Business Roundtable

Union Relevance in Aotearoa in the 21st Century

Laila Harré
National Secretary
National Distribution Union

The smugness of the National Party at present is positively nauseating. Three months of encouraging poll results and they are already arguing about the colour of the new drapes for Premier House. (Most, naturally, favour royal blue; some a light green; and there's even a staunch minority still holding out for a rich, ethnic brown.)

This overweening confidence is fed by the unceasing drumbeat of anti-government stories, negative cartoons, and wildly-hyped poll data hurled at them almost daily by elements within the news media. "One Party State!" - screamed a recent headline (although it was difficult to tell whether this was supposed to be a prediction, a description or a suggestion). The business community, prone to believing just about everything it reads in the newspapers - even its own propaganda - is now furiously advising itself on how best to "manage the interface" between business and government under the new regime.

All the usual suspects from the 1980s and 90s - along with a crop of up-and-coming acolytes from the country's leading businesses -gathered on Waiheke Island last week to discuss this "interface" at the Business Roundtable's annual "Dunes Symposium". The two Rogers (Douglas and Kerr) were present to deliver their thoughts on "Business Leadership in Public Policy" - an interesting choice of subject for a former politician and a one-time civil servant. As one of the prime movers of the 1980s reforms was later heard to mutter: if New Zealanders had waited for business to take the lead on public policy reform "we'd still be waiting to start".

Rod Deane - once affectionately known as "Dr Death" - was also in good form, discoursing upon "The State of the Nation". (Not good.) The star-turn of the symposium, however, was undoubtedly the new kid on the right-wing block - John Key. (Although his allocated speaking time of 45 minutes on "National's Economic Vision" did strike me as a trifle generous.) Not to worry. The National Party leader was received by these awestruck minions of Mammon with such reverence that the journalists present could have been forgiven for thinking he had actually walked to Waiheke Island. But, not everyone is ready to hail Key as New Zealand's messiah.

More than a few (including the Labour blogger, Jordan Carter, to whom I am indebted for the following quotations) have noted the leader of the opposition's startling revisions of his own - and his party's - stance on the 2003 invasion of Iraq. Responding to visiting left-wing British MP George Galloway's charge that a National government would be more likely to lead New Zealand into a conflict in the Middle East - Mr Key declared: "(We've) made it quite clear we won't be going to Iraq, we wouldn't have sent troops to Iraq. National did support the Coalition of the Willing's right to send troops, but that's because we are of the view that every country is entitled to take its own actions, but we certainly won't be going."

On March 11, 2003, however, the Rodney Times reported that: "New Zealand should support its allies first and the United Nations second, says National MP John Key. `Any relationship with the United States or Britain has to take precedence over the United Nations.'... He would be prepared to commit any support requested by the United States for a war against Iraq, including SAS and combat troops. `New Zealand should be prepared to fight for the values it believes in."'

At the Dunes Symposium dinner on Thursday night, the keynote speaker, Jonathan Ling, chief executive of Fletcher Building, emphasised the crucial importance of getting the big leadership decisions right. But the statements quoted above expose Key as a leader who made the wrong call on one of the biggest decisions any prime minister is ever likely to make: whether to commit our nation's troops to an illegal war of aggression. Even worse, he is now unwilling to acknowledge his error.

Applauded by New Zealand's business leaders and cheered to the echo by the National Party faithful Key may be - but he still has a long way to go before he's ready for the responsibilities of Premier House. National's redecorators should hold off buying those drapes for a while yet.

David Teece discovered his penchant for economics in the 1960s at Canterbury University. Since then he has gone on to become a world leader in the field. Colleen Simpson reports.
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DAVID TEECE cuts an impressive and well-groomed figure, creating a hush in a roomful of aviation and tourism bigwigs in San Francisco as they still their cutlery to catch his every word of wisdom.  Professor Teece's time is precious.

He gives the impression of being used to working a finely tuned schedule in which every minute counts.  After a hasty but substantial presentation on the virtues of New Zealand's investment climate he offers some time to answer questions. But he is clearly anxious to make a quick exit to get to his next appointment.

That date happened to be in court, where Professor Teece took the stand in a landmark antitrust court battle between software giant Oracle and the United States Government.  Such is Professor Teece's reputation that he appeared as Oracle's final witness in the trial last month, during which the government tried to stop Oracle's US$7.7 billion bid for PeopleSoft.

