ASB boss Vittoria Shortt: New Zealand should ‘lean in to taxes’ to pay for more infrastructure

Sunday, 13 October 2024

ASB chief executive Vittoria Shortt says New Zealand has to collect more tax to invest in the infrastructure the country so desperately needs.

“I think New Zealand has to really lean into taxes,” Shortt told The Post in a wide-ranging interview.

“We've got to invest in this country. It's a pretty simple equation,” she said.

“Can anybody sit back and say today that we’ve got everything we need in the country?

“We probably do need to pay more tax.”

Shortt, who earned around $5 million in the past year from her job, acknowledged that she was effectively asking to pay more tax.

“I paid more tax in Australia,” Shortt responded.

Her comments follow those of ANZ chief executive Antonia Watson, who drew the ire of some right-wing lobbyists by calling for a capital gains tax in a media interview earlier this month.

However, in its Free Press newsletter to supporters, ACT praised Watson for voicing her opinions, even though the party did not agree with them.

“Free Press welcomes business leaders talking about public policy. We’d all benefit if they did it more. Too often we hear business leaders say things privately that we wish they’d say publicly, but they’re usually too afraid of criticism.”

Shortt said there needed to be more co-operation between parties on investment, especially on the core infrastructure all leading parties would agree on, infrastructure that was needed for the country’s economy to thrive.

“I don't think it's helpful that one government comes in and invests in a particular way, and then the next government comes in and tries to undo that,” she said.

“You just don't make the progress you need to make as a country,” she said.

Shortt has been chief executive of ASB since February 2018, a period that started with the Reserve Bank Te Pūtea Matua, and the Financial Markets Authority Te Mana Tātai Hokohoko, doing a deep dive on bank cultures, fearing they might mirror the abusive behaviour of their parent companies in Australia.

“In May, we got a call from the regulators saying, ‘We're really worried about the Australian Royal Commission, and we're going to do the conduct and culture review.”

That was a lot of work, but it was good work, she said.

The regulators reported banks had under-invested in their systems, were error-prone, and were slow to pay back customers they had overcharged, but it effectively cleared them of abusing customers.

It was followed by a culture review of life insurers, one outcome of which was the FMA launching High Court proceedings against ASB for overcharging customers by about $3.9m, though all had been repaid.

“If we find an issue, we will fix it,” Shortt said.

Then came Covid, the house price boom and rampant inflation caused by government economic stimulus, and the recession that followed as the Reserve Bank cranked up interest rates to bring inflation back under control.

Banks’ profits drew increasing ire from the public, scrutiny from the Commerce Commission market study into retail banking, and latterly even from ACT and National MPs and ministers, traditionally not antagonistic to the banking sector.

Shortt lamented what she saw as “populism”, however, she said that comes with the territory.

“Big businesses; you're going to be always under a lot of scrutiny, and sometimes that scrutiny will be more, or less.

“The thing that I've seen, and it also occurs in Australia too by the way, is populism. I would prefer if people work together better,” she said.

Chief executives had to be wired in a particular way to cope with the pressure of the job, Shortt said.

“You can't be one person, and pretend to be another,” she said.

“You have to understand and accept that many people will expect many things from you. You have to understand and accept that you cannot deliver everything to everyone. You have to make peace with that.”

The way Shortt tells it, some of her wiring was not the result of nature, but careful nurturing.

“You've got to really decide that you want to do a CEO role, particularly of a big organisation, because it takes so much from you.

“No-one should ever expect to go into the role thinking, ‘Jeez, this is going to be like a warm bath’,” she said.

Though hard work and commercial-mindedness were features of her family life, Shortt believes she was driven to achieve financial independence as a result of the emotional impact of the failure of her father’s business when she was young.

“It really shaped me a lot,” said Shortt, who grew up in Auckland, studied at Waikato University and climbed the corporate ladder at Deloitte, Carter Holt Harvey, and Commonwealth Bank of Australia, the parent company of ASB.

“It meant that I had a very strong drive to earn money, save money, and have financial independence to avoid, in essence, all the emotion.”

But Shortt also took a very studied route to the the C-suite. She says she was very influenced by a Harvard University article more than 20 years ago called The Making of a Corporate Athlete.

“It’s a terrible title, but it’s really It was really interesting to me,” she said.

It argued that to perform at the highest level in the C-Suite, executives needed to learn from Olympic athletes in getting four areas of their lives into fighting trim: mind, emotions, body, and spirit.

That last one, Shortt renamed “purpose”.

She said she researched the four areas, and worked on achieving fitness in all, including working with physiologists and psychologists, and developing routines for her life.

“I've done a lot of work with experts on emotions, and how to replace negative emotions with positive emotions,” she said.

She also focused on getting good sleep, which was difficult for a self-confessed “night owl”.

Shortt has two sons, both in university on sporting scholarships (rowing and basketball), and the disciplines helped her get through the time-squeezed years of trying to build a career with a young family.

Corporates have become more mindful of their leaders’ worklife balance.

“How do you expect people to be good husbands, wives, mothers, fathers, friends, daughters, sons, if they are stressed out, if they are sitting around, eating, drinking, tied to the office chair? You can't expect people to operate at their best in those conditions,” Shortt said.

The late nights, the late dinners, the boozing which the banking industry was known for were long gone, she said.

Shortt and her husband ‒ a successful entrepreneur ‒ are now extremely wealthy. Shortt said she didn’t know exactly what they are worth, but she does know its “magnitude” though she didn’t reveal it.

“I'm lucky enough now to be out of the woods financially,” she said.

She and her husband paid experts to manage their wealth. She described her and her husband’s outlook as “pretty conservative”, and said she was not the kind of person to spend her free time playing the markets.

She was also not a collector, and though she had a nice house in Auckland’s Herne Bay, she did not hanker for a true mansion, or an island in the Caribbean.

“I think that adds complexity,” she said. “I don't want to live a complex life.”

She liked to spend on travel experiences with friends and family, but her ideal holiday was with family, camping in the outback of Australia.