The rich get richer (and more powerful)
By Bryce Edwards
Graeme Hart has topped the NBR's 2013 Rich List. Photo / Martin Sykes
26 July, 2013
The political power and wealth of New Zealand's business elite is on display in two important media publications this week - the NBR's 2013 Rich List and the New Zealand Herald's 'Mood of the Boardroom' survey of CEOs.
Both publications illustrate the immense power and wealth that is concentrated amongst a miniscule group of businesspeople. According to the NBR, 'The rich continue to get richer'. Editor Nevil Gibson says 'This year's Rich List is bigger and richer than ever before, with the total minimum net worth of members now at $47.8 billion, an increase of $3.5 billion on last year's list. Add the small group of New Zealand-based international billionaires and the figure climbs to $60.4 billion, an all-time record' - see: How to be a millionaire - NBR Rich List.
This enrichment is because, Gibson says, 'The past year has been a good one financially', with record profitability: 'The surge in wealth is mainly due to the substantial gains of most investment classes; the New Zealand equity market returned 25.9% last year'.
Most of the 2013 NBR Rich List information is behind the NBR paywall online, but you can still see the summary Rich List at a Glance (Wealth order), as well as the individual entries for various rich-listers such as Graeme Hart, Richard Chandler, the Todd family, Owen Glenn, and Alan Gibbs. And of course there's some very political people on the list too - for example, both the National Party's leader and president - see: John Key and Peter Goodfellow's family. A good summary of the report can also be read in Steve Deane's Hart returns to top of wealthier NBR rich list.
Further evidence of growing wealth and profitability in New Zealand was also seen earlier this week via Hamish McNicol's Luxury car sales leave rest behind and Christopher Adams' Banks' profit jumps 12.9pc, nears $1b.
Of course not everyone is celebrating the achievements of New Zealand's wealthy - see my own analysis of the latest list: A View of who runs New Zealand, which also has plenty of images and cartoons about the wealthy in New Zealand. See also, Max Rashbrooke's blogpost, The Key graph for understanding the Rich List, which draws attention to growing inequality in New Zealand and shows 'how the NBR Rich List's wealth has increased dramatically since the mid-1980s'.
Unionist Robert Reid has spoken out against the NBR list, saying that 'The top one per cent owns three times as much wealth as the poorest 50 percent, and low wages are one of the biggest drivers of poverty in New Zealand' - see Newswire's Rich list nothing to celebrate, union says. And the NBR reports the views of Labour MP Andrew Little - who the newspaper says is 'one of the more business-friendly Labour MPs'. According to Niko Kloeten's article, NBR Rich List highlights inequality, claims Andrew Little, Little 'says he does not have an issue with the Rich List celebrating those who have created wealth but the plight of the less well-off should not be forgotten'. Little points out that the median wage has gone down for two years in a row now.
For the polar opposite point of view, see Mark Hubbard's blog response, Inequality ... No, No, No - Don't Go there. Similarly, the NBR's Nevil Gibson has published an article saying, Who says we need more taxes? [paywalled]. He rails against suggestions that multinationals need to pay more, and suggests instead that 'A case can be made for no tax on profits at all, as they punish successful companies, shelter the unprofitable and are volatile at times of economic uncertainty. The tax collected from profits is cash that comes from charging customers more and leaving less for investors and employed staff'.
The list is also why many New Zealanders believe that a business elite essentially runs this country. According to a recent Colmar Brunton survey for Transparency International, 79% of New Zealanders believe the country to be run by 'a few big entities acting in their own best interests' - see my blogpost, Corruption in New Zealand survey. The business sector certainly fares badly in the survey. When New Zealanders were asked to rate how badly New Zealand business is affected by corruption on a scale of 1 to 5, the average response was 3.1. Furthermore, 73% said the private sector is affected by corruption to some degree.
The Herald's annual 'Mood of the Boardroom' CEO survey reports provides another useful insight into the rich and powerful, and how they view politics. You can see all the reports here: Mood of the Boardroom 2013. It seems that the Minister of Finance is held in very high regard - higher in fact than Prime Minister John Key - see Fran O'Sullivan's English - star of the show. She reports that CEOs are very positive about the economic direction of the National Government, although they have less confidence in National's stance on keeping the Superannuation age at 65 or about the pace of the Christchurch rebuild.
