Influentials: Business movers

By Pattrick Smellie In The Influentials

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Late on a steamy Beijing afternoon a few weeks back, an “old China hand” and sixth-generation New Zealander took me through to his back office. He wanted me to meet the team helping foreign companies get a toehold in the eye-wateringly complex but enormous Chinese economy.

This team is helping Les Mills chief executive Phillip Mills bring something healthy to China from New Zealand that’s more than food or drink. His mission: to create “a fitter planet”. So why not get cracking on its most populous nation?

Mills is one kind of influential businessperson in a list that is, inevitably, incomplete and subjective. Many could make the cut. Those selected are here either because their actions can profoundly affect the whole economy or because they are using their reputations and money as businesspeople to influence the nation.

GRAEME WHEELER – RESERVE BANK GOVERNOR

Graeme Wheeler. Photo/Mark Mitchell/NZH

A former managing director at the World Bank in Washington DC, Wheeler is regarded by some senior bankers, let alone Opposition politicians, as a central banker too obsessed by his experience of the banking crises in the US and Ireland that followed the global financial crisis.

His recent comments have stressed how much personal anguish was felt by homeowners left owing more to the bank than their houses were worth, but his detractors say Ireland and the US are inappropriate guides for New Zealand’s more stable and recovering economy.

They fear his statutory independence is allowing him to conduct experiments other central banks have rejected, particularly in restricting low-deposit lending to the housing market. However, both the Bank of England and Reserve Bank of Australia have begun making noises about trying to curb rampant house-price growth using similar methods.

Plenty of others want a piece of him. He is unpopular with manufacturers suffering from a high dollar and with politicians who argue inflation shouldn’t be the only target of monetary policy, let alone with first-home buyers who now need a larger deposit to get a mortgage.

The Green Party only recently stopped exhorting Wheeler to print money to reflate the economy, which now looks in danger of overheating in the next year without a cent being specially minted.

Wheeler’s critics may soon include real estate agents and Aucklanders expecting to sell their houses well in coming months. The new loan-to-valuation ratio lending restrictions apply from October 1, with ANZ Bank predicting they will “kill the spring selling season”. But that’s the idea. Wheeler’s putting a spanner in the spokes of the mad Auckland housing market and hoping like hell that affordable new housing will emerge quickly from policy initiatives in other areas.

A lot of ducks are in a row: a pro-development bias encouraged in resource management law, special housing area accords, the Tamaki Transformation Project in Auckland and the Christchurch rebuild. Collectively, they should start delivering a flood of affordable homes. If not, Wheeler has only one other lever: interest rates. He will already be facing a whole new balancing act next year, when pressure will be on to raise the official cash rate from 2.5% for the first time in three years, as faster economic growth unleashes inflationary pressures not seen for some years. If the loan-to-valuation ratio experiment fails, interest rates will rise even further and faster.

JACKI JOHNSON – IAG NZ CHIEF EXECUTIVE

Jacki Johnson. Photo/David White/NZH

Insurance companies are in the gun for slow, tight-fisted and argumentative handling of too many claims stemming from the Christchurch earthquakes. And few insurance companies can be more in the gun than Australian-controlled IAG New Zealand, owner of the State Insurance, NZI and AMI brands.

Meanwhile, across the country, homeowners’ insurance premiums are increasing for replacement cover, following the discovery by international reinsurers that the whole of New Zealand is a lot riskier than previous premiums allowed for.

All this put IAG’s chief executive in New Zealand, Jacki Johnson, in the hot seat.

Love or loathe her insurance companies’ performance, their actions are profoundly affecting post-quake New Zealand, and she’s been impressive behind the scenes in the massive co-ordination job the quakes have required between the Government, the industry and homeowners.

For a start, she’s been more than willing to front up in public in Christchurch. That mightn’t get things fixed immediately, but it’s noted and respected. On top of that, she’s impressed the Beehive with a combination of initiative and decisiveness.

“She’s an Aussie CEO who seems to be able or willing to make some decisions,” says Finance Minister Bill English. “You don’t feel like you’re dealing with the branch manager. What marks her out is she seems to have a bit more commitment than someone who’s on their way to their next job in Australia.” In fact, Johnson’s appointment to the New Zealand role came after years of rising through the ranks at IAG and dealing with some of Australia’s bigger disasters. Moving her to Auckland was supposed to be a finishing school where she’d hone formal management skills for running a big organisation.

