Session wrap-ups

Catch up with session summaries, resources, photos and social media updates

Thursday 2 March 2017

Summit opening with John Brogden AM FAICD and Elizabeth Proust AO FAICD

This year, we were joined by 1,000 business leaders and governance professionals from across Australia as we explore what it means to be Directing in a complex environment.

AICD Chairman, Elizabeth Proust AO FAICD discussed some of the challenges directors face in an increasingly complex world, business’ relationship with the community and the importance of business’ engagement with its stakeholders and society in general.

 

Directors currently govern organisations at a time where:

  • the nature of the workforce and the generations that make up the workforce have changed;
  • there is a growing importance of speed over scale, with a greater emphasis on technology;
  • they operate as part of a more challenging, macro environment – where there are growing critiques of inequality and the role of modern organisations in contributing to inequalities.

The pressures of the macro environment in particular threaten the business community’s place in today’s society. Elizabeth Proust explained that “if we [directors] want to maintain the compact between business and the community that Australia has benefited from over the last 30 years, then business needs to accept its wider social obligation to fight for and maintain that consensus. If it does not, we risk having that consensus taken away by an angry and fed-up community.”

To avoid this, directors must improve dialogue with shareholders, government and the wider community.

Read Elizabeth Proust’s full speech here.

Elizabeth Bryan AM FAICD, Chairman, Virgin Australia - Keynote: Directing in a complex environment

Elizabeth Bryan is one of Australia’s most respected corporate leaders. As Chair of Virgin Australia and Caltex Australia and a director of Westpac, she has board expertise across a range of sectors and has worked in industries going through periods of dramatic change.

Elizabeth Bryan provided an overview of what boards should do to ready themselves for the future and the unknown changes that it will inevitably incorporate: becoming familiar with new industries; building resilience; and harnessing key enablers.

 

 

Becoming familiar with new industries

Boards will need to find out – and find out quickly – which markets will be future sources of sustainable growth and innovation. Budding industries in robotics, advanced life sciences, the code-ification of money, cybersecurity and big data are likely to drive the next 20 years of change in the global economy

"Your world will change. Your business could be replaced by new technology companies." Food for thought from Elizabeth Bryan at #GovSummit17 pic.twitter.com/QdQKRrLUuu

 

 

Building resilience

Innovation brings challenge, risk and also great opportunity to board directors and their organisations. For organisations to not only survive, but thrive, organsiations need to build resilience in order to be strong and flexible in an era where uncertainty is guaranteed.

“If the board and its executive team are not talking about and monitoring resilience, then they will be less equipped to manage the inevitable shocks to the systems that will hit them,” Bryan said.

Building resilience involves a cultural and organisational shift for many established organisations.

Harnessing key enablers

Trust and respect and people and culture are great enablers of change and innovation.

“The bulk of company value is now made up of intangibles that are not capitalised such as brand, reputation, intellectual property, human capital, and culture.

The sustainable value of all these assets is deeply rooted in the community’s acceptance of the role companies play in society and the trust and respect accorded to individual organisations.”

 

How future-proofed is your board?

Does your board need a shake-up? Hear an energised discussion about the steps your board should be taking to equip itself for the future.

Speakers: Holly Ransom and Sally Freeman GAICD and Dr Keith Suter FAICD

Does your board need a shake-up? Our panellists discussed the steps boards should take to equip themselves for a future of uncertainty and change.

Holly Ransom identified the key drivers of large-scale change: the pace of technological advancements in combination with shifting demographics, noting that the current generation of people under 30 is the largest in history.

Dr Keith Suter FAICD, representing the not-for-profit (NFP) sector argued that the sector formed an important part of the economy and that it too must manage change seriously and professionally.

Sally Freeman FAICD: what gets invested in gets done. We need to budget for changes, not BAU. #govsummit17 pic.twitter.com/wkYLpmhOdQ

 

 

Sally Freeman FAICD provided five tips for boards to adapt to change?

  1. Follow the money. What gets invested in gets done. We need to budget for change, not business as usual.

  2. Nudge theory. Push the organisation in the right direction, with small improvements, all the time.

  3. There are winners and losers. As you change, you need to acknowledge that parts of the organisation will need to be trimmed or removed.

  4. Don’t over consult. There may only be 20 per cent of people in your organisation that have the insights that you need.

  5. Embrace risk. You need to be aware of the risk and be prepared to fail.

Three key lessons from our panellists:

  1. Large-scale change is inevitable, being driven by shifting demographics and technology advances.
  2. We must structure our thinking – from how organisations set budgets, to the way board meetings are run – to allow for change, not business as usual.
  3. Scenario planning is critical. It is a model for thinking that forces directors to ask the right questions to manage risk and change.

