Why is former NZ Business Roundtable’s Lindsay Fergusson attacking Penny Bright’s anti-‘conflict of interest’ recommendations over the St Heliers ‘art deco debacle’?
23 January 2011
MY ‘HARD’ QUESTIONS THAT APPEAR TO HAVE JAMMED FORMER NZ BUSINESS ROUND TABLE ‘HEAVY WEIGHT’ LINDSAY FERGUSSON’S BUTTONS ON FULL?
www.nbr.co.nz/article/st-heliers-three-get-stay-execution-ck-84129#comment-56207
Penny Bright’s comments should be completely ignored. They are typical of this left wing anarchist, who has no respect for, or understanding of property rights. Giving vent to the claims of “the mob” who want their views to override the rights of a legitimate property owner, at the cost of that property owner, at no cost to “the mob” puts on the road to mob rule.
I want to begin by giving you some background on the New Zealand Business Roundtable, of which I am a member.
In the early 1980s a group of business executives met together on a casual basis to discuss common business issues.
The Business Roundtable has grown from this loose group into an incisive think tank, constantly researching and assessing its own business viewpoints. Like us or not, we are contributing in a major and constructive way to the decision making processes and vision of our society.
Our charter commits us to promoting overall New Zealand interests, including a more prosperous economy and a fair society.
Membership is by invitation to the chief executives of major businesses, and is limited to around 45 persons.
………………………………………..
(Lindsay Fergusson is no longer listed as a member of the NZ Business Round Table, or on their Board – but he was a member, and quite a ‘high-flyer’ in the 1990s).
www.nzbr.org.nz/About+Us/Membership.html
WHAT IS THE NZ BUSINESS ROUNDTABLE?
www.nzbr.org.nz/About+Us/Overview.html
“Overview
What is it?
The New Zealand Business Roundtable is New Zealand’s leading public policy think tank.
Founded in 1985 by a group of New Zealand business leaders, the organisation’s mission is to research and promote policies for achieving a better standard of living and quality of life for all New Zealanders.
Members of the Business Roundtable are chief executives of many of New Zealand’s major firms operating in many business sectors.
They are involved in the organisation because they believe business leaders have a responsibility to speak out on matters that affect the well-being of the wider community.
The organisation is concerned with the broad national interest, as opposed to sectoral interests. Its major concern is with the quality of New Zealand’s public institutions and policies, which have a profound impact on the country’s economic performance and its attractiveness as a place to live, work and do business.
Vision
The Business Roundtable’s vision is of an open, dynamic economy and a prosperous, fair, cohesive society.
It supports the concepts of individual responsibility and choice, competition, entrepreneurship and risk-taking as vital to achieving economic and social progress.
It believes that a healthy, flourishing business sector is fundamental to the achievement of the economic, social and cultural aspirations of New Zealanders.
Approach
The Business Roundtable believes that thorough research, objectivity, a long-term view and dispassionate dialogue and debate are the best tools for developing and promoting sound policies. It is prepared to put forward ideas on matters of national importance which challenge current thinking.
Independence and funding
The organisation prides itself on being independent and politically and sectorally non-partisan in its views and research. It is funded entirely by its members’ subscriptions, donations and book sales. It receives no funding from government.
Key themes
The organisation’s activities cover a broad range of areas dealing with social and economic policy. Its key themes are:
- smaller, better quality government
- labour market flexibility and job creation
- choice and excellence in education
- fostering entrepreneurship
- less regulation of the private sector
- fair opportunities for all “
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LINDSAY FERGUSSON’S PRESENTATION TO THE PUBLIC RELATIONS INSTITUTE OF NEW ZEALAND 28 June 1991: (Full copy)
“Public Relations Institute of New Zealand
What Can Public Relations Offer New Zealand Business?
Lindsay Fergusson AUCKLAND
GROUP MANAGING DIRECTOR 28 JUNE 1991
MAGNUM CORPORATION LIMITED
http://www.nzbr.org.nz/documents/speeches/speeches-90-91/pubrelations.doc.htm
I want to begin by giving you some background on the New Zealand Business Roundtable, of which I am a member.
In the early 1980s a group of business executives met together on a casual basis to discuss common business issues.
The Business Roundtable has grown from this loose group into an incisive think tank, constantly researching and assessing its own business viewpoints. Like us or not, we are contributing in a major and constructive way to the decision making processes and vision of our society.
Our charter commits us to promoting overall New Zealand interests, including a more prosperous economy and a fair society.
Membership is by invitation to the chief executives of major businesses, and is limited to around 45 persons.
Every member of the Business Roundtable shares a vivid picture of the potential of our country, and willingly devotes time and effort to help realise it. Our individual prosperities and the partisan viewpoints of sectoral groups have been set aside for the goals we seek collectively for New Zealand.
Although we have advocated the opening up and restructuring of the economy and the need to make tough political choices, we examine every issue as it arises.
In 1984, when financial crisis loomed as a result of the snap election and the foreign exchange markets were closed, an increasing number of people in business began to sense that a continuation of the same economic agenda of subsidies, protection, budget deficits, inflation and stop-go policies would prove terminal.
We were not content – as we have never been content – with mere conjecture. We have engaged New Zealand analysts and other professionals to help us understand the problems and advise on how they can be fixed. A cardinal rule within the organisation is that we will not commit ourselves to a policy position unless we have first done our homework.
We have now done our homework for several years. We have commissioned over 50 publications – studies into key areas of the New Zealand economy. Many submissions to the government and to parliamentary committees have been made.
We have looked at the Commerce Act, privatisation, labour market reform, telecommunications, social welfare, education and immigration.
Over the next year, we shall be publishing reports on agricultural marketing, health, housing, central banking and local government.
In the course of each investigation, we solicit information and comment from national and international specialists. Although the work frequently comes under attack from interest groups who feel threatened by its conclusions, it is seldom challenged for its quality or integrity.
We defend free speech and free thought as vital to a healthy democracy, particularly in a country that has had to accept the need for radical changes to make its way more successfully in the world. In response to our steady compilation of economic thought, we believe there has been a sea change of public opinion towards the views we have put forward.
