John Durie’s 2018 CEO Survey - part 2

John Durie asked more than 60 of the biggest names in business five key questions about what’s coming in 2019.

57 min read

12:00AMDecember 15, 2018.

Updated 1:32AMDecember 15, 2018

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In our annual a survey of business leaders, the top executives maintained that economic growth, a national energy policy and most of all long-term stability were the key agenda items.

In the wake of the financial services royal commission, the survey revealed an almost religious devotion to customers as the route to prosperity for corporate Australia.

Delivering customers what was promised is seen as the key way to restore trust.

Business leaders are also beginning to see signs of wages growth across their workforce, particularly as labour markets tighten, although wage rises are not even distributed across the economy.

At a time when trust in big business and government is at all-time lows business chiefs want leadership from Canberra with an emphasis on bipartisan energy reforms and long-term policy to improve the economy.

These were our five big questions for 2018:

What should be the key issues in the next federal election campaign?
What use are you making of customer and company data and how are you collecting it?
What are the key challenges for your company next year?
How can big business regain community trust?
What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so, how much?

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Mark Fitzgibbon | NIB

Picture: Hollie Adams

What should be the key issues in the next federal election campaign?

It will be and should be climate change. It won’t be and should be reform of the $180 billion healthcare system. Australia desperately needs more private funding given a ballooning dependency ratio.

What use are you making of customer and company data and how are you collecting it?

Claims experience to better inform how we might help members improve or better manage their health. We aspire to collect even more member data with their permission and involvement to make this guidance all the more personalised and precise.

What are the key challenges for your company next year?

Convincing policy makers of the need for private health insurers to play an expanded role in the healthcare system.

How can big business regain community trust?

By focusing upon their purpose as a business and narratives that place this ahead of financials. By making an active contribution to the wellbeing of communities in which they operate via “sustainability” agenda.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so, how much?

Claims costs driven by a combination of price inflation and growing utilisation. Best offset by deregulation of prices and helping members stay healthy. Will be some wage pressure say 3 per cent but that will help stimulate spending and sales.

Elizabeth Gaines | Fortescue Metals Group

Picture: Colin Murty

What should be the key issues in the next federal election campaign?

2018 has been a challenging year in Australian politics. Our political representatives have a responsibility to ensure we have a positive and constructive election campaign and that our national economy is robust and positioned for future growth. Western Australia’s mineral endowment and talented people have created a strong resource industry which is a major ongoing contributor to the Australian economy. There are a number of important projects that have been approved across the sector in Western Australia with a pipeline of investment in the short to medium term of close to $15 billion. It is vitally important that there is stability in policies and pathways to approvals to ensure these opportunities are optimised for the State and the Nation. It is vital Australia remains globally competitive with policy settings that facilitate ongoing stability, sustainability, innovation and investment.

What use are you making of customer and company data and how are you collecting it?

Fortescue was the first company in the world to deploy CAT autonomous haulage on a commercial scale at our Solomon operation and, by the end of next year, we will be the only iron ore company in the world to have a fully autonomous haulage fleet. In a world first, we have retrofitted an autonomous haulage system on a CAT 789D and a Komatsu 930E haul truck. We continue to look for opportunities for automation and artificial intelligence to drive greater efficiency across our business including data that enables us to predict outcomes and optimise our performance. This extends from our mining operations right through to administration, workforce planning, procurement and finance functions. Personally, I believe data analytics represents a huge opportunity for our business and industry and we are focused on optimising the data generated from our large-scale autonomous operations to drive productivity, safety and efficiency improvements.

What are the key challenges for your company next year?

2019 will be a pivotal year for Fortescue as we begin exporting our new 60.1 per cent iron content product, West Pilbara Fines. The higher iron, low alumina ore further enhances the range of ores available for our customers. The development of the $US1.275 billion Eliana mine and rail project will also continue with first ore due in December 2020. The project is important to Fortescue and the state of Western Australia, creating up to 1900 jobs during construction, 500 full time site positions once operational and underpinning the ongoing production of West Pilbara Fines. Feasibility studies and development options for the high grade, Iron Bridge Magnetite Project continue to be evaluated with a decision to be made in conjunction with our joint venture partners. The investment across the sector will drive demand for key skills and trades. It will continue to be important for Fortescue to drive our unique culture and values to ensure we attract and retain the skills and talent we require.

How can big business regain community trust?

Social licence to operate and community trust goes hand in hand. “Social licence to operate” is a term used by many, but it is not a term you will hear frequently mentioned at Fortescue. That’s not because we think it’s invalid or superfluous to our operations, on the contrary; how we work with our communities is a part of our DNA. Fortescue was founded by our chairman Andrew Forrest AO with the vision to ensure the communities in which we operate benefit from our growth and success. Our commitment includes creating economic opportunities for Aboriginal people through the provision of training for guaranteed jobs; employment and business development opportunities. Our Billion Opportunities program is a strong reflection of the success of our approach with over $2 billion in contracts awarded to Aboriginal businesses and JV’s.

What cost pressures are hitting your company; how are they being offset?

Our C1 cost for FY18 was an industry-leading and record low US$12.36/wet, which continued our consistent year on year improvement. As a business, we are impacted by external cost factors including the oil price and exchange rate, so we’re very focused on controlling the costs we can control. We strive to ensure that our ongoing C1 cost achievements are sustainable and continually seek initiatives to further enhance our cost performance, including further automation of our operations. We are currently converting our manned fleet at the Chichester’s to Autonomous Haulage and, once completed, we will be the only iron ore operation globally to have a fully autonomous haulage fleet. This is an important initiative to offset any cost inflation. Our relocatable conveyor is another great example of how innovation is delivering cost reductions. By providing greater flexibility and increased accessibility to remote mine pits, the relocatable conveyor is reducing haulage costs and offsetting rising strip ratios.

Do you see any pressure to lift wages; if so how much?

We continually benchmark our labour rates to ensure they are competitive within the industry and the remuneration packages offered to our team members include short and long-term incentives as well as bonus payments. We also believe our unique, differentiated culture is crucial in our ability to attract and retain a talented and diverse group of people across the business. There is no doubt that we are facing a period of competition for key skills and trades and it is important that the government policy settings facilitate access to these key skills and trades to ensure that Australia benefits from investment opportunities across the mining sector. Fortescue strives to be an employer of choice and implements programs and incentives to attract, develop, challenge and retain its people including practical initiatives to support women in the workplace such as job flexibility and child care available through the Fortescue Family Room.

Kevin Gallagher | Santos

Picture: Marie Nirme.

What should be the key issues in the next federal election campaign?

I’ve spent the last three years at Santos paying down debt and building the financial resilience to withstand the bottom of the commodity price cycle, continue to fund our operations, grow our business and return dividends to shareholders. That mindset should be front and centre in the next federal election too. While the budget looks set to return to surplus in the next year or so, it is on the back of increased revenues because of higher commodity prices. But commodity prices go down as we’re seeing with the oil price right now, so you can’t assume rivers of gold will just keep flowing. Australia faces an ageing population, with all the social security, health and care costs that come with looking after Australians who’ve paid their dues, so fiscal responsibility and economic policy that facilitates investment and grows the economy should be the big issue of the 2019 federal election campaign. It’s the only way to ensure future generations can enjoy the high living standards that we have. While Australia still does not have a coherent energy and climate change policy that will support investment in critical energy infrastructure, it’s the last thing we need to be an election issue. What we need is leadership on both sides of politics to deliver a post-election return to the bipartisanship that served Australia so well in resources and energy up until the last decade.

