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The State of the Nation - An Economic Overview of New Zealand
1 May 2007.
This speech reviews the progress of the New Zealand economy from the point of view of an economist and policymaker turned businessman. There has been a disconcerting halving of the rate of productivity growth in NZ since 2000 compared with the 1990's, a huge increase in the number of public servants (compared to earlier declines) and a massive increase in the regulatory burden on the private sector. This presentation reflects on the way in which these trends are inter-related and how the business world views these matters, as seen through the eyes of a former senior public official (Deputy Governor of the Reserve Bank of NZ and Chairman of the State Services Commission during an earlier period of economic reform) and leading businessman (Chairman for a lengthy period of three of NZ's four largest companies). The presentation has been made to a variety of audiences ranging across fund managers, corporate CEO's, professional associations, and Government officials. It comprises on this web site two documents: a summary explanatory text and a substantial series of charts.
Summary text
1 May 2007.
Full paper (PDF format 31KB)
An Economic Overview of New Zealand
1 May 2007.
Full paper (PDF format 601KB)
A Single Economic Market for Australia and New Zealand
There has been much discussion of harmonization of the Australian and New Zealand economies but progress has been painfully slow and the issues addresses often minor. There has been a lack of vision, political commitment and leadership. These notes of a speech to the Australia New Zealand Leadership Forum advocate a much more radical approach, emphasizing the need to tackle the big issues and suggesting that they are typically remarkably similar to the issues New Zealand still needs to address with respect to domestic economic matters. Many of the issues centre around the need to allow markets, domestic or cross border, to do their job more effectively and for governments to be less controlling in their approach to the business world.Australia New Zealand Leadership Forum
April 2005.
Full paper (PDF format 44KB)
NZ Institute of Management
12 May 2005.
Full paper (PDF format 44KB)
Regulation - How Backward Can We Get? With an emphasis on the Electricity Sector
28 September 2005.
The hugely important electricity sector in New Zealand has been subject to numerous regulatory changes over the years and remains both extensively regulated and heavily owned by central Government. This has resulted in numerous conflicts of interest and competing and often irreconcilable objectives. The risks around the industry in terms of potential shortfalls in generation and transmission outages remain substantial, as events have proven but to which the policy response has been severely inadequate. The industry is an illustration of the dilemmas being imposed on other parts of the business world whether it be the costly banking prudential regulation or the misguided telecommunications interventions or the now abandoned Kyoto carbon tax regime (30 months of negotiation between many companies and numerous government officials only to fall over completely in 2006). All of these have imposed huge costs on the corporate world without any gains being as yet apparent.
Full paper (PDF format 192KB)
The Complex Art of Governance
29 November 2004.
Corporate governance is a highly fashionable topic but one where some basic propositions are of critical importance regardless of the regulatory regime imposed by governments. These include clear and agreed goals, appropriate separation of governance functions, a balance of incentives and sanctions, good disclosure, strong personal relationships, a culture with an emphasis on integrity, and a willingness and determination to address problems as they arise. While these types of considerations form the underpinnings of good governance, it is a myth to think that they can simply be regulated into practice. Indeed the risk is that excessive regulatory attention will simply lead to risk averse behaviour by listed companies and the creation of new markets which avoid the costly burden of such interventions, as amply confirmed by the rapid but unsurprising expansion in private equity activity over recent years.
Full paper (PDF format 24KB)
People, Power And Politics
October 1995.
Economic Theory works. That is the thesis of this address, but it is a thesis built upon the belief that economic progress if there is the right leadership of people; if the power of ideas is free to emerge; and if there is a sufficiently strong political will to facilitate the durable implementation of those ideas. In a sense, the address is thus about the interaction of people, power and politics in contributing to the processes of economic change in New Zealand, and the lessons which can be drawn from that process.
This Discussion Paper No. 39, published by the NZIER, formed an address to the Annual General Meeting of the New Zealand Institute of Economic Research in Wellington in October 1995 subsequent to Dr Deane receiving the inaugural NZIER Economics Award in 1994.