More people are reading our research – which is available to you and any other group. They are concluding that it is challenging and probing – not easily dismissed.
There is a real role for professionals like yourselves in understanding and analysing what makes countries prosper, which policies work and which don’t, and why.
More than anyone else, public relations practitioners are in a position to catch new currents of private and public opinion, and to communicate them.
It is your role to identify these trends and communicate them to your clients for measurement, interpretation, and competitive application.
In this way, public relations can act as a key change agent in a world that is not about to stop changing. Politicians and editorialists may yearn for teabreaks, stability and a return to the graveyard calm that was New Zealand. But as we have learned, we succumb to those temptations at our cost, and the rest of the world continues to pass us by.
You have a major role to play in bringing New Zealand into the twenty-first century restructured, competitive and positioned to give our young people the chance of a better future.
But I’m getting a little ahead of myself. Before I talk about how you can do that, I want to briefly examine your current role. I will then suggest to you ways in which you have more to offer New Zealand business, particularly in the context of an open and competitive economy.
There is no doubt that public relations is a little understood profession. To a certain extent you, as practitioners, must be held accountable for that.
While the public policy role of public relations is well established in most overseas countries, it remains relatively under-developed in our own.
What is more, in the eyes of many you continue to sit uncomfortably alongside New Zealand business.
Corporate managers still view public relations with scepticism. Although the public relations professional’s role is to cast doubt on assumptions, business still interprets this as a lack of belief in the product.
Sitting on the other side, the media – and to some extent the public – still see you as serving the interests of your paymasters.
The true role of public relations should be somewhat different.
From the public’s point of view, the public relations professional should be the can opener to the life, thoughts and values of corporate clients.
Commerce is naturally pre-disposed towards self-protection. In bad times, it simply bunkers down.
Lacking an independent viewpoint in tough times, businesses often fail to distinguish between the kind of communication that reaches out for interchange with new audiences – that expands new horizons – and the kind of information that must remain private.
Life in the corporate can is safe and protected – but it is also dark.
The very best public relations turns the light on.
Whether business likes it or not, commercial activity is both public and private. The lifeblood of commerce is public support. No corporate entity can function without the goodwill and understanding of its wider community.
This understanding is partly built around the formal exchange of information – through the annual report, or media relations, or newsletters.
It is also built on every piece of communication taking place, noticed and unnoticed, at every level of the organisation. The very way an organisation conducts its business is in itself a communication.
But there is a further way in which public relations practitioners can play a role in New Zealand business. This role is far wider than any I have mentioned thus far.
Next month, the National government will deliver its first budget.
A government is never in a better position to spell out its vision, and its strategy to achieve it, more clearly than in its first budget. For a moment, the community will stop and turn its full attention to that communication.
It is a chance to wipe the communications slate clean and start again. If the government does its job well, there will be a deeper appreciation of the truth about New Zealand’s parlous economic state. If the facts are put before it, I believe the electorate will accept that the economy is in a mess and that the road ahead is long and tough.
But the government must also provide a realistic basis for hope. This budget – more than any other – gives National an opportunity to paint an exciting picture of the future of New Zealand. They must use it to create a climate where optimism and growth are possible.
While the budget will inevitably try to wean New Zealanders away from our longstanding dependence on the welfare state, it must also create a business climate in which enterprise can be nurtured. The vision must be strategic, long term, bold, articulate and arresting.
Picking up the vision will be people like yourselves.
You too must play a role in helping make New Zealanders believe in a competitive and entrepreneurial future. Business is society’s wealth-creating process. Cast a vote against enterprise and you vote for life in an economic backwater.
Through your work many individual enterprises already enjoy a high reputation. But public relations contributes little at this stage to the overall perception of commerce in New Zealand.
Business is still not regarded as a priority by most New Zealanders – perhaps at best a necessary evil. We do not have a passion for service, for quality, for finding out and satisfying the needs of the world’s most demanding customers.
We are not yet preoccupied with ourselves as aggressive traders in the world’s market places. Instead, we are preoccupied with our isolation. We see ourselves as an inconsequential country at the end of the world.
A recent Massey University study found that we did not connect effort with prosperity. While we wanted high levels of comfort and security we did not believe in the hard work needed to achieve them. As one of the authors put it: “New Zealanders want more than they are prepared to work for.”
The huge challenge for public relations in New Zealand is to take the image of business as boring and mundane and turn it into something creative and dynamic, something that is recognised as being at the very core of a successful society – the way it is in Asia, for instance.
We in business know we have to earn that kind of standing. Business has been tarnished in recent years. Much opprobrium has been heaped on business heros who turned out to be less than heroic. In most cases, however, the true greedies in my view were those who chased high interest investments or a quick turn on their shares. Business is risky, and if you like high risk investments don’t cry if you get burned.
Lessons have been learned from that experience, and they will stand us in good stead. Little by little we are building a new economy and a new class of business manager. We need to encourage and celebrate world class business men and women – and seek greater community recognition for their achievements. The task is not hopeless, despite the anti-business mentality that has prevailed in New Zealand. Polls tell us that the community’s rating of business is not good, but it is better than that of the media, politics and the trade union movement.
There are other ways in which the public relations industry can help lead New Zealand out of the economic fortress.
The recent Porter project – which the Business Roundtable co-sponsored – concluded that we had not clearly identified or established our competitive advantages as a nation.
Fortunately, the report also offered a few helpful suggestions. For example, it repeatedly directed us to look at our own “clean, green, unspoiled” image to help differentiate New Zealand in marketing agricultural products. This calls for creative public relations strategies. You – public relations practitioners – can help build such competitive advantages.
At the end of the Porter report, the authors wrote: “There is nothing inevitable about New Zealand’s economic decline… Unlike many nations, we still have the luxury of a choice.”
The Business Roundtable has been engaged in researching that choice. We have been speaking at functions like this; we have been catalysts for change.
The outlook for New Zealand is swinging on a hinge. A failure of nerve by the National party caucus could undo all the hard work of recent years and set back our prospects for a decade. Tough and determined action could break the mould. I believe international investors would then look at us through new eyes, and the business community would shift to a much more confident and expansionary mode.