What use are you making of customer and company data and how are you collecting it?

We’re starting to really focus on advanced analytics to optimise our operations, particularly in remote areas to help us reduce costs. As Australia’s lowest cost onshore operator, we use data analytics to continuously improve our operational performance. We have successfully used analytics to predict failure of equipment and automate the creation of work orders to repair; create efficient routings for deliveries in remote areas; and optimise the use of consumable materials.

What are the key challenges for your company next year?

The biggest challenge we face in Australia is access to natural gas resources so that we can unlock their wealth for future generations of Australians and provide cleaner energy both in Australia and in Asia. Unlocking these resources is also the best way to put downward pressure on gas and electricity prices. Santos is about to enter a major project development phase, particularly offshore Western and northern Australia, so we need a stable and internationally competitive fiscal and regulatory environment to give our customers and our investors the confidence to back our investment decisions. When I travel around the world to meet with investors and customers, it is no longer taken for granted that Australia will deliver the reliability and certainty we have been renowned for over many decades. Policies that could restrict gas exports, regulate prices or force divestment of assets make customers and investors concerned about their positions in Australia. We need leadership on both sides of politics to reassure our trading and investment partners that contracts will be honoured and that we will continue to operate a stable, rules-based market system.

How can big business regain community trust?

A clear purpose, reflected in a company’s values, culture and behaviours is extremely important. The last Edelman trust survey found that about 65 per cent of Australians think that CEOs should lead on social change. At Santos our purpose is to provide sustainable returns for our shareholders by supplying reliable, affordable and cleaner energy – natural gas – to improve the lives of people in Australia and Asia. It’s a great way for us to lead on social change because in Australia natural gas is the perfect partner for renewable energy, providing reliable power 24/7, and in Asia natural gas is cleaning up air pollution, bringing blue skies and better health, and lifting hundreds of millions of people out of poverty. Our purpose is defined in a way that reflects one of our core values – to build a better future. I think we have to take a long-term view of shareholder returns and ensure we contribute to society by paying our fair share of tax, acting with integrity, investing in the communities where we operate and protecting the environment.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Over the last three years Santos has implemented a disciplined low cost operating model that means we are cash flow positive at oil prices of $US40 or below. We will continue to be very disciplined in managing our costs so that we are resilient throughout the oil price cycle. People want to work in our industry because we offer high-skilled and well-paid jobs across regional Australia. While Santos has had a conservative approach to wages during our transformation to become Australia’s lowest cost onshore gas developer, our remuneration and benefits have been designed to reward results and facilitate our low cost focus. We aim to ensure we are competitive with our peers in terms of attracting and retaining talent and we undertake periodic benchmarking to ensure that.

Nigel Garrard | Orora

What should be the key issues in the next federal election campaign?

Resolving the energy crisis to address availability and affordability are critically important, not only for the Australian manufacturing sector and companies such as Orora, but also for our nation more broadly. Federal politics over the last decade has been short-term and tactical in focus and as a result decisions regarding many of the key strategic issues for Australia, have either been left idling or not resolved. As a nation, where are we going, what do we want to be? The parties should take their visions for Australia to the election and seek endorsement from the public, so that the big strategic issues for our nation, such as global competitiveness, energy, immigration, and infrastructure and so on can be addressed. Without a vision for our future we are condemned to reactionary and tactical politics that does little to advance our nation in the long term.

What use are you making of customer and company data and how are you collecting it?

Today we are able to access an enormous range of data on every aspect of our business. The ongoing challenge is therefore not the availability of data, but how to leverage the data in a meaningful way. This has been a major focus area for our business and we have invested to improve the way we collect data, data security and importantly how we analyse that data to improve production efficiency and overall business performance.

What are the key challenges for your company next year?

Energy cost and reliability remains the major challenge for our business in Australia. Gas and electricity prices are a long way from being comparable with advanced industrial economies around the world. Australian manufacturing was built on low cost, reliable energy in the past, and this has been an advantage when competing in international markets and against imports. While companies are playing an important role by investing in renewable energy and to drive their own energy efficiency programs, ultimately industry needs policy reform that is beneficial to Australia in the long term and leaves partisan politics behind. Attracting high quality talent, particularly in some North American states and sectors, where the economy is growing strongly and unemployment is at historically low levels, remains a challenge for Orora in that region.

How can big business regain community trust?

A business builds trust over the long term by consistently delivering on its commitments and through being open and transparent with all stakeholders. While community trust in business has been tested in some quarters in Australia this year, it is also important not to tar all business with the same brush. Businesses, large and small, have and continue to make a significant contribution to communities across Australia. In addition to being a signatory to the United Nations Global Compact’s (UNGC) Ten Principles covering human rights, labour, environment and anti-corruption, Orora contributes positively to its communities though investing in initiatives in areas where we believe Orora can make a real, tangible difference. These include: 1. Advancing manufacturing jobs, skills and people by providing opportunities for apprentices, industry 2.0 undergraduates and career development; 2. Meeting the sustainable energy challenge and the two power purchase agreements (PPAs) Orora has signed with renewable, wind generated electricity providers to supply volumes equivalent to 80 per cent of Orora’s electricity needs across Australia are an example of that; and 3. Recycling – Orora is one of Australia’s largest recyclers of old cardboard boxes, glass bottles and aluminium, that we collect and manufacture back into new packaging that is then returned to our customers in Australia and North America.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

The major cost headwind for Orora is energy. Orora has taken a number of proactive steps to do what it can to offset the cost of higher energy prices in Australia, including signing two separate power purchase agreements (PPAs) with renewable energy providers to supply wind generated electricity to Orora’s operations in South Australia, Victoria and NSW, where Orora operates its largest and most energy intensive plants. We have also invested $23 million to build a secondary water treatment plant at Orora’s Botany Paper Mill that has reduced waste water charges and also generates biogas that is converted into renewable electricity to help power the site.

In Australia and New Zealand, Orora’s workforce receives wage increases annually. In North America, we are seeing increasing wage inflation that we need to be mindful of. In both cases, the role of the business, and our obligation to all stakeholders, is to find ways to be more effective and efficient and overcome the cost pressures we face, including wages. To date, Orora has done this and we will continue to make this a focus.

Nigel Garrard | Orora

Nigel Garrard is the managing director of Amcor Australia, pictured in their Hawthorn offices.

What should be the key issues in the next federal election campaign?

What use are you making of customer and company data and how are you collecting it?

What are the key challenges for your company next year?

How can big business regain community trust?

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so, how much?

Emilio Gonzalez | Pendal

Picture: Hollie Adams

What should be the key issues in the next federal election campaign?

As it was famously said before: “It’s all about the economy.” I’d like to see the next federal election fought and won by the party with the most well-considered economic policy that best positions Australia for sustainable growth in the decades ahead. We are heading towards an economic inflection point – and managing this successfully should be high on the political agenda.

