Paul Holmes interviews Dame Jenny Shipley
PAUL Dame Jenny Shipley, good morning.
DAME JENNY SHIPLEY - Former NZ Prime Minister
PAUL Yes, so another Chinese bid for the Crafar farms. Looks fairly hopeful. Is this the kind of foreign investment that's good for New Zealand?
DAME SHIPLEY Well, I'm not familiar with the company or the current bid, but let me remind us we are wealthy today because we've done business with the middle classes of the world. The next big middle class of the world is China. And so we do have to work out how to do business, so it's either got to be New Zealand businesses doing business with China or China businesses reaching in and working out what Chinese people need that they're interested in buying from us.
PAUL OK, let's go back to the acquisition of land, though, just for a second, because given the level of foreign acquisition that China's undertaking right around the world and their need for dairy, is there a danger, as John Key ruminated some time ago, that New Zealand could become tenants in our own country?
DAME SHIPLEY Look, I think that's very unlikely because the OIO process is very thorough, but remember the Chinese don't want the land. The Chinese want the resources and protein.
PAUL But in guaranteeing... But what they want is guarantees of supply, don't they?
DAME SHIPLEY Look, their middle class is exploding, and the one thing the Chinese government and Chinese companies worry about is disappointing the middle class, so they have to get good-quality food, and they have too keep providing steel and copper and coal and oil to fuel that economy.
PAUL I understand, but...
DAME SHIPLEY So they're out for long-term contracts, and so the Crafar farm to them will be "How do we buy into a big industry that matters to our people?"
PAUL And what matters to our people, of course, is the selling of land.
DAME SHIPLEY Of course. I understand that.
PAUL Right. So are we wrong to worry about that?
DAME SHIPLEY Well, look, I think we're wrong to be indifferent to it. The best business model is New Zealand businesspeople and Chinese businesspeople working out a way to do business together so it's a win-win.
PAUL Yeah, but the Chinese on the world stage, this is what they're doing - they're buying everything. They're buying in Africa. They're buying ports, mines - buying up supply chains.
DAME SHIPLEY That's true, and if you go and ask why they're doing it, it is this anxiety over the long-term. So they'll come in and say, "I don't want a three-year contract. I want a 40-year contract." And the reason they're wanting the 40 is they've got 1.3 billion people, and if they run amok and the middle class implodes and creates disruption there, that's a big problem for China. So the Chinese governments and their companies try and think about how to keep stability, and having food security and resource security are the two keys things on their mind.
PAUL Do we have to get real about China?
DAME SHIPLEY Look, we borrow from China every day.
PAUL Well, Steven Joyce said the other day if it weren't for Chinese money, we're buggered.
DAME SHIPLEY Well, I think, to be frank, right around the world that's true today. But again come back. Look, we have done business with people we know, and that's why we're wealthy as a small country. The new middle classes are people we're not so familiar with, and I think that's the point, Paul. We have to learn that if we want to remain wealthy and our children and their children will continue to be successful, we have to do business with the people who are moving in to the successful era of their development, and China right now - and India and Vietnam - are centre-stage in this development.
PAUL We seem to have a thing about Chinese, don't we?
DAME SHIPLEY Well, we use that word, but there are very good Chinese families here in New Zealand.
PAUL Oh, we know this. We know this, but...
DAME SHIPLEY And in Malaysia and in Fiji and in Singapore and in China, so what is the issue? Both my children have lived in China as young New Zealanders doing business around the world. Anna is there today. Ben was there for five years. And they, like many young New Zealanders, go to different countries where there's opportunity. Today, our next generation has got to look to China, and for my generation and my parents' generation, if we don't get over this, we should get used to wearing jandals.
PAUL Yes, by which you mean we won't be very well off?
DAME SHIPLEY Well, look, we are getting poorer and poorer.
DAME SHIPLEY And we are borrowing to keep our lifestyle. I'd rather us do business to earn our standard of living and pay off our debts. The government has been talking about what they can do, but the private business and private citizens have got to do our share, and part of it means understanding where the next opportunity is. China is one of many next opportunities.
PAUL I suppose it's the old business, isn't it? We're worried about being overrun, you know, as China...
DAME SHIPLEY We are a long way from China. Look, honestly, I don't think that's the issue. I think it is a long-standing ability for us to be comfortable like shoaling fish selling to the billion people we know, and suddenly there are four billion people we don't know very well in the new world, of which China is the main game.
