Trends and Issues from Qwater14 http://wp.me/p2g64Q-43

Qwater14 has come and gone with some great discussions, presentations and networking. Many of the issues raised during the conference are trends that are relevant to the industry as a whole. My view of these trends and issues include the following.

• Collaborations need to be led by industry and not be a political directive
• Innovation is about cultural change and not a system or new product
• Utilities will have an increased level of investment from the private sector
• Regulatory harmonisation will lead to improved industry productivity
• Being Asia’s food bowl will drive private investment in new Australian dams
• AWA needs to develop a new industry based leadership model for the water industry
• The water industry needs to have a low carbon future
• Operational benchmarking is allowing identification of high and poor performers
• The community does not understand the value or cost of water
• Water management needs a broad toolbox

Collaboration – Our industry is collaborating at an increasing rate. We need to determine what we are good at and what areas we should join with others.  There is an increase in the use of supplier panels and partnerships with research and academia. The industry needs to lead these arrangements to ensure that the benefit are realised, risks managed and utilities are not forced into “arranged marriages”.

Innovation – Innovation is about cultural change and not a system or new product. Innovation is currently a buzz word, but just to have forums, workshops, committees or suggestions boxes will not result in the ongoing change we desire.  It is just not a step change or continuous improvement. It is about giving permission to staff to challenge and change the way we do things. The change needs to happen from the bottom and be supported by the top.

Utility ownership – Capital recycling opportunities and pressures on balance sheets will see a significant change in the ownership model of the water industry in Australia. It is unlikely that any of our utilities will be privatised but other investment models will see the release of large funds from these utilities. Leases, long term operating contracts and the increase in private investment in new projects will increase and become the norm over the next few years.

Regulatory reform – The need for regulatory reform has been recognised in all jurisdictions with significant achievements having been made in red and green tape initiatives. The next significant improvement needs to be through the harmonisation of regulation across jurisdictions. Economic, health and environmental regulation needs to be harmonised across all states to act as a catalyst for improved industry productivity.

New infrastructure – Currently some 27 dams are proposed to expand agricultural regions in the north of the country. These are not associated with flood or drought mitigation. This will be the only significant infrastructure spend in the foreseeable future. The financing of these will be provided by the private sector, likely in association with Australia’s desire to be the food bowl for Asia.

Leadership of the industry – The demise of the National Water Commission needs to be used as the stepping stone to a new industry leadership model. It is our chance to develop a National Water Strategy, reduce the number of players in the industry and present a united face to the government, business community and our communities.  This will increase our ability to sell our industry both locally and overseas.

Low carbon industry – Climate variability and electricity prices have had serious effect on how we operate our industry. Energy recovery on all assets, alternative energy and benchmarking tools are now standard tools across the industry.

Efficiency of operations –The water industry has not been good at demonstrating our level of performance. Recently several benchmarking tools and surveys have been developed including those for sewerage treatment plants, sewerage pumping stations, electrical and mechanical services. The increased use of these operational level benchmarking will improve the performance and efficiency of our operations. Increased benchmarking will help identify and focus on the industry poor performers.

Customer expectation – We need to close the gap between the expertise of water industry and communities knowledge of our capability. Water is off the public agenda after the awareness developed during the drought. The industry needs to continue to converse with the community as to the value of water to them and the overall economy eg – for $2 a day we walk 50 miles and carry water to your family, for $3 a day we take away your families waste and bury it away from our communities.

Integrated water management – The importance of having many options for the supply of water and disposal of effluent is as essential as ever. The nomination of contingency sources of water is increasing with desalination and recycling important components for management of risk during times of scarcity. Costs need to include all externalities including things such as system insurance and protection of catchments.

These are my views of the conference and may not reflect the views of AWA or my employer MidCoast Water.

So what happened at #Qwater13?

Here is a summary of the information and trends I gained from #Qwater13.  http://wp.me/p2g64Q-2t They are my interpretations and not necessarily those of the speakers.  Happy to discuss them with anyone interested.

