PANEL DISCUSSIONS
HOSTED BY SUSAN WOOD

In response to JULIA XU interview

SUSAN WOOD
Let me get straight to you there, Michael. I know that you are leading a delegation to China. We’ve heard very much there from Julia, ‘Get on the ground, get there, get there, get there.’

MICHAEL BARNETT - CEO, Auckland Chamber of Commerce.
Mm. And that’s what it’s going to take, and I think when you have a look at what has happened, obviously, the processes, procedures, testing that we’ve had in place, we’ve betrayed our own standards, and that’s not just a dairy company that that’s happened to; it’s the NZ brand, it’s the NZ reputation. So is it repairable? Yes, it is. But the thing is, it’s going to take time. Many of the people that are up there are companies that have invested over the last two or three years. They don’t have the strength of balance sheet to be able to do a Fonterra in this market, but they are going to have to go up there, and they’re going to have to tell a story and tell a story that’s going to give the consumers confidence that that product that we’re selling up there is good for their children.

SUSAN Because, Kate, you do get a sense Fonterra’s a giant. You get the sense it’s going to keep on rolling through. The commodity prices have held firm, and it will be the smaller companies like Julia’s and ones that Michael will be representing when he goes up in a week or so that are going to get damaged really badly.

KATE This is a consequence of the government’s hands-off approach, and we’ve got to remember that what the government’s role in this was and is. $26 million worth of cuts out of MPI. That’s staff cuts, that’s resource cuts, and Kiwis should be really concerned about that. And this has cost us as New Zealanders more than that. So whenever we put in place cuts for savings, we really need to think about what are we putting in place for the future. And as Julia was saying, it’s not just this one incident that we’ve just had; it’s been continuous for her, and that’s a real brand challenge for NZ.

SUSAN Because there are still the questions, Raymond, over the science. I mean, we’ve learnt that AgResearch that of course came up with the false positive wasn’t even accredited to actually be doing tests.

RAYMOND MILLER - Political Scientist
I don’t think any of us can be completely confident that this sort of thing might not happen again. And the problem is, of course, that the sad reality is that, you know, your headline’s all around the world when the scare is announced. You can’t buy space later on to say, ‘Well, actually, it wasn’t as bad as we thought, or there’s a false alarm.’ You just can’t do that. I am surprised that the Prime Minister hasn’t hightailed it up to China to actually directly intervene and tell a story, which is what Michael is talking about, because, I mean, I think it’s really important that our top politician is up there and explaining to the Chinese Government officials what we’re doing about it. Because, you know, it’s all very well for individual businesspeople to go to China and try and explain-

SUSAN PM’s got a lot of clout, though.

RAYMOND He’s got a lot of clout, and, you know, it’s a pity. I know he’s very busy and he’s going off to see Mr Abbott, I think. He’s-

KATE Too busy for this? You know, Fonterra and milk and dairy is NZ in China, right?

MICHAEL But I think Kate makes a very good point. And when you say about confidence in the future, they should be confident that our testing regimes are correct. They should be confident that our people on the ground are fully informed and know of the changes that are happening in China and are articulating it back here. There is no excuse for a lack of confidence, and that, to me, is where we’re going. So we need more people on the ground in China. That’s long-game. We need more testing, better testing, better processes here in NZ. But right now we need to be able to get up there and to be able to start giving those messages. I have to say, John Key’s been good. He’s given us a video clip where he’s saying the right things, and we’re not looking at the apparent or error; what we are looking at is the confidence that we need to rebuild in consumers.

KATE It’s probably not enough, though. He should really be there. And the $2 million from NZTE, I mean, that’s from savings in NZTE, so that’s $2 million that isn’t going to go towards helping other Kiwi businesses export out of NZ. So there’s a real consequence to this, and $2 million is probably not going to scratch the surface.

MICHAEL We look at it differently. We look at it and say there’s $2 million. We’re going to take that money, we’re going to invest it in the market, and if I have to come back and say to Mr Groser, ‘That wasn’t enough. We need some more, because this recovery-‘

KATE $2 million we didn’t need to spend. We could have been spending it on other Kiwi businesses.

MICHAEL But we have. I can’t change that. What I can change is what’s in front of me, and that, to me-

KATE But this is about leadership, and we shouldn’t let Fonterra off the hook either. Let’s remember, you know, $100,000 a week to be the CEO, and it was their systems and processes that fell over. They couldn’t track it. I mean, yes, we can’t change what’s happened, but we do need to come back to leadership failure, and we do need to set in place processes and systems. And, for me, I prefer to plan for the future, not cut staff budgets, not cut systems budgets just because I want to say to the NZ people that, ‘Oh, look how efficient I am.’ Well, this is the cost of that.

RAYMOND I think, too, we have been rather blasé in our attitude towards China, and, hey presto, suddenly it’s our most important trading partner. And a lot of people were just sort of flying in and doing a bit of business and then flying out again and assuming the NZ brand would carry everything. And I think that Julia makes a very good point, and that is the importance of having people on the ground who learn about the culture and the economy and are able to respond in a better and more informed way.

MICHAEL I don’t think we’re being blasé. I think we’ve seen the pace at which that market has grown for us. I don’t believe we’ve kept in place the checks and balances, and whether it was from the cuts or whether it was from the speed of growth, what he haven’t done is manage. We’ve learnt, we’ve learnt the hard way. And what I’m saying is it’s going to take some solid work.

SUSAN It’s going to take some time, though, to bring that up to speed, and you would hope that while we are bringing it up to speed, there are no more scares.

MICHAEL Correct, and that’s why I’m saying we shouldn’t be sitting here saying, ‘We can’t be confident.’ We should be sitting here saying, ‘We will be confident, and we should make sure that the right processes, the right number of people on the ground in China and here are in place to ensure that this doesn’t happen again and that our reputation, the NZ brand, isn’t damaged.’

KATE This is a consequence of a too hands-off policy, and Kiwis have a choice around that. Kiwis have an option.

SUSAN Thank you, panel.

ENDS

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