WestpacTrust And New Zealand After September 11
Thursday 22 November
The Auckland Club
WestpacTrust And New Zealand After September 11
Striking The Balance
The turbulence this year in America and at home has underscored the need to get stronger to protect our enviable New Zealand way of life.
The view I’d like to share with you tonight is that despite the unsteady international outlook, WestpacTrust and New Zealand remain positioned for growth as we go forward into 2002.
In advancing this view, I want to first assess how the global environment has changed for people and business since the attacks on September 11. In this context, I’ll comment on WestpacTrust’s positioning in the New Zealand and global economy as we move forward. And from there I’d like to offer some thoughts on how New Zealand can achieve growth and prosperity in the shadow of a gloomy international horizon.
On September 11, the world became a much smaller place. Some say everything changed. I think it’s more accurate to say we got a sharp jolt of reality. A single, unthinkable strike against an icon of human progress brought the fault lines of globalisation – power, identity and wealth – suddenly and starkly into view.
As the political and economic flow-on effects ripple towards us, it’s a timely reminder of the shrinking, divided and increasingly complex world we live in. The distances between cause and effect in the world are narrowing by the day. At the same time, the degree of economic, environmental and social interdependency between the peoples of the world is increasing.
The porous borders of the world’s superpower and the shocking loss of innocent life has led many people, at least in developed countries, to reexamine what is really important for them and their families. The images in New York have reminded us that intangibles – the values and emotions that make us human - matter infinitely more than the tangible things in life – the material things.
For people in business, the importance of intangibles is an emerging not a sudden phenomenon. Over the last decade, globalisation has seen rational connections between business and consumer increasingly supplanted by expectations grounded in emotion.
Smarter businesses have responded to the dictates of a new age of choice and ubiquitous information by building deeper consumer relationships and embedding social responsibility in the way they conduct business.
What September 11 did was to strengthen but also narrow the emerging imperative for socially-responsible business – particularly so for billion dollar businesses like WestpacTrust whose influence cuts across the economic, environmental and social fabric of a nation’s culture.
Overnight, world consumers have become much more conscious of the core values in their lives – values people fall back on when unthinkable catastrophe becomes shocking reality: home, family, community and connectedness.
For business, the global shift in sensibilities places a much higher premium on trust and social responsibility. Integrity, authenticity, sincerity and empathy are now a starting not a median point for successful business.
The degree this plays out will vary according to business type as well as size. Airlines and hotels, for example, are high-anxiety and consequently higher expectation businesses. Others are lower anxiety. Financial institutions, which manage the security and comfort provided by money, sit well up the anxiety and expectation scale.
That’s the global environment we’re operating in: greater complexity; higher expectations; increased sensitivity. The good news is it plays to WestpacTrust’s future business strategy. Let me elaborate on that.
WestpacTrust has just announced a very satisfactory after-tax profit - 14% up on the previous year. The result was boosted by higher loan volumes across all customer segments. Realistically, it will be very difficult to match that result in 2002 given the likelihood of less business activity in a climate of higher uncertainty.
Nonetheless, the bank is extremely well positioned to maintain its strong performance.
I say that for two reasons.
Firstly, the fundamentals of the New Zealand economy are solid. As Adrian has said, the economy is relatively buoyant. Interest rates are down. Unemployment is at a 13-year low. Export prices are still higher than a year ago - boosted by a low dollar. And inflation is expected to come down to 2 percent this calendar year.
To my mind – that’s encouraging in itself. Particularly because the fate of New Zealand and this country’s largest bank are intertwined. We have a relationship with one in three kiwis. In short, where New Zealand goes, goes WestpacTrust.
Secondly, and decisively, WestpacTrust’s is continuing its focus on improving customer satisfaction.
Pre-September 11, we knew that engaging customers on all levels was a winning play. Post-September 11, engaging with customers where, when and how it suits them is even more important.
Now we’re about to take our customer-driven strategy to a whole new level of engagement. Over the next three years, we’re investing a coordinated programme to deliver enhanced systems and processes.
Our whole organisation is re-orientating in order to improve services, maximise convenience and deliver on the increasing expectation for ethical and emotionally-responsive business.
It’s exciting. I’m convinced that by offering services that respond to emotional sensitivities and surpass social expectations, WestpacTrust can ride through and maintain its strong performance.