Ethical decision-making in the boardroom

Are ethical issues discussed in your boardroom? Hear how high performing boards approach challenging ethical discussions.

Speaker: Fabian Dattner. Panellists: Barry Rafe FAICD, Dr Simon Longstaff AO and Dennis Gentilin MAICD

Are ethical issues discussed in your boardroom? An overflowing room of delegates heard from panellists in a frank discussion about how boards approach ethical discussions, moderated by conference MC Julia Baird.

Fabian Dattner gave the opening introduction. We need to do two things to make meaningful ethical change: 1. have real conversations about culture and 2. especially now, know the facts.

#govsummit17 ethical failures result from human systems, not checked by formal systems

A majority of conduct issues occur because of ineffective systems, not formal systems, Gentilin said. You can have robust frameworks in place but still norms can emerge where unethical behaviour is common.

Organisations need to work on a peak up cultures, so boards don't get a rose-coloured view, Gentilin also noted.

Longstaff's message for the audience was bracing. Not every director understands ethics are paramount.

@SimonLongstaff great quote @ #govsummit17 "...the custom of following blind habits gets people in trouble." pic.twitter.com/93spLhgn3f

“Corporations have no heart, no mind, no soul. They are like a patient in a comatose state. They can’t make decisions for themselves. Everything comes from that board. Boards have to set a framework so people know the right thing and the wrong thing,” Longstaff said.

Three lessons from the panel:

  1. Have real conversation about culture
  2. Know the facts
  3. Systems won't stop human ethical lapses.

Preparing your response to climate change

How will climate change impact your organisation? Hear an energised discussion about the steps your board should be taking to equip itself for the future.

Panellists: Stuart Allinson, John Connor GAICD, Dr Fiona Wild and Rebecca McGrath FAICD

How will climate change impact your organisation? The panel of experts discussed the realities of climate change, where the priorities should be for boards and business more broadly, as well as the steps boards should take to equip their organisation for climate change risk.

"Climate change is a risk to business. It is not a political or ideological issue, it is a risk issue" says @jconnoroz at #GovSummit17

Three lessons from the panel:

  1. Climate change is a risk issue – not ideological or political. One way that organisations can can begin to shift the focus is to take away the politics and the ideology and focus on the key risks: the physical risk and the transition risk.
  2. Business is preparing for climate change from a risk mitigation perspective, but there are positive consequences in that it is forcing innovation, as well as helping to identify opportunities for sustainability.
  3. Boards need to enhance their literacy of climate change and carbon budget.

Focus on the long-term, deliver for the short-term

Is your organisation too reactive? Explore how boards can strike the right balance to ensure their organisation delivers for the short-term while focusing on long-term strategic goals.

 


Speaker: Kath Roach and Patricia Cross FAICD

Is your organisation too reactive? The panel explored how boards can strike the right balance to ensure their organisation delivers for the short-term while focusing on long-term strategic goals.

Mgmt (not just board) need players with ability to think strategically to lift org beyond the short term @AICDirectors #govsummit17

Panellists discussed a wide variety of issues, from what drives short-term focus and behaviour, remuneration, targets and reward and how this can incentivise performance and even long-term focus, communication, consultation and culture.

It seems that now, more than ever it is even more difficult for boards to bring that long-term focus to their practice and their day-to-day decision-making and many big institutions are struggling with big change.

"The only thing that is certain is that the future is uncertain. Prepare for it" says @PatriciaACross at #govsummit17 pic.twitter.com/rHzZRJBAQD

Our panellists discussed several barriers to long-term thinking, strategy and execution:

  • Loss of trust
    Whether it is loss of trust with politics and our politicians, the NFP sector which has faced an increased level of scrutiny, and loss of trust with big corporations.

  • Selfish behaviour
    There is great reluctance in today’s business environment to negotiate to find a mid-point or an agreed point of action. There is great focus on achieving a binary outcome. This is particularly evident in politics.

  • Remuneration, reward, targets and KPIs
    Executive pay and remuneration is a particularly hot issue for boards. There is great contention between the merits of ‘hard’ or financial targets and ‘soft’ or non-financial targets. The question to ask is what encourages long-term value creation and how should boards balance that?

Despite the great need for business and politics to focus on the long-term, becoming stagnant can be dangerous.