Full paper (PDF format 2MB)
IRD Seminar on Corporate Restructuring and Governance
May 2007.
Fletcher Challenge Group was for many years the largest company in New Zealand and, after a period of strong growth, was subject to stresses and strains through the late 1980's and 1990's such that eventually, in 2000-01, the largest corporate restructuring exercise in NZ commercial history needed to be undertaken. These lecture notes use the company as a case study of the vision which underpinned the creation of the FCL Group, summarize some of the governance principles which emerged as important, and outlines the analysis and operational steps which were required to put the company back on a sound basis. These involved some of the largest transactions executed in NZ and the creation of new listed vehicles including particularly the now highly successful Fletcher Building Ltd. This lecture was originally part of the course work for the MBA at VUW but has been used in other forums as well...
Full paper (PDF format 260KB)
Prudential Supervision of the Banking System
August 1992.
Prudential Supervision of the Banking System edited by Bernard Galvin, is a collection of papers from a seminar held under the auspices of the Institute of Policy Studies of Victoria University of Wellington at the Reserve Bank of New Zealand, Wellington, on Tuesday 25 August 1992.
The issue of prudential surveillance of the financial system, usually by the central bank, has attracted considerable attention in recent times. This reflects in part the failures or near failures of financial institutions that have occurred in a number of countries in the Western world.
Full paper (PDF format 756KB)
Notes on the Merger of the ANZ(NZ) Bank and the National Bank of NZ
May 2007.
The merger of the ANZ(NZ) Bank and the National Bank of NZ was the
largest merger in NZ corporate history. It promised sizeable synergies
and considerable benefits for customers and shareholders of ANZ but in
the early stages of the merger the gains from the improved efficiencies
were very substantially eroded by the hugely costly new prudential
controls put in place with minimal notice by the Reserve Bank of NZ.
Despite the burden of these changes, which have now adversely impacted
all banks in NZ, the merger grew to be very successful in terms of
customer and market share retention; proof that a dual brand strategy at
the retail level could be effective; and now pleasing growth earnings
and shareholder value.These notes summarize some of these points as made
in a lecture using the merger as a case study....
Full paper (PDF format 27KB)
Advanced Corporate Management
The following five papers were presented to MBA classes in Advanced Corporate Management in the MBA programme at Victoria University of Wellington. Roderick Deane was Professor of Economics and Management from 2000 to 2003.
Advanced Corporate Management - Overview
MBA programme, Victoria University, 2003.
The Advanced Corporate Management course offered in the MBA programme encompassed issues of shareholder value creation, corporate governance, offshore investing, venture capital, public versus private ownership, and the role of market places. These notes outline briefly the topics encompassed under these headings, some of which are developed further in other papers on this web site.
Full paper (PDF format 16KB)
Advanced Corporate Management - Public vs Private Enterprise
MBA programme, Victoria University, 2003. (PDF format 36KB)
Despite the overwhelming empirical evidence from the history of Government ownership of commercial enterprises in New Zealand to demonstrate the numerous conflicts of interest and drag on taxpayer funding, there are many New Zealanders who believe in the efficacy of public rather than private ownership. These lecture notes outline the issues, which need to be considered in weighing the relative merits of the alternative forms of ownership. The problems for State Owned Enterprises (SOE's) are not just those of multiple objectives but of plural principals. Private enterprise typically has better defined objectives and more clearly specified owners to whom they are accountable. They do not carry the hidden costs of implicit official subsidies to SOE's. The market forces them to adapt to economic realities more rapidly than their public counterparts. Politics and social judgements muddy the waters around SOE's. The notes sketch the points made under various approaches: that of welfare maximization, political economy, and transactions costs. The latter argument for privatisation is a powerful one when it becomes apparent that SOEs are poor agents for taxpayers and creditors, when a wider set of reforms is being undertaken (commercialise, deregulate, privatise), when the ability to intervene is no longer seen as a virtue, and when SOE-type redistributions are seen as either too costly or too invisible.
Full paper (PDF format 36KB)
Advanced Corporate Management - The Investor's Perspective
MBA programme, Victoria University, 2003.