What use are you making of customer and company data and how are you collecting it?

Our core business is active investment in equities to create long-term value for clients and shareholders. We are a people business that relies on the talent of active managers as stewards of capital – rather than being a passive, algorithm-led fund manager. When making capital allocation decisions, our fund managers undertake deep analysis of company data, forecast market trends and consider the read-through of geopolitical events, which enables them to identify mispriced securities and make long-term investment decisions that often take many years to fully play out. As a B2B business most of the intermediaries supply us with information on their business that helps us better service them and understand their business better.

What are the key challenges for your company next year?

Key challenge will be navigating through markets that have been supported by loose monetary policy, which is coming to an end. On top of this there is growing geopolitical and global trade concerns, which do not appear to be going away anytime soon. Domestically we have a Federal election that could lead to a change in government and there continues to be little policy direction. All of this is likely to place a dent in consumer confidence and concern over markets. However, we view periods of uncertainty and weakness as potentially throwing up opportunities where firms like ours with no debt, patience and a clear strategy have the ability to look beyond the short term and maintain a vision for the long term.

How can big business regain community trust?

Connect with the community and be part of the community. Big business needs to engage in effective communication that is authentic and real, be transparent and above all demonstrate integrity in what you do and how you treat your customers. The tone needs to be set from the top.

What cost pressures are hitting your company? How are they being offset, and do you see any pressure to lift wages? If so, how much?

The trend towards increased regulation, particularly in financial services, is a global phenomenon that shows no signs of abating. As a result, compliance costs are increasing, and we must therefore focus on ensuring disciplined cost management to offset these costs in other areas of the business. In terms of wage pressure, we’re a people and performance-orientated business and our employees are paid market-competitive salaries and incentivised to achieve outperformance.

Matthew Grounds | UBS

Picture: Britta Campion

What should be the key issues in the next federal election campaign?

Stable government, sensible long-term policy settings which encourage investment and sustainable economic growth, infrastructure investment, modernising the national curriculum for high schools, restructuring the funding model for our university sector and more investment in medical research.

What use are you making of customer and company data and how are you collecting it?

An example would be when UBS founded Evidence Lab in 2015 as a primary research capability within our Global Research business. In 2019 Evidence Lab Innovations will form its own business outside the research regulatory barriers operating as a central repository for data services for all UBS Investment Bank businesses. Evidence Lab Innovations will continue to be at the forefront of data innovation, operating as a distributed model direct to clients of all parts of the Investment Bank globally. Unlocking this capability across data science to all parts of our business is an exciting next step.

What are the key challenges for your company next year?

As I expressed last year our challenges are also our opportunities. They are:

Ongoing investment in our people making sure we have an inclusive and diverse culture
Continuing our track record of prioritising great client outcomes
Building our technology capabilities to support our people and our clients.

We need to continually invest in our business – in particular, our people and technology –we see this as driving positive change and continuing to help our clients achieve great outcomes. This has proved to be the right approach for us in Australia. Our team is renowned for its leading innovations in research, equities, fixed income, capital markets and M&A. Our expertise in the execution of capital markets transactions has ensured that we are once again the number one Investment Bank in the Australian market this year. UBS continues to focus on conduct and our culture and we are focused on ensuring strong local and global career paths for our employees.

How can big business regain community trust?

We need to ensure that that the benefits of growth are distributed fairly across society. Business needs to be seen to be leading by example on this by tangibly demonstrating their contribution to the broader community – as an example through supporting education, supporting investment in medical research and other charitable pursuits. We need to encourage our employees to play a wider part in the community and back them with our resources. We all need to invest in education for the development of the financial services industry as a whole.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Overall although Australian unemployment has fallen to a relatively low level, wage pressure remains relatively modest. Within the finance sector specifically, increasing technology, regulatory and compliance costs are a feature and so we are continually being selective and targeted with our investments both here in Australia and offshore.

Andrew Harding | Aurizon

Picture: Supplied.

What should be the key issues in the next federal election campaign?

Political stability and policy certainty. Governments need to restore the confidence of the community and the business sector that they have plans and will deliver against those plans for the benefit of the nation. That should be the platform for initiatives to enable economic activity and deliver competitive advantage for Australia and jobs for Australians. Priorities should be energy and tax reform, and simplification of a complicated regulatory environment for Australian business. There is a need for investment that provides for efficient supply chain infrastructure and operations over the medium to long-term. If the private sector is to make sustainable investments, policy and regulation needs to recognise the risks associated with investment and consider medium to longer-term requirements of producers.

What use are you making of customer and company data and how are you collecting it?

Digital transformation and technology are driving better outcomes for Aurizon and its customers. Real-time data capture by drones, and onboard locomotive and trackside equipment is changing the way we run our business and maintain our assets. Our maintenance crew are now as likely to carry a tablet as a toolbox. For example, we can pinpoint to the millimetre the wear and flaws on 12,000 tonne coal trains as they rumble past at 80 kilometres an hour. We use trackside “supersites” with banks of lasers and cameras that take more than [200,000] images on each train pass. This real-time data then drives how we plan and prioritise maintenance, dramatically reducing costs, improving asset utilisation and reliability for customers, and safety for employees, customers and the community.

What are the key challenges for your company next year?

A key outcome for Aurizon is achieving more balanced regulatory settings to underpin investment in our coal export infrastructure and to support the continued success of Australian coal exports. Long-term regulatory reform is long overdue in this space. We must create more commercially-oriented regulatory settings that encourage investment, industry growth and supply chain efficiency. An emerging challenge, especially for those companies involved or servicing the resources sector, is demonstrating our broader community benefit and contribution to the economy. The polarisation of views on the thermal coal industry for example does little to inform a balanced discussion on its role in a modern economy and a sensible transition to lower-emission energy sources. Internally, we are very much committed to delivering a much simpler business model for the company, with more leaders and roles located closer to the customers in the regions. We are lowering our cost base, finding smarter ways of doing business and introducing technology that unlocks higher productivity for Aurizon and our customers.

How can big business regain community trust?

There are two elements to the trust equation. Firstly, companies need to be open and transparent about the social, environmental and economic aspects of your business and be prepared to be judged on your performance. At Aurizon we bring this together in our Sustainability Report and measure performance against industry benchmarks so the community can decide if we’re delivering on our promises. The second element is delivering at the community level. Here people can see the tangible benefits of local jobs and your spend with local business. Your community Investment programs must also work at this level and be linked with the interests and needs of your people in the local community. More than 75 per cent of our workforce live and work in regional communities. This is the place where the community can genuinely judge whether corporates are “doing the right thing”.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

We achieved a reduction in operating costs of $44 million in FY18 while delivering record volumes in both our Coal and Network businesses. This is largely the result of a transformation program aimed at reducing our cost base and finding new efficiencies – many of which are technology-enabled. This transformation program delivered $380 million in benefits over the past three years. Continuous improvement across every dimension of the business will underpin value creation for customers and shareholders moving forward.

In terms of wages growth, Aurizon is part way through negotiating enterprise agreements covering the majority of our workforce. The context for these is the low-inflation environment that has prevailed in Australia for a number of years and which has resulted in a relatively low-growth environment for wages. The EAs we have negotiated this year have produced wage outcomes in line with this modest growth, with annual increases of between 1.5 per cent and 2.5 per cent.