Managing the water cycle

• No new water sources are required in QLD til 2032. We currently have twice the supply as required demand.
• Water quality issues due to the 2011/13 floods remain of concern. The floods mobilised significant sediment in the Brisbane River, which is being transferred into Morton Bay.
• The floods led to aquifer recharge, which has led to an increase in TDS and hardness in the middle Brisbane river which is expected to continue for the next two years.
• With industry restructures, new governments and failures of previous models we are still faced with lack of leadership and accountability across the water cycle. River & catchment health, nutrients offsets and holistic investments strategies are all issues that could be improved with a new leadership approach.
• The CRC for water sensitivity cities is up and running and has the potential to shape our cities of the future. They are challenged with the lack of take up of many previous initiatives including IWCM.

Need for industry leadership

• Many of the COAG reforms over the past 20 years have not led to improvements in the urban water industry. A new model of responsibility between the Federal & State Governments, utilities and providers needs to be established to drive future efficiency improvements.
• We need long term planning, well outside the current political cycles. Droughts & floods will return and we need to be well prepared for all outcomes. We have historically had poor delivery & approval of planning in water infrastructure. (Hopefully the 30 year plan will address this)
• Water is a key enabler of the economy, but has never had community acceptance as a key industry.
• Water Innovation & R&D needs ongoing funding and growth driven by both the public & private sectors. This is currently poorly coordinated across different sectors and industry groups.

Achieving contestability & private sector involvement

• Contestability is about continuing to demonstrate that we are delivering our services in an efficient & effective manner.
• Substantial private sector involvement currently exists in the water sector, with some 50% of major supplies provided by the private sector. QLD has less take up of private involvement than other states.
• We need to determine how the private sector involvement can assist in areas that have traditionally had little attraction. This needs to include regional areas and utilities with high investment needs, conflicting with poor ability to fund.
• Private sector can bring new approaches, culture change, new technologies; improved asset management, international knowledge, investment and better managed the risk.

Asset Management & Efficiency

• Most organisations have a poor level of knowledge of their assets. After 20 years of asset management few standards in approach exist across the water sector.
• The driver for lower cost of service will continue to put pressure on organisations to get more from their current assets. The lack of availability of asset knowledge and skills restricts our improvement.
• Future asset issues will be around asset optimisation, adaptation, mitigation, resilience, big data management, systems approach & anticipatory governance  
• Current benchmarking is poor and hence it is hard to compare organisations. We need the ability to compare at whole of organisation, business unit and function levels.

Customers

• Since the end of the droughts, customers have downgraded the importance of water and no longer recognise its value. This is associated with the industries out of sight out of mind approach.
• Water has been caught up in general price rises and customers are demanding the lowering of the cost of service, without any real understanding of what they are paying for.
• We need to restate our value proposition to our communities and have good feedback mechanisms to customers so they can modify behaviour.
• There is an increase in the monitoring of customers comments on social media and a decline in asking them what they think. We need to convert customers from users to advocates.  

Regulation

• Most current economic regulation is about controlling political pressures. Economic regulations are often at odds with community regulation eg. Environmental and health regulation drives higher cost solutions.
• We need an economic framework, which addresses regulatory certainty, the whole of sector, the whole of government, customer engagement expectations, with proper establishment timeframes. It needs to cover issues of capital models, clarity on dividends & asset standards.
• It needs to be a flexible framework, set a med term price path, with low burden of compliance and to provide certainty to future investment in the industry.

Better Managed

Provides management consultancy service to water utilities and infrastructure providers including;

• Strategic Planning & Trend Analysis
• Strategic Outsourcing & Procurement Reviews
• Asset Management, Efficiency and Optimisation reviews & strategy
• Business frameworks, systems, policies, processes and procedures

Contact

David Nixon

Mobile: +61 4 1915 6986

davidn@bettermanaged.com.au

www.bettermanaged.com.au

How can Queensland’s LNP get the state finances under control & keep popularity?

How can Queensland’s LNP get the state finances under control & keep popularity? http://wp.me/p2g64Q-2e

I am sure there are several people in the LNP worried if they have taken the right track, getting the public sector finances under control and keeping the their popularity high.

They are on the right track, but once the downsizing is finished the job to make a more productive public service and do it in a popular way will have only just commenced.  Getting productivity and support in the public service and keeping the voters on side can coexist.