It wasn’t to be. She started work here months earlier than planned after the Canterbury quakes struck, taking the initiative in the “hard discussions” that English says the insurance industry couldn’t avoid in the aftermath.

And of course, IAG came to the rescue, picking up the viable bits of AMI when it threatened to collapse under the weight of earthquake claims.

KERRY PRENDERGAST – ENVIRONMENTAL PROTECTION AUTHORITY CHAIRWOMAN

Kerry Prendergast. Photo/Ross Setford/NZPA

The former Wellington Mayor and dyed-in-the-wool Tory finds herself leading the Environmental Protection Authority – the only thing standing between you and a resource consent for deep-sea oil drilling. The EPA’s remit runs much wider than regulating activity in the exclusive economic zone, but that’s where much of the action will be for the relatively young agency.

The organisation can expect to receive applications in coming months for deep-sea oil exploration and mining the seabed for phosphate nodules on the Chatham Rise in an area fenced off from fisheries bottom-trawling, and probably also for mining iron sands from the seabed off the west coast of the North Island. All will be controversial and hard-fought on environmental concerns. All have massive potential value to New Zealand.

Restrictions on protests at sea near oil-industry infrastructure and the decision not to require public notification of resource consent applications for offshore drilling have boosted the mood for action among environmental groups.

The EPA’s job, perhaps an impossible one, will be to demonstrate a credible avenue for public submissions on such proposals, although its ability to do so for exploration wells is likely to be very limited. Prendergast’s EPA board is peppered with a range of relevant expertise and environmental sensitivities, including former Ngai Tahu senior executive and Meridian Energy board member Anake Goodall, whose colours are firmly nailed to the clean-technology mast.

“The future of sustainable mining in the exclusive economic zone and on land rests largely in the possibilities offered by innovative new technologies and not in the mistakes of the past,” Prendergast says.

The EPA will be working under a “highly consultative regulatory regime” to consider the environmental effects of mining the seabed while taking into account economic and social benefits.

Good luck with that. It presumably can’t be any worse than her old job of herding cats at the dysfunctional Wellington City Council.

MIKE POHIO – TAINUI INVESTMENT GROUP HOLDINGS CHIEF EXECUTIVE

Mike Pohio. Photo/supplied

As an iwi, Waikato Tainui has its problems with governance, not least the war of attrition between King Tuheitia’s chief adviser, Tukoroirangi Morgan, and the tribal parliament. Morgan remains influential in such areas as freshwater policy and was a prime mover in trying to stop asset sales through the courts, but he is a divisive figure in his own tribe.

Tainui’s corporate arm, by comparison, has the bit between its teeth under the leadership of chief executive Mike Pohio. That’s especially since Tainui Group Holdings secured a ministerial call-in to fast-track resource consents for the first phase of its $3 billion-plus, multi-decade plan for an inland port, industrial zone and housing on 500ha of land in the semi-rural Hamilton suburb of Ruakura.

Pohio was a senior manager at Port of Tauranga for a decade and worked intensely on the container terminal development that is crucial to Tauranga’s ambition to be the country’s largest port. That experience makes Pohio perfectly suited to executing the massive infrastructure plan shaping up at Ruakura, situated at the connection point between Tauranga and Auckland. “He’s a hard-driven commercial animal but setting it in a Maori context,” says one close observer.

One to watch on Pohio’s team is Nathan York. The group’s property manager is an up-and-coming Maori commercial leader who did a lot of the hard yards required to put a huge deal like Ruakura together. Pohio is not from Tainui, but hails from Te Arawa and Ngai Tahu.

Governed by a board stacked with commercial experience and chaired by former Fonterra chairman Sir Henry van der Heyden, Tainui Group Holdings might just give Mark Solomon’s Ngai Tahu a run for its money.

ROB JAGER – SHELL’S NZ CHAIRMAN

Rob Jager. Photo/supplied

Rob Jager is influential not only for pushing through a very tough new health and safety framework in the wake of the Pike River disaster, but also for leading the re-emergence of deep-water oil exploration in New Zealand waters.

Chairing the Health and Safety Taskforce was a huge drain on his time, but Jager was determined to bring the best of the oil industry’s safety culture to New Zealand, where “she’ll be right” continues to cost too many workers’ lives.

Some of Jager’s uncompromising attitudes produced fear of major new costs and regulatory burdens among some in the business community who believed not every industry needed to exhibit the same duty of care as the petroleum sector. However, Jager was adamant. His contribution in this project was a big part in his taking out the Energy Executive of the Year award at the annual Deloitte Energy News Awards last month.