I am hopeful that there will be a positive message for your industry to communicate in the near future. If you do the job well you have the capacity to profoundly influence our commercial direction, and a great deal to offer New Zealand business.
I urge you to pick up this positive challenge. ”
__________________________________________________________________________________
MORE ARTICLES WRITTEN BY LINDSAY FERGUSSON – TAKEN FROM THE NZ BUSINESS ROUND TABLE WEBSITE:
WHAT ARE /WERE LINDSAY FERGUSSON’S BUSINESS CONNECTIONS?
www.ivistra.com/content/ivistra_team.inc.php.old – [Cached Version]
Published on: 8/31/2008 Last Visited: 8/31/2008
Lindsay is a business consultant and currently independent Chairman of Ecodiesel Limited and a director of iVistra Technology Limited.
He is a former director and CEO of Auckland Trotting Club and was a founder, Chairman and Chief Executive Officer of Virtual Spectator Inc.
Other former directorships include iiNet, Reserve Bank of New Zealand, Forestry Corporation of New Zealand, Northern Regional Health Authority, Tauranga Civic Holdings, Terabyte Interactive and Auckland Regional Chamber of Commerce & Industry.
He was also Chairman of Business in the Community and Expo 1992 and founding Chairman of America’s Cup Village.Prior to this he was Group Managing Director of Magnum Corporation Limited and Managing Director of New Zealand Steel Limited and held senior positions in Mobil Oil Corporation.
He is a Life Fellow (and Past President) of the New Zealand Institute of Management, a Fellow of the Institute of Directors and has completed the Executive Program in Business Administration of New York’s Columbia University Graduate School of Business.
Lindsay is a graduate in law from Victoria University of Wellington.
- archive.iinet.net.au/about/board/index.html – [Cached Version]
Published on: 9/13/2008 Last Visited: 9/13/2008
Lindsay Fergusson
…
Lindsay Fergusson LL.B., LifeFNZIM, FInstDNon-Executive Director
Lindsay is currently Chief Executive Officer and a director of Auckland Trotting Club.He has had wide international commercial experience at board level over the past 30 years, including 17 years as a CEO.
He was with Mobil Oil Corporation for 26 years and held a number of senior positions in marketing, strategic planning and general management in Mobil’s operations in NZ, Australia, Malaysia, Greece, the UK and the USA.
He was then Managing Director of NZ Steel Ltd and Magnum Corporation Ltd (now called DB Group), both of which were publicly listed companies.
He is a former director of the Reserve Bank of New Zealand, Forestry Corporation of New Zealand Ltd, the Auckland Regional Chamber of Commerce & Industry, and a former Council member of Auckland University of Technology.
Most recently, as a director of Terabyte Interactive Ltd and the founding Chairman and CEO of Virtual Spectator Inc., Lindsay has had practical experience of the challenges of growing internet based consumer services companies.
www.sealegs.com/news/article/virtual-spectator-secures- – [Cached Version]
Published on: 2/10/2000 Last Visited: 3/11/2010
Lindsay Fergusson, Chairman, Virtual Spectator Limited, Tel: +64 9 520 6523
Sealegs News
Sealegs Attending US Based Boat Shows Sealegs Completes Circumnavigation of Malaysia Sealegs Appoints Two New US Based Dealers
www.sealegs.com/news/article/it-capital–partner-take-6 – [Cached Version]
Published on: 1/14/2000 Last Visited: 3/11/2010
AUCKLAND, 14 January 2000 – IT Capital Limited (ITC) and Mr Lindsay Fergusson have together purchased the shareholding held by Virtual Spectator Investments Limited (VSIL) in Virtual Spectator Limited (“Virtual Spectator”). As a result, ITC and Mr Fergusson will between them own 68% of Virtual Spectator. The $1.86 million deal, which is subject to final legal documentation, will see Mr Fergusson, the current Chairman of Virtual Spectator, become the Managing Director of the company as well. $1.5 million of the investment will be used for working capital.
…
Lindsay Fergusson, Chairman, Virtual Spectator Limited, Tel: +64 9 520 6523
Sealegs News
Sealegs Attending US Based Boat Shows Sealegs Completes Circumnavigation of Malaysia Sealegs Appoints Two New US Based Dealers
dulce.picturesitedirect.com/tallow.html – [Cached Version]
Published on: 6/12/2008 Last Visited: 8/9/2008
Ecodiesel chairman Lindsay Fergusson says there is enough tallow – waste animal fat – available in New Zealand to replace 5 per cent of the country&39s diesel …http://www.stuff.co.nz/4557105a13.html
Alexandra Park Online – [Cached Version]
Published on: 9/16/2003 Last Visited: 10/12/2004
Lindsay Fergusson has been appointed as the Acting General Manager of the Auckland Trotting Club (Inc).Lindsay had been appointed to the Board of Directors in April as an independent Director and will aid in the appointment in finding a new General Manager to replace Graham Brown.
…
Lindsay was the founding Chairman of the America’s Cup Village Ltd, Chairman of Expo 1992 and Managing Director of New Zealand Steel.Before joining that company Lindsay was employed by Mobil Oil Corporation for 26 years with several appointments including Planning Director in New Zealand and Australia.
AmericaOne – Syndicates Commit to AC Village – [Cached Version]
Published on: 3/16/1997 Last Visited: 2/7/2006
Chairman Lindsay Fergusson announced the participating syndicates at a public ceremony.He said this is a significant milestone in the New Zealand’ preparations for the America’s Cup competition, which will get underway in October, 1999.
“Our principal objective for the New Zealand Cup Village is to provide the world’s best-ever syndicates and public facilities for the regatta,” Fergusson said.
…
Fergusson credited the “vision and drive” of the Auckland Regional Services Trust, as well as several corporate sponsors, with the development of such outstanding boating and public facilities in the heart of Auckland.
Bayview Y.C. Website – sponsored by The Yachtsman and… – [Cached Version]
Published on: 2/11/2000 Last Visited: 8/12/2000
The multi-million dollar deal also sees Jay Snider, President of the Pennsylvania based Snider Capital and Keith Phillips, Managing Director of IT Capital, becoming Board Members of Virtual Spectator Limited, Chairman Lindsay Fergusson announced yesterday.
