageous bank fees in the midst of a cost-of-living crisis, you then have have the cheek to say that others should pay capital gains taxes to make things fairer. Not to be outdone, ASB chief executive Vittoria Shortt says NZ has to collect more tax to invest in the infrastructure the country so desperately needs. Seems she's not heard of France where motorways are managed by private companies (under government concessions) and are responsible for the upkeep, modernization & safety of the roads. In exchange, they collect tolls from road users, which ensures that the cost of maintaining high-quality infrastructure is shared among those who use it, rather than relying on funding by taxpayers.
If the Big Bank Oligopoly Bosses want to practice Corporate Social Responsibility, they should do so correctly. The market failure applying to them, which our government is having problems correcting, is monopoly powers. Voluntary actions that are good for society should, in their case, be confined to not exploiting those powers - by bringing down bank fees & surcharges. However, since doing so would lower their profits & their personal pay cheques, the CEOs of the Big Banks (and a bunch of other large NZ firms) don't want to go down that road. Instead their plan is to shake others down to repair the social damage that they are doing by advocating the public pay higher taxes.
Before the Productivity Commission was de-commissioned, it identified lack of "managerial capability" as a contributor to our low productivity. In other words, though its tempting to blame the government for getting in the way of business, there's a lot about Kiwi business that is about getting in the way of itself. Many of our CEOs & Boardrooms are not capable. As a top ten rich-lister once observed to me, "When you have the wrong person at the top, things will never work". The staff can't make up for a boss who is the wrong boss. One thing that struck me when I used to attend the meetings of the NZ Initiative was the degree to which the Big Chief CEOs of NZ Incorporated had so happily embraced all manner of woke causes - not because they believed in them - but because such causes had become a way of furthering their own corporate careers. Spare New Zealanders the Mood of the Boardroom. We should be grading them - who do they think they are grading us and David Seymour?
Sources:
https://www.rnz.co.nz/news/business/529263/anz-backs-capital-gains-tax-what-about-the-other-bank-bosses
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
Since the Mood of the Boardroom Survey, a bunch of CEOs have come out as supporters of higher taxes, particularly capital gains taxes. Big ANZ Bank Monopoly Boss Antonia Watson, said that taxing properties at the point of sale was fair. Talk about virtue signaling. When you've made record profits out of people's mortgage misery arising from oligopoly powers to the extent your share price has risen over 50% the last several years, and you shake people down for outrageous bank fees in the midst of a cost-of-living crisis, you then have have the cheek to say that others should pay capital gains taxes to make things fairer. Not to be outdone, ASB chief executive Vittoria Shortt says NZ has to collect more tax to invest in the infrastructure the country so desperately needs. Seems she's not heard of France where motorways are managed by private companies (under government concessions) and are responsible for the upkeep, modernization & safety of the roads. In exchange, they collect tolls from road users, which ensures that the cost of maintaining high-quality infrastructure is shared among those who use it, rather than relying on funding by taxpayers.
If the Big Bank Oligopoly Bosses want to practice Corporate Social Responsibility, they should do so correctly. The market failure applying to them, which our government is having problems correcting, is monopoly powers. Voluntary actions that are good for society should, in their case, be confined to not exploiting those powers - by bringing down bank fees & surcharges. However, since doing so would lower their profits & their personal pay cheques, the CEOs of the Big Banks (and a bunch of other large NZ firms) don't want to go down that road. Instead their plan is to shake others down to repair the social damage that they are doing by advocating the public pay higher taxes.
Before the Productivity Commission was de-commissioned, it identified lack of "managerial capability" as a contributor to our low productivity. In other words, though its tempting to blame the government for getting in the way of business, there's a lot about Kiwi business that is about getting in the way of itself. Many of our CEOs & Boardrooms are not capable. As a top ten rich-lister once observed to me, "When you have the wrong person at the top, things will never work". The staff can't make up for a boss who is the wrong boss. One thing that struck me when I used to attend the meetings of the NZ Initiative was the degree to which the Big Chief CEOs of NZ Incorporated had so happily embraced all manner of woke causes - not because they believed in them - but because such causes had become a way of furthering their own corporate careers. Spare New Zealanders the Mood of the Boardroom. We should be grading them - who do they think they are grading us and David Seymour?
Sources:
https://www.rnz.co.nz/news/business/529263/anz-backs-capital-gains-tax-what-about-the-other-bank-bosses
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
5 comments:
This is exactly why I do not invest in NZ companies.
Too true Professor, too true. The people who weasel their way up the greasy pole are very rarely ‘get things done’ types. The woke thinking now steadily destroying excellence and productivity is well and truly embedded. We are definitely on the downhill side of the bell curve with these fools in charge.
It shows how far woke thinking has become entrenched through the media and education system, when it's considered racist to oppose discrimination based on race and when it's considered divisive to encourage equality.
True story: I sold all shares in a major - troubled - NZ company when, at the AGM, results were too poor to pay shareholders a dividend - but the Board proposed a + 30% increase in their own fees so as to be in line with Australian companies. The company is still in trouble
Pretty sure this reflects how afraid the boards are of their employees and market sentiment in general, rather than their own wokeness. We have seen how much of a chilling effect the blue hair brigade can have on business. Don't immediately assume the board are perps - they can be victims too.
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