However, Jager’s influence extends to his success in convincing Shell’s head office in The Netherlands that New Zealand was not a basket-case venue for new investment after all. Love it or loathe it, Shell’s intention to drill in the Great South Basin in the summer of 2014/15 is a big deal, as is its securing of exploration rights outside the normal tender process for the unexplored New Caledonia Basin, far offshore from New Zealand.

Jager is also clearly the force behind the deep-sea protest restrictions, which prevent protest within 500m of deep-sea oil industry infrastructure, according to notes of ministerial meetings released by the Green Party after Official Information Act requests. Anti-deep-sea oil activists have called the 500m exclusive economic zone exclusion zone the “Anadarko Amendment”, but that’s just for an alliteration to constantly remind that one of the parties seeking to drill in deep water was also a funder partner in the Deepwater Horizon disaster. Shell pushed for the protest restrictions and got them, partly on the grounds that such action in the notoriously wild waters of the Tasman Sea poses a serious health and safety risk.

SELWYN PELLETT – HIGH-TECH INNOVATOR AND MILLIONAIRE, FRIEND TO THE LABOUR PARTY

Selwyn Pellett. Photo/David White/NZH

Recent polling puts a Labour-Greens combination well ahead of a lonely National Party at next year’s election, but the potential for a change of government has yet to be taken seriously by many business leaders. Neither Labour nor the Greens have many firm friends in the big business world. Multimillionaire intelligence software entrepreneur Selwyn Pellett is an exception.

During the 2011 election campaign, he not only allowed himself to be quoted as a businessperson applauding Labour’s capital-gains tax plan, but also turned up to help launch the policy. After the election, he travelled to financial capitals at his own expense with Labour finance spokesman David Parker to interrogate some of the world’s leading economic minds on monetary policy. On his return, policy-makers, academics, journalists and anyone else he thought should listen received from Pellett “In the Wake of the Crisis”, a collection of essays by leading American economists questioning the financial system orthodoxies that led to the global financial crisis and that make low inflation the primary objective of monetary policy.

This year, Pellett was a star turn at hearings for the opposition parties’ manufacturing-crisis inquiry.

What gives Pellett chops is his involvement with Endace, one of a new breed of smart Kiwi-bred software companies with global potential. He’s in the same field as Rod Drury, from global accounting software play Xero, and Craig Richardson, CEO at intelligence software company Wynyard Group, who’s also a director at the Government’s new innovation policy showpiece, Callaghan Innovation.

Perhaps most memorably, Pellett got royally up Economic Development Minister Steven Joyce’s nose by criticising the fact the Government would pocket none of the $156 million paid by American investor Emulex for Endace, despite taxpayer-funded research seeding Endace in the first place.

Pellett’s influence with Labour seems likely to increase given Parker’s appointment as deputy leader. But for the moment, he is a rare beast: a successful “knowledge economy” multimillionaire who has no friends in the Beehive

PHILLIP MILLS – GLOBAL BUSINESSMAN, ENVIRONMENTAL ACTIVIST

Phillip Mills. Photo/David White

Phillip Mills may not have the profile of Moa Beer’s Geoff Ross or Icebreaker’s Jeremy Moon, two of the go-to guys for funky Kiwi business innovation. But what makes him stand out is his combination of global success in business and behind-the-scenes grunt on environmental causes.

Here’s a guy who has taken the business created from a single Auckland gym, opened in 1968 by his father, Les, and turned it into a worldwide franchise of 14,000 fitness clubs across 80 countries. He boasts it delivers more than a million individual workouts a week.

The 2013 NBR Rich List estimated Mills and wife and business partner Jackie’s wealth at $105 million. Ross, Moon and merchant banker Rob Morrison – brother of the late and charismatic Lloyd – didn’t make the Rich List, although all were involved with Mills in establishing the Pure Advantage business lobby to push a clean-tech strategy for New Zealand.

Mills put serious personal coin into the task force, although it appears to have run out of steam a bit since its UK economic consultants produced a lukewarm view of the opportunities for New Zealand. That hasn’t dimmed Mills’s wider commitment.

Come a change of government, Mills will be the kind of business voice a centre-left government with a green-tinged agenda will look to not only for support but also for credibility. In a sense, that makes Mills to the Green Party what Selwyn Pellett is to Labour.

Disclosure: Pattrick Smellie is a principal of The Hugo Group, a news and information service for senior executives, some of whom are featured in this article.

Click here to read more from our Influentials series.

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