Currently the approach is though downsizing the operations and management component and cutting services or programs. This approach only addresses a small component of the potential productivity savings and doesn’t go down well with the electorate. It is though important

Productivity gains can be made through improving the delivery of capital & operational expenditures both in the procurement and operational areas. To ensure the right services are being delivered we need to get the strategy and culture right.

The electorate will support the government when it can demonstrate that downsizing was only one component of the productivity drive, that the government is more effective and the government is delivering on its promised objectives.

These were;

• Grow a Four Pillar Economy based on
Tourism, Agriculture, Resources and
Construction
• Lower the Cost of Living for Families
by Cutting Waste
• Deliver Better Infrastructure and 
Better Planning
• Revitalise Front Line Services
• Restore accountability in government

So what does the Government need to do next?

Finalise the downsizing

Change needs to occur quickly, with a purpose and be well managed.  To date the changes have occurred quickly (for government) and the purpose is well understood. The Government needs to stick to its timetable and have all downsizing in place by the upcoming budget.  The downsizing has rocked the culture of the public services and strategies need to be put in place to rebuild this.

Get the Strategy Right

This government has done what few others have. They came to power with a 100-day action plan, which was completed and have since published a 6-month action plan, which they intend to continually measure themselves on 6 monthly.

This next 6-month action plan needs to be cascaded through the departments to the staff. Each department needs to quickly develop their own strategic plan, taking in consideration the government objectives, the 6-month action plan and the purpose of the department.

This doesn’t need to be complicated and could be expressed as a vision / strategy poster.  Then the most important part of achieving the strategy needs to occur. The actions of the strategy needs to be cascade as KPI’s to the DG, Executive and through to all staff members.

It is important that all members of the departments understand how they fit into the strategy.  This cascading can have a few effects. You will find staffs that don’t appear to have a purpose in delivering the departmental strategy.  This can be due to their roles being redundant or the strategy needing adjustment.

This can be done with minimal effort and over a couple of weeks and will have an extreme effect on the performance of the organisation.

Improvement the Management  & Operations

 

When we look at improving performance we need to think about Edwards Demming,  the father of quality. His quotes include “We should work on our process, not the outcome of our processes.” “The prevailing style of management must undergo transformation. A system can not understand itself. The transformation requires a view from outside.”

It will be important to undertake a systemic review of what we do, the inputs & outputs and challenge and review every component. Productivity is gained by changing the system, not working harder on it.  This can be a quick and easy task, but can be rarely undertaken by those who have ownership of the tasks.

To admit that you can improve a process you are responsible for is to admit you have previously failed. These reviews need to address issues like;

• The mapping of key processes for delivery of services
• The delegations, approval and governance arrangements of projects and operations
• The services we provide and channels we provide them through
• How technology is affecting our services. Eg use of social media and ceasing use of faxes

It is well-documented that spending 10 percent of your time improving the systems you work on, provides immediate benefit to an organisation. If you use a consultant for this, pay them on a shared risk model. Ie no fee unless savings are realized!

 

Improve the Procurement

Procurement isn’t only on big capital projects.  The government procures consistently and is regularly criticized for its procurement decisions.  The actual and perception of its procurement can be improved substantially.

Every department should publish immediately following the release of the state budget a draft procurement strategy.  This should be followed by industry consultation on the strategy including accepting alternative delivery methods prior to the details of the procurement being fixed. A monthly report should be issued by each department stating the current status and method of all procurement actions.

The procurement strategy needs to include an in-depth understanding of the potential providers and the intended risk profile of the procurement. Providers charge to accept risk, risks that are undefined or allocated to a party that cannot control then results in increased cost for nil benefit.

Government employees need ongoing training in procurement and how to ensure maximum benefit is gained from the market.

 

Build a QLD Government Culture

 

The culture of any organisation changes with a new CEO or management team. The change of government, substantial change in policy direction, replacement of many key officers and current downsizing has resulted in the biggest cultural change in years.

It is important that the new culture is defined and bedded down as soon as possible.  Key actions that need to be undertaken include;

• Defining the strategy and cascading it through the organisation as discussed above
• Promotion of new values and focus
• Establish regular transparent communication throughout each department ie newsletters, briefings and one on one communication
• Three monthly review of KPI’s with all staff
• Promote internal good news, success and develop corporate stories
• Ensure recognition programs are in place

The adopting of these key issues will both see the success in improving the productivity of the public service and the recognition from the public that the current downsizing is good governance.

