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Business Update - Friday 13 December: Issue 63

Friday 13 December Issue 63

Merry Christmas!

In lieu of greetings cards Business NZ will again make a donation to Workbase, the centre for workplace literacy, for a productivity-focused project - this year we are supporting the publication of 'Voices from Management', case studies that explain the value of investing in literacy training. The Council and staff of Business NZ take this opportunity to wish readers a merry Christmas and happy, prosperous New Year.

New Business NZ President

Terry Arnold, President of EMA Northern, has been elected Business NZ President, succeeding founder President Doug Marsh. Mr Arnold was recently Chairman and Lead Negotiator for the International Employers’ Delegation in Geneva for tripartite negotiations on the deregulation and privatisation of transport. Mr Arnold who has been involved in many top-level labour market and employment relations negotiations, says Business NZ will continue promoting a common vision for NZ’s future growth.

ACC the worst compliance cost

A survey of NZ businesses released by the MED this week found ACC tops the list of business compliance costs. The regulations rated most negatively were ACC (55%), employment law (41%), RMA (27%), local body regulations (34%), and holidays legislation (21%). Regulations appear to be more of a concern for bigger companies (who endeavour to comply), whereas the smallest ones - the majority - are more likely to be unaware of them or ignore them! The report, Firm Foundations, is on

ACC levies help drive Laxon from NZ

A small report in the media this week spoke volumes - Melbourne Cup winning trainer Sheila Laxon, leaving New Zealand permanently to live and work in Australia, said ACC levies were a factor in the decision to move. Three years ago her ACC bill for 10 staff was around $2,000 - now it’s $20,000.

Urgency to bash business

Next week is Parliament’s last sitting week for 2002. It will go into urgency to pass three anti-growth Bills:

The Minimum Wage Amendment Bill will:

- make trainees eligible for the minimum wage, increasing payroll costs for their employers

- override existing employment agreements that recognise an employee’s “still-learning’ status

- discourage upskilling by increasing costs for those who employ trainees

The Health & Safety in Employment Amendment Bill will:

- increase fine levels up to half a million dollars

- include stress as a workplace hazard, likely to prompt expensive, opportunistic claims

- establish intrusive inspection, reporting and infringement systems

- change from everyone being responsible for safety to responsibility lying with designated representatives - often union reps with power to shut down company operations, offering potential for industrial sabotage

The Local Government Bill will:

- encourage councils to get involved in any commercial undertaking they desire

- encourage councils to operate businesses in competition with private sector companies

- reduce requirements for efficiency, transparency and accountability

(And councils shifting to STV could find infrastructure projects vetoed by anti-growth activists - an outcome from a system that transfers votes to also-ran candidates and helps small groups hold back development).

Supreme Court light on commercial experience, heavy on cost

The Supreme Court Bill, which would end our recourse to the Privy Council, gets its first reading next week. Business owners mostly want to keep access to the Privy Council; its deliberations are cost-free. Taking cases to a NZ Supreme Court would cost more than an airfare and accommodation in London. NZ judges by and large still lack commercial expertise and the commercial community needs judicial decisions that reflect accepted commercial practice worldwide.

Supreme Court could entrench anti-growth laws

Another problem with the Supreme Court Bill - it would effectively let the Govt appoint supreme court judges for life. It could appoint youngish judges holding similar opinions to the Govt on political and social issues, resulting in the entrenchment for several decades of the kinds of laws being passed now that are harmful to business.

Fiscal update unlikely to surprise

Next Thursday the Finance Minister will release the December Economic and Fiscal Update (DEFU) that sets out the state of the Government's finances, and the Budget Policy Statement that will set the parameters for the 2003/04 Budget to be delivered next May. Despite higher than forecast tax revenues, Dr Cullen has indicated he will be keeping the lid on spending and will not be entertaining any tax cuts. It’s good to avoid loose fiscal policy that fuels inflation and brings higher interest rates, but our tax burden is too high, with our company tax rate particularly uncompetitive. This has serious implications for attracting and keeping business investment that is critical for growth.

Click and grow rich

Trying to make money on the Internet? Make sure your website is search engine-friendly, says netpreneur Simon Angelo. Use words that are likely to be entered by anyone searching for the kind of goods or services offered via your website. Include links to other popular, related sites to ensure your website appears high up on the list of options thrown up by web searches. And add a “meta-tag’ that prompts search engines like to revisit repeatedly your website for updates. More information on

Growth stats


There were continued signs of strong domestic demand as seasonally adjusted total retail sales increased 0.8% during October. The core retailing group (excludes motor vehicle retailing and motor vehicle services) increased 1.1%. The increase in sales was widespread, with 13 out of 15 store types recording higher sales compared with Sept. The largest increase was for recreational goods (up 5.2%). There were increased sales throughout the country, the largest increase in the Wellington region (up 1.8%).

Trade deficit widens

In contrast to increased domestic demand, external demand is till waning, as the merchandise trade deficit blew out to $696m for Oct. The deficit resulted from provisional exports amounting to only $2,481m for Oct (down 9% from Oct 2001), compared with merchandise imports of $3,177m. As a percentage of exports, this is the largest deficit for an Oct month since 1989. Monthly trend values show that exports are declining, while imports are rising, leading to a widening trade deficit for the latest five months. The main

contributors to lower exports for October 2002 in comparison with October 2001 were dairy products, fruit, and fish, crustaceans & molluscs. Over the year, the merchandise trade balance has deteriorated from a surplus of $904m for the year ended Oct 2001, to a deficit of $892m for the year ended Oct 2002.

Overseas Trade Index

Both the export price index and import price index fell during the Sept quarter, by 2.8% and 1%. This meant the merchandise terms of trade index fell 1.8%, following a 4.7% fall in the June quarter. Dairy products fell hardest, by 7.1%. Dairy prices are now 36.6% lower than in the Sept 2001 quarter and at their lowest level since Sept 1991. For imports, textiles, clothing & footwear prices fell 4.9%, and passenger motorcars fell 2.1%. Partly offsetting the declines were rises in prices for petrol, petrol products, manufactured fertilisers and fruit & vegetables. The merchandise export volume index showed little change during the Sept quarter, down 0.2% from the June quarter.

ANZ job ads

Job advertising levels declined 10.6% in Nov, an expected fall given the approach of the holiday season. Auckland job ads dropped 8.9%, although over the year they were up 10.5%. Hawke’s Bay ads fell 25.6%. Wellington ads dropped 11.6%. Christchurch ads fell 9.7%. Otago had its sixth consecutive monthly decrease, falling 14.2% in Nov and 24.1% since May.

What’s new


- New President for Business NZ

- Productive sector penalised today

- ANZ-Business NZ PMI for October 2002

- Extra week’s holiday would harm productivity, growth

- Local Government Minister must do better

- Hazardous substances inquiry is unnecessary duplication

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