Business leaders are particularly unimpressed with David Shearer's leadership of the Labour Party, with many comments about how National benefits from having such a weak opposition leader - see Steve Hart's Why Shearer doesn't have what it takes. See also, critical business views on the Greens in Steve Hart's Green alliance causes CEOs to shudder.
It's not entirely surprising to hear that the business elite isn't too well disposed towards the Labour Party. However it's a myth that the business community always supports National over Labour. In fact, in the lead up to the last two times Labour has gone into office, the business community has backed Labour. In July 1984 the NBR's poll of business leaders revealed a majority in favour of a Labour victory. Then in 1998 - a year before Helen Clark become PM - a survey by the Independent business newspaper showed that CEOs believed the Shipley National government should be voted out and that the Labour Party was then the preferred choice of business.
The CEOs surveyed by the Herald also criticise John Key's political management. One report stresses how he's been 'vulnerable to silly sideshows' and 'petty distractions' - see: Managing the hot potatoes. National is rated poorly for its management of issues such as the GCSB saga, youth unemployment, Auckland housing, and Solid Energy. Business leaders are very complimentary about 'rising stars' Simon Bridges and Amy Adams.
So what policies do CEOs want changed? Unsurprisingly, they want more privatisation - including in local government (), and they're particularly keen for further reform of the RMA and other 'red tape' - see Brian Fallow's Doing hard labour and Steve Hart's RMA roadblock to progress.
Most of the CEOs surveyed appear to be men, but the corporate world is becoming more gender-balanced, with Richard Meadows reporting that 'Women are becoming more common in New Zealand boardrooms, with female directors' numbers almost doubling in five years - see: More women in NZ boardrooms.
Finally, satirist Scott Yorke hopes that the Herald will publish next week a corresponding, Mood of the Food Bank 2013. But the Herald itself has the most telling satire, included in the actual boardroom report, with its cartoon of the Minister of Finance proclaiming, 'There's only one poll that counts, and that's of CEOs...'
Other recent important or interesting items include the following:
David Shearer is in obvious trouble when John Armstrong joins the chorus saying that the Labour leader is fast running out of time - see his commentary, 90 days to save Shearer's bacon. Armstrong's prescription for survival involves a shift to the right - which Chris Trotter has reacted to in a blogpost entitled Surveying the Middle Ground: Chris Trotter on John Armstrong's advice to David Shearer. Trotter is writing a huge amount on the ideology and nature of the Labour Party at the moment - see his columns, Right-wing Left-wingers: Labour's Oxymoronic Tragedy 1946-2013 and Creating jobs is what Labour needs to do. Also critical of Shearer's current position is Newstalk ZB's Felix Marwick - see: Leadership back under the spotlight. And for a lighthearted look at Shearer's office reorganisation, see Scott Yorke's A new chief of staff.
National could be in trouble too, according to Patrick Gower who thinks John Key should be careful in making his 'massive U-turn' about a coalition with New Zealand First - see: John Key's biggest risk: Winston. And for more on why New Zealand First might be so vital in 2014, see Greg Presland's Winston Peters, King Maker.
New Zealand and Australian forces are withdrawing from the Solomon Islands, with some calling the ten-year operation a 'failure'. Some locals and academics are critical of the legacy of the armed force rule - see Michael Field's NZ marks 10 years in Solomons. Although NZ and Australia have put $2.5b into the country, there's some cynicism about what it was spent on - for example, Field says that 'A huge prison was built while the hospital remains a health hazard'. John Key has also just gifted a playground to the nation.
The partial privatisation of the Meridian power company is supposed to occur in the next 10 weeks, but according to Pattrick Smellie a number of messy issues make a Writedown likely for Meridian sale.
The Government's SkyCity convention centre deal has been criticised for many things - but is it really illegal or against the constitution? Public policy expert Ryan Malone says 'no', in SkyCity deal not unconstitutional.
Finally, last night's GCSB meeting is reported by David Fisher in Hundreds hear big-hitters rail against spy legislation. Two sides of the debate can be seen in editorials today - see The Press's Changes to bill far from trivial, and the Herald's Changes to GCSB bill not yet enough. The issue is clearly polarising. But will it be enough to get the public out on the streets tomorrow? Gordon Campbell has some further arguments about the bill as well as details of the protests throughout the country - see: On the GCSB Bill protests. Meanwhile, there's clearly some sympathy for 'GCSB victim' Kim Dotcom - see Patrick Gower's Public sides with Dotcom in poll.