It’s billed as a century of transformation – a time that will render the past 100 years’ worth of change into little more than a starting line for major advances in science and technology. But the 21st century will also bring major challenges.
Ongoing growth is running head first into environmental limits as resource-hungry humanity out-paces the planet’s ability to provide. The recent resurgence in economic activity and business confidence meanwhile, threatens to turn into something of a false dawn.
Economic pundits have, since the beginning of the year, been predicting a recovery that is more “W” than “V” shaped, as the bubbles of fiscal stimulation delivered by governments worldwide lose their froth. What remains are unprecedented levels of government debt. OECD countries’ total net government debt is forecast to increase by 21 percentage points of GDP between 2007-2010 to more than 60 percent.
Given these realities, how will New Zealand fare on its journey to 2020? What are the critical issues the nation will face and what are the opportunities we could exploit?
We put these and other questions to five high profile Deloitte/Management magazine Top 200 Awards winners of the past two decades. Their answers reflect a cross-section of business opinion – and perhaps the reality that change can be viewed either as threat or opportunity.

Critical issues
New Zealand will face some critical issues in the next 10 years. Opinions, however, differ as to which three are seen as most critical. The emphasis ranges from preserving and building New Zealand’s “clean, green” reputation; to building personal savings in order to help fuel growth; or untangling the excessive regulatory red tape that stymies business endeavour.
For Roderick Deane, Top 200 Executive of the Year in 1994 when he was CEO of Telecom and then voted Top 200 Executive of the 1990s’ Decade, too much government, excessive regulation and low productivity are the critical issues. Deane now holds directorships on several boards including that of Fletcher Building, Woolworths and the IHC Foundation.
To his mind, the Government has again become too large and is crowding out the private sector. “We need less government intervention and less regulation to get things done more easily and more quickly in order to promote our international competitiveness,” he adds. And tax rates need to be lowered to promote more incentives to work and save, to promote individual self-sufficiency and to “ensure we do not continue to lose our competitive advantage as a nation”.
Saving is Jim Syme’s priority. He was chosen as Top 200’s QBE Chairperson of the Year in 2004 and had 30 years of experience in retail, commercial and merchant banking. He also held numerous other directorships including chair of Waste Management.
“We have,” he says, “a very shallow capital market compared with other countries, particularly Australia. We must deepen it. To do that we need more savings because they transfer to investment. We [Kiwis] are not good savers and I think we should introduce compulsory superannuation.”
A deeper capital market would, Syme reasons, help business grow exports that can quickly capitalise on free trade agreements with Asia. Besides, the country needs to increase its per capita income to help lift the tax base so New Zealanders can access quality education, healthcare and social services.
Stephen Tindall, founder of The Warehouse and the Top 200 Executive of the Year in 1998, agrees that generating a savings mentality is a clear priority.
“Maintaining a national triple bottom line approach is important because it means balancing taxation issues to maximise the productivity of the economy,” says Tindall. “Having a savings mentality so as to invest in companies that are focused on export is a big part of that. The other side of that coin is about maintaining a well-run infrastructure in areas such as education and health,” he adds.
But for Tindall, the first priority is to protect New Zealand’s clean, green image. “We can [then] continue to leverage all that springs from that including safe, healthy food production and inbound tourism, while also growing what I call clean, green technologies,” he argues.
He also calls for a stronger emphasis on education and internships in the productive sector to help focus the country on earning its own living and becoming cashflow positive.
Unsurprisingly perhaps, Queensland-born Ralph Waters, the former Fletcher Building chief executive who hit the jackpot in 2003 by scooping Executive of the Year for himself and Company of the Year for his company, sees closer New Zealand ties with Australia as critical. “By 2020, New Zealand will hopefully realise the importance and benefit of a single economic ANZ market – if it has not already [by then] moved down that track,” he offers.
And New Zealand must recognise the importance of its larger corporates growing their businesses overseas and simultaneously lift its aspirations rather than be swayed by “gloom merchants” who oppose enterprising endeavour.
Kerry McDonald, 1996 Top 200 Executive of the Year and former Comalco chief executive, is emphatic that the most critical issues for New Zealand are the parlous state of its economy, its low productivity, low competitiveness in the export sector and its serious structural problems, such as the nation's high level of net foreign obligations.
“I’d add to that the electorate’s propensity to focus on short-term personal benefit rather than on the national interest and what needs to be done to create a viable future for New Zealand,” he says. “We’re worrying too much about house prices and welfare and not enough about the economy, our business and the tradeable goods sector.”