Peter Harmer | IAG

Picture: James Croucher

What should be the key issues in the next federal election campaign?

What we need to be talking about is a plan that sets Australia up for sustainable growth in a global economy, and policies that create a stronger, more inclusive and fairer society. However, given the current environment, I’m worried that we’ll get caught up in short-term populist politics rather than visionary policy and leadership. I am hopeful, however, that future leaders, especially with both political parties recently taking action to limit leadership spills, will take a bolder, long-term view. We should be having conversations about how we transition to a digital-first economy, build better governance frameworks to strengthen our economy and what we can do to mitigate the impacts of climate change.

What use are you making of customer and company data and how are you collecting it?

Data is quite simply a window into our customers’ worlds and what’s important to them, and one of the key organisational assets we’re developing to build an IAG fit for the future. As Australia and New Zealand’s largest insurer, we are in the unique position of having a wealth of information that gives us an insight into our customers, the assets they insure and the environments they interact. In fact, we have records of almost all motor vehicles registered and profiles of nearly all the domestic residences across Australia and New Zealand. Through better understanding our customers, we’ve turned this data into real insights that will help us provide them with the experiences they value and desire in the areas of mobility, home and the workplace. Data is one of the assets – along with capabilities such as analytics and artificial intelligence, digital tools and a structured innovation approach – that we’re using to transform IAG into a more customer-centric company. As we continue to improve our understanding of customers’ needs, and harness more sophisticated technologies and innovations, we will be able to do more to help people understand, manage and prevent risk, whether that’s through new products or new and complementary extensions to our business. This opportunity makes me excited about our future growth.

What are the key challenges for your company next year?

Like so many other companies, our challenge is to balance delivering for the short term while building a business for the long-term. We see the IAG of the future offering assurance, rather than just insurance. Assurance is about helping people understand, manage and prevent risk. We’ve been helping people for 160+ years deal with misfortune. For example, we help them get their car back on the road after an accident, repair their home after a storm or help get their community back on its feet after a flood or bushfire. Our future, however, is about helping to mitigate or prevent that misfortune by harnessing increasingly sophisticated technologies and innovations to help people better understand, manage and prevent risk. The technology we’re exploring via our own Firemark Labs in Sydney and Singapore, and through our partnerships with start-ups, is helping with this evolution.

How can big business regain community trust?

It’s as simple and complex as taking a much broader stakeholder view every time you make a decision – so that your choices demonstrate that you’ve got your customers’ and the broader community’s well being at heart.

It’s about the basics of:

doing what you say you will do
keeping your promises, and
listening.

Building trust takes time and consistency. We’re continually reassessing and challenging ourselves to do better, and our Consumer Advisory Board (CAB) and Ethics Committee are helping us do that. The CAB brings us customers’ firsthand insights and concerns about insurance, while our Ethics Committee helps us with ethical decision-making frameworks.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

We continue to tackle higher motor and home claims costs because they’ll ultimately impact the cost of insurance for customers. In terms of motor, cars are getting more advanced and complex to repair which is why we work closely with our repair partners to ensure they have the right skills, technology and processes to deliver for our customers. This work, along with initiatives for customers like choice of repairer, are showing signs of success and helping us keep ahead of claims inflation. We also expect to see greater costs in the future from compliance. Broadly, we’re not seeing consistent pressure to increase wages at a faster rate compared to recent years. What we are seeing is pressure on particular skills where there is currently a shortage in the market.

Brian Hartzer | Westpac

Picture: AAP

What should be the key issues in the next federal election campaign?

A strong economy is central to maintaining Australia’s high standard of living. A strong economy also provides the taxation base that governments need to invest in the services that people value. So the starting point needs to be policies that help the economy continue to grow, in ways that spread the benefits across our community. If governments provide policy stability and a tax framework that welcomes business and rewards investment, then businesses will invest in ways that create opportunities for everyone. Transport infrastructure is one area where governments can make a direct impact: better roads, rail, and ports mean it’s easier for people to get to work and businesses to get goods to market. And, we’ve seen clear evidence that commitments to investing in specific infrastructure projects has a multiplier effect across the economy, particularly with small businesses who invest to serve those projects. There has been considerable progress at both the federal and state government levels but more needs to be done. This includes investing in regional areas, to take pressure off already-congested cities. Finally, we need to resolve energy policy. Higher energy costs are a major impost on both businesses and households and are crowding out spending in other areas.

What use are you making of customer and company data and how are you collecting it?

Our number one priority on data is protecting our customers’ privacy and personal information. We’ve made substantial investments in improving our cyber protection this year and are encouraging our business customers to do the same. The increasing availability of data through our customers’ use of mobile banking in particular is helping us understand our customers better and provide them with a more personalised banking experience, while also improving our ability to identify and reduce fraud. In the future, better use of data will help us streamline our credit processes for customers while ensure we meet our regulatory and responsible lending requirements Data sharing through “open banking” will bring improved efficiency and competition to our banking system. However, it’s critical that we keep data security and privacy at the forefront, and make sure consumers maintain control over where and when their personal data is shared.

What are the key challenges for your company next year?

As an industry we clearly have a long way to go to resolve outstanding customer issues and restore trust. At Westpac our top priority is to complete our remediation activities and make sure we embed the lessons from the royal commission into the way we run our business. As part of this process we will work constructively to implement any further changes while seeking to ensure that the strength of our financial system and support for the broader economy are not compromised. In particular, I am committed to ensuring that Westpac continues to do our job in providing credit to support our customers to own their homes and build their businesses. From an internal perspective, we are continuing to invest in our technology platforms in ways that help our people deliver a great service experience for our customers at a much lower cost. This will give customers more reasons to join our brands and consolidate their financial services needs with us — for reasons that aren’t just about price. Finally, with revenue under pressure, higher compliance costs, and increased competition, structural cost reduction is a priority. We are aiming to reduce our “run” costs by 1 per cent this year through simplifying our products, digitising processes, and removing duplication across our business.

How can big business regain community trust?

For banks, many of the stories raised at the royal commission were terrible, and there’s no magic wand that can restore that trust. Rather, we need to work over time to rebuild trust along three dimensions:

First, character: We need to demonstrate that our motivations are not about putting profits ahead of people, but rather start with the goal of earning and maintaining customers’ trust over time. Second, competence: we’ve made too many operational mistakes that have impacted our customers, and we simply need to do better — and fix things fast when they do go wrong. And third, consequence: we need to demonstrate that people at all levels are held to account for their failings. At Westpac we’ve already begun this process, by:

Reviewing and simplifying our product set, customer processes, and fees, with the goal of getting the basics right, every time
Improving the way complaints are handled and resolved, including more proactive identification of vulnerable customers and putting in place mechanisms to resolve issues more quickly
Reinforcing a service culture across the company, and empowering people to make decisions that give customers the benefit of the doubt, and
Strengthening the clarity of accountability, sense of ownership, and range of consequence that flows to when our people make mistakes or fail to live up to our code of conduct

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

The biggest challenge has been a material increase in regulatory and compliance-related costs. This has included development of the New Payment Platform, the introduction of a new reporting framework for banking statistics, implementation of comprehensive credit reporting, preparations for the new “Open Data” regime, the need to replicate financial systems in NZ, a new ASIC funding model, and implementation of the BEAR regime. These Regulatory and compliance cost have increased $268 million over the last two years, up almost a third. If you add in the Bank Levy that is an increase in costs of $646 million per annum for the Westpac Group. Westpac is already one of the more efficient banks in the world, which means there aren’t many “quick wins” to meet our cost objectives. That means we need to invest in order to reduce costs through product simplification, re-engineering, and automation — including a greater use of digital technology by our customers. Over recent years, this approach has delivered productivity savings of around $250 - $300 million per annum. In 2019 we aim to lift that to more than $400 million — almost one third higher than in 2018. We do believe that wages will begin to increase next year. Westpac has awarded pay increases to most staff, including a 3.25 per cent annual increase in fixed pay for the next 3 years for employees earning up to $82,500 p.a.