Now recognised as a world-leading economist, Professor Teece has gone far from his Blenheim roots.  His family moved to Nelson when he was 12 and he went to Waimea College where he was a couple of years behind Business Roundtable executive director Roger Kerr.  His elder brother Murray says the young David never did homework, but could often be found "picking up spuds in the paddock" to earn money to get him to university.

After a stint as head boy in 1966, he went on to discover his penchant for economics as an undergraduate at Canterbury University.  "I'd always be decent at science and maths, but never the best," he says. "Economics was a social science. I really got into it."  Murray Teece says his brother always showed signs of being an entrepreneur and bought his first section when he was 20.  "David never sells anything," he says. "I've asked him why he doesn't sell that stupid section at Pakawau and he said one day he might put a bach on it. The first car he bought was at 20 years when he went to California and he's had that car (a Buick convertible) restored twice."

Those school and university days were obviously special times for Professor Teece, who remains a contributor to both institutions.  Now 55, his list of qualifications reads like a thesis and he has gone on to carve out an enviable career and publish numerous books and articles while earning a slew of accolades along the way.  He has honorary doctorates from universities in Finland, Denmark and Russia, in addition to the PhD in economics from the University of Pennsylvania and a couple of other masters' degrees.  He has also been named by global professional services firm Accenture as being one of the world's top 50 living business intellectuals.  But Professor Teece takes most pride in the honorary doctorates. "That was very satisfying."

However, he is modest about his natural predisposition for all things economic, crediting a clear, analytical mind and a keen ear -- despite having some difficulty remembering how many degrees he has.  "It's not so much (the) formal training," he said. "Quite frankly, at the top of the list I would put good old-fashioned Kiwi values like hard work and also being a good listener.  "In addition to that -- and not all, arguably most (economists), don't have this -- is the ability to take economic concepts and apply them to policy and business decisions."

And Professor Teece has not only been thinking, he has been doing.  He is a low-profile but majority stakeholder in sportswear label Canterbury International and jointly founded I-Cap -- New Zealand's biggest private equity firm with $400 million under management and offices in Auckland, London, San Francisco and Bahrain -- with Tony Hannon and Nick Lodge in 2000.

Professor Teece's name may not be familiar to most Kiwi households, but he is undoubtedly one of New Zealand's most successful -- and probably most wealthy -- business sons.  He has lived in the US for more than 30 years, longer than he lived in New Zealand, but keeps a foot firmly in both camps and is still patriotic.  The years living abroad have only made Professor Teece more of a champion for New Zealand.  "I come down there with some frequency driven by two things, family -- my kids and wife are very keen on New Zealand -- and second the number of business associations and contacts I have."

IN ADDITION to his business interests, he supports not-for-profit organisations in New Zealand, the US and Russia, and has chipped in for Nelson's about-to-be-opened transportation museum and the new Fulbright scholarship programme.

He is a business and finance professor at the University of California at Berkeley's Haas School of Business and is an advocate for New Zealand's investment environment. Professor Teece says opportunities in this country are ripe for the picking for foreign investors -- partly because of the lower levels of competition compared with overseas markets.

Professor Teece says Air New Zealand's new Auckland-San Francisco direct service is an important step for New Zealand because it brings the country much closer to the technology hub of Silicon Valley, shaving laborious hours spent travelling through Los Angeles.  "Sydney has been closer to San Francisco than Auckland -- not geographically, but because you have had to go through Los Angeles," he says.

The Business Roundtable's Mr Kerr does not remember Professor Teece from their school days, but the two have since become friends.  "He's really made the grade in the American academic world," Mr Kerr says. "He's regarded as a serious guy and that takes some doing in the academic world, and the American one is the fiercest in the world."

At Professor Teece's wife's 50th birthday party in Nelson several years ago, Mr Kerr said that "in typical David style" the economist chartered a plane to give his American friends a tour over the Southern Alps.  "He's made a lot of money along the way," he says. "It wouldn't be correct to call him a big figure in New Zealand business, but he's got some serious investments."