Opportunities ahead
How, then, does New Zealand best make its way in a changing world?
Our panel of outstanding leaders suggest, perhaps understandably, a stronger focus on the export sector. For Tindall, however, that is hooked into building on our environmental credentials.
“Our opportunity lies in providing high quality premium-priced food and beverage products to a world that will become increasingly short on safe, nutritious and reliable food,” he elaborates. Beyond that, he suggests focusing on building our environmental know-how and developing an export services industry based around the intellectual property and products that grow from it. “Renewable energy generation, water conservation, innovative new clean-technology companies… there are some big opportunities we could exploit there,” he adds.
“I also think we could leverage the innovation that comes from the public sector – New Zealand could build a world-class business and gain royalties from developing innovation in the health sector in software, devices and drugs.”
Syme is also optimistic that New Zealand can significantly increase exports over the next 10 years, particularly from the dairy, meat, fruit and timber industries, and in niche manufacturing, service IT and “tourism into our clean, green New Zealand”.
To accomplish this New Zealand must, he says, beef up resources and trade offices in Asian countries to facilitate export growth. “We also need stronger collaboration between business and our educational institutions to build the talent pool of scientists, technicians, export marketers and managers so we actually have the resources to achieve these opportunities,” he adds.
Syme thinks New Zealand has the horse power and brain power to create successful enterprises, but we need to “deepen our capital markets” in order to scale them up without losing them offshore. “Once we get good [levels of] saving, investment will flow into many areas of the capital markets, both public and private. Without that we won’t get very far,” he warns.
Ralph Waters thinks New Zealand’s world-leading role in dairy is an opportunity that should be more fully exploited. But it will require continued overseas investment. And he thinks we should be able to secure a larger share of the education of foreign students with good quality institutions and “a safe and understanding culture to ethnic diversity”. A single Australian/New Zealand market would, he says, help grow and retain the best and brightest people in both countries.
McDonald believes New Zealand's “resource-rich economy and relatively low population” represents its greatest opportunity. We are, however, already “squandering” that opportunity and in his view, the policy response to climate change will make it even harder to exploit. The energy intensity involved in all our primary production areas – such as meat, timber or fishing – makes them problematic in the long term.
“Even if the [climate change] policy is benign in the short term, there will be an expectation of harsher policy in future and if you’re investing in payback over 20 years or so then the policy risk in those areas looks too high,” he says.
The consensus is, however, that our natural resources will still deliver our greatest competitive advantage. Primary production will remain a major part of the economy, at least through to 2020. They also agree that there will be a shift away from American, British and European markets toward Asian countries – including India. Australia will, of course, remain a major customer for our goods.

Catching Australia
The Government’s stated goal of catching up with Australian living standards looks like “a big stretch” to our Top 200 winners. It’s not just Australia’s mineral resources that give our trans-Tasman cousins the edge. They don’t have the same level of structural problems, says McDonald.
He, like Waters, believes New Zealand would be (economically) better off if it was more closely aligned to Australia. “But there is still a high degree of political sensitivity around that which, in my view, is a luxury we can’t afford.”
We might not reach parity with Australia by 2020, but a keen focus on the export sector could see us nailing it by 2040, suggests Tindall. Achieving the target will mean all pulling together. “We need a national strategy that everyone buys into,” he adds. “If we could take a bipartisan view on a strategy for NZ Inc, we would have a much better chance of delivering it – and sooner rather than later.”

A changing landscape
In 2020 New Zealand probably won’t look much different than it does today.
Business will continue to transform because that is the nature of the beast, says Waters. “There are few opportunities in New Zealand for capital-intensive, large-scale efficient manufacturing for world markets – so enterprise where geographic disadvantage and financial capital are not inhibitors will, of necessity, get more focus,” he adds.
Demographic change is also inevitable. “If we worry about the effect of global warming in 50 years then we’d better also worry about the much sooner and serious consequences of an aging population and its associated ballooning medical and social security costs. They will all have to be paid for by fewer tax-paying workers,” says Waters. Citizens will, he adds, have to accept a later retirement than they do today.
New Zealand could, in relative terms, deteriorate further rather than catch up with the fast growers, warns Deane. “Proven solutions are available but we lack the will or courage to undertake them.”
Tindall hopes for a political and social shift toward greater unity. New Zealand’s smallness means it can’t afford too much factionalism or too many political flip-flops. “By 2020 we will have decided that the short three-year political cycle is counter productive to delivering a national strategy. A real partnership between private and public sector will have emerged by then. That will be developing well and becoming stronger,” he says optimistically

Leaders for the future
Finally, what traits do our successful Top 200 leaders of the past two decades think New Zealand’s political and business leaders will need to successfully navigate the years to 2020?
Courage and vision, they said almost universally.
Our leaders will need “real courage and to be driven by what must be done rather than what will help them survive the next (MMP) election”, says Waters.
Dr Deane thinks the real challenge for leadership is to: “develop a vision, set some key objectives, design strategies to achieve the goals, decide what to do, allocate the tasks and get on with it. Instead, we look likely to continue wringing our hands, arguing over petty matters and fail to grasp our opportunities.”
We are, he adds, too occupied with short-term political matters and not sufficiently imbued with a wish to achieve longer-term goals.
Kerry McDonald does not think that what New Zealand’s political leadership has delivered over the past decade or so is a successful recipe for the future. “There must be a fundamental shift to investing in what is good for business and the economy; [understanding] what will improve productivity, what will increase savings and what will increase exports.”
Business leaders will need to be more strategic in their thinking around risks and opportunities and more focused on creating high performance. More of the same but lifting the game along the way.
In other words, leadership traits for the future won’t be so different from today.
Both business and political leaders will, it seems, need a clearer vision and be more single minded about achieving it. And, said former Meridian Energy chief executive Keith Turner who was a finalist in the 2006 Top 200 Executive of the Year category; “they will need to be strongly connected to the New Zealand public. There is no single factor that makes a great leader – we need people who can operate on 20 different factors at the same time. We probably need to import more of those Kiwi leaders who are doing well offshore back into New Zealand.”
Stephen Tindall agrees with the need for vision and courage. New Zealand needs some long-term thinking and a unified vision. “It’s about having the determination to follow through,” he says. “To say this is our future and we should stick to it. The beginnings are there with the 100% Pure vision but, if we don’t have a strategy that everyone sticks to, then we could destroy all that overnight. Our leaders need a resolute and brave attitude toward delivering a New Zealand Inc strategy – one that focuses on positive export trading with the rest of the world to increase wealth for both private and public sectors in order to deliver the social and environmental benefits that this fantastic little country deserves.”