2017 is looking good
By Richard Harman (author)
From the dairy farm to tourism to the marae --- Henry van der Heyden has a unique breadth of knowledge about what makes New Zealand tick.
Best known as the second chair of Fonterra, Sir Henry is now a key player in the tourism industry, banking and perhaps surprisingly for the product of a Dutch immigrant family, in the Maori economy.
His family are still dairy farming just out of Putararu, and he is a shareholder in the wider family's huge poultry business which puts mud on his boots that he can trample into the Rabo Bank board room where he is the chair.
Looking across all this experience, he says quite bluntly that has never been more positive about the New Zealand economy going forward.
“there are two really big factors,” he says.
"Tourism is booming, and it's not going to slow down in the short term.
“And you’ve had dairy turn around very very quickly from a milk price perspective.
“When you get tourism and dairy going together at the same time then you’ve got a very buoyant economy.”
Van der Heyden first achieved national prominence in 2002 when he took over as chair of Fonterra from its founder-chair John Roadley.
It was a logical move; he had been chair of the largest dairy co-operative, the Waikato-based NZ Dairy Group but even so, he had to grapple with what insiders at the time described as the “intense tribalism” of the heritage companies which had merged to form Fonterra.
The chair of a farmer-owned co-operative Fonterra is unlike chairing a public company.
Van der Heyden had to spend days and days each month travelling the country to farmer meetings trying to explain what the company was doing.
He didn’t always succeed.
A proposal to split the company's shareholding into two and to open one of the slices up to outside investment met with overwhelming farmer rejection.
It had to be withdrawn.
But the rest of Fonterra’s strategy which developed under van der Heyden --- essentially trying to maximise the value from each litre of milk --- has begun to work, he believes.
“It’s actually been missed,” he says.
“At a higher milk price they are still able to maintain their profitability figures, somewhere between 50 and 60 cents per share.
“So that strategy is starting to work.
“At long last!”
The other hallmark of the van der Heyden years was a seeming confidence that dairy growth potential in New Zealand was almost infinite.
That was driven by the huge rate of dairy conversions, particularly in the South Island where dairy cattle numbers have risen by 55% since 2002 (the year Fonterra was founded).
However now he thinks the conversions have more or less stopped and growth will slow.
“I think that you are going to see a slow improvement through productivity, whether it’s genetics, breeding, pasture – those sort of things.
“I don’t think you are going to see the big increases like we have seen in the past.
“I think dairy will just keep on growing at a nice steady pace.”
But though he concedes the conversion boom may be over he points out (and here he draws ion his Rabo Bank experience) that other parts of agriculture like forestry, apples or wine are now starting to do very well, so much so that the sector grew as a whole even when dairy declined with the price fall.
Long term he continues to see China as an important player.
“It has to feed its people,” he says.
But the Chinese are not just consuming New Zealand dairy produce; they are also flocking here as tourists.
The Chinese are part of a push was seen an additional eight airlines service Auckland Airport last year and which has seen the industry overall achieve an eight to ten per cent annual growth.
Sio is there a limit?
“I don’t think so,” he says.
There are however questions about capacity and whether we can accommodate everybody who wants to come.
Plainly Auckland Airport itself is struggling with the transport infrastructure to get its passengers to and from the city.
The airport has been involved with the study led by Air New Zealand which has proposed a bed tax and a $5 increase in the border levy to fund infrastructure growth.
The study suggested $130 million annual fund to meet infrastructure problems exacerbated by the surging number of tourist, particularly for regional communities.
“Infrastructure does need to be built,” says van der Heyden.
But despite that he believes we can still grow.
“If you look at Ireland, our tourist numbers are only about half what they get so we’ve got a lot of capacity to actually grow.”
And he makes the point that while the bulk of tourists go to the big destinations like Auckland and Queenstown, significant numbers visit regional New Zealand and contribute to growth there.
But again it comes back to providing infrastructure. He has an answer for that, though.
“And wouldn’t it be great if the GST that the tourists spent contributed in those regions was actually spent in those regions,” he says.
It seems logical now that Tainui would grab van der Heyden to help runs it commercial arm, Tainui Group Holdings.
After the iwi’s $195 Waitangi settlement in 1995 and a long period of internal dissension and some failed investments, Tainui now have assets worth $694 million and have become a formidable force in the Waikato economy.
Van der Heyden has been part of that renaissance.
So what was it like for the son of Dutch migrants to find himself in the middle of the culturally very different world of Maori politics?
“It has been so good for my personal development,” he says.
“I’ve learned a lot about New Zealand.
"I've learned a lot about myself, and I see a part of New Zealand which I had never been exposed to which is Maoridom, iwi etc.
“And i6t’s quite nice to actually be part of it, particularly on the commercial side.
“The politics I will never understand one hundred per cent, but you do work out where the alliances are and those sorts of thing."
Van der Heyden admits he may have been a bit purist when he started in his role but now he thinks he understands what Tainui want.
“Maoridom has a got a real role to play,” he says.
“Tainui do want self-determination as an iwi and they’ve brought me in because of my capabilities and skills to generate cash.
“But ultimately they will want one of them in my seat so if I can play a part in that then that is positive.”
He says he is comfortable in his own skin and that he focuses on what he thinks is right and “then you just push in that direction”.
It’s a very pragmatic approach, but van der Heyden has shown it works.
In a way, it's typically Kiwi where you just get on with it. And he has done that since he left Canterbury University and he continues to, all the time focussing on what will add value to New Zealand.