Driving Today – [Cached Version]
Published on: 3/21/2002 Last Visited: 4/25/2002
Lindsay Fergusson, chairman and CEO of Virtual Spectator, said, “This revolutionary new product for Internet viewers was developed in tandem with our World Rally television broadcast applications, which enjoyed a spectacular debut at the Rally of France on March 7.The operation of the WRC technology involves both Virtual Spectator and our partner, International Sportsworld Communicators (ISC), holders of the TV and commercial rights to the WRC.”
Rally fans can download and register VS on-line at http://www.wrc.com/vs.There is no cost for registration.Subscriptions are charged per event and are expected to cost about \x249.95.Important information about computer system requirements and additional product features is also available on the site.
Motor Trend News: World Rally Championship Comes to… – [Cached Version]
Published on: 3/18/2002 Last Visited: 3/19/2002
Lindsay Fergusson, Chairman and CEO of Virtual Spectator, says: “This revolutionary new product for Internet viewers was developed in tandem with our World Rally television broadcast applications which enjoyed a spectacular debut at the Rally of France on March 7.The operation of the WRC technology involves both Virtual Spectator and our partner, International Sportsworld Communicators (ISC), holders of the TV and commercial rights to the WRC.”
Rally fans can download and register VS online from Monday, March 18.There is no cost for registration.Subscriptions are charged per event, and are expected to cost about $9.95.
0 of 29 online sources for Lindsay Fergusson
www.ivistra.com/content/ivistra_team.inc.php.old – [Cached Version]
Published on: 8/31/2008 Last Visited: 8/31/2008
Lindsay is a business consultant and currently independent Chairman of Ecodiesel Limited and a director of iVistra Technology Limited.
He is a former director and CEO of Auckland Trotting Club and was a founder, Chairman and Chief Executive Officer of Virtual Spectator Inc.
Other former directorships include iiNet, Reserve Bank of New Zealand, Forestry Corporation of New Zealand, Northern Regional Health Authority, Tauranga Civic Holdings, Terabyte Interactive and Auckland Regional Chamber of Commerce & Industry.
He was also Chairman of Business in the Community and Expo 1992 and founding Chairman of America’s Cup Village.Prior to this he was Group Managing Director of Magnum Corporation Limited and Managing Director of New Zealand Steel Limited and held senior positions in Mobil Oil Corporation.He is a Life Fellow (and Past President) of the New Zealand Institute of Management, a Fellow of the Institute of Directors and has completed the Executive Program in Business Administration of New York’s Columbia University Graduate School of Business.Lindsay is a graduate in law from Victoria University of Wellington.
www.sealegs.com/news/article/virtual-spectator-secures- – [Cached Version]
Published on: 2/10/2000 Last Visited: 3/11/2010
Lindsay Fergusson, Chairman, Virtual Spectator Limited, Tel: +64 9 520 6523
Sealegs News
Sealegs Attending US Based Boat Shows Sealegs Completes Circumnavigation of Malaysia Sealegs Appoints Two New US Based Dealers
www.sealegs.com/news/article/it-capital–partner-take-6 – [Cached Version]
Published on: 1/14/2000 Last Visited: 3/11/2010
AUCKLAND, 14 January 2000 – IT Capital Limited (ITC) and Mr Lindsay Fergusson have together purchased the shareholding held by Virtual Spectator Investments Limited (VSIL) in Virtual Spectator Limited (“Virtual Spectator”). As a result, ITC and Mr Fergusson will between them own 68% of Virtual Spectator. The $1.86 million deal, which is subject to final legal documentation, will see Mr Fergusson, the current Chairman of Virtual Spectator, become the Managing Director of the company as well. $1.5 million of the investment will be used for working capital.
…
Lindsay Fergusson, Chairman, Virtual Spectator Limited, Tel: +64 9 520 6523
Sealegs News
Sealegs Attending US Based Boat Shows Sealegs Completes Circumnavigation of Malaysia Sealegs Appoints Two New US Based Dealers
dulce.picturesitedirect.com/tallow.html – [Cached Version]
Published on: 6/12/2008 Last Visited: 8/9/2008
Ecodiesel chairman Lindsay Fergusson says there is enough tallow – waste animal fat – available in New Zealand to replace 5 per cent of the country&39s diesel …http://www.stuff.co.nz/4557105a13.html
Alexandra Park Online – [Cached Version]
Published on: 9/16/2003 Last Visited: 10/12/2004
Lindsay Fergusson has been appointed as the Acting General Manager of the Auckland Trotting Club (Inc).Lindsay had been appointed to the Board of Directors in April as an independent Director and will aid in the appointment in finding a new General Manager to replace Graham Brown.
…
Lindsay was the founding Chairman of the America’s Cup Village Ltd, Chairman of Expo 1992 and Managing Director of New Zealand Steel.Before joining that company Lindsay was employed by Mobil Oil Corporation for 26 years with several appointments including Planning Director in New Zealand and Australia.
AmericaOne – Syndicates Commit to AC Village – [Cached Version]
Published on: 3/16/1997 Last Visited: 2/7/2006
Chairman Lindsay Fergusson announced the participating syndicates at a public ceremony.He said this is a significant milestone in the New Zealand’ preparations for the America’s Cup competition, which will get underway in October, 1999.
“Our principal objective for the New Zealand Cup Village is to provide the world’s best-ever syndicates and public facilities for the regatta,” Fergusson said.
…
Fergusson credited the “vision and drive” of the Auckland Regional Services Trust, as well as several corporate sponsors, with the development of such outstanding boating and public facilities in the heart of Auckland.
Bayview Y.C. Website – sponsored by The Yachtsman and… – [Cached Version]
Published on: 2/11/2000 Last Visited: 8/12/2000
The multi-million dollar deal also sees Jay Snider, President of the Pennsylvania based Snider Capital and Keith Phillips, Managing Director of IT Capital, becoming Board Members of Virtual Spectator Limited, Chairman Lindsay Fergusson announced yesterday.