Mark Hooper | Sigma

Picture: Stuart McEvoy.

What should be the key issues in the next federal election campaign?

We’d like to see less political self-preservation, and more about long-term policy development. This should also consider long-term support for essential services like the medicine supply chain particularly in remote rural and regional centres. Sigma services some of the most remote parts of Australia and our CSO obligations ensure pharmacies have the right medicines available to enhance the health outcomes of their patients.

What use are you making of customer and company data and how are you collecting it?

Data itself is not the answer, it is the analytics that go with it. If you don’t do this, you get picked off by competitors, including online providers. Sigma has invested in industry leading technology that allows our brand members to tap into de-identified data at a point of sale, so we can see what customers buy, when they buy and identify patterns. That allows us to get closer to our customers and react better to their buying needs.

What are the key challenges for your company next year?

The pharmacy sector has become one of the most disrupted sectors in Australia over the last decade. Sigma is at the forefront of the juggling act between working with the Federal government to reduce its PBS financial exposure, while at the same time maintaining our Community Service Obligation (CSO) responsibilities that continuously ensure timely and efficient medicines access for patients. We are addressing this by implementing significant structural change across our business, investing in our distribution network to drive efficiency and effectiveness in serving our customers, and actively seeking growth opportunities in other adjacent sectors that leverage our existing core capabilities. Other logistics operators that aim to offer a lower standard direct distribution model risk undermining the current system and diminishing health outcomes in the community.

How can big business regain community trust?

The community needs to be a key consideration in everything a business does. As Australia’s leading pharmacy wholesaler, Sigma knows we need to ensure pharmacies have the certainty of medicines access for their patients. That’s what businesses need to do every day – ask the question of how they can look after customers and their communities.

What cost pressures are hitting your company? How are they being offset, and do you see any pressure to lift wages? If so how much?

Sigma has growing volumes, increased regulatory pressure, increased competitive pressure, but declining like-for-like revenues due to regulatory changes to the PBS system. We try to offset this by targeting new revenue streams in Hospitals and 3PL/4PL services while at the same time driving operational efficiency improvements. Our strategy recognises that what is really required is step change, and that partly comes from investment in infrastructure (which is the phase we are more than half way through) and a commitment to look for new income streams. Sigma has embraced this challenge.

Patrick Houlihan | Dulux

Picture: Adam Yip

What should be the key issues in the next federal election campaign?

Maintaining Australia’s economic prosperity and living standards while protecting the cultural fabric of fairness and equality of opportunity. For government and business that means working together to maximise economic growth while also protecting and enhancing the cultural fabric of our society – democratic principles of fairness, equality of opportunity and living standards. Key focus areas include energy reliability and cost, labour skills, fostering innovation and addressing key infrastructure.

What use are you making of customer and company data and how are you collecting it?

We use it to improve the consumer and customer experience. One example is our “Live Chat” capability to provide real-time support and advice, e.g. Dulux colour consulting, Yates horticultural advice in the garden (which just reached 100,000 ‘live chats’), etc.

What are the key challenges for your company next year?

For our market leading brands to continue to stay ahead of the curve on marketing and innovation in our rapidly changing world.

How can big business regain community trust?

Put the consumer/customer at the heart of everything they do. Businesses need to understand their core purpose. That is: “Why do they exist in the first place?” If they do that well, then consumers consume, customers trade, suppliers supply, employees are engaged and shareholders benefit.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Direct raw material input costs, which are globally driven, will continue to increase, albeit at a lower rate than FY18. Although we are not a large direct user of energy, the cost of energy has an indirect impact through our suppliers. We have a good track record of offsetting costs through efficiencies and pricing discipline.

Greg Hunt | Nufarm

Picture:Yuri Kouzmin

What should be the key issues in the next federal election campaign?

There are a few macro global headwinds that multinational companies like Nufarm are navigating (volatile currency movements in emerging markets; Brexit and US/China trade policy etc.) so domestic policy certainty and stability would be very welcome. If we want sustainable manufacturing of crop protection in Australia, then we need to reduce energy costs. We urgently need clarity on domestic energy policy – we must settle on a policy framework that balances affordability and reliability with steps towards reduced-emissions supply. Without this we’ll continue to see the competitiveness of Australian manufacturers suffer. Foreign policy won’t be an election issue, but it should be – Australia has a delicate line to walk given the trade tensions we are seeing between China and the US. China is both a key supplier and a potential market for us, and we have a growing business in the US. We’d like to be confident that either side of the political divide will be sensitive to foreign policy ramifications for global businesses like ours, particularly when it comes to trade.

What use are you making of customer and company data and how are you collecting it?

Like many other companies, Nufarm is refining the way we use our data to drive our strategic decision making and deliver better outcomes for our customers. We’re investing capital to roll out a new data-heavy back-office system, for example, as well as rolling out new technology that gives us better global visibility and leverages data to drive our procurement and demand/supply planning. Data and analytics have a big role to play in our future competitiveness.

What are the key challenges for your company next year?

In terms of our domestic business, autumn rainfall in key cropping regions – particularly in drought-affected Eastern states - will be important to us and many others in the ag sector if we want a good winter crop. Improved weather conditions are also needed to help us capitalise on the recent product portfolio acquisitions we made in Europe. We’ve got 100 years of experience dealing with drought and other weather-related challenges – and we’ll be continuing to look for efficiencies to ensure we stay competitive in the tough Australian market.

In 2019 we’ll be doing a lot of work to strengthen our customer-centricity. There’s a lot of consolidation going on in the crop protection sector around the world, and many of our competitors are focused on merger integrations and other internal issues. We’re taking the opportunity to really engage with our customers around the world and focus on delivering them the solutions they need to grow strong-yielding, healthy crops.

How can big business regain community trust?

If business truly focuses on the needs of all stakeholders – and through that generates shareholder value – then we will earn the trust of the community. We need to be alert to the changing views and expectations of the community and our customers and be willing to swiftly respond with both transparency and honesty when things don’t go to plan. Educating our stakeholders, including the general public, on the science-based independent assessment that underpins the safe use of our products will also help establish trust in the crop protection industry. The confidence that farmers and the community have in our products and the role they play in the food chain is one of the biggest assets we have.