Ben Hubbard FAICD, NFP director and former Chief of Staff to Prime Minister Gillard was quick to add to the conversation:

"Stuff happens. If you stand still, you do more damage than responding to issues a purposeful way" - Ben Hubbard #GovSummit17 pic.twitter.com/KUMGaaDNsR

Practical lessons for boards who are struggling to lift their attention from the short-term to the long-term:

  • Set the tone from the top – The chair of the board should be steering boardroom conversations to focus on the long-term and the overarching organisational strategy.
  • Review what is on the agenda – A board’s agenda is what drives the conversation and focus of each board meeting. Boards should make sure they are spending time on the right things.
  • “What’s the scaffolding you have in place to make sure you are reviewing strategy constantly and consistently?” – Does the board hold regular reviews of the organisations strategic objectives?
  • Develop the muscle memory – Focusing on the long-term comes down to practice. Don’t think about it. Just do it.

Get the agenda right to focus on the long term yet hit the short term targets. #govsummit17

ASX: Improving board and shareholder engagement

Is your board managing its shareholder’s expectations? Experts consider the competing interests and complexities of shareholder groups and provide practical tools to improve the quality of board-shareholder engagement.

Panellists: Karin Halliday GAICD, Kathryn Fagg GAICD, Greg Cooper and Martin Lawrence

Is your ASX listed board managing its shareholder’s expectations? The panel considered the competing interests and complexities of shareholder groups and provided practical tools to delegates to improve the quality of board-shareholder engagement.

Panellists were led in a discussion by AICD Board member Sally Pitkin FAICD on the changing dynamics between the board and the shareholder.

Full house for Q&A session with ASX panel - engagement is more than communication @AICDirectors #govsummit17 #Governance pic.twitter.com/T86lR34iX5

“There hasn’t been wholesale changes but there is an understanding that there is a degree of engagement that is absolutely required and it is different for different investors,” said Greg Cooper.

Arguing that there is “no rote formula for engagement”, Greg Cooper joined with Kathryn Fagg GAICD to highlight that a key component of successful shareholder engagement is not to treat investors as a homogenous group.

“Investors have very different views about what you should be doing, so understand that,” said Kathryn Fagg.

Highlighting some emerging trends in investor relations, Karin Halliday GAICD identified a shift in the volume and content of engagement.

It's imperative to engage outside the AGM season, agrees our panel at the ASX session at #GovSummit17 pic.twitter.com/fp1egKtTKX

“In terms of trends in engagement we are using the same channels but the volume and content of discussion has changed for example we are talking about sustainability and Corporate Social Responsibility issues because they impact company performance,” said Karin Halliday.

#govsummit17 Karin Halliday on shareholder engagement: it's just communication, its positive, 2-way, build value & alignment, not just Rem.

“Directors are also more prepared for questions – about culture, leadership, succession planning and diversity – because this drives company value” she said. Discussing his role as a proxy advisor, Martin Lawrence identified three types of shareholder engagement:

  1. routine engagement that happens all the time about many things
  2. the second is – the company is thinking of doing something specific and want to talk confidentially
  3. AGM engagement

"Nothing worse than opening the annual report & saying 'whaaat, where was that?'" Says Martin Lawrence, talking engagement at #govsummit17 pic.twitter.com/8C4jn9Sj80

Three key lessons from the ASX panel:

  1. There is now an established view amongst directors that shareholder and investor relations matters but engagement should be specific and targeted
  2. The volume, tone and content of engagement has changed with a growing recognition of its role and importance.
  3. Sharing information regularly and encouraging shareholder/investor relations that cuts to the core of the problem or issue and deals specifically with it is the most constructive form of engagement.

PRIVATE BUSINESS: Embracing intrapreneurship and innovation

Is innovation the key to accelerating the growth of your business? Our speaker will explore a number of ways boards can cultivate a culture of innovation and how looking within your organisation may be the key to growth.

Speaker: Andrew Klapka GAICD

Is innovation the key to accelerating the growth of your business? Andrew Klapka GAICD explored a number of ways boards can cultivate a culture of innovation and how looking within your business may be the key to growth.

Only 16% Australian businesses have high performance innovation culture, OCE 2015-16 report. #roomforimprovement #govsummit17 @AICDirectors

Importantly, Klapka argued that small- to medium- businesses should think strategically about the kinds of problems that exist in their industry, and they should diversify their efforts to develop a portfolio of innovations across a range of problems. Klapka refers to this as the “strategic axes” of innovation.

Engaging your team and generating a culture of innovation is extremely important, and Klapka provided three tips for this:

  1. The mantra from the top is key
  2. Engage people from across different functions
  3. Celebrate the quick wins early

The next step is to undergo processes of discovery. This is a systematic process of testing and ranking your ideas against both quantitative and qualitative measures. At the end of this process, you will have identified your most attractive two-three ideas for you to pursue. This is an important component of risk management and will increase your probability of success.

Working with a board can assist with the innovation process – but the board needs to be highly supportive and engaged in the process. Innovation should be a standing item on the board’s agenda, and the executive should use board members as a resource for knowledge sharing and business benchmarking.