Driving Today – [Cached Version]
Published on: 3/21/2002 Last Visited: 4/25/2002
Lindsay Fergusson, chairman and CEO of Virtual Spectator, said, “This revolutionary new product for Internet viewers was developed in tandem with our World Rally television broadcast applications, which enjoyed a spectacular debut at the Rally of France on March 7.The operation of the WRC technology involves both Virtual Spectator and our partner, International Sportsworld Communicators (ISC), holders of the TV and commercial rights to the WRC.”
Rally fans can download and register VS on-line at http://www.wrc.com/vs.There is no cost for registration.Subscriptions are charged per event and are expected to cost about \x249.95.Important information about computer system requirements and additional product features is also available on the site.
Motor Trend News: World Rally Championship Comes to… – [Cached Version]
Published on: 3/18/2002 Last Visited: 3/19/2002
Lindsay Fergusson, Chairman and CEO of Virtual Spectator, says: “This revolutionary new product for Internet viewers was developed in tandem with our World Rally television broadcast applications which enjoyed a spectacular debut at the Rally of France on March 7.The operation of the WRC technology involves both Virtual Spectator and our partner, International Sportsworld Communicators (ISC), holders of the TV and commercial rights to the WRC.”
Rally fans can download and register VS online from Monday, March 18.There is no cost for registration.Subscriptions are charged per event, and are expected to cost about $9.95.
http://www.nzbr.org.nz/documents/speeches/speeches-90-91/feracctinpvtesect.doc.htm
Institute for International Research
Efficiency and Accountability in the Private Sector
WHAT CAN WE LEARN?
Lindsay Fergusson WELLINGTON
GROUP MANAGING DIRECTOR 17APRIL 1991
MAGNUM CORPORATION
EFFICIENCY AND ACCOUNTABILITY IN THE PRIVATE SECTOR
WHAT CAN WE LEARN?
Introduction
Over the years, larger and larger shares of New Zealand’s resources have come to be absorbed or directed by the state. Few people seem to associate this with any corresponding increase in social well-being or in the sense of satisfaction of the average citizen.
Government expenditure was 28.4 percent of GDP in 1974-75. By 1989-90, that figure had risen to over 40 percent. This sharp upward trend was unplanned. Throughout that period, most governments would have claimed that they were trying to hold each year’s expenditure at roughly the same levels in relation to GDP. In other words, the single most important structural change in the economy in the past 15 years was largely unintended. The ever-rising tax burden, especially in the last five years, has undermined the growth potential of the market sector and sapped business confidence.
Transfer payments accounted for a large part of the spending growth, as did assistance to industry in the early part of the period. In recent years spending has mushroomed in areas such as education, health and government administration. The overall trend reveals the power of interest groups in obtaining political support for spending programmes which often benefit them rather than the wider community. It also exposes the weak disciplines on government employees to manage and control resources efficiently.
Incentives for Efficiency in the Private Sector
In the private sector, success and survival is firmly anchored to the disciplines of making a profit by meeting consumers’ needs. The disciplines apply to sole traders, partnerships, and private and public companies alike.
Those forms of organisation have evolved over a prolonged period of time through competition with other forms of organisation. The listed company, for example, is a successful method of organising many kinds of economic activity because it allows for management by specialists and risk-sharing by a diverse group of shareholders who take no part in the detail of the organisation’s business affairs.
The separation of company control from ownership makes it imperative to align the interests of managers with the interests of the shareholders. This is best achieved by allowing unrestricted transferability of ownership.
At a higher level, the interest of private firms is aligned with the interests of society as a whole by requiring them to operate without protection or privileges in a competitive environment. Within that framework, their objectives will not be achieved unless they put the customer first and, in doing so, organise themselves to use resources efficiently.
When those are the ground rules, private firms may make bad investment decisions or perform poorly, but the market checks on sustained poor performance are the strongest available. Since sustained poor performance is precisely the problem that public sector organisations are most prone to, it is important to understand how, on average and over the long haul, the private sector achieves superior results.
In all cases the answer comes down to effective incentives and disciplines. For example, the ability to transfer ownership in a company by means of the sharemarket has a powerful influence on the attitudes and behaviour of management. Poor quality management and inefficient resource use opens an opportunity for new owners to take over the company, replace the management, achieve more efficient resource use, and realise a gain on their investment. This motivates continuous monitoring for cases of poor performance. Even if a poorly performing company is not taken over, investors may dump their shares and the end result may be much the same. Debt holders also take a close interest in the performance of businesses to which they lend.
The market for corporate control and the market for managers are two of the most important markets in the economy. For both directors and management, reputation and future prospects are linked with the performance of the company and directly affected by the information generated by the sharemarket. There is little point in trying to withhold information from the market. Investment analysts nowadays are professional and vigilant. They mark up companies that openly disclose the bad news as well as the good and mark down those that appear to have something to hide.
None of these mechanisms is perfect, and poor performance can sometimes go hidden or uncorrected for a long time. But it cannot go on forever. The ultimate check on poor performance in the private sector is bankruptcy. This check is virtually non-existent in the public sector. No New Zealand government in recent history has let a public sector organisation fail. In the past 12 months, two more have been bailed out.
It is this set of mechanisms – competitive markets, the discipline of profits and losses, and the incentives for monitoring – that underwrite the efficiency of the private sector and the accountability of its decision makers. This point is poorly understood. It is often assumed that the public sector would work better if only it were run by more capable managers. But the private sector is not efficient because by chance it has been endowed with superior managers. It has better managers because competitive markets provide the filter mechanisms required to make sure that only managers making the correct decisions survive and prosper. Appointing top flight managers to run factories in the Soviet Union or hospitals in New Zealand would have a minimal pay-off in the longer run unless the systems in which they have to operate are changed.
The relative efficiency of the private sector in relation to the public sector does not mean that there are no cases of poor performance in the private sector nor cases of good performance in the public sector. Of course mistakes are made in the private sector; indeed successful entrepreneurship involves taking risks, accepting a number of mistakes and learning from them. The difference is that the discipline of having to make a profit ensures that bad decisions are not enshrined in open-ended, ongoing investments. Successful managers have to make more good decisions than bad ones. In the public sector, by contrast, bad decisions may not be transparent, politicians have incentives to conceal them, and good money is often thrown after bad when things turn sour.