What cost pressures are hitting your company? How are they being offset, and do you see any pressure to lift wages? If so, how much?

The cost of energy remains a significant impost, and we’ve seen big increases in prices of both electricity and gas over the last few years. Policy certainty is critical - we need to find a less partisan way through the current stalemate we have on the energy issue in Australia. The balance between price, reliability and emissions is important.

Development and manufacture of crop protection products is highly regulated, and the cost of compliance represents a significant investment. It is important that the processes involved are efficient and help deliver the right outcomes. We need to strike the right balance between regulation and red tape that can restrict our global competitiveness.

Stuart Irvine | Lion

Stuart Irvine, CEO of Lion Nathan at Flemington Racecourse for the 2015 Emirates Melbourne Cup.

What should be the key issues in the next federal election campaign?

It is imperative for any prospective government to refocus its policy efforts on building a platform of prosperity for all Australians. Key to this overarching theme is the following:

Attracting and retaining talent. This is a great place to live and should be one of the best places to do business so we need to be asking ourselves how Australia can better attract and retain local and global talent. We should have an overarching proactive strategy in place to encourage and incentivise entrepreneurs to stay and grow in Australia, not feel the need to up-sticks to Silicon Valley.

The future of work. AI and automation will dramatically change every industry over the next 10 years. In a high labour cost country like Australia, we need to adapt to remain competitive, reskill the workforce and ensure there is an adequate safety net for those who find it tough to transition. There will not be less jobs; just different ones.

Energy policy. Policy uncertainty continues to threaten the affordability, reliability and sustainability of Australia’s energy supplies. That is why industry is increasingly working to address these issues independent of government. Lion is continuing to look at ways to manage high energy costs throughout our supply chain, but particularly for some of our smaller business partners.

What use are you making of customer and company data and how are you collecting it?

We are using data to help us satisfy our customers’ needs better and faster, reduce waste in our operations and make our people’s experience at work better.

What are the key challenges for your company next year?

More growth here and in new markets, selling our dairy and drinks business, and continuing our digital transformation

How can big business regain community trust?

If business only acts in the interest of its bottom line then it is “self-interest”. In all walks of life, self-interest destroys trust. Business must create value for the communities it serves. We’ve seen the reputation of big business take a battering this year, with the banking royal commission having far-reaching implications beyond just the financial sector. With business responsible for five out of every six Australian jobs, regaining community trust starts with regaining the trust of your own people.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages. If so, how much?

Costs: Energy and drought-related agricultural costs.
Offsets: Efficiency initiatives and sustainable energy.
Wages: This always needs to be a calculation based on competitiveness, productivity and cost of living. We continue to give competitive wage increases.

Jeanne Johns | Incitec Pivot

Picture: Aaron Francis

What should be the key issues in the next federal election campaign?

The most important issue for our business is having access to affordable gas on the east coast of Australia. With the significant development of LNG in recent years, about 80 per cent of gas on the east coast is being exported, leaving Australian businesses and consumers with a shortage of supply and vastly inflated prices. This is putting at risk the viability of our manufacturing plant on Gibson Island and the 450 jobs at the facility. Having reliable and affordable energy in all regions of Australia is important for our economy and for jobs.

What use are you making of customer and company data and how are you collecting it?

Digital technology is continuing to transform businesses, ours included. We have invested to capture our existing blasting expertise in new digital blasting platforms and algorithms and are now increasingly working with our mining and quarry customers to take the next steps to capitalise on the global big data trend. As we link our knowledge of predictive blasting with actual outcomes, the learning loop created will drive faster and better optimization of blasting plans. Coupled with our current unique precision blasting capability, our customers will benefit from better outcomes and efficiency. When our customers win, we win.

What are the key challenges for your company next year?

Our known challenges are actively and professionally managed. I spend more of my time thinking about those that may arise in an uncertain world and business environment and building the resiliency of the company. Engaging in the complex issues in the external world – changes in the geopolitical landscape and markets and the tensions between affordable energy supplies and climate change – helps to shape the company’s actions and priorities to address potential risks and opportunities for the business.

How can big business regain community trust?

Building trust requires engaging transparently and openly with all our stakeholders - our customers, the communities in which we operate, and our shareholders – and ensuring that our actions match our words. Trust takes time to build and, unfortunately, can be quickly eroded – so avoiding those things which diminish trust is also important.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Working in international markets requires us to remain globally competitive, offsetting cost pressures with improved productivity and increases in value adding products and services. It is at the heart of what we do to remain a sustainable and thriving business.

Tony Johnson | EY

Picture: David Geraghty.

What should be the key issues in the next federal election campaign?

Jobs and real wage growth enabled by infrastructure, innovation and immigration policy. Government has an opportunity to get on the front foot but that window is closing fast. The economy is doing well despite what’s happening in Canberra but we do need good policy settings, particularly in areas such as energy. We need to get back to bipartisan policy making. It’s really important we get good government back.

What use are you making of customer and company data and how are you collecting it?

Data is the new king of assets and capturing it, analysing it and channelling it into meaningful input for our clients and our business is critical. We use it to proactively provide insights that matter – from the way we conduct statutory audits, to better utilisation of our real estate footprint, to re-engineering supply chains in the agri sector, to data matching clients’ staff profiles against their statutory payroll obligations.

What are the key challenges for your company next year?

Growth and ensuring we continue to attract and retain the best talent to enable the growth while operating in a different and digital world. License to operate has clearly shot up the list amid a gap with community expectations. We need to bring our purpose of building a better working world to life for all our people, clients and communities by better telling our story, educating, and demonstrating value.

How can big business regain community trust?

Have and live a purpose that is transparent and focuses on employees, clients and communities. Business needs to learn from recent scandals and not hide behind language that obscures the truth or desensitises issues. The community respects transparency and authenticity. Business leaders need to own their decisions and actions and be accountable for them. People can pick a fake. Businesses that demonstrate ethical, genuine, authentic behaviour and practices, and own their successes and failures, are more likely to regain and build trust in their communities.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

We’re under pressure to increase wages particularly in technology areas including data, cyber and analytic. This is being offset by productivity improvements from automation and contingent workforce.

Alan Joyce | Qantas

Picture: Colin Murty

What should be the key issues in the next federal election campaign?

Making sure Australia is competitive and future fit, which in practical terms means a lower company tax rate, certainty around energy policy and a balanced approach to industrial relations. Above all, I think business and the community in general want to see some stability in Canberra.

What use are you making of customer and company data and how are you collecting it?

Data is making us a lot more efficient. We have a new flightpath planning system that crunches a decade worth of seasonal wind data to help us pick the best routes and it’s cutting fuel burn and carbon emissions, as well as travel time. Data helps us understand our customers a lot better. We now have 12 million frequent flyer members, which gives us a lot of insight and allows us to personalise the service we provide. That makes a big difference to how people feel about your brand.

What are the key challenges for your company next year?

Qantas is a good bellweather for the broader economy, given the nature of our business. The general demand environment is really healthy at the moment and that reflects the strength of the Australian economy, but there’s a real tendency for people to focus too much on the negative and lose sight of the bigger picture, and that can undermine overall confidence.

How can big business regain community trust?