These notes background issues for investors in relation to asset classes and returns, portfolio management, the role of mutual funds, the merits of indexation, and some lessons to be drawn from a study of investing markets and their history. For example, it is clear that top performing sectors rapidly change, staying the distance pays off, absence from the market carries penalties, top performing funds change rankings rapidly, fads or following the crowd can be dangerous, and there is a need to emphasize diversification and the critical importance of portfolio allocation and persistence. The notes point out that the overall market explains about 85% of the total return of most investors and funds, past performance has very little predictive ability, asset allocation explains 90% of differences in total returns, a substantial majority of funds managers fail to beat the stock market index (after allowing for fees and taxes in funds), and top performing funds are invariably not top performing for very long.
Full paper (PDF format 20KB)
Advanced Corporate Management - Competition and Market Behaviour
MBA programme, Victoria University, 2003.
This lecture reviewed the role of the market system, what it does, the roles of the various market participants, the scope of the economists' so-called neo-classical model, market incentives, market behaviour, market failures, co-ordination within firms, and the role of the internet.
Full paper (PDF format 20KB)
Advanced Corporate Management - Shareholder Value Creation
MBA programme, Victoria University, 2003.
This lecture reviewed a number of aspects of shareholder value creation including its measurement, the complexities involved in this, the concept of economic value added (known as EVA), corporate goal setting, the need for alignment of interests between boards and management teams, and some New Zealand market issues and challenges in delivering improved performance for shareholders.
Full paper (PDF format 20KB)
Globalisation and constitutional development
Building the Constitution conference, April 7-8 2000.
The paper argues that globalization is not of itself a threat to national sovereignty; that the rule of law is of fundamental importance; that property rights and their enforcement are crucial; and that freedom is only preserved if powers to tax, take and regulate are suitably constrained in order to limit the size of government in society. Comment is offered on the electoral system, republicanism, the Treaty of Waitangi, and related matters. Conclusions are drawn that what really matters in this debate is not that the constitutional arrangements are broken and need fixing but rather that some fundamental principles need to be reasserted. These include the need for the business and the wider community to promote respect for the rule of law, well-protected property rights, sanctity of contracts, and a less intrusive, flexible and adaptable government.
Full paper (PDF format 80KB)
Book Review - Being Accountable: Voluntary Organisations, Government Departments and Contracted Social Services in New Zealand
February 12, 2007.
This paper is a review of Jo Cribb's excellent research piece on this sector. Despite the great complications faced by many clients of voluntary organizations, and the pressing demands of their immediate caregivers, the research found conclusively and with startling clarity that the relationship with Government was "the most difficult and obstructive" of all the accountability relationships and was very much "a hindrance rather than an aid". Even more worrying, contracting and funding agreements with government agencies were seen to be "driving down standards of care". This was attributed to poorly designed programmes, irrelevant measures, and a piecemeal approach to service provision. Jo's conclusions have much relevance to the business world more generally. The increasingly centralized and bureaucratic control of New Zealand society, and the need for leaders in sectors as diverse as those of private sector business and voluntary organizations to spend so much of their time negotiating with officials and being accountable to them, despite the latter?s remoteness from the clients of the sectors they oversee, is one of the major changes which have occurred in New Zealand over recent years.
Full paper (PDF format 24KB)
Telecommunications Review Interview
David Dickens, July 2006. (PDF format 40KB)
This interview was conducted around the time Deane resigned as Chairman of Telecom Corporation of NZ Ltd in protest at the what he saw as an unnecessarily intrusive regulatory regime for Telecom, one which not only seriously and adversely impacted shareholder value for Telecom's shareholders but also is likely to be ultimately deleterious for the industry as a whole. The interview surveys the gamut of issues facing Telecom at that time and some of the issues which were receiving much political and media attention.
Full paper (PDF format 40KB)
Victoria University of Wellington Graduation Speech
15 APRIL, 1999.
Speech by Dr Roderick Deane to the graduation ceremony for Victoria University of Wellington graduands on the occasion of him receiving an honorary doctorate of laws.
Full paper (PDF format 20KB)