Nor can private sector efficiency be guaranteed when markets are not open to entry and firms are not subject to competition or the threat of it. There is no reason to expect that in a sheltered environment private firms will behave much differently from public sector organisations. We have seen much evidence of that in protected industries in New Zealand in the past.
The changes in Eastern Europe and the Soviet Union have now convinced most people that, at the level of whole economies, political and bureaucratic systems work less well than competitive market systems, if indeed they work at all. But this lesson has not yet been fully absorbed in relation to major parts of OECD-type economies. For example, Americans are puzzled and frustrated that their superior performance in industry relative to the Soviet Union is not matched by the superior performance of their schools. Commentators have pointed out that this should be no real surprise: in both countries schools are largely run by the public sector. Although the notion is still fiercely resisted, it is unlikely that education performance will increase markedly until competition, pressures from owners and consumers, and private initiative are introduced into the education system.
The State-Owned Enterprise Reforms
The reforms adopted for state-owned business enterprises in recent years have deliberately aimed to replicate as far as possible a set of private sector incentives and sanctions to improve business performance. Enormous advances have been achieved in SOE efficiency. The Electricity Corporation has reduced the average wholesale price of electricity by 16 per cent in real terms over the past four years while total real unit costs are down by 29 percent. At the same time profits have gone up from $140 million to around $400 million and returns are now approaching commercial norms. Current Airways charges for a Boeing 737 from Auckland to Wellington are only a little over a third of their 1987 level. The combined costs of Telecom toll calls and local services for a range of businesses have gone down between 32 percent and 48 percent in real terms in the past 4 years, and people no longer spend months waiting for new telephones. New Zealand Post has held postage rates for ordinary mail constant for over three years.
The evidence of waste and mismanagement has conclusively disposed of the arguments of those in the State Services Commission and Public Service Association who saw no need for the reforms. It was pleasing to hear the new minister for state-owned enterprises, Mr Kidd, say recently:
“We are by no means at the end of the corporatisation process. There are more government departments, and even more activities within departments, which could be turned into State-Owned Enterprises. The Housing Corporation has already been flagged by this government as a potential SOE. The answer isn’t for government to build or buy more, but to make sure that people who need housing assistance get it.”
Even in the business areas of government activity, however, corporatisation is not enough. The limitations of the SOE model were succinctly summarised in a Treasury paper written as long ago as September 1987. Corporatisation, the paper said, had undoubted advantages over previous organisation forms for government trading activity. But it went on to point out that:
“In the absence of contestable ownership and control, however, the incentives for SOE directors’ interests to coincide with those of a wealth maximising owner are blunted… There are difficulties in monitoring the performance of SOE boards and in applying sanctions…
“For SOE directors to be held responsible for performance, they must have the freedom to make commercial decisions. But there is also evidence from history that the more independence they are given, the more likely it will be that over time they will substitute non-commercial objectives because of the lack of commercial incentives that would normally occur with contestable control…
“The fundamental conflict between avoiding political interference in SOEs and ensuring that SOEs are operated in the commercial interests of shareholding Ministers remains.”
In other words, privatisation is a fundamentally better option than corporatisation for the economy and society in the longer run. Mr Kidd acknowledged that in his 8 February speech, when he said that he intended to recommend a resumption of asset sales, subject to the state of the market and the condition of the business – and after all regulatory, monopoly, social and Treaty of Waitangi issues have been properly resolved. The lengthy list of reservations may be sound in principle, but it can also prove very costly if it is applied with excessive caution. Recent experience with the Bank of New Zealand and the Government Property Services Corporation has demonstrated that the sooner exposure to business risks is reduced the better.
The prime motives for sale, as stated by the new National government, will be efficiency and risk avoidance. No business venture is risk free – not even the biggest trading bank in the country. Moreover, without privatisation, the growth of many state-owned businesses would remain hostage to other priorities for government funds. Their development might well be stunted for lack of capital. This could hinder the growth of the economy as a whole.
Structural Solutions to Public Sector Management Problems
There is ultimately no satisfactory solution to the problem of monitoring public sector performance. That is why it is important to shrink the public sector as far as possible while seeking to achieve further improvements in accountability.
The principles underlying corporatisation and privatisation must be extended as widely as possible through the public sector. Allowing unreformed departments to levy user-pays charges on a full cost-recovery basis without any real competitive pressure on them is a licence for waste. Many commercial and net-funded activities undertaken by departments should be set up as state-owned companies. Wherever possible, privatisation should follow to complete the process.
Where privatisation is not feasible – perhaps because of the requirements of foreign governments as may be the case with MAF meat inspection services – the organisation could be split into two or more competing units or the function could be contracted out. Greater contestability is feasible and desirable in departments as diverse as Social Welfare, Labour and Justice, as well as universities and hospitals.
Funding should be split wherever possible from decisions about who produces goods and services. This separation is what frees the government to buy on a basis of best value for money, instead of buying as a matter of principle only from some other government organisation. The proposal of the minister of broadcasting to put the publicly-funded programmes of Radio New Zealand out to tender is a sound application of this approach.
Comparable problems continue to occur where a single organisation is responsible for both policy advice and major departmental operations. Housing Corporation advice on housing has consistently favoured spending more money through the Housing Corporation. MAF has advised Federated Farmers on how to make a case for disaster relief; it has then advised the government on the proposals made by Federated Farmers; and finally it has received a percentage of the funding granted for the administration of the subsequent relief programme! While I agree with those who say that the principle of splitting functions should not be pushed beyond reasonable limits, it has a lot going for it.
It is not enough to exhort civil servants to be objective, and to put the public interest first. Nobody can be objective under those conditions. That is why client capture has been such a frequent occurrence in the past. The Ministry of Transport typically argued Air New Zealand’s case to the government; it did not put the interests of consumers in lower fares first. Trade and Industry aligned itself with the Manufacturers Federation in promoting protection and subsidies for industry. The Department of Social Welfare came to think of beneficiaries as clients to whom it should deliver the highest possible level of benefits. Fairness to clients dominated considerations of fairness to the taxpaying public. The only satisfactory answer to such problems is structural change.
