The Economic State of the Nation, 2011
17 Feb 2011.

This latest set of my charts on the New Zealand Economy 2011 were prepared for a presentation to a group of company CEO's and Chairmen at a New Zealand Business Roundtable Retreat held at Formosa, Beachlands, Auckland on 17-18 February 2011.
The presentation sketched the progress of the NZ economy over recent decades with respect to the story of:

1. Fluctuating rates of economic growth, and how NZ has been a poor performer relative to the rest of the world;
2. How inflation has been tamed but may re-emerge as a concern;
3. How unemployment is higher than it should be or needs to be;
4. The role of commodity prices and the terms of trade in this story;
5. The major concern about the way in which the rate of productivity growth has slowed dramatically since 2000. This followed the post reform years 1988-2000 when NZ recorded what was easily its best period of productivity growth for many decades and at a rate which ranked it highly by western world international standards;
6. The irony of the fact that the industry with the fastest growth of productivity was communications, which has now become one of the heaviest regulated industries in NZ.
7. The risks around the persistent external current account deficits and the now huge overseas debt (relative to GDP), which ranks us alongside countries such as Greece, Spain, Portugal and Iceland;
8. The squeeze on the traded sector by the non-traded sector;
9. The now large Government fiscal deficit and the rapidly accumulating public debt, despite the favourable position on these fronts until around the mid-2000's.
10. The massive rise in central and local government spending, from having been about 35% of GDP to now 45%, and the associated huge increase in the number of civil servants and how they are paid on average much more than employees in the private sector;
11. The staggering rise in invalid and sickness benefits, vastly outstripping unemployment benefit numbers (are we really this sick ?);
12. How NZ tax rates, which became highly competitive relative to other OECD countries after the 1980's economic reforms, are now no longer competitive;
13. How inadequate NZ's performance has been relative to that of Australia where even the poorest state, Tasmania, has a much higher income per head than NZ;
14. The burden for industry of high tax rates and heavy duty pervasive bureaucratically administered regulatory structures;
15. The range of worry zones for economic policy makers and our seeming unwillingness or inability really to get to grips with these (charts 42 to 44 summarise a few illustrations);
16. Some illustrations of the opportunities NZ needs to embrace in industries such as minerals, dairy, education, and tourism;
17. A summary of the Prime Minister's set of announcements for changes in economic policy 2011 and later;
18. And, finally, a summary of the changes needed to economic policy if NZ is to get back on track to faster rates of economic growth.

In particular, the presentation advocated the case for lower taxes, smaller government, less intrusive regulation, privatisation of state owned enterprises, stronger protection for property rights, a closer economic relationship with Australia, and a deeper understanding of the growth opportunities in China, India and South East Asia.

Full paper (PDF format 3.5MB)

Tribute to Robert McLeod on his Contribution as Chairman of the New Zealand Business Roundtable
17 Feb 2011.

Full paper (PDF format 52KB)

Value for Money Review of the NZDF, Dr Roderick Deane & Greg Kay
Aug 2010.

This review was carried out at the request of the New Zealand Government to assess the extent to which Value for Money (VfM) savings could be achieved by the NZ Defence Force (NZDF) to facilitate meeting the financial requirements of the defence strategy contained in the Defence Assessment of July 2010 and the Defence White Paper 2010.
Based on numerous interviews, extensive analysis and benchmarking set out in the report, the conclusion of the review is that "it will be possible to close the gap between the NZDF's projected operating expenditure (including depreciation) and expected Defence Appropriations and at least to meet the Defence Assessment’s "middle pathway". Generating the savings and the efficiency gains to enable this to happen will not be easy. But with a culture change within the NZDF, organisational and personnel changes and determined leadership, it is achievable. Other organisations have clearly demonstrated this. The NZDF has shown repeatedly at the front line that in VfM terms it can foot it with the best. It needs to transfer these same skills and determination to the back and middle of the organisation. When this happens, the NZDF will be able to say that it is as good at the business of Defence as it is at the operational and military elements of Defence." The report sets out the changes necessary to deliver the improvements both in terms of culture and organisational aspects as well as the magnitude and likely timing of the projected savings.

Full paper (PDF format 8484KB)

The New Zealand Economy: Challenges and Opportunities
9 Sept 2010.

These charts are background material for an address to the Dunes Symposium, a Public Policy Forum for Tomorrow's Business Leaders, held on 9-10 September 2010 at Formosa, Beachlands, Auckland. The Symposium was organised by the New Zealand Business Roundtable.
The charts cover such matters as New Zealand's economic growth and productivity performance over time and relative to other countries; the constraints in the form of the external deficit, the growing overseas debt, the pressures from the size of the government sector again looming large, and the emergence in recent years of fiscal deficits; the challenges facing NZ such as in the form of a decline in tax competitiveness, pervasive and costly regulatory controls, and an inadequate capital market; offset by opportunities in industries such as diary, minerals, tourism and education.
In summary, the charts show that in the post reform period (1988-2000) NZ demonstrated that it could grow faster than in any previous comparable period and indeed that its rate of increase in multifactor productivity growth was among the best in the developed world. But then there was an erosion of those gains as the Government sector grew much faster than private sector between 2000 and 2009, the fiscal surplus turned into a deficit, regulations again became widespread and constraining and the global financial crisis added to the country's woes. In essence, NZ has not yet been able to address fully the big policy challenges such as those relating to taxes and the rate of increase in government spending, particularly in social welfare, health and education, the inadequate infrastructure sector, and the heavy duty regulatory environment. The present Government is conscious of these matters and is gradually addressing them but often only in a cautious way. Thus, over recent years, the private sector has been getting crowded out. Yet that is the real source of growth and productivity gains.

Full paper (PDF format 292KB)

The NZBR ........... Myths and Legends
9 Sept 2010.

Some notes for a brief address by Dr Roderick Deane to the Dunes Symposium: A Public Policy Forum for Tomorrow's Business Leaders, 9 September 2010, Formosa, Beachlands, Auckland.

Full paper (PDF format 13KB)

Speech at farewell function as Chairman of Fletcher Building - Te Papa Wellington
17 Mar 2010.

Full paper (PDF format 84KB)

Speech at farewell function as Chairman of Fletcher Building - Auckland Museum
16 Mar 2010.

Full paper (PDF format 52KB)

Dunedin speech on occasion of the centenary of Fletcher Building
10 Nov 2009.

Full paper (PDF format 80KB)

A Health Check on the Economy: How Does it Measure UP?
2 Sept 2009.

Background material for an address to the NZ Retailers Association at Sky City Auckland on 2 September 2009.
Full paper (PDF format 410KB)

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

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)

Wedding speech by Dr Roderick Deane in proposing a toast to the bride and groom, Sandra Martinovich & Jonathan Lemalu
19 August, 2006.

Full paper (PDF format 68KB)

List of Publications covering the period when Dr Deane was a professional economist and up to 1995
Download file (PDF format 189KB)

Copyright ©2007 Dr Roderick Deane
All Rights Reserved