Letter from Australia*: Notes from a sunburnt boardroom

Sydney, Australia. A city of boundless optimism, where the Harbour Bridge stands defiant against time and the business district hums with a steady rhythm of enterprise. But beneath this outward confidence, the conversations in boardrooms tell a more complex story.

I arrived in Sydney expecting robust discussions on corporate governance and economic trends. I left with a head full of reflections on AI, superannuation policy and reform, and the slow-moving wheels of regulatory change, and almost “sclerosis” — lessons that New Zealand’s directors would do well to consider.

The superannuation squeeze

Talking to leading legal advisors with a focus on corporate regulation and risk, a sobering discussion unfolded about Australia’s ongoing superannuation reforms. A system once lauded as a world leader now finds itself in potentially troubled waters. Successive tax adjustments have progressively eroded its benefits, leaving employers and employees alike grappling with policy uncertainty. The long-term implications? A workforce increasingly aware that what was once a retirement safety net might instead become a bureaucratic tightrope.

For New Zealand, where KiwiSaver is still maturing, the Australian experience offers a cautionary tale: grand financial schemes, however well-intentioned, must be handled with care. Once public confidence is shaken, restoring it can take decades.

AI: friend or foe in the boardroom?

A meeting with governance technology firm Diligent reaffirmed what many of us already suspect: AI is here, and it is reshaping corporate governance. Board minutes, compliance tracking and risk management are being transformed by AI-powered tools.

Yet, as the Diligent team stressed, AI’s ability to assist does not replace directors' fiduciary duties. The danger of “AI hallucinations” (fabricated outputs that appear credible) means boards must balance technological efficiency with human oversight. A misplaced reliance on AI-generated documentation could lead to significant liability risks – something ASIC, Australia’s financial regulator, is watching closely.

New Zealand’s directors face the same dilemma: how to harness AI for productivity while avoiding its pitfalls. The lesson from Australia? AI governance frameworks must be proactive, not reactive.

Regulation, stagnation, and the ASX dilemma

Regulatory reform was a recurring theme, nowhere more so than with those with a focus on public markets and corporate governance regulation. Discussions revealed a governance code in limbo, an exchange struggling with declining listings (which is also true of many exchanges internationally), and a regulatory and governance environment increasingly shaped by international influences, particularly from the United States. This is against a background of Australia’s Corporations Act 2001 (the equivalent of New Zealand’s Companies Act 1993) running to 3,700 pages!

The big question for New Zealand’s boards is whether we are any better placed. Our regulatory settings are generally more stable, but the pace of legislative change remains slow. Australia’s lesson is that if reform is inevitable, directors should be actively involved in shaping it rather than reacting once it lands.

Energy transition: The hard road ahead

In Newcastle, a port synonymous with coal exports, a fascinating case study in decarbonisation is playing out. The transition from coal dependency to a clean energy hub is proving a masterclass in balancing shareholder expectations with environmental responsibility.

Port leaders spoke of the need for cultural change, not just infrastructure investment. Their success involved engaging communities, while making the transition to green hydrogen production and offshore windfarms. There was also a sobering lesson about restrictive competition regulation in the context of the sale of port by the, then government in New South Wales.

For New Zealand, where climate-related disclosures are now mandatory, the message is clear: decarbonisation is not just a compliance issue but a fundamental shift in business strategy.

Lessons for New Zealand directors

Leaving Sydney, I was reminded that governance is often about navigating contradictions – between risk and innovation, regulation and flexibility, economic growth and social responsibility.

Australian directors face challenges that feel strikingly familiar:

• • Superannuation reform reminds us that retirement savings systems, similar to other major areas of policy need a level of certainty to support investment
  • AI governance teaches us that technology cannot replace judgement
  • Regulatory stagnation warns us of the risks of piling additional regulation on top of what is already there to address the latest issue, and undue prescription
  • Energy transition shows us that sustainability is as much a leadership challenge as a financial one.

Back in New Zealand, these issues are already knocking on our boardroom doors. The real question is: are we ready to answer?

* With a tribute to “Letters from America by Alistair Cooke”

 

*AI assisted