Related reading:

Three key lessons from Andrew Klapka GAICD:

  1. Take a strategic approach to innovation and pursue more than one innovative product at a time.
  2. Build a culture of innovation by bringing your “true believers” on the journey.
  3. Manage your risk carefully by testing and learning as you go and working in partnership with your board.

NFP: Setting up your board for long-term financial strength

Is your organisation’s financial future sustainable? Sector leaders examine the role that a well-equipped board can play in ensuring the long-term financial strength of your not-for-profit organisation.

Speaker: Susan Pascoe AM FAICD. Panelists: Laura Anderson, Gideon Haigh and Allan Myers AC, QC

Is your organisation’s financial future sustainable? Sector leaders examined the role that a well-equipped board plays in ensuring the long-term financial strength of not-for-profit organisations (NFP) in this current climate.

Commissioner Susan Pascoe AM FAICD opened the first NFP sector-specific session of the Summit by dispelling the myth that the NFP sector shouldn’t and can’t make a profit.

#govsummit17 It is "simply a furphy" that nfp boards are not as professional as commercial. Thankyou @SusanPascoeACNC @FamilyLifeAU

 

 

However, the reality is that charities are spending less than they are earning and are reinvesting this surplus profit into their purpose.

The Australian Charities and Not-for-profits Commission encourages not-for-profit organisations to generate a surplus to help steer the enterprise through difficult times and financial uncertainty, to build capital for new and improved enterprises and to allow the capacity for innovation.

Good #governance is the best precaution to financial instability and the survival of our NFPs - @SusanPascoeACNC at #GovSummit17 pic.twitter.com/CLckcZY4Vy

 

 

Some facts about charities in Australia from a recent report by the Australian Charities and Not-for-profit Commission:

  • Charities had a combined total income of over 134 billion last year
  • Charities employ over 1.2 million staff – and is the second largest employer in Australia after the Australian Public Service
  • Charities engage over 2.97 million volunteers
  • 37 per cent of charities have an income of under $50,000 per annum

Philanthropists are communicating and collaborating together to help to solve deep-rooted problems with pooled resources.

Growth of the capital base at the Ian Potter Foundation is a great case study. Investing for the long term #govsummit17 @AICDirectors

 

 

Allan Myers AC QC, Governor of philanthropic foundation, Ian Potter Foundation explained that at the foundation they have taken the “Warren Buffett approach” – smart, safe and stable investments to ensure the organisation’s financial future and spending power doesn’t diminish.

Allan Myers AC QC - risks are only bad if you don't understand them - relevant to all Boards Inc NFP #govsummit17

 

 

For Laura Anderson MAICD, Chairman of the Virgin Australia Melbourne Fashion Festival the key to financial sustainability for NFPs is “selecting the right CEO and then getting the chemistry between the chair and the CEO right.”

'Shiniest silver bullet for NFP financial sustainability, get the right CEO' totally agree with @LauraAndersonGL @AICDirectors #govsummit17

 

 

Key lessons for NFPs from our panellists:

  1. Make sure you have the right people on the board.
  2. Have difficult conversations.
  3. Inclusion and diversity is essential to any successful board.

View Susan Pascoe's presentation here

PUBLIC SECTOR: Governing within the constraints of the sector

Can government entities operate effectively in a commercial environment? Experts take an in-depth look at the governance challenges of government business enterprises including how to manage complexity and optimise opportunity.

Speaker: Peter Harmsworth AO, Panelists: Leilani Frew, Hon Karlene Maywald GAICD and Suzanne Jones FAICD

Can government entities operate effectively in a commercial environment? Our public sector experts took an in-depth look at the governance challenges facing public sector boards.

Peter Harmsworth AO on governing within the constraints of the public sector @AICDirectors #govsummit17 #Governance pic.twitter.com/Z5cqVWav3b

Peter Harmsworth led off the discussion with an overview of the sector. He underscored the importance of public sector boards having good relationships with its resposnible minister.

“Minister is the master steward of government policy. It's very important relationship with minister’s office is robust,” he said.

Frew called out two of the major challenges that public sector boards are facing are: 1. the expectation that they will be operated, run and governed like corporate entities when they lack the levers to do so and 2. shareholder instability, a nice way of saying ministers change.

Jones added that expectations of stakeholders need to be managed, especially around delivery and timeframes.

Maywald saw it as a problem that public sector boards need to focus on the long-term but operate in a short-term political environment. It's important to maintain good relationships with various ministers and the opposition. But it's difficult in sensitive areas like water because you can end up a political football, Maywald warned.

Sometimes even when the decision is bad from the government or you don't agree with it, a good process can lead to a better outcome, said Jones closing the session on an optimistic note.