Well, it’s not going to happen overnight. We all trust people who are transparent and genuine and I think the same applies for companies. In the meantime, we shouldn’t lose sight of what a huge contribution big business makes to the community.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

We’ve seen some indirect cost pressure from a lower Australian dollar and a lot of movement in the oil price. Even in a low inflation environment cost pressures are a constant, so you need a perennial focus on efficiency. We’re targeting at least another $400 million in transformation benefits again in FY19. Qantas has been performing strongly and we’ve been sharing those benefits with our people. Wage growth is 3 per cent and we set aside more than $300 million in the past few years for non-executive bonuses.

Mike Kane | Boral

Picture: Renee Nowytarger.

What should be the key issues in the next federal election campaign?

Energy affordability and reliability, tax reform to attract investment, continued investment in infrastructure to support growth and an industrial relations framework to support productivity growth should be key issues at the next federal election. We need the right policies and planning in place to support Australia’s continued prosperity and competitiveness.

What use are you making of customer and company data and how are you collecting it?

Effective use of data sits at the heart of Boral’s digital strategy. Data is captured across our entire scope of business activities from traditional sources such as core transactional systems to more modern platforms that include internet of things (IoT) sensors and mobile applications. A global data repository, or data lake, is used to consolidate this data and make it available for other systems, advanced analytics, and machine learning platforms. For example, we’re providing customers with real-time tracking of their concrete order delivery progress, as well as optimising supply chain planning and monitoring plant operational efficiencies.

What are the key challenges for your company next year?

Our key challenges for next year are three pronged. In Australia our key challenges and opportunities involve working with our customers to supply construction materials to the growing pipeline of infrastructure and commercial work. In North America we remain focused on delivering the Headwaters acquisition synergies and benefits of growth. And in USG Boral – where we are well positioned in plasterboard across Asia, Australasia and the Middle East – we are continuing to assess whether to exercise our call option to own 100 per cent of what is a very attractive long-term growth business or to move into a new and expanded joint venture.

How can big business regain community trust?

I’m not a big believer in collective guilt. Just as I don’t tarnish all unions with the bad behaviour of some I don’t believe all business is culpable for the misdeeds of a few. I’m a firm believer in capitalism and know that in the last 70 years more people have risen out of poverty because of capitalism than in the entire history of human endeavour. So we all can learn from the mistakes of others but we are not collectively accountable for others.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Overall, we are seeing inflationary cost impacts and markets tightening, which is challenging for our business, but very manageable. We are seeing wage growth of around 3 per cent in Australia and the US and we are facing higher energy and fuels costs in Australia of around $25 to $30 million in FY2019. In response, our strategy is to recover cost increases through price and improvement initiatives. We have also moved away from energy-intensive manufacturing, exited higher cost, less efficient cement kilns in Australia and replaced volumes with lower cost imports.

John Knox | Credit Suisse

Picture: Hollie Adams

What should be the key issues in the next federal election?

The key issue should be which political party is best positioned to manage the economic and social considerations of Australia over the next three to six years. However, there is a chance that the election becomes a battle over the influence and benefit of big business to the country.

What use are you making of customer and company data and how are you collecting it?

We are using company data to ensure that we are providing the right services to our customers and have our human capital resources dedicated to the right opportunities – that is the areas that our customers want us to focus on. There is a huge amount of data available across our business. The challenge is to convert that data into meaningful feedback for our managers and employees. This is an area where we have made significant progress in the past year.

What are the key challenges for your company in the next year?

Growth: all companies need to find areas of sustainable growth to continue to prosper. We will assess closely the impact of the findings of the banking royal commission to see where opportunities beyond our existing core business may exist.

How can big businesses regain community trust?

There is no doubt that big business increasingly has a social responsibility. Big business already does a lot for the community, which goes largely unrecognised – employing millions of people, paying taxes and distributing dividends. Big business needs to work closely with communities to remind them of its contribution and to be seen to be active participants in their local communities. All CEOs I speak to take this obligation seriously but they need to be more effective at communicating this without coming across as self-serving, which can be difficult.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so, how much?

We have to continue to invest in both high-quality people and technology to serve our customers. Our wages pressure is coming from increasing the skill level of our overall employee base and highly skilled people are always going to be in demand and expensive. The offset is that we deliver more relevant information and better services more efficiently to our customers because of our higher skilled people and our investment in technology.

Susan Lloyd-Hurwitz | Mirvac

Picture: Hollie Adams

What should be the key issues in the next federal election campaign?

To ensure Australia remains an attractive place to live and work, two key issues include better planning for population growth and investing in our people to address the skills gap. Planning for the growth of our future needs a coordinated population and infrastructure policy that will focus on strategic urban planning and deliver more certainty on investment in key public infrastructure. We also believe the government, together with the corporate sector, has a responsibility to invest in people to ensure Australia has the appropriate skills to remain competitive. Of course, that must be a focus for both state and Federal governments, but we would expect that all parties will prioritise the continued upskilling of the Australian workforce.

What use are you making of customer and company data and how are you collecting it?

Through better collection and analysis of data, we are able to make significant and sustainable changes to the way people live, work and play. One of the initiatives that we are focused on is the advances we are making in our smart office buildings, with sensors tracking air quality, desk utilisation and building performance, which enables the internal environment to be adjusted in real time according to the needs of the building and its occupants. Another interesting project is within our residential portfolio in Victoria, where we currently have a family of four, living rent free for 12 months to participate in our Australian-first “House with No Bills” experiment. A core component of the experiment is tracking how an everyday Australian family interacts with, and lives in, this prototype energy-efficient home, as well as providing feedback to inform our future design process. The aim of this project is to ultimately determine how to deliver attainable, energy-efficient homes to the broader community.

What are the key challenges for your company next year?

As a diversified property company, the outlook for Mirvac in the new year remains positive. While we are very aware of the changing market conditions, particularly within our residential business, the economic fundamentals across Australia remain robust, with low unemployment and interest rates predicted to remain low. The economy has also transitioned away from resources, the service sector is strengthening, and business investment along with government spending is forecast to be higher over the next few years. We are finding that the external challenges are centred more on general uncertainty and sentiment. Housing markets are moderating after a very strong price and activity boom. With housing affordability stretched and tighter lending standards from banks, the residential home market is slowing, though it varies widely by sub-market and product type. Political and policy uncertainty is also impacting sentiment.Our internal focus continues to be supporting our workforce and maintaining employee engagement levels, which are currently above global high performing benchmarks. Our employees are key to our ongoing success and we will continue to listen to them to ensure that we provide the best possible workplace.

How can big business regain community trust?

There is certainly a growing disconnect between the community and big business. It is clear that the public has lost faith in institutions that were previously pillars of trust. It takes a long time to rebuild that trust, and we all have a responsibility to deliver good, corporate leadership that steers business as a force for good. At Mirvac, we know we have a responsibility to do more than simply deliver returns for our securityholders. We have a responsibility to the wider community. We need to do our part to protect the planet. We need to leave the places we build and manage, better off than when we arrived. We never want to lose sight of the fact that we need to be for profit and for purpose. We have learnt that if we want to live up to our purpose, to Reimagine Urban Life, we need to listen and engage more effectively with communities, customers and our other stakeholders to ensure that we are delivering solutions that best meet all their needs. Most importantly, we need to do what we say we will do and meet, and where possible, exceed our stakeholders’ expectations.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Construction costs are growing across the country at 2-4 per cent. We continue to invest into strategic areas including technology and business investments that will build a more efficient business.