David Nixon is the Managing Director of Better Managed Pty Ltd that provides services in key person support, turnaround, corporate reviews, strategic planning, innovation & change management, both across businesses and within their projects.

David can be contacted on davidn@bettermanaged.com.au, via www.bettermanaged.com.au or add him on linkedin or Twitter on #bettermanaged

My thoughts #AICD – Fast, frictionless and disruptive; Hypereconomics and Australian business with Mark #Pesce #FutureSt & Bruce #Linn

My thoughts #AICD – Fast, frictionless and disruptive with Mark #Pesce #FutureSt & Bruce #Linn http://wp.me/p2g64Q-2a

• 4.5 Iphones sold per second
• A wave of business interruption occurring
• The change is irreversible but we don’t know what the full change is
• This means we can shape the change
• We all have multiple connected devices, but business hasn’t changed their business to cater for this
• We are connected to 5B people but we don’t have anything to say
• Need to pay notice of the signals coming out to the market, so we need to listen
• Smart phones are the fastest selling device in history

An Indian fisherman Story

• Indian Coast, many ports, many fisherman picked a port to sell fish at
• Some ports got too many fish and other not enough and hence high and low prices
• Mobile connection occurred and a fisherman went to the port that had less fish and hence got better price
• Months later the whole industry had connection and the port all served, maximising income to all.
• Phone paid back by all in months

An US Limo Company – Uber

• Need a booking for a limo as opposed to a taxi
• An app was developed for limos and customers
• Now has disrupted the taxi market across many cities
• Limo drivers doubled their income and up to 90% utilisation
• The capital cost a was minimal, no asset outlay, utilised an under utilised market, the limos
• Created a cheap business model with a great return
• Could work with logistics eg backloading

Kenyans – Kazi 560

• Poor African Country
• Can’t afford to be part of the job market
• But have access to the mobile phones
• Kazi 560 is an app to links job seekers with employers
• Low marketing costs, low search costs
• Becomes a connected market

Airtasker Australia
• Browse available work
• Connect labour and labour seekers via app
• Post work wanted, people respond and work awarded
• Could be used to get a lift from an airport when no taxis available, much the way it works in Russia, where every car is a taxi

Kick Starter
• Crowd Funding eg Kick Starter get capital when idea is launched and not when it hits markets
• Will change the approach of an IPO

SONY
• Currently suffering big time
• They lost touch

MICROSOFT
• Will they exist in the future
• If Windows 8 doesn’t work they will be irrelevant
• Area decade behind others

Vodaphone
• Skunworks
• Take a few people to innovate and huge company
• Mobile payment system in Kenya
• Mpesa a payment system was the result
• Money paid to shop, transferred via msm and recovered at another store
• 65% of country has an account
• The countries bank are suffering
• Created a financial system to the worlds poorest

Canada Mint
• MintChip
• Chip that holds funds and can transfer cash, but is not connected to banks
• Have invited developer to use the Mintchip
• Might challenge paypal and others
• Worth watch to see if it gets traction
•

The cornerstones of business (New Entry Forces)
• Time – In time and when committed, no late delivery
• Territory – Communication is no global, available everyway, but location services can only be sold locally
• Talent – Can teach most people anything, need talented people in companies, companies being brought for their people
• Trust – Only do contracts with those we can see and trust. If you are trusted people will work with you.
• Tongue – English is world language, but Mandarin and Arabic are billions. We need to be able to translate to work locally
• Tension – Some people don’t get along, need to understand and deal with this

What’s it all mean?

