15 December 2012
CEOs call for action, not words
The Australian
AUSTRALIAN chief executives have accepted that flat is the new up and are turning to technology to help clean up their businesses so they are ready for the upswing when it comes.
A Weekend Australian survey of just under 70 of the nation's top chief executives across all industries shows business confidence and growth expectations are low.
The chiefs are also bewildered by the lack of consultation from the federal government.
"There needs to be a greater understanding from Canberra of the importance of assisting business to grow, as this will lead to jobs growth," BT's Emilio Gonzales said.
He urged politicians to adopt an attitude of "how can we promote businesses to grow and compete?" rather than "how can we continue to tax industry?"
The chief executives think Julia Gillard sees business as being on the other side of the fence, rather than an ally to help grow the economy. And their faith in the federal opposition is no better.
Outgoing Arrium chief Geoff Plummer said he wanted Tony Abbott to deliver "clear and accountable policies that will make Australia a place in which to invest and do business".
The CEOs said that excluding the macro factors outside their control, Australian business fundamentals were in good shape.
But corporate Australia is sitting on a record $395 billion of cash, due largely to fear about committing money amid the global and domestic uncertainties. This shows the upside, when and if business commits.
Surprisingly, Asia did not figure highly in the responses, apart from the obvious impact on the resources sector and service providers such as lawyers. In general, business supports the government's white paper but wants action, not more words.
The weak consumer confidence is being exacerbated by the dysfunctional relationship with the government and the impact of global regulatory changes on the financial services sector.
Macquarie Bank's Nicholas Moore noted the "ongoing impact of deleveraging through the lower risk appetite of regulators and broader society".
Deutsche Bank's JT Macfarlane said: "As we enter 2013, board confidence to commit to large projects will be low and perhaps exacerbated by the additional uncertainties of the election cycle."
Incitec Pivot boss James Fazzino joined Rio Tinto's Tom Albanese and others in saying the policy decisions and inaction from the government were causing companies to look offshore.
Productivity may be measured at the company or plant level, but national policy provides the settings. Mr Albanese noted: "Our Mine of the Future program is going from strength to strength and delivering a real pathway and vision for Australia's mining future. It's quite exciting for us to see some of these developments in technology and innovation out on our mine sites, and the productivity potential."
Coca-Cola Amatil's Terry Davis said: "Australia's high labour costs mean CCA has little choice other than to continue its investment in innovation and labour-saving technology to drive greater levels of productivity and efficiency." Commonwealth Bank chief Ian Narev said the "opportunities and challenges of developing technologies" were his main focus. Mr Narev is rolling out lean processing techniques to cut bureaucracy and speed up decision-making.
The big retailers such as Paul Zahra at David Jones and Bernie Brookes at Myer have revamped their technology in an attempt to entice and catch whatever sales they can.
Boral's Mike Kane said he would "begin to invest more deeply in innovative technologies that address long-term strategic issues like product carbon content, product recycled content and improved product performance".
The big telcos are concentrating on their networks. Telstra's David Thodey said: "4G is a key differentiator for us in terms of its breadth and quality and we are looking to accelerate the rollout by injecting $1.2bn to lift Telstra's 4G coverage to about two-thirds of the population by June 2013."
Optus's Kevin Russell said he was focusing on "overhauling customer experience" and improving network quality, while Vodafone's Bill Morrow is planning his recovery around network quality.
As the NBN rollout ramps up, M2's Geoff Horth predicted "further consolidation of tier two-three industry players to achieve scale in the lead-up to NBN."
Industry reputation was a key focus in this survey. ANZ's Mike Smith said: "The reputational challenges facing the industry are not going away and I believe you'll see more attention focused on addressing this at both an industry and individual bank level."
The unconventional gas producers also stressed the need for them to lead the way in building community trust to support their projects.
AGL's Michael Fraser said: "It is incumbent on the whole of the industry to ensure that communities are educated, informed and consulted about activities."
Santos's David Knox said what was needed was "a sustained effort to earn the long-term trust of communities in which the oil and gas sector operates."
"This can only be achieved through the demonstration of good values and behaviour and respect for individuals, farmers, indigenous groups and local industry," Mr Knox said.
Some who have restored their company's fortunes are now looking to build. GPT's Michael Cameron said: "I want GPT to be recognised as more than just a real estate investment trust. With our innovative approach, we aim to be playing a broader role in shaping the future of Australian business."
The financial services sector has gone through a regulatory overhaul and Cbus's David Atkins wants a "moratorium on significant reform" while the Stronger Super changes are consolidated.
At the same time the sector wants more reform, with Mr Atkins saying: "There needs to be a conversation about self-managed super fund investment in asset classes that carry excessive risk levels, including those investment classes that have led to losses arising from incompetence or fraud."
Westpac's Gail Kelly wants recognition from policymakers on all sides that now is the time to take further action to identify "a sustainable funding model for the Australian economy." Origin's Grant King also wants action. "In the past year, Australians talked more about energy than ever before, as we continued to focus on how to reduce the carbon intensity of the energy we produce with the often competing challenge to reduce the pressure that increasing energy costs are having on the community," he said. "This has highlighted the problem of having costs imposed on the industry at a federal level, while price controls are the responsibility of the states. This has resulted in unacceptable pressure on industry margins."
Rob Murray from Lion said: "As the mining boom matures, we need a climate that facilitates investment by good employers who deliver fair pay and conditions for their people."
Rob Sindel from CSR said: "The underlying benefits of the manufacturing sector are far more important than just jobs. Factories tend to be in outer suburbs and regions and often form the basis of a community."