Fantastic panel insights on the intricacies and opportunities of public sector governance #govsummit17 #aicdirectors pic.twitter.com/ScbFHAm3p3

The panel's advice for public sector boards

Maywald

Understand the environment you're working in well.

Be aware of the differences with the corporate sector, especially freedom of information when you're expected to give frank and fearless advice.

Be yourself and don't compromise your personal integrity

Jones

Do as much homework as possible

Meet your fellow board members – take that coffee

Frew

Do a lot of DD even before you put your name forward

Have community at your hear but commercial discipline in your head

"Community at ❤️ but commercial discipline in my head." - advice from NSW Treasury's Leilani Frew for public sector boards #govsummit17 pic.twitter.com/JpBLf30YGO

Three key lessons about governing in the public sector:

  1. Have a good relationship with the minister
  2. Need to understand the difference with corporate board, particularly FOI
  3. Be community-hearted but commercially-minded.

View Peter Harmsworth's presentation here

 

Life Fellow Achievements

4.45pm

AICD Chairman, Elizabeth Proust AO FAICD will present Life Fellow Achievement awards to members of the AICD in recognition of their eminent director careers and distinguished service to the organisation.

There are six categories of membership with the AICD, and the Life Fellow Achievement is the highest honour given to our members.

AICD Chairman, Elizabeth Proust AO FAICD presented Life Fellow Achievement awards to three members in recognition of their contribution and distinguished service to the organisation and the Australian governance community.

Martin Kriewaldt FAICDLife

Martin Kriewaldt FAICD is the Chair of XLam New Zealand and Chair of Hyne Timber – a 130-year-old family owned private company.

Martin previously served as a non-executive director of ImpediMed and Macarthur Coal as well as servicing as a non-executive director of Oil Search for over 10 years.

As a previous Chair of Suncorp Insurance and Finance, Suncorp Building Society Ltd, Suncorp Finance Ltd, Infratil Australia Ltd, Airtrain Citylink Limited, Suncorp Property Funds Management Ltd, Knight Frank Australia Holdings Pty Ltd, Graham & Company Ltd and Hooker Corporation Ltd, Martin holds over 20 years’ experience as a professional director and chair for both major national and international organisations.

Additionally, Martin has served as a director for several not-for-profit and community organisations and companies including as Chair of Opera Queensland Limited.

Previously, Mr. Kriewaldt was a partner for 25 years, and a consultant for 13 years, at law firm Allens specialising in banking, insurance, structuring, construction and insolvency.

Involved with the AICD as a member for more than 27 years including serving as President of the Institute’s Queensland Division, Martin served on the AICD’s National Conference Committee in 2013, has been awarded the AICD’s Gold Medal, regularly contributes to our Company Director Magazine and serves as a member of the AICD’s Corporate Governance Committee.

Today we acknowledge the significant contribution Martin has made to the Australian Institute of Company Directors over almost three decades and present him with Life Fellowship, congratulations Martin Kriewaldt.

Kevin McCann AM FAICDLife

Kevin McCann AM FAICDLife is Chair of Citadel Group Limited, Dixon Hospitality Limited and the Sydney Harbour Federation Trust. He is Co-Vice Chair of the New Colombo Plan Reference Group, and a Director of the US Studies Centre and Evans and Partners.

He was previously Chair of Macquarie Group Limited and Macquarie Bank, Chair of Origin Energy Limited, Chair of Healthscope Limited, Chair of ING Management Limited, a Director of Pioneer International Limited, Ampol Limited and the State Rail Authority of New South Wales and served on the Defence Procurement Advisory Board, the Takeovers Panel and as Chair of the Sydney Harbour Federation Trust, a Commonwealth agency.

His community activities include Fellow of the Senate of the University of Sydney and Chairmanship of the National Library Foundation. In recognition of his service to the Law, Business and the Community, Kevin was made a Member of the Order of Australia in 2005.

As a member of the AICD for over 35 years, Kevin has contributed significantly to the advancement of women in corporate Australia particularly as part of the AICD’s ASX 200 Chairman’s mentoring program.

His contribution to the Institute is second to none. Kevin has been profiled in the Company Director magazine, gives of his time extensively to a range of AICD events and initiatives, serves on the AICD’s Corporate Governance Committee – identifying and advocating for good practice in governance and directorship and has assisted countless staff and members, providing advice and his valuable support.

Wendy McCarthy AO FAICDLife

Ms Wendy Elizabeth McCarthy AO MAICD is a highly-experienced director with more than 35 years’ experience serving on a range of Private, Not-For-Profit and Government boards and advisory bodies.