Angus McKay | 7-Eleven

7 Eleven CEO Angus McKay (left), with chairman Michael Smith. Picture: David Geraghty.

What should be the key issues at the next federal election campaign?

Two key issues are the cost of living and the cost of doing business. Both families and businesses have been feeling cost pressures on a range of fronts, and the community is calling out for some long-term vision on how these costs are going to be managed and mitigated into the future. The spiralling cost of energy is a major issue for 7-Eleven as we operate a network of near 700 stores, 365 days a year, 24 hours a day.

What use are you making of customer and company data and how are you collecting it?

Digital engagement with our customers is a primary business objective. Understanding their needs and hence simplifying their day and becoming more relevant to their needs is core to being a truly convenient business.

What are the key challenges for your company next year?

A key challenge is to attract and retain the very best people across our network. We have the opportunity to provide not just jobs but careers at 7-Eleven. This means being serious about investing in people and their development. Providing real opportunities to be challenged and to grow. Setting and embedding the right culture in all corners of the business is also crucial to our continued success.

How can big business regain community trust?

We know that it is easier to break trust than to rebuild it. Business leaders (at all levels) need to set the right tone and culture, ensure they are actively listening to all stakeholders, and have the right monitoring measures to provide early warning of potential issues. When things go wrong, business leaders need to visibly take ownership and accountability, swiftly fix the situation, ensure best steps are taken to prevent a recurrence, and be transparent with their team and the public throughout. We continue our own journey and remain very committed to that destination.

What cost pressures are hitting your company, how are they being offset and do you see any pressure to lift wages? If so how much?

With nearly 700 stores trading 24 hours a day, the cost of labour and energy are significant costs to the business. We’re exploring a range of energy-saving technologies, and ensuring new stores are as energy efficient as possible and have also invested in optimising rates and terms of supply. Optimising our labour force and identifying productivity initiatives that mitigate the delta between real inflation and wage inflation is a daily exercise. The higher oil price (and lower exchange rate) experienced in recent months is also a significant cost pressure faced by our fuel consumers.

Steve McCann | Lendlease

Picture: John Feder

What should be the key issues in the next federal election campaign?

The performance of Australia’s economy will be a significant election issue, particularly maintaining the nation’s record period of economic growth. While economic growth has been underpinned by Australia’s growing population, many people are concerned about inadequate infrastructure and congestion. As such, governments need to continue highlighting the benefits of strong population growth especially as the nation’s population ages over coming decades. The housing sector will also be in focus given current market softness, household debt levels and proposed changes to negative gearing and capital gains tax. Changing demographics within our major cities means the residential for rent sector potentially offers opportunities from a policy perspective – facilitating a long-term shift towards renting as well as attracting institutional capital to the residential sector.

What use are you making of customer and company data and how are you collecting it?

Our customers are at the forefront of Lendlease’s business strategy. This means using data to inform everything from our approach to safety, through to how we design and operate our precincts and products. More broadly, technology is fundamentally changing the way cities, precincts, communities and buildings are being designed, built and operated. For example, our increasing use of cross laminated timber, or CLT delivers a faster and more environmentally friendly build with less disruption for people in surrounding areas. It’s estimated that using CLT reduces carbon emissions associated with the build process by around a third compared to a traditional concrete build. Most recently, we delivered one of the world’s largest engineered timber office buildings, 25 King, at Brisbane Showgrounds.

Another example is our TRX urban regeneration project in Malaysia where virtual design technologies and drones are being used to monitor construction progress, safety practices and equipment utilisation. Additionally, the use of biometrics enhances security and safety on site.

What are the key challenges for your company next year?

In the shorter term, addressing the underperformance that impacted a small number of projects in our Engineering business is a key priority. Our core strategy remains clear and unchanged. We’re committed to pursuing our integrated model in targeted gateway cities, leveraging more than one of our operating segments of Development, Construction and Investments. Our development pipeline, at $71.1 billion, has never been stronger, and we’re very well placed on a number of major urbanisation projects both in Australia and internationally. We’re also focused on cementing our key talent and ensuring we’re well set up for the longer term.

How can big business regain community trust?

It’s now well understood that while governments grant permits, communities are the ones that grant permissions. As such, business and government need to do more to earn the trust of their stakeholders. Every day, people around the world live, work, shop, travel and play in assets created by Lendlease. As such, we value the importance of working in close partnership with the communities in which we operate. Early and meaningful stakeholder engagement and a genuine focus on trying to find the best solution are essential.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Australia’s current infrastructure boom, particularly in New South Wales and Victoria, has resulted in labour costs increasing. To mitigate this impact on our business, workforce planning and resourcing is a major focus. We also have strong internal talent and prioritise attracting and retaining the best resources. More broadly, Australia’s productivity performance is still tracking below average rates and will be a key factor in boosting incomes over the long term. In the UK, our business is focused on managing potential pressures that could arise from Brexit. We see increased costs and counterparty risk as the biggest issues and have employed mitigation plans for both. Our supply chain carries the majority of labour risk and we are supporting them with the development of mitigation plans. As a longer-term solution, we are proactively developing local skills and recruitment, working closely with our local government partners. For example, the Southwark Construction Skills Centre, located at our Elephant Park project in London, has provided training to over 5000 local people since opening in 2016.

Mick McCormack | APA

Picture: James Croucher

What should be the key issues in the next federal election campaign?

I’m ever-hopeful of seeing bipartisan support for sensible energy policy that goes beyond a single term of government. We need reliability of energy supply and a foundation policy that sets targets for pricing and emissions. Right now, we’ve got too much renewable energy and not enough reliability. We need an emissions target that acknowledges different groups and different aspirations, which also has regard for the impact of energy costs on the community. Whatever energy policy transpires by whatever government, politicians really need understand that the cost of electricity is having a real impact, particularly on people out where I live in the bush.

What use are you making of customer and company data and how are you collecting it?

APA is an energy infrastructure business, owning and operating Australia’s largest interconnected gas transmission network. Our interactions sit between the energy producers and the retailers – and they have all the data – so we work both sides of the street to deliver the services our customers want, when they want them. Our job is to have the systems in place to support this.

What are the key challenges for your company next year?

In our business, we’re trying to navigate all the possible permutations of what may or may not be so on the future of state and federal energy policy and which way regulators may bounce on any given issue. Right now, that seems a pretty big task.

How can big business regain community trust?

Big business needs to go back to basics and remember that ultimately we exist to serve a customer. As I say to my people, if you’re not serving the customer directly, you’re working for someone who does; always remember that.

What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?

Increasing regulation is increasing the cost of doing business, and this mad steeplechase doesn’t necessarily deliver the actual benefits to customers that the rule-writers seem to intend. It always amuses me the fascination Australians seem to have in believing we can regulate ourselves to greatness. Regarding wage pressure, our wages are reviewed annually or are set under enterprise bargaining agreements, which together means we are able to attract and retain the very best talent.

John DurieColumnist

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