PAUL How are we placed for supplying China, then? What does China need? How can we deliver?
DAME SHIPLEY China wants protein, because they're suddenly eating milk and now cheese, and so things that we can sell, they value. But they worry about if it's grown at home, so New Zealand-based milk powder or baby formula or any type of product - that carries a premium. Surely to goodness, New Zealand wants to then say, "Well, which Chinese-branded companies can we collaborate with so it's a win-win for the New Zealand business and the Chinese brand and the consumer there?" That's where the opportunity is.
PAUL So we've got great opportunities for the long-term with the Chinese, haven't we?
DAME SHIPLEY Well, yes, as long as we don't keep insulting them.
DAME SHIPLEY I mean, we have got very good connections. The previous Labour government and National governments have won this free-trade agreement, so it's a great platform. Every private-sector company, large and small, can now stand on the shoulders of that great relationship. But you don't keep poking people in the eye if you then want to do business with them.
PAUL But they're hard to do business with, aren't they?
DAME SHIPLEY I think many sophisticated businesspeople are hard to do business, but New Zealand companies have done business well around the world. That's why we're middle class today, and I do not believe that we can't continue to do business well with China.
PAUL China, of course, has its own problems, doesn't it? You know, the pollution there is terrible. 20% of the world population. They have 7% of the world's water, and half of that water is so polluted, it's unusable from the point of view of consumption and also industrially. It's got an ageing population because of the one-child policy. 18 million young Chinese per year move to the coast where the jobs are, leaving old Mum and Dad on the farm. The middle class want more freedom. They depend on ferocious supplies of foreign resources from very unstable parts of the world - like the Middle East for oil and so forth. How big are those problems for China?
DAME SHIPLEY I think all of the growing economies - I mean, the US relies of the Middle East for oil. We all rely on some of these unstable economies for certain resources. But China needs to keep its population stable, so that's why it's aggressively going out and taking a long-term position, and I think we need to understand that they have learned from history, that if their people get angry and implode, that destroys China. So they're not going to do that again.
PAUL Are they a benign country?
DAME SHIPLEY They say they are, and I haven't seen anything to make me feel otherwise.
PAUL Let us speak about women in business, Mrs Shipley. You're very committed to closing the gender gap in business. What is the Global Women's Network, of which you are a part?
DAME SHIPLEY Look, Global Woman New Zealand is a group of senior women - either executives or directors - who decided to get together.
PAUL This is New Zealand women?
DAME SHIPLEY Yes.
PAUL All around the world?
DAME SHIPLEY All around the world.
PAUL About 120 of you?
DAME SHIPLEY About 90 here and about 30 abroad.
DAME SHIPLEY We want to share our experience and support each other. We want to grow the New Zealand economy, and we want to bring the next generation of leaders through so that they also fill the gaps on the directors boards and chief executive roles.
PAUL So the Global Women's Network is the umbrella for Women in Leadership Breakthrough Programme. What is that?
DAME SHIPLEY Well, it's interesting. We started our Global Women and we had some great foundation sponsors. And five big New Zealand companies came and said, "Actually, we've got a problem bringing women through, and we will pay you..."
PAUL From the management point of view?
DAME SHIPLEY And in directors. I mean, Fonterra came. It's one of five: Fonterra, Telecom, State, PWC and Westpac all came and said, "Look, we're committed to bringing women through, and we want you to help work with us." So they helped pay for us to start a programme, and people like myself and Joan Withers and others give our time to mentor these young women who will be the directors of tomorrow or the CEOs or CFOs and so on.
PAUL There's some fascinating research coming through, isn't there - McKinsey have done some, the Hay Group have done some - on the effect of closing that gender gap on economies. There's research that says if Australia were to close the gender gap completely - 50/50 each way - that would cause an increase in the Australian GPD by 11% or $120 billion a year. How does that work? What are they saying there?
DAME SHIPLEY Well, people say, well, how can just women on boards or leading companies make the difference? If you go back to the financial crisis, the companies that did well appear to have women and men on boards or in the senior-management team in critical mass.
DAME SHIPLEY And on average, those companies had performed better because they take a different view toward risk and also opportunity. So the point is, Paul, when you have qualified people who are talented, but with a broad range of both business and community and connected experience, you bring all of that to the table, and it appears those companies thrive.
PAUL You bring both sides of humanity?
DAME SHIPLEY And you can't afford not to, because as the minister you just had on said, we need a plan for our country, and the government's doing their share, but companies - listed companies, private companies - also need to get the engine room going.
