I am half way through reading a new book by Jane Kelsey, Professor of Law at Auckland University, The FIRE Economy. It is fantastic and a must-read for all New Zealanders.

FIRE is an acronym for what New Zealand and the global economy has been built on since about 1975 and stands for Finance - Insurance - Real Estate.

Neoliberal - adjective: 1. Relating to or denoting a modified form of liberalism tending to favour free-market capitalism.

Professor Kelsey talks about how the introduction, 40 years ago, of a “neoliberal” orthodoxy has brought instability to our economy, is socially inequitable and has empowered the few. However, it remains remarkably resilient, even resurgent, in NZ and abroad. The result she calls the “financialisation” of our economy - focussing on making money out of money but not producing anything. As the star of finance has risen, the industrial sector has declined. I was always taught at University when I studied economics that a free-market, neoliberal economy has flaws and creates an unstable economy that is frequently punctuated by recessions and global financial meltdowns, many of which I have witnessed in my teens while observing the economy since 1975.

There are a number of themes in the book, one of which she calls the “normalisation” of debt in New Zealand whereby people now feel justified in borrowing money for something intangible like taking a holiday. The trend seems to be to borrow to sustain a certain lifestyle. Our tertiary students are being dragged into this situation through student loans which guarantees that future generations will be tied to a significant debt at the start of their working lives. This exposes people to the risk of financial failure should there be another recession and will have a serious adverse effect on the Government should people lose their jobs and students be forced to default on their loans.

There has been a huge increase, since 2000, in private debt (you and me) rather than public debt (Government).

She explains how NZ has earned the reputation for being the “Wild West” in international financial circles due to our Government’s “hands-off” approach to regulating the finance industry to safe-guard ordinary investors. It talks about the devastation caused by the massive loss of wealth by ordinary New Zealanders as a result of “trusting” policies making the collapse of a number of “cowboy” finance companies in New Zealand virtually inevitable. The very people advising Government on how to regulate the finance industry are the same people who operate within the industry and stand to gain the most!

Anyway, I’m up to the part where she talks about what we could possibly to do to fix it. I’ll keep you posted - or you could just buy the book. Published by Bridget Williams Books Ltd with the New Zealand Law Foundation.

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By Dean Dalton DBA
Director, DaltonPlan® Business Action Planning Limited

By Kiri and Leigh Carter
Directors
EBOP Plant Services Limited
021730275
KiriandLeigh@Xtra.co.nz
EBOP Plant Services Facebook

I have been in the finance and banking industry for most of my working life and my husband and business partner, Leigh, has been in the earth moving industry since 1991. He started working on farms and then moved to Australia in 1993 and became employed as an excavator operator for a well-established earth moving company on the Gold Coast specialising in site works and road building.

We started EBOP Plant Services in the Eastern Bay of Plenty about 10 years ago. We started small and gradually built the business, buying bigger equipment and taking on more jobs. Our company has worked on a number of high profile civil construction projects including Reid’s Central Canal bridge replacement and the Regional Council river stop bank upgrade works.

We currently employ two full time staff and utilise the services of a number of contractors as required.

Our business is going well and our main challenges are having the right work/life balance and maintaining the prices that reflect the quality of our services. We don't have many direct competitors, as such, as we live in a small community so we tend to work in collaboration with other businesses in our industry.

When I heard Dean's talk in our business women's group, I thought his experience and personality would make the perfect outside view of our business that we needed.

We were looking for confirmation of our strengths and identification of areas for improvement. We're always looking at ways to work smarter.

Dean's DaltonPlan Benchmarks are fantastic and the positivity and trust with which he introduced them to us was great. We were doing quite well but Dean identified that profitability could definitely be increased by being more selective on picking jobs. Some jobs are not suited to our structure and capacity so it is sometimes necessary to turn down jobs. As a result we know that our costings must be specific and have to keep looking at them closely.

We will also implement some flow charts, they are great for supervision. We employ some people and also contract other businesses so the flow charts will help us to increase efficiency. In times of growth, the flowcharts are the kind of tools that help you work smarter.

We are looking at growing the business as long as it allows us to have the quality of life we want. We have a young family so this balance is essential. It's great that someone like Dean is out there, someone who understands businesses and who understands the people who operate them.