Succeeding in regional areas is all about trust
Crowe Horwath partner Craig Macalister CA sees Invercargill as a wealthy regional area that requires a different accounting approach than a city.
- There are opportunities for young accountants in the regions.
- Keeping businesses in the family is a priority for regional areas.
- Accounting is more personal and all about relationships and trust, which can take time to build for new professionals.
“In Auckland, people make a lot of money out of buying and selling property among themselves. Property prices are booming and they are generating wealth through that,” says Craig Macalister CA.
“Down here, people don’t generate wealth through buying and selling property among themselves. There is probably more inclination, if they are a bit entrepreneurial, to go into business.”
The “down here” is Invercargill, New Zealand’s southernmost city, where Macalister is a partner at Crowe Horwath and where a growth strategy aims to attract 10,000 more people to the region by 2025.
Historically, the city grew up in the late 1850s to serve the gold rush economy and subsequently developed as an urban hub for the farming community. Invercargill’s economy revolves around the primary sector, which primarily means the dairy industry. The Southland region, of which Invercargill is the commercial centre, also has a significant meat processing sector and the nearby Tiwai Point aluminium smelter employs around 800 staff.
Macalister estimates that a further 3,000 to 3,500 people supply contract services to Tiwai Point “so there is quite a strong engineering sector here. On top of that, there are the usual things that you get living in a provincial city – retail and entertainment and the like.”
(Pictured: Craig Macalister CA)
Macalister moved to Invercargill in 2012 after a career that included spells at New Zealand’s Inland Revenue, KPMG and as tax director for the former New Zealand Institute of Chartered Accountants.
It quickly became evident that the dynamics of the economy in Invercargill were very different to his experience in Wellington, New Zealand’s capital.
“When I came down here, we had the global financial crisis (GFC) going on. In Wellington, that hit really hard and the government of the day had knocked the public sector back a bit. A lot of businesses went to the wall or were failing.
“When you came to Invercargill, because of the strong agricultural support base, it was GFC? What GFC?”
Just how different the local business environment was in the deep south was made clear by one of his first assignments. Macalister was asked to offer advice to a client who was buying a commercial building.
“So I asked how much they were borrowing. What? Borrowing? Don’t be silly, we don’t trust banks.”
One thing you learn in regional areas is that accounting is all about relationships and trust
Many of the established businesses in the region have deep roots and significant cash reserves. But that wealth is not evident on the streets.
“The wealthiest people in Invercargill… you can’t pick them out from anyone else. People down here don’t wear their wealth with them when they drive around. And in some ways they don’t regard themselves as well off.
“People are conservative. They won’t stick their heads out and borrow stupid money to enter into ventures.”
For a chartered accountant, the main workflows involve the profitability and management of existing business, as opposed to “buying and selling”.
“Keeping the business in the family is often a strong focus. Business continuity issues, owner exit issues, dealing with the wealth within a family and issues that crop up to do with that… it’s very much your accounting fundamentals.” One thing you learn in regional areas is that accounting is all about relationships and trust, he says.
“You might wonder, gee, why does that small accounting firm have such a large client? It’s because the principal of the firm has probably grown up with – and been to school with – the person who owns the business. As the firm has grown, they have remained the trusted adviser. The relationships are long and strong and often very deep.”
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The strong relationship focus of the local business community presented Macalister with a challenge – how to fit in.
“It took at least two years to start to edge in. And that’s just to start. I’ve been here four-and-a-half years and I don’t think I’m there yet.
“They say the colder the climate the warmer the people, but nevertheless, people are what they are. You have to make the extra effort – to join a few clubs and do a few different things outside your day-to-day job is a must.”
The transition was difficult, despite his family having deep roots in the Southland region – his ancestors lived in Invercargill “when they got off the ship”. Indeed, part of his rationale for moving south was to bring his young family closer to his mother. “I got sick of crossing Cook Strait,” Macalister chuckles.
“There were still some old remnants of the family down here. For instance, the Cobb and Co [restaurant] is the old family homestead.”
The regions need constant thought in terms of their economic future, Macalister says. “Carefully thought through and carefully managed, the regions can survive and do well.”
This is happening around Invercargill through the Southland Regional Development Strategy, which aims to attract 10,000 more people to the region by 2025. It is also happening at the community level, Macalister says, citing an innovative project in the small town of Kaitangata (population: around 800) that is offering housing and employment packages to new residents.
He sees the tourism sector as ripe for growth, but stops short of expressing optimism. “We are more steady as she goes at the moment.”
He doesn’t see regional economies as a key battleground in this election year.
“The government doesn’t necessarily need to play a role [in regional economic growth] but it could play a role in the location of certain government services, such as call centres and the like. Why do they have to locate them in Auckland? There could be some strategic thinking around those things.”
There are opportunities for young accountants in the regions, if they are prepared to look, he says.
“It’s a significant issue that the accounting profession has not addressed that well – the need to find a way to highlight opportunities out in the regions, because they are there.
“You just have to make a bit more effort to meet people and get to know people," Macalister says.
Related: 2018 National Primary Sector Conference
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