I’d like to send you home - or back to the bar - with some thoughts on the safe road ahead for New Zealand. The greater uncertainty flowing from this year’s home-and-away events haven’t altered my prescription for prosperity. To my mind, they’ve simply reinforced and made more urgent some fundamental truths that we already knew.
In short, New Zealand needs to work smarter and harder if it’s going to reverse the historic decline in its relative income. To overcome a size/geographical disadvantage, an average set of economic resources and an averagely educated population, we’re going to have to drive hard and fast off several key bases. We’re going to have to do better things, not just things better.
Firstly we need policymaking that strikes a pragmatic balance between social responsibility and economic progress. Secondly we need to cultivate and mainstream an innovative business mindset. To my mind both are entirely achievable. Furthermore, there are already encouraging signs of progress.
Sound policymaking provides the overall framework. Progress is underway. We did the hard yards over 15 years of economic reforms. Now we have to continue the momentum and develop a policy infrastructure that can foster the growth of globally competitive clusters in target sectors of the economy.
Ultimately, it’s about striking pragmatic balances – balances that are socially acceptable and economically astute. As life becomes more complex, balance assumes ever-greater importance. Without social acceptance, business will stumble - doubly so Post-September 11. Without economic development, people ultimately suffer.
Adrian has touched on some of the purer economic balancing acts. I’d like to highlight two others.
The outcome of the debate on GMOs is a good example of balanced decision-making.
The balance struck between human progress and risk was pragmatic and sensible. It plays to a dynamic economy without compromising human safety.
The Kyoto Protocol is now emerging as another significant issue. Like GM, Kyoto is a multi-dimensional issue that squares off conflicting goals in a complex world – protecting the environment that sustains life and generating income that supports it.
In passing responsibility to businesses, government policy will have to strike a progressive balance – one that supports the Protocol’s objectives without creating a competitive disadvantage or disincentives for entrepreneurship. Striking the pragmatic balance will come down to timing as much as to policy content. Keep an eye on Kyoto. There’s a lot at stake for businesses of all sizes.
The policy framework is the first key element. Investing in innovation is the second. We have to make the gearshift from the information to the transformation revolution. In many ways, now is the hour. The doomsdayers conveniently forget that times of high uncertainty play to the small, the nimble and the innovative. Tough times broaden the opportunity landscape.
On top of this, New Zealanders have innovation and entrepreneurship in their DNA. Last week’s release of the highly-authoritative Global Entrepreneurial Monitor confirms it.
For opportunity-based entrepreneurship. New Zealand ranks No.1 - ahead of second-placed Australia, the US and Ireland. I’ll say that again – No.1. Overall we ranked second only to Mexico out of 29 countries. Fantastic!
Where kiwis fall down though is in attitude – in the self-belief that we can beat the odds. Engendering that belief is the single most important challenge facing New Zealand society.
We all have to step up to that challenge. We have to support the engine room of New Zealand’s economic growth - small and medium businesses. WestpacTrust is doing just that. I want to underscore that our sterling result this year strongly reflects our focus on the small and medium business segment.
It’s a quid pro quo. WestpacTrust is putting its weight and scale behind the entrepreneurial instincts and efforts of go-for-it kiwis in order to build a critical mass of high-value exporters.
We actively promote business excellence in innovation. Two weeks ago WestpacTrust sponsored the New Zealand Hi Tech Awards. The winners-list confirmed my optimism for New Zealand’s future – it demonstrated outstanding diversity and depth in the application of new ideas to both existing and new industries.
Supreme winner was Auckland health software company Orion Systems. They’re currently finalising a six-figure export deal. To give you a taste of the effervescence in New Zealand innovation, other winners included: Napier’s Ericsson Data Services; Auckland biotech company Genesis Research & Development; Palmerston North’s R&D Solutionz, and also from Auckland: Peace Software, graphics software company Right Hemisphere, and start-up of the year winner award winner Protemix – which researches and develops diabetes treatments.
WestpacTrust also supports business excellence awards around the country.
The challenges ahead are many. But I’m an optimist. And I tend to the view that optimism breeds success. Self-belief is lurking in the Kiwi spirit. We just to have coax it out so we can unleash our innovative flair on the world.
With an innovative mindset and an exceptional set of economic policies, I reckon this country and its businesses can ride through the global economic uncertainty.
Conclusion? Like WestpacTrust, New Zealand is positioned to perform well in the face of competitive pressures. And when we do come of entrepreneurial age, our competitors won’t know what hit them.
Here’s to New Zealand!