Wendy has been a trailblazer for women, mentoring, encouraging and creating a path for female directorship and increased participation of women in executive roles. So recognised are Wendy’s achievements in assisting women in corporate Australia, in 1989 Wendy was appointed an Officer of the Order of Australia for outstanding contributions to women’s affairs and in 2011 she was featured in the International Women’s Day publication The Power of One which profiled 100 women who have shaped Australia. In 2013, she was inducted into the Women’s Agenda Hall of Fame for her contribution to the lives of Australian women.

Wendy has featured prominently in the AICD’s Company Director magazine, discussing the role and benefits of mentoring to assist women into non-executive director roles, and taken part in Finding Board Positions workshops to assist women expand their director and executive careers.

An experienced government director, Wendy is the current Chair of Headspace and Circus Oz and non-executive director of Goodstart Learning and IMF Bentham. Wendy also previously held the positions of Deputy Chair of the Australian Broadcasting Corporation, founding member of the Prime Minister’s National Women’s Advisory Council and the former Co-Chair of the NSW Sustainable Access Health Priority Taskforce.

She has also held international directorship and advisory roles including Vice Chair of the Plan International Board, Director of Plan Hong Kong and Chair of the Advisory Committee WHO Kobe Centre, Japan.

Unfortunately, Wendy was unable to be here today, however we recognise her for ongoing contribution to our Institute.

Friday 3 March 2017

National Economic Outlook 2017 | For Directors and Boards

Hear our expert economists discuss the domestic environment and the issues and challenges you and your Board need to be aware of.

Speakers: Stephen Walters, Chief Economist, AICD, Stephen Halmarick, Chief Economist, Colonial First State, Scott Haslem, Chief Economist, UBS Investment Bank


How will emerging domestic and international economic trends affect Australian boards and businesses? Our panel of expert economists discussed the state of the economy.

The panel kicked off with a discussion of the global political environment. “On Trump, the markets are taking a glass half-full view,” Halmarick said.

All the economists were optimistic about the Australian housing market. “Our market is very different from America,” AICD Chief Economist Stephen Walters said. “We’re still not building enough homes in the detached housing space.”

The government budget is also still doing ok. “Our debt is very low. There's still plenty of room on fiscal policy. We should be borrowing for infrastructure investment,” according to Halmarick.

But the investment environment is a cloud for Australia. “There is an absence of animal spirits,” Walters said.

Businesses say they want a return of 12%, according to Oster, which is a real rate of more than 10%. They want to fix up their balance sheet, rather than investing. There are some sectors picking up, health and education, but the other sectors are doing nothing.

To improve productivity, the economists called for infrastructure investment and tax reform.

We need to build infrastructure because “moving people and goods around a service-based economy is critical”, according to Halmarick.

“We tax income too aggressively and profits too aggressively, and we undertax consumptions,” Walters said.

Oster was concerned about the second round effects of a credit downgrade for Australia. “Will it cost government more funding costs? No. But once you lose your AAA, all the banks lose AA and Australian banks look the same as the rest of world. If we get into trouble then, we get a [funding] supply problem.”

The economists ended on a note of optimism. Australia is well-positioned in the long-term as a services economy in Asia which will have a middle class of 3.5 billion people in less than 15 years, according to Walters.

“Thank God my kids are living in Australia and not in Europe,” exclaimed Oster.

Three lessons from three of Australia’s leading economists:

  1. Business investment is weak
  2. We still have a shortage of detached housing in Australia
  3. We need more infrastructure investment and tax reform

Policy making for the long-term

How do today’s leaders overcome the constraints of short-termism? Our highly-esteemed panel will continue last year’s conversation on the opportunities and impediments for productivity, innovation and long-term public policy reform.

Moderator: Jennifer Hewett. Panelists: Graham Bradley AM FAICD, The Hon John Brumby, Christine Hawkins FAICD, Nick Greiner FAICDLife and Peter Nash

Room: Plenary 2


How do today’s leaders overcome the constraints of short-termism? Our highly-esteemed panel continued last year’s conversation on the opportunities and impediments for productivity, innovation and long-term public policy reform.

Trump, trade and the rise of populism

“It’s hard to believe that it’s been a year. And it’s only become more challenging.”

The panel agrees that the relationship between the government and the business community has deteriorated, and this is linked with the rise of populism around the world. On China, John Brumby said that their interests are served by expanding world trade and will take the lead in a time when America is far more protectionist.

Nick Greiner was hesitant to say that Trump was closing trade, as it is not in his interests to start a trade war, but he is substantially unwinding free trade and this is stopping the momentum for future free trade in the global context.

Tax

vPeter Nash argued that there is complacency in the way that we deal with our tax. The system is a critical leaver in the economy and other economies are adjusting their tax systems to their benefit.