• No staffing, compliance and regulatory issues in online environment
• Low capital requirements
• If you don’t keep an eye on the movement you will lose
• Innovation coming out of the developing world
• India and Africa will out innovate the rest the world
• Banking is necessary but banks are not, lot of small organisations providing the services of banks
• Pull them together and have a virtual bank
• Traditionally we smother innovations as they are against the norm
• Innovations and productivity gain needs protection to get ahead
• Book “the Lean Startup” is a worthwhile read
• Organisations need to create many “spunkworks” projects
• Innovation without disruption does not work
• Businesses need to change today, Boom or Bust

Questions

• Directors need to have a pulse and understand what might hurt and what might be an opportunity in the future
• Biggest changes in Medical is coming out of India, they are building the things the US used to build
• Nano technology will not have a good effect for 10-15 years
• Will be able to 3D print tissues
• The effect of Crowdsourcing on professional services? Works well on advisory site. Room for people in an Consulting Bases??
• Need papers on how the connected world affects our organisations.
• Invest in Angel Investment
• Taxes / Customs / Approvals – A connected world will change how we do and control trade

My thoughts on the #AICD – Technology Innovation in a disruptive world

My thoughts on the #AICD – Technology Innovation in a disruptive world http://wp.me/p2g64Q-25

• Transformation takes 80 years from start to be properly defined
• Hence IT only half way through its development
• Have a look at “do not track”, software that sees who is tracking you

Data
• Heaps of data being produced, 90% of all data created over last 12 months
• Data Gathering and aggregate of data occurring
• Aggregation of data is the key
• Operational data is around how much can we store and utilise

Cloud
• Is like electricity, the more you use the more you pay
• Cloud is on demand or outsourcing and just a buzz word
• Can outsource hardware or hardware and software
• Better security than in-house
• Handy when you can’t find the right IT staff
• Be careful that you don’t give away IP
• Gets expenditure into OPEX, driven by cost benefits
• Cost issues may exist in yr 3 plus or when you bring it back into the business
• May break enterprise systems

Mobile
• India is not rolling out cable, they will only use mobile
• Mobile usage skyrocketing
• Mobile bigger than fixed
• Google suffering due to use of apps, bypassing advertising
• Web 3.0 is about mobile
• Online retail will overtake face to face

Social
• United Guitar case
• Humans like to communicate
• Immediate contact
• Organisation sites need to have a purpose
• Not a new communicates tool, who is the conservation with and who is listening.
• Sometimes unnice things will be said about you

Gen Y
• Have to communicate in their world, not your world
• How do we interface our business systems to the social systems
• A lot of unintended consequences eg online stalkers
• Driven by emerging technology’s and are driving technology
• First port of call is the web
• Home loans will be on the web, as will be everything else

My thoughts #AICD “Shaping a Nation” with Mark #Pesce Futurist, Paul #Broad CEO Infrastructure NSW, Warren #Hogan Chief Economist #ANZ, Michael #Reenie #McKinsey and Co.

My thoughts #AICD “Shaping a Nation” with Mark #Pesce Futurist, Paul #Broad CEO Infrastructure NSW, Warren #Hogan Chief Economist #ANZ, Michael #Reenie #McKinsey and Co. http://wp.me/p2g64Q-1Z

• Productivity is the number one question
• Major infrastructure projects started and stoped, very poor use of capital
• Rail system in Sydney works at half the throughput of a similar one in Europe
• Productivity is about innovation
• Innovation has 3 type -Things you want to do, ones you have to do, the ones forced on you
• People do not like to change, new businesses need to be extremely thin
• Planet is now very well connected, need to realise the potential of being connected
• Australian working off Hawke / Keating Changes and we have had no structural reform since that period
• Currently being ran by populism with no courage for change
• Currently no vision in Government, no leaders
• Politician do not understand innovation, Swan does not understand
• Need Competition, Need intellectual capital, get politicians out of the way to let market deal with it
• Government needs to get out of town, need to get away from career politicians

Labour Market Productivity
• Unions killing Businesses, they hate flexibility, they just want fee’s some they can spend
• Need greater labour mobility, even Executive staff don’t like to move. 20 yrs of good times have set this up. US has been traditionally flexible due to their low social blanket
• Labour security is falling onto the worker
• People like FIFO because people will not live there. FIFO increases project costs.
• Skills training needs to be continuous and not a one off retraining session
• A welfare state stifles innovation and competitiveness. If we didn’t have payments over last 10 years we would have $0.5T
•