The Core State Sector
The State Services Act and the Public Finance Act laid a foundation for a much more efficient public service. Departmental chief executives are now on contract. An annual contract between the CEO and the minister spells out the government’s goals and priorities for the year, and agrees the resources which will be provided in order to achieve them. The CEO’s performance is to be judged in terms of departmental outputs against that contract.
CEOs can be appointed from anywhere. They have power to hire and fire, choosing staff from inside or outside sources. For the fixing of pay and conditions, each department is regarded as an enterprise. Negotiations can be based on departmental circumstances rather than on nationwide occupational classes. CEOs are no longer bound to give preference to other departments in buying their inputs.
Those are large changes of fundamental importance. Yet in the core public service departments, as both the prime minister and the minister of state services have publicly stated, surprisingly little has changed. Their comments indicate that the papers coming forward to the government are still, in many cases, woefully inadequate and that Crown assets continue to be poorly managed. In many areas, expenditure creep remains the norm. The fact of the matter is that, by the best private sector standards, management in the core state sector remains seriously deficient.
Currently there is a danger of drawing the wrong conclusions from this experience and going back to a system of centralised controls. There have already been indications of such thinking in respect of wages, accommodation and computing. This would fly in the face of ongoing trends in private sector management practice towards decentralised decision making with accountability being exercised through budgets and results. Past problems of control agencies and ministers running departments and confused accountability for performance are too easily forgotten. In my view the new structures provide a much better basis for achieving government objectives, but they must be made to work. The focus should now be on matching greater managerial freedom with greater accountability for performance and on remedial action where performance falls short.
People in the private sector find it difficult to understand, for example, why those responsible for the botched implementation of the Picot reforms were not brought to account, or why there have been no apparent sanctions on those responsible for this year’s blow-out in the education budget. What is the accountability of managers in the Department of Justice for the mess that has been made of commercial law reform in recent years, or in the Department of Labour for their steadfast opposition to necessary labour market reform? Who in the Ministry for the Environment was responsible for the incompetent handling of the resource management review which has had to be revisited by the present government, or in the Law Commission for the low quality exercise on accident compensation which is also having to be reworked? Ministers may have had some responsibility in some of these cases, but they appear to raise large questions about public sector management performance.
Three years down the track from the State Sector Act, a number of potential improvements have yet to be realised. The evidence is clear that many ministers have a limited understanding of their role in the new system, and how to play that role effectively. Of the first 23 CEOs appointed as heads of departments under the new contract system, only 4 came from outside the public service. Although management talent is in short supply in the country at large, the State Services Commission has not yet been successful in significantly widening the pool it draws on.
The new system, however, needs a new mix of skills to make it work properly. Some top jobs in the public sector have large responsibilities compared with many in the private sector. There is no point in quibbling over remuneration for such positions. Management skill is an internationally traded commodity. The cost to the country of paying cut rates for inadequate talent is far higher than meeting the market. Individuals can make a difference, as experience in Telecom and the Electricity Corporation has shown.
The State Services Commission is responsible, subject to government policy directions, for setting the framework within which performance agreements are made and ministerial assessment occurs. It plays a key role in finding the right people, advising on appointments, helping ministers to monitor performance, and advising on what to do in cases of inadequate performance. A power of dismissal exists now. Despite some visibly inadequate performances, it has not been used. While that continues to remain the case, many will doubt the seriousness of the SSC and the government in seeking to use all the tools at their disposal to achieve maximum departmental efficiency.
It is, of course, impossible to know precisely why top departmental positions continue to fail to attract top applicants from the private sector. The intrusion into individual privacy of forced disclosure of salaries is one negative factor. Very probably, private sector CEOs continue to lack confidence that politicians would be content to set clear objectives and let the department get on with the business of achieving them efficiently. It is also important to ensure that CEO positions are properly specified. DSIR, for example, recently managed to bias the choice of CEO for that department by placing virtually an exclusive emphasis in the job specification on the need for scientific standing and ability to relate to the scientific community. There is no excuse for allowing such manoeuvring to go unchallenged and become the basis on which an appointment is finally made.
The SOE programme was successful precisely because exceptionally capable chairmen and directors were appointed to run the various businesses largely free from ministerial interference. There are signs that this is changing, and that the life of the SOE model may have run its course. There has already been one directive under the SOE Act to prevent a corporation from taking decisions it regarded as commercially sound, and there are reports of a much higher level of interest in the day-to-day running of SOEs. The inevitability of a re-emergence of political control constitutes one of the strongest arguments for privatisation.
In the case of core government departments, ministers in the past have tried to become the chief executive themselves or allowed themselves to be captured by departments which had already been captured by their clients. In one or two cases, distrusting the department, they tried to run policy out of their own offices by way of decree.
The fact is that this new system cannot work properly unless ministers understand that their role is that of the board of directors, not the chief executive. Who helps ministers to come to terms with these problems? So far, we do not have any answer which is good enough. Ministers need to recognise collectively the requirement for skills and training in running a large organisation, setting its objectives, and determining which priorities ought to have precedence over others.
A variety of options exist which might fill the gap. It is clearly possible to appoint an advisor or two with real professional clout to the offices of ministers to provide assistance of this kind. Another option may be to appoint appropriate outside people as boards of directors for core public sector agencies – either like the SOE Steering Committee on an advisory basis or as a more direct counterpart to the boards of directors of SOEs. In the case of onerous tasks such as Social Welfare or Health, particularly where major organisational change is involved, there may be a case for appointing an establishment board or commission to supervise an effective reconstruction and find or support a chief executive with skills that fit the new requirements of the job. A third option could be modelled on the advisory board used by the Debt Management Office of the Treasury, which uses experienced outsiders as a sounding board to help monitor market conditions and plan debt management strategy.
Whatever the options adopted, they should of course preserve and reinforce the improved accountability which the new system has established for CEOs.
Health and Education
Health and Education are among the largest businesses in the country. In most respects, the job of improving the way they run has not yet seriously begun. The previous government’s attempted decentralisation of education was, in the event, compromised profoundly by education bureaucrats at every level. This was one of the more notable cases in recent years of sound proposals being captured by the providers, and turned to their advantage.