PAUL One thing...
DAME SHIPLEY And I'm arguing that if we get more women directors who are qualified and young women coming through our Women in Leadership programme - which is now into its... had its first year, out in the marketplace recruiting for its second year - we will see that New Zealand companies with women and men on boards will be contributing to the future economic growth.
PAUL But there practical ways in which we can quantify the contribution women can make on boards. For example, as you were mentioning to me yesterday, men possibly think more of production, whereas women will think about what the consumer wants.
DAME SHIPLEY It's interesting. Most women in most households - when that last dollar's being argued about, it's more often Mum not Dad who will decide where it will go. So the discretionary spending we know globally is often finally determined by the female preference. So again where boards are trying to decide whether their product is resonating with their consumers, again we need women and men on boards considering both the production issues, the logistics issues, the consumer preference, the brand position and whether or not the value proposition we're taking with New Zealand foods or beverages or products actually is just what we think is good for them, or what the consumer abroad things. And women often can stand on that other side of the fence and say. "Uh-uh. Just what we think is not enough. Let's stand in the shoes of that consumer."
PAUL "Mum's not gonna buy that breakfast cereal for the kids."
DAME SHIPLEY That's right.
PAUL I understand... I read yesterday, in Japan, women are responsible for 60% of the choices of what car you buy in families in Japan.
DAME SHIPLEY I suspect that once we get over the engine and the horsepower, women in New Zealand may well be deciding just on the practical comforts and so on of what will work for families.
PAUL Well, I'm only allowed a black car.
DAME SHIPLEY (laughs)
PAUL In France, 50% of board members have to be women by 2015.
DAME SHIPLEY Yes.
PAUL They just passed this. The ASX, Australian Stock Exchange, require its companies to advise - this is from last year - requires its member companies to advise on how they're meeting gender objectives. John Key initiated a Women on Boards initiative here in '09. Is anything changing in New Zealand, however?
DAME SHIPLEY Well, look, the Prime Minister's initiative was fantastic. He's saying we do need more women on boards. He and his women ministers are very proactive and they're working with the IOD and other organisations.
PAUL Yeah, but is it happening?
DAME SHIPLEY It's not enough.
DAME SHIPLEY While the state sectors been very good, by the way - 40% of current positions that the government appoints are held by women, so that's very good. But the NZX is not terribly interested in at the present time, and that's where...
PAUL Our lot aren't interested?
DAME SHIPLEY Well, that's where the transformation needs to change, because the leader of the ASX, a gentleman, said, "This matters, and I'm going to change the rules and require companies now to report." So while we don't want to add to the cost of compliance, we do want change.
PAUL Yeah, but, Jenny, are we going to have to regulate to make this happen?
DAME SHIPLEY Well, look, I would prefer not to.
PAUL Well, the French are doing it, aren't they?
DAME SHIPLEY Well, the French and the Norwegians and others have regulated. They said 40% by law. But in New Zealand, we're a small, dynamic economy by preference, and I would far prefer women and men who are senior directors today to say, "Look, we do need to compose our boards properly and go out and actively hunt these women down." And women like myself and other senior women in Global Women are creating a pipeline, so there's no excuse that they're not there. I don't buy that.
PAUL Good. McKinsey points out something else - that women seem to be reluctant to go for broke in the way that men do.
DAME SHIPLEY (chuckles) That's true.
PAUL You know, to put themselves forward for opportunity. Why is that? Because there's also the business of - what's it called? - the double burden: the domestic...
DAME SHIPLEY Sure, the family and work responsibility. Increasingly today in New Zealand, mums and dads are sharing the load - not in the same way, but much more than it used to be.
PAUL Women still do the domestic work, don't they?
DAME SHIPLEY They do more of the domestic work than men, but that's a good message for our male colleagues this time as well. What we need is to understand that women won't often apply for a job until they're almost 95% qualified. So they tick the box and say, "If I can't do it all, I can't be qualified." Men look at the same job, and as long as they get to about 60%, they'll apply. Now, I think that's not a women or men issue, but rather over years women often have not seen themselves in these roles. And again it's up to the broader community to say, "Look, we do expect and support women to come through as CFOs, COOs, CEOs and as chairmen of companies and women directors." As the climate changes, I think then you'll see younger women expecting to be successful in a different way.
PAUL It is a fascinating business, and I thank you very much for coming in.
DAME SHIPLEY It's my pleasure.