Wednesday, 07 October 2020 06:25

How the primary sector can lead NZ’s recovery

Written by  Jane Fraser-Jones, Corporate Finance partner at Deloitte New Zealand
Jane Fraser-Jones says with the primary sector leading NZ’s economic recovery, all political parties would do well to consider what policy settings will best enable it to succeed. Jane Fraser-Jones says with the primary sector leading NZ’s economic recovery, all political parties would do well to consider what policy settings will best enable it to succeed.

OPINION: The COVID-19 lockdown brought a brutal clarity to New Zealand’s economy and laid bare the importance of our primary sector.

News stories throughout the lockdown showed selfless workers isolating together to ensure supermarkets were open, drivers making heroically long round-trips to ensure milk was delivered on time, and a resilient primary sector that kept producing.

With this election marking another milestone in our Covid-19 recovery, the question will now be how businesses across the country can replicate this resilience, and how the primary sector will adapt to and lead the country’s recovery.
We are seeing a shift in sustainable business practices across the board. Survey results suggest customer expectations are a driving force in this change. When asked why sustainability issues were important to their businesses, 65% of respondents voted for customer expectations, closely followed by reputation (60%). Interestingly, only 36% of businesses thought sustainability was an important factor to remain competitive.

The reputation aspect is interesting. Managing reputation risk is a slippery issue. In organisations, it’s often everyone’s and no-one’s responsibility. Building brand and reputation resilience is more than a communications or risk issue. A holistic approach to brand and reputation management can differentiate an organisation and create competitive advantage, enabling leaders to better sense threats, seize opportunities and shape outcomes.

While businesses recognise that consumers demand sustainable business practices, only 21% of respondents said their business operations have actually been impacted by this demand, although over half (53%) of the businesses surveyed noted that while they have not been impacted to date, they expect to be in the future. When asked what impact climate change was having on their business, 42% said that it was having no impact. However, 26% said it was affecting the cost of inputs.

With the importance of the primary sector in no doubt, the question for political parties in this election is how to deliver policy that proactively encourages sustainable business practices in a way that elevates – rather than stifles – the contribution this sector makes to the country.

Another key concern for the primary sector is water reform. Water placed third when businesses were asked to rank infrastructure types with the most potential to contribute to New Zealand’s business growth. Transport was first, followed by telecommunications, with energy (electricity and gas) ranked least important.

More than half of the businesses surveyed thought the Three Waters sector should be subject to greater commercial discipline and user charges. 

Reform in the sector will likely impact or disrupt local authorities’ delivery, and potentially signal the most profound change in local government arrangements in a generation.
With the primary sector leading our Covid-19 recovery, political parties would do well to consider what policy settings will best enable success in the short and long term. 

Balance will be key in forming these policies, with sustainability, commercial discipline and reputation all at play.

• Jane Fraser-Jones is a partner - Corporate Finance at Deloitte New Zealand

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