The education reform process needs to go back to the original Picot concept and involve a real decentralisation of control to local school boards. Indeed it needs to go further, as a flaw in the Picot thinking was the belief that satisfying consumer interests in education meant that parents had to become involved in running schools. This is analogous to the proposition that to improve the quality of beer, consumers need to get involved in running a brewery. Parental involvement in schools has merits, especially where educational choices are limited, but a far more potent force for raising educational standards is competition. Means need to be found to fund students, whether on a per pupil basis or by direct vouchers, instead of funding the providers. Without this, there can be no satisfactory parent/pupil discipline on the quality of education. Public and private schools should compete in the education market. Like their private sector school counterparts, the boards of public schools should be able to set the pay and conditions of teachers, and hire and fire, in line with the terms of the new Employment Contracts Bill. Until we have a system of this kind, educationalists will continue to defend the inadequacies of a system which has turned far too many children out into the world without the skills they need to cope in today’s job market.
The new government appears to be heading in the right direction in the case of schools, and in tertiary education. Corporatisation of tertiary institutions will be a dramatic improvement on the present situation. It will be necessary to appoint boards with the right skills to assess performance, not just in commercial and asset management, but also academic excellence, teaching and research in order to achieve international standards. An element of private tertiary provision should be welcomed, not feared. Competition is important to force the pace in providing higher quality education.
As with the SOEs, fresh appointments should be made to chief executive positions. Present CEOs should obviously be able to apply, but they should have to compete to hold their positions. New terms of appointment are required, not just for them but for all tertiary education staff. The international market for academic skills should determine terms and conditions. In some areas that may cost more than at present. In others, it will undoubtedly cost less. There is no shortage of skilled people in some disciplines, and where this is the case terms of employment should reflect it.
In the health area, the Hospitals Task Force headed by Alan Gibbs set out some initial steps that should have been taken three years ago. The crucial first step is to separate funding from provision. Both public and private providers should be placed on an equal footing to compete. What matters is not whether provision comes from a public or privately owned facility, but whether it offers the public the best value for money.
The Wellington Area Health Board’s Wellbank proposal moves in the right direction. Unfortunately, our present system provides no incentives to area health boards other than a politicised process where outcomes are largely determined by interest group pressures. Health care will continue to be grossly wasteful and grossly unfair to disadvantaged people as long as that system persists.
The following steps should focus on how to fund health care. Traditionally we have funded health care out of taxation revenue. People have paid on the same basis, regardless of how well or how badly they chose to look after their own personal health and the health of their families. Nothing in the system of funding health insurance gave them any particular incentive to adopt a healthy lifestyle or placed any penalty on those who failed to do so, thereby imposing higher costs on others.
The evidence of the Hospitals Task Force was that the present system has been wasteful in the extreme. Large numbers of people, most often the disadvantaged, have been deprived of timely health care as a result. We need an improved set of incentives and sanctions at every level: for the funders, the providers, and the people whose health the system is supposed to look after. The present approach to state funding has been disintegrating under the weight of its own inefficiencies for many years. A better structured mix of public and private funding has become a necessity for the future.
Conclusion
I began by referring to the growth in the public sector share in the economy in the last two decades. One way of measuring it is by looking at what has happened to Tax Freedom Day. This is the day on which New Zealanders effectively start working for themselves. Until that point in the year, all of their earnings go to the government in tax.
Government expenditure is the best measure of the true tax burden. When the government share in the economy was around 30 percent, Tax Freedom Day fell around now. Today it takes about 150 days or another 5 weeks of the year – close to the end of May – before New Zealanders earn income for themselves.
I applaud the aim of the minister of finance to bring Tax Freedom Day back to around mid-April. Reducing the tax burden in this way would give a real impetus to the economy. To achieve this aim will require the utmost discipline on the part of governments. In respect of transfer payments, many more hard decisions on rates and eligibility criteria for state assistance will need to be made. In respect of government provision of goods and services, a rigorous application of the principles I have been discussing is called for.
To summarise, I have argued:
* First, that while it is not immune from making poor decisions, the private sector – provided it operates in a competitive environment – is subject to strong checks on poor decision making which encourage efficient performance;
* Second, that these checks are almost impossible to replicate in the public sector. Hence the most important requirement is a structural one: to shrink the public sector as far as possible, so that ministers and other elected representatives can concentrate their energies on those functions that cannot be handled satisfactorily in the market sector;
* Third, that this implies a need for privatisation of all government activities that can be run as businesses;
* Fourth, that where the government is properly engaged in funding services such as health and education, it does not automatically follow that it should be the provider. It should explore the scope for funding the recipients of such services where appropriate, allowing competition between the public and private sectors and scaling back its role as a provider over time;
* Finally, that there is a real problem of monitoring, rewarding and disciplining management performance in the core state sector which has not been overcome. The temptation to revert to centralised controls should be firmly resisted but ways of strengthening current standards of accountability need to be found. Control agencies and ministers should be much more rigorous in correcting problems, including dismissal of non-performing managers.
I might add that much the same analysis applies to the local government sector.
If we take these principles to heart, I believe that there is a real possibility that if this conference is held on the same date in the year 2000, we could be celebrating the occasion of Tax Freedom Day.
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The Watchdog 
Regarding the St Heliers ‘art deco debacle:
What were the ‘interests’ of those Auckland City Council elected representatives,staff, consultants and contractors involved in the District Planning and resource consent process?
Any ‘conflicts of interest’ with property developers?
How would anybody know?
Who was checking?
What processes were in place to ensure ‘transparency’ and accountability?
What processes are in place now to ensure ‘transparency’ and accountability?
Where are ‘Registers of Interest’ now for all those involved in Auckland Council property and development?
(Including the unelected appointees to the Auckland Council Property CCO?)
To what extent is this St Heliers ‘case study’ representative of a generic problem?
How come in Auckland there appears to be so much ‘democracy for developers’?
Good on you Barry Coleman!
Penny Bright
Media Spokesperson
Water Pressure Group
Judicially recognised Public Watchdog on Metrowater, water and Auckland regional governance matters.
“Anti-corruption campaigner”
Auckland Mayoral candidate 2010.
Independent candidate Botany by-election 2011.
https://waterpressure.wordpress.com
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