Innovation
• We have a lot friction but not a lot of innovation. Will lead to driverless trains, people free mines etc
• The smartest people are the poorest people, staying on the edge of technology is an advantage
• The connected world is driving us, A cloud world will change the world. Call centres can be decentralised,
• Need to find the technology and work out how to utilise it.
• The difference between an idea and an innovation is commercialisation and this is hard
• Necessity is the mother of invention
• The Drought lead to a lot of innovations, we need to create a pressure
• Some great education initiative’s

Future Investment
• Education is key
• Need to build up our knowledge base

The Big Risks
• Don’t address Productivity
• Government interfere in the markets
• Lack fitness – High $, Low productivity, become non competitive
• Government investment in welfare
• Will always have overseas difficulties, up to us to be the best, hence we need leadership
• Politicians do not give the electorate any credit

Questions

• Should we have a Melbourne Sydney Fast Train – North Coast trains needs to be more efficient, better option than NBN but economics don’t stack up
• Should be driving our trains from low cost countries, this can be safer, lower O&M
• War can be fought by remote control
• Productivity Improvement, what needs to occur? Bring in short term workers, Health system needs to be rebuilt, the IR laws need to go back, 70% of productivity is in organisation.
• Need to challenge organise to improve
• Education – Need to keep University’s and TAFE separate. TAFE should be supported by Corporate and are about skills, Universities are investment in the Future and need higher levels and Government Funding and they are about learning.
• Educations – Masters degrees have become a ticket and need to increase. Need a Stafford etc
• School Class sizes, halls etc don’t matter, Teaching Skills are the most important thing.
• New Industries ie CSG take a period to sell to the community, we are pushed back by government and the media, we need to tell out story, get rid of spin merchants and get the CEO to be the spokesman
• If you wish to get through to a politician, get in the newspaper
• Outside Carbon what are the big Environment Issues? – Cyclones in north, Flooding Western Sydney (200k people), Should price pollution and let the market work it out.

Final Comments
• Best Environment for wealth creation, though unstable
• Australia is in the best position in the western world, but at tipping edge
• Corporate World needs to tell its stories and debate the pollies
• Need Courageous Leaders, that allow the economy to run
• Need more industries to link into Asia
• Best Country in the World, good democratic system

My thoughts on the #AICD“Shaping a Nation” with Warren Hogan Chief Economist #ANZ, Michael Reenie #McKinsey and Co.

My thoughts on the #AICD“Shaping a Nation” with Warren Hogan Chief Economist #ANZ, Michael Reenie #McKinsey and Co. http://wp.me/p2g64Q-1W

We have a Global Infrastructure boom
• Under investment on 1980’s /90’s
• The rise of the emerging economies
• Asian incomes rising
• Change of urban population
• This Boom will not have a bust

The commodity Boom
• Strong Commodity demand due to increase in metals
• Most growth is coming from China, but others to follow
• S2T investment on Australia over next 20 yrs
• New projects appeared to have peaked out in Aust
• Aust currently not set up to take the continued Boom

• A$ based on Commodity price and hence it will stay high

Productivity Growth drives income

• Currently not on government agenda
• Can’t keep redistributing wealth unless we get it on the agenda

• We have just come off 20 years of reform
• We have consensus on good financial management and low debt
• The mining boom has taken the pressure off, given free money 50% was change in terms of trade
• Commodity prices have reached there peak, hence investments will be constrained
• We are a low performing economy and Productivity needs to get back on the agenda
• Politicians don’t lead, they only respond and hence industry needs to put productivity back on the agenda

The big opportunities include;
1. Capital Productivity – Currently 30% too expensive, the time take to get to market, the number of regulations, Green tape, most companies are overspending to get projects too market
2. Health Care – We need to reform our health care
3. Labour flexibility and IR – eg retail 20% less productive than US
4. Approvals, Zoning, Deregulation – Ease of doing business getting worse
5. Energy Policy – Cheap Energy equals high living standards, this is changing, in 5-7 yrs this will slow growth, it is a elephant in Aust, US is now an net exporter of Energy.
6. A lot of productivity improvement is in the hands of our managers, only attacked we are pushed too

• China is being oversold. Eg Japan was the same. 30 year growth
• In 30 years China’s demographics looks like Japan
• Longer term India will keep going
• Africa is huge for the future.
• The US responds to issues quite well, it will be back in 2 yrs
• Europe will keep muddelling through

