Kiwi businesses might have to take on more risk in order to stay ahead of constant “change” and “disruption”.
That’s according to economic commentator and former ANZ chief economist Cameron Bagrie who spoke to guests at the Road Transport Forum conference in Dunedin.
Bagrie says disruption is having a big impact on firms around the world and New Zealand and the transport industry is no exception.
This includes technology driven disruption, government driven disruption and even demographic disruption which will have big impacts on the economy over the next few years.
In terms of demographics, New Zealand will have to face the costs and social impacts of an ageing population which by 2055 will see two working aged people for every person of retirement age.
The impacts of this are already starting to take place in terms of succession of business leaders, Bagrie says.
He gives the example of accounting software firm Xero which is reporting around 90,000 businesses on its platform looking to exit over the next five years.
Another example is a Queenstown accountant he was speaking to who, approaching retirement age, is looking to sell his business but can’t find the next generation of business leaders to sell to.
These stories of business succession are going to be a huge issue facing the country over the next few years and the transport industry will be no different, Bagrie says.
Disruption, both nationally and internationally, is broad reaching and the country needs to be ready for this, he says.
He points to a recent economic survey which shows 50% of NZ firms have faced disruption in some shape or form in the last two to five years.
However, only 37% of business leaders expect to be hit with disruption in the next five years.
Bagrie argues the figures show there is some complacency amongst Kiwi firms in the face of changing trends.
“The pace of change is not going to slow, the pace of change is going to accelerate.
“Kiwi firms have the good old attitude, ‘she’ll be right’ … ‘I’ll address it when it turns up at my door step’.
“For certain sectors that is a really risky strategy.
“If you ever look at what’s happening across a lot of sectors … if you let the disruptors get distribution capability, your ability to respond and innovate to that disruption is minimal.
In fact, you don’t have any ability.
It’s goodnight nurse.
“Firms in New Zealand I think are going to have to take a little bit of risk to respond to disruption,” Bagrie says.
For now, the biggest issue facing New Zealand businesses is finding skilled staff.
“That’s a real good economic problem to have … but it creates challenges.”
There is also the issue of low business confidence.
This should be ignored, Bagrie says.
“We ignore business confidence as an indicator.
Business confidence is a junk economic indicator.
It’s useless and politically bias.
“Let’s call a spade a spade; the business sector likes to put the boot in and they’re doing it loud and clear, so we just ignore it.”
However, the current government is not off the hook and it hasn’t yet done enough to identify economic growth opportunities over the next decade.
Bagrie says the government needs to act now on identifying and supporting growth opportunities which at the moment is “materially absent”.
What we’re seeing now is “grumpflation” where growth is occurring slowly while businesses are getting hit with higher costs.
“Grumpy growth and rising costs … it becomes a real niggle factor.”