Hawkins agreed that this is critical: “We are not seeing any appetite for substantial reform; business was pleading for this as far back as Howard. We have little resilience – shocks are coming from the US, UK and Europe, changing how economies function. We may need a catastrophic event to shake us out of apathy.”

Greiner said that this is Australia’s single biggest disadvantage: “we don’t want to do a deal so we stay in our corners. The budget needs to be repaired, our corporate tax rate is uncompetitive, and we should increase the GST to 15%.”

Energy security

Energy security has only recently – since power outages in South Australia last year – become front of mind for government, despite its critical importance.

“Energy security has become a long-term issue,” said Graham Bradley. It requires business and both sides of government coming together around a national sense of purpose.

“Transitioning to cleaner, more stable and sustainable energy will require input from everyone. And for us to start thinking about it we have had to have lived through a crisis to deal with it,” added Brumby. “But, bi-partisan long-term energy policy could very well be easier to solve than tax.”

Leadership and government reform

Reform of government bodies, including COAG is imperative to driving change and sound policy for the long-term.

The panellists all agreed that leadership, particularly at the government level is floundering in Australia. Communication to constituents, reluctance for the major parities to come to the bargaining table and ‘meet in the middle’ and the lack of focus on key strategic issues were emphasised.

Bradley and Greiner use the example of COAG, whose agenda could and should be set by an independent secretariat so that big, strategic issues are discussed on a regular basis and are a recurring agenda item.

In closing the session, the AFR’s Jennifer Hewett asked the panellists: what would you change about politics if you could?

There was nervous laughter until Greiner, former Premier and Treasurer of NSW stepped in to put it bluntly: “If I could change anything, I’d make a federal parliament that functions. It doesn’t actually matter what they do at the end of the day – just as long as they do something.”

Three key lessons from our panellists:

  1. Reform is desperately needed to ensure Australia remains competitive in an increasingly unpredictable global environment.
  2. The biggest impediment to reform is the influence of minor parties in the Senate which make it difficult for governments to pursue centrist agendas.
  3. Long-term planning and policies are required for a range of issues, including tax, energy, housing and infrastructure.

How to foster a culture of innovation

Is your board taking a methodical approach to innovation? Hear from business leaders on what it takes for an innovation culture to flourish and the steps that boards and governance teams can take to ensure its success.

 Speakers: Dr Amantha Imber and James Mabbott

Room: Plenary 2


Is your board taking a methodical approach to innovation? In this session, business leaders discussed on what it takes for an innovation culture to flourish and the steps that boards and governance teams can take to ensure its success.

Dr Amantha Imber MAICD opened the session with a lively and engaging presentation by taking a deep-dive into the science behind innovation and what is required to allow innovation to thrive in organisations.

For Imber, who works with many organisations who are on ‘an innovation journey’, she often hears organisations describe their success with innovation by claiming that they are ‘lucky’ and were ‘at the right place at the right time’.

However, it has been proven that the following three factors are an essential foundation for innovation:

  • Structure: in mid-to-large size organisations you need structures to help innovation flourish
  • Leadership: leadership is critical for consistent innovation
  • People: People who spread your word, who live out your purpose day-to-day

According to a recent study that aggregated the data from 42 different studies on innovation the top five most impactful variables that are driving innovation include:

  1. Positive interpersonal exchange
  2. Intellectual stimulation
  3. Challenge
  4. Flexibility and risk-taking
  5. Top management support

Part of the challenge for boards and organisations more broadly is that there “is there is no deliberate or consistent approach, process and frameworks to help support innovation. Innovation architecture should be directly linked to the purpose of the organisation for it to work,” said KPMG’s James Mabbott.

Patience is also important when it comes to innovation. “Successful innovation – which is rare – takes a long time and it takes a long time to realise investments,” Mabbott said.

“Organisations just need to be prepared to fail,” added Imber.

For boards, innovation is often about balancing governance and risk. “Boards have the capacity to influence and change the culture, and the way their organisations innovate. They should be asking: what happens when someone has an idea in an organisation? What is the process? Are there frameworks and processes in place that can impede its success?” said Imber.

The differences between leaders in highly innovative organisations and leaders of organisations who are less innovative is, that those who delegate innovation to others are less successful.

Three key lessons on innovation:

  1. Skills to be a good innovator can be learnt
  2. A good innovation process doesn’t start with innovation – it starts with clients
  3. Teach the organisation how to experiment. Bad failure is failure without learning – good failure, on the other hand is where organisations can take away valuable lessons and grow.

Panel discussion: the relationship between good governance and performance

The nature of disruption is being disrupted, with significant implications for what we consider to be good governance.