My thoughts on the top 10 director issues after #AICD session from Fiona Harris, Chair Barrington Consulting, James Strong, Chair Woolworths, Yasmin Allen, Director IAG

My thoughts on the top 10 #director issues after #AICD session from Fiona Harris, Chair #Barrington Consulting, James Strong, Chair #Woolworths, Yasmin Allen, Director #IAG http://wp.me/p2g64Q-1S

• Hasn’t changed of lot, same factors around now
• Issue can be divided up into issues that effect specific companies and general issues for company directors

Issues of Concern
• Standard questions of, Have we go right strategic? Have we got right team? What is the corporate performance etc
• Continuous Disclosure is an issue
• Issue around public perception and media
• Availability of capital
• Economic uncertainty, especially due to Europe, getting money of European banks, effect of European elections
• Risks due to bringing new operation online eg new mines
• Understanding the risks around growth
• Rapid Change in technology, the solutions will be there, but we don’t yet know what they are, will change the commodities market, insurance companies losing money due to increased competition. Printing of solid objects, Online strategy must be integrated, not separate
• Remuneration of talent, hanging onto you top people, development of people

Good issues
• AICD getting on top of issues
• Aust Company Directors are high class and we are well governed

General
• Renewable Energy – Not possible to invest due to the oppositions pledge to reverse the tax, similar situation in UK, this is slowly down the development of these industry’s
• Boards now spend time spent on alternative realities, the rate of change is increasing,
• Power needs to be given to the consumer, so they need a variety of methods to interact with you. Need to continually assess this, because it changes
• Dynamic tension between Board and Management is important, trust versus risk versus opportunity
• Risk assessment includes in depth look at politics, need to stay close to the government (and opposition) at all times
• Public is now interested in shares due to their super funds and hence the politicians want to run the show, 10-15 yrs ago they weren’t interested
• Remuneration excesses in Australia is rare, need to ensure it is aligned with performance
• How do you see the wood from the trees, lot of board papers are well too long, need to cascade reporting and only look at things once, reporting should not be undertaken only for the board, management needs to get benefit as well.
• When things go wrong, they get blown out of proportion, eg Centro etc
• Liability of directors should be centralised under the corporations act to simplify
• HSE and Environmental issues will continue to exist and need to be dealt with

Lessons
• Leadership makes a real difference, though this is hard to convince the public (Remuneration)
• The most important this a board does is appoint the CEO and those around them
• The Chair needs to establish a good relationship between the board and management, needs trust, respect, openness etc
• Difficult when dealing with poor performing CEO or board members
• Whole point of being a director is that you take responsibility

Questions
• How do we deal with social media and the media as a whole? We need to be constructive with the press; you get the reputation that you deserve, most comments are ill informed and without detail, need to engage regulators, media and others to ensure they understand your position, need to be there all the time.
• How do you gain understanding of how you will work with a new board? The business and financial due diligence is easy, the culture and how they work together is hard. Talk to people who have sat on boards with the other board members.
• Role of Common sense on a board. Real important, many of the court issues have raised due to directors not stopping to think. Important to keep a pulse on the business.

The Ascent and Descent of Money

Thoughts and issues – The Ascent and Descent of Money #ACID Conference – Niall #Ferguson http://wp.me/p2g64Q-1N

The Ascent and Descent of Money # ACID Conference – Niall Ferguson

• Coming via video out of Oxford England
• 5th year into the slight depression (as opposed to the great depression)
• This time some of the smaller economies are being effected more than the big ones eg Greece

The Slight Depression

• In 2007-2009 the collapse was similar to the great depression
• From June 2009 the economy pulled out of the trend
• This was for 3 reasons
• Bank Failures – We learnt from the GD on monetary policy and saved the Banks from collapsing. Only a few failed
• All the major economies went into debt. Debate continues on if this was at the right level. Ie too much or too little. They mitigated but didn’t cure
• China, the third reason. 2nd largest economy in world, they maintained demand.