Warehouse founder Stephen Tindall admires Professor Teece's business acumen as well as his brain power.  "He is an academic and that's his first love," Mr Tindall says. "But he's been able to bridge that gap (with business practice)." Mr Tindall first met Professor Teece at the Knowledge Wave conference in 2000 and the pair agreed to put up $100,000 to establish the Kiwi Expat Association, which helps expats make business contacts abroad.  Since then, the two men have been in regular contact, speaking often on the telephone and conducting "virtual board meetings".

Mr Tindall says Professor Teece remains reasonably low profile even within the higher echelons of the Kiwi business community.  "Unfortunately, New Zealand tends to be a little Kiwi-centric. To be a household name or office name, you normally need to be in the press and living here," he says.

Professor Teece founded expert consultancy group LECG in 1998, but sold it after it joined the New York Stock Exchange nine years later. However, he led a group of investors that bought it back in 2000. It floated on the Nasdaq late last year at US$17 a share. Its shares are now sitting around US$16.66, giving it a market capitalisation of US$363.5 million.

There are few things more frustrating for an employer or employee than being forced to obey outdated regulations that are no longer relevant to today's workplace.  Red tape of this nature is like molasses. I know from my experience as the managing director of Foodstuffs (Auckland) that it is easy for a business of any size to get bogged down.

One piece of legislation that has clearly passed its use-by date is the 22-year-old Holidays Act. Since this law was introduced, New Zealanders have changed. We've changed the nature of the work we do, and the hours we spend doing it. Once employees were mainly wage-earning 9-to-5ers, but today far more are casuals, or self-employed, or salary-earners.

Almost every other Government intervention into our working lives has been overhauled: shop opening hours have been liberalised; the Employment Contracts Act freed us from many prescriptive regulations. Yet despite all these changes, we continue to rely on the same old holidays legislation, which as well as being out of date is complex and difficult to enforce.

That's why many people in the business sector, including the Business Roundtable, have been hoping that some government would consider putting the tired old Holidays Act out of its misery.

Sadly, though, the Government is planning to replace one bad law with another. Although it cuts down on some complexities, the new Holidays Bill is hardly any more relevant to today's labour market than the act. Crucially, it still mandates holiday arrangements upon employers and employees, instead of allowing people to reach their own agreements.

As Business New Zealand and other organisations have warned, the Holidays Bill cuts down complexities in some areas, yet sprouts whole new areas of regulatory intricacies in others. It is like a pharmacist supplying you with a pill for your migraine and then giving you a whopping head-butt before you leave the store.

One cause of the headache for business owners is the news that administration and compliance costs are likely to increase rather that decrease. In fact, some tourist and retail operators could choose to remain closed on public holidays because the new legislation means it could cost the equivalent of 20 hours of ordinary pay to employ a person for one eight-hour day.

The effects of the Holidays Bill won't be confined to private business. Many public sector operations that work seven days a week - such as prisons, police, hospitals and fire services - could be affected. The Auckland District Health Board estimates its increased new costs at $1.25 million. The Government and taxpayers will need to decide between reduced services and increased taxes.

The new legislation is being examined by the parliamentary transport and industrial relations select committee, which is hearing submissions from the public.  The Business Roundtable is challenging the committee to dump both the archaic Holidays Act and the new, flawed bill. Full deregulation is both feasible and reasonable. These days there is little sense in having the Government involved in the holiday arrangements between employers and employees.

Despite dire warnings from unions in the 1990s, a decade of life under the Employment Contracts Act showed that employers and employees are sophisticated labour market participants.  As with the Employment Contracts Act, we will find that moving to a deregulated environment does not lead to either group employers or employees having a chokehold on the other.

Repealing this legislation would not put us out in the wilderness internationally; the world's richest and most productive economy, the United States, has no statutory provisions at all governing annual leave or the terms of employment concerning public holiday arrangements.

Left on their own, employers and employees have the scope and the ability to structure work, pay and holiday arrangements in a way that is satisfactory to both sides. Regulation makes it difficult or impossible for this to happen.

If the committee cannot bring itself to recommend a fundamental review of the act with a view to its repeal, it should at least recommend that only minimum holiday entitlements are set by law, and that employers and employees should be free to negotiate mutually acceptable holiday terms, including trading pay for time, and vice versa.

The old Holidays Act is a molasses of legislation. The new Holidays Bill may have a slightly different flavour, but the outcome will be just as annoyingly sticky for workplaces.