Panellists

  • Dr Robert Kay
  • Bill Scales AO FAICD
  • Nancy Fox FAICD
  • David Shortland FAICD

What is the relationship between governance and performance? Drawing on interviews with around 100 directors, Dr Robert Kay and Professor Alex Frino found that balanced boards are better performers. Using this research as a basis, Kay and an esteemed panel explored a range of topics with lunch attendees, including independence, performance, diversity and disruption.

Key questions for your board to ask:

  • What does good organisational governance mean?
  • How do we characterise performance?
  • Is there an opportunity for our board/organisation to disrupt itself, rather than wait on disruption?
  • How can we work on building trust as a board?
  • What value are we creating from the boardroom?

Click here to read the full research

ASX: Strategies for growth and adapting to change

Do you need to redefine what success looks like to your company? ASX directors explore the changes on the horizon and how boards are reorientating their governance approach to build risk-resilience and foster growth.

Panellists: Deborah Page AM FAICD, Fiona Balfour FAICD, Colin Galbraith AM FAICD and Launa Inman

Room: 210

Do you need to redefine what success looks like to your company? ASX directors explored the changes on the horizon and how boards are reorienting their governance approach to build risk-resilience and foster growth.

Drawing on her deep experience working in China, Chair Nicola Wakefield Evans asked about the role of Asia in fostering growth with the panel responding that there was enormous potential and opportunity in Asia with new markets still opening up.

They discussed the important role that new technology has played both in developing new business in Asia and also in helping some Asian businesses become more efficient and productive.

However, Deborah Page argued that from a BT perspective, the US is offering greater dollar-for-dollar growth than Asia. “Finding a formula for doing business in Asia can be tough,” she added.

The panel also discussed the role and composition of the board in fostering and promoting growth.

“The composition of boards is evolving but depends what sort of companies you have,” said Colin Galbraith.

“The more modern approach is to have a range of skills relevant to the business at the board level so that you can assess and make the management feel accountable,” he said.

Three key lessons from the session:

  1. New technology will change the way we work, including the skills and experiences required of our workforces, and boards need to be forward- planning and long-term in their view
  2. Markets are still opening up in Asia and technology has played a role in that.
  3. Directors, boards and business should be focused on being profitable. Making a return on capital needs to remain the number on goal of growth

Simon McKeon AO FAICD Keynote: Directing in a complex environment

We close the Summit with our keynote speaker providing a national and international perspective on directing in a complex environment.

Former Chair of AMP and former Australian of the year, Simon McKeon AO FAICD drew on his own experience as a leading company director to share his own reflections and insights on how boards can ensure that they are leading and governing well during a time of unprecedented levels of change and complexity.

McKeon began his presentation to close the Australian Governance Summit with a simple message: “the issue of governance is often taken for granted. It doesn’t just happen. It is as important as any element of activity and constantly requires training and refining.”

Over the course of his half-hour presentation, McKeon covered a range of issues that are relevant to today’s boards.

Culture

McKeon spoke about the importance of culture, “it’s the absolute starting point for the success of any organisation.”

“Culture needs to be felt throughout the organisation and its impact genuinely affects behaviour,” he added.

McKeon went on to draw the link between financial performance of organisations and good culture: “it’s very difficult to generate long-term financial returns when the culture is sub-optimal. A top culture is critical to the success and sustainability of our organisations.”

Diversity

“Diversity is a whole lot bigger than gender – it includes age, geography, skills…and we are all wired a little differently because of our experiences,” he said.

McKeon went on to explore the importance of honest conversations in the boardroom, and how the difficult conversations that can arise are a result of diversity – which can only be a good thing.

“A board that does not have any differences is a board I worry about. The best decisions are those that start with a number of possibilities – and when the conversation is well steered and chaired, the end result is when the group of individuals has come together to make the right decision,” McKeon said.

Change

“Governance should be open to change…indeed it is the only constant,” McKeon said.

McKeon echoed Elizabeth Bryan’s opening keynote that all boards should actively promote and support its organisation’s culture – and in particular a culture of change if innovation is to be successful.”

He explained that the old, Dickensian model of innovation is no longer a choice or possibility. In fact, boards and management should unite in their approach to tackling ‘the world we live in’ and making an impact.

McKeon also touched on the barriers to execution of innovation that seem to face Australia – a sentiment which featured heavily throughout the Summit – and argued that it is critical for boards and leaders of business in Australia to be willing and ready to make impactful change and to adjust the culture of their organisations to fully embrace innovation.

Three key lessons from Simon McKeon:

  1. When boards think about innovation as a cultural issue, it becomes less threatening
  2. Governance is absolutely critical and excellence in governance can shift an organisation from good to great
  3. Directors, should ask themselves about what they can do better and how they can do the best possible job in the positions they are in today.