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Business Update - 24 January 2003 Issue 64

Friday 24 January 2003 Issue 64

Government costs business plenty

Analysis completed just before Christmas shows that Government actions could cost an average sized business an extra $43,000 in 2003. Major costs to business are likely from:

- extending annual holidays from 3 to 4 weeks

- requiring time and a half to be paid for all (including salaried) staff working on statutory holidays

- the need to make provision for health & safety claims (insurance against fines is now banned)

- increased costs for collective bargaining now it’s compulsory to do this through a union

- increased energy costs, because of uncertainty of supply (hydro stations can’t get re-consents because of Resource Management Act problems)

The full analysis is on under “The Great NZ 7-Day Service Co. Revisited’.


Transport Bill won’t fix Auckland’s problems

Auckland mayors have joined business and road user groups in expressing concern about the Land Transport Management Bill. Auckland region’s $1.2b shortfall for the next decade won’t be fixed by this Bill as it puts too many restrictions on funding options, the mayors say. Very few Auckland roading projects will be able to take advantage of the Bill’s tolling and public private partnership provisions as the extensive, onerous requirements for Government approval are likely to scare off potential private investors.


Constitution being changed by stealth

The Supreme Court Bill (which would replace appeals to the Privy Council by a supreme court) is likely to pass easily, given the current makeup of Parliament. This is a huge constitutional change and shouldn’t be allowed to pass just by simple majority. In other countries constitutional change can’t happen without a 75% majority or similar. It’s an issue for business because most appeals to the Privy Council are commercial ones - if those appeals were instead to go to a supreme court made up of judges holding similar views to this Government (they will all be appointed under this Government) then the outcomes for business could be uncertain or negative. Contact

Govt adviser causes concern to business

A key Government adviser is causing some concern to business on two fronts - Gary Taylor, until today a senior adviser to the Minister of Energy, is connected with lobby groups the Environment Defence Society (EDS) and the Climate Defence Network (CDN). The EDS is trying to stop Auckland University from selling land at Waikawau Bay; it’s reported that Mr Taylor has threatened potential buyers that they will face lengthy and expensive opposition via the Resource Management Act. And the CDN has recently approached the Government seeking nearly $1m to conduct an information campaign on climate change and the Kyoto Protocol. Abuse of the Resource Management Act is not a good look for a Government adviser, nor is the conflict of interest inherent the CDN funding application.

Kyoto not the only way

Supporters of the Kyoto Protocol approach to climate change say it’s the only way. But the US approach to climate change - voluntary rather than compulsory emissions control - is now under way. Next month the list of voluntary pledges, aimed at reducing US emissions by 18% by 2012, will be made public. Companies that have already set up voluntary emission caps and trading schemes in which pollution credits can be traded include DuPont, Motorola, Waste Management Inc and American Electric Power (reportedly the largest emitter of greenhouse gases in the western hemisphere). The US Business Roundtable, representing 140 major businesses, has promised to deliver 100% of its members. Business NZ says voluntary efforts by NZ businesses are highly preferable to coercion.


NCEA exposes poor job skills

NCEA results issued last week have exposed poor results in key employment skill areas: 40% of candidates failed formal writing, 41% failed graph interpretation and 50% failed spreadsheet information management. The results show the usefulness of NCEA system in pinpointing key skill results, but also expose poor teaching of these skills in secondary schools.

Contact binge clean-up

This week the US Securities & Exchange Commission adopted new auditing rules: accounting firms can no longer offer non-audit services to audit clients, audit staff must now be periodically rotated off their clients, and accounting firms must now hold all audit working papers for 7 years. Just before Christmas a federal judge’s ruling increased the potential liability for corporate advisers that aid companies in disguising their financial condition. At the same time the NYSE announced a global settlement with 10 major firms who will pay $1 billion in fines. The companies will also face dozens of class-action lawsuits.

Your input sought

Several Bills are being promoted which would have negative impact on business. Business NZ is preparing submissions and would like to hear your views on any of the Bills mentioned in this publication, Contact

Growth stats


Commodity prices increased 3.5% in the Dec year and 0.4% in the Dec month. During Dec, 5 commodities showed price increases, notably dairy (+2.9%). Four commodities showed no change, and 4 recorded price falls, the largest being sawn timber (-5%). As in Nov, the continued recovery of the $NZ more than negated the world price gain. The ANZ commodity price index fell 2.1% during Dec to be 13.7% below the level of Dec 2001. ANZ says if current (January) levels were instead used to convert world commodity prices, the NZ$ index would have fallen a further 4.8% to be 17.8% below the level prevailing the year before. But ANZ is still optimistic, saying the bulk of the spectacular gains achieved during the 200/2001 agricultural boom have been preserved.


Seasonally adjusted retail sales in Nov were not as good as Oct’s, but domestic demand is still bolstering the economy: retail sales were up 0.5% on Oct. The core retailing group (excludes motor vehicle retailing and services) increased by 0.5%. Nine of the 15 storetypes had higher sales than in Oct, the largest being for department stores (+ 3.3%) and furniture & floor coverings (+ 3.1%). Footwear retailing had the largest decline (-1.7%). Sales rose throughout the country except for Wellington (-0.8%) and Waikato (-0.1%).

Job ads

Following a fall (- 10.8%) in job ads for Nov, the number of firms advertising for staff increased 3.4% during Dec. Job ads were up 3.3% over the Dec year. Auckland ads were up 2.1% in Dec and up 12.9% over the year. Waikato was down 6.7%, compounding falls in the previous two months. Hawkes Bay rose 24.2% after a 25.6% fall in Nov. Wellington region was down 11.6%. Christchurch rose 2% and Otago rose 16.6%. Internet job ads fell 9.6% during Dec, the third consecutive decrease, and were down 4.7% over the year.

Work stoppages

Work stoppages in the Sept quarter show an upward trend in person-days of work lost. There were 11 stoppages ending in the Sept quarter involving 14,749 employees, with a loss of 23,461 person-days of work. This compares with 14 stoppages in the June quarter, with 1,427 employees involved and 4,510 person-days of work lost. Over the Sept year, there were 38 stoppages involving 35,381 employees and the loss of 55,871 person-days of work. Manufacturing had 14 of the 38 work stoppages ending in the Sept year; health and community services had 8. Education had the largest number of employees involved in stoppages: 35,381, or 78% of the Sept year.


The Consumers Price Index rose 0.6% in the Dec quarter, compared with a 0.5% increase in the Sept quarter and a 1% increase in the June quarter. The Dec quarterly rise was mainly due to higher prices for housing and transportation, both up 1.4%. Of the 9 groups that make up the CPI, 7 recorded increases, while household operations and credit services remained largely unchanged. Annually, the CPI was 2.7% higher, influenced by the purchase and construction of new dwellings (up 4.4%), international air travel (up 8.9%) and petrol (up 7%). The annual inflation rate is still at the upper end of the Reserve Bank’s inflation range of 1-3%.

What’s new


- The Great NZ 7-Day Service Company Revisited

- Supreme Court proposal raises serious questions

- Shaping future leaders

- ANZ-Business NZ Performance of Manufacturing Index

- Extra week’s holiday would harm productivity, growth


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