Europe
• Appears to be limits to what can be done with monetary union without fiscal union. Eg like EU
• No chance that the EU will be dismantled due to the high cost. If Greece left than it will be cut off from funds form EU, the rest the global and high inflation would lead to the collapse of banks.
• If Greece left, many others would be keen to do the same, eg Italy and Spain
• Germany have been going well due to structural reforms in 1990’s and they have been able to control their exchange rate
• Don’t bet on the break up of the Euro, but expect more EU to increase control of the member states
• Might be a EU control over foreign debt, EU Bonds, Money for bail outs, Germany wants a Federal Republic of Europe,
• Europe is bad but not terminal

China
• Overtake US in 4 yrs
• Worries about a China Crisis are over stated.
• Issues in China are more political than financial
• Party knows its doomed if discussion on Democracy occurs
• But expect that the new leadership will have 1 party state with the rule of law. Hong Kong is closer to this model.
• More secure Private Property, More internationalisation of the Yuan
• If the middle class output is larger that will do well for the Yuan.
• Expect economic liberalisation 12 month after the new leadership

Global Economy
• US not much room left to stimulate economy
• US has election in Nov and will experience contraction after this
• This will be a close election, expect BA in Presidency and still locked house
• US Companies have the balance sheet to assist but the government is not giving them confidence
• US Silicon Valley is still providing great input into the economy eg Facebook and Google, but is facebook a phase or not?
• Globalisation is still working
• The US share index is a barometer of global economy due to the effects of working globally
• It isn’t over yet, the outlook is very cloudy, but better than the 30’s
• Financial Services will be effected by popularism

• US getting close to Debt Ceiling, but it is a superpower and prints the worlds currency, So it is expected that they will keep borrowing.
• Unlikely that the US will hit an inflation issue and the dollar be devaluated, can’t inflate things like social security
• India has advantage over China that is has Law, Free Press and Democracy in place. The States are improving and they will need to move further before the Country settles
• Indonesia – Biggest problem is corruption and this needs to be tidied up
• Politically Populism is increasing but doesn’t appear to be revolutionary
• China’s middle class is larger and growing quicker than India
• The Arab Spring continues but we don’t know where it will end, expect it will be anti democratic

My thoughts and issues #AICD Conference – The evolving role of the director from John Price #ASIC Commissioner & Steven Cole #Reed Resources Director

My thoughts and issues #AICD Conference – The evolving role of the director from John Price #ASIC Commissioner & Steven Cole #Reed Resources Director. http://wp.me/p2g64Q-1I

Steven Cole Reed Resources Director

• Most Company Directors are Baby Boomers
• Most our Corporate Managers are X Gen
• Most our “workers” and future managers are Y Gen
• Are Company Directors really connected?
• Huge growth of special interest groups, very single focused groups, they don’t need to find a solutions, just to highlight it
• GAP between societies expectations and that that can be delivered by our directors
•
High risk of unintended consequences when trying to meet these expectations, can lead too;
• Reduced productivity
• Reduce investor inflow
• Reduce new market entrants
• Reduced competitive
• Reduced social and community income

3 levels of responsibility
• Base – Things we have to do
• Secondary – Minimising harm to others
• Tertiary – social / community participant

We need to be;
• More inclusive / Transparency
• Educate Society on our role
• Provide leadership to community
• Regain trust and confidence
• Grow professionally and enhance skills
• Improve integrity and quality of decision making
• Highlight and explain the burden from regulatory / liability
• Review our conditioned mindsets

• How can it be a 2 way street?

John Price #ASIC Commissioner

Three observations

• Expectation GAP
o Very difficult to close
o Thought that audit is 100% and should result in 0 failure

• Practical ways to address GAPS
o Control expectations through education, structure changes and ongoing discussion
o Increase level of performance to meet expectations

Current ASIC Actions
• ASIC choses matters to pursue
• Looking to increase awareness of enforcement issues
• Enforcement activities are broad and are widely reported
• 4 main issues
• Honesty
• Competence
• Diligence
• Independence from conflicts
• Have a variety of regulatory guides
• Looking to educate investors

• Banks are pressured to follow government policy eg Interest Rates – Banks were lazy and just followed the RBA, The super fund versus interest rate is starting to come out
• Needs to be great care by our directors not to effect the share price
• Company Directors have a reverse onus of proof, it doesn’t apply to politicians or Unions!