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Business Update - Friday 9 May 2003 Issue 73

Business Update - Friday 9 May 2003 Issue 73

BUDGET TEST Next week’s Budget will showcase where the Government has done well, including more funds for industry training and some moves to reduce tax compliance costs. Today Government MPs were dispatched around the country to talk up growth and innovation, however lower growth is forecast for the coming year that will put the Government’s own growth targets further out of reach. The test for the Budget will be how much of the surplus is invested in policies to return NZ to the top half of the OECD.

$4 BILLION SURPLUS – HOW ABOUT A TAX CUT? National’s Don Brash says in the NBR today that 30% company and top personal tax rates are now affordable: “If we were serious about lifting NZ’s growth rate, we would be encouraging business investment by cutting the company tax rate for all businesses and, since many businesses are unincorporated and the company tax rate is in any case just a withholding tax, the top personal tax rate to match.”

BUSINESS WANTS MORE MONEY ON ROADS Last week Business Update readers were asked where they would most like their petrol taxes and road user charges spent. Readers voted for:

roads: 83%

public transport subsidies: 15%

walkways and cycleways: 2%

Road funding is a big issue, with two laws coming that would result in less money for roads. Business NZ is joining with other concerned groups to try to improve the Land Transport Management Bill and the Road Traffic Reduction Bill – if you would like your name added to our list of concerned individuals and groups, please email with the words: GET REAL ON ROADS.

CLOGGED ROADS MAKE BUSINESS INEFFICIENT Last week’s survey uncovered a fair depth of feeling. A representative comment: "This company operates a fleet of service vehicles and spends over $100,000 pa on fuel alone. Congested, substandard roading impacts heavily on the productivity/efficiency of our business. I calculate lost time of our field engineers through travel delays adds a minimum $375,000 pa in costs which have to be passed on. The taxes are raised against vehicles and should be spent on roading.”

VAGUE CONCEPTS REMOVED The RMA Amendment Bill was improved slightly yesterday, with the removal of mention of “spiritual”, “cultural landscapes” and “ancestral landscapes”. These are abstract notions without widely accepted definitions that could unnecessarily hold up development and the United Future party has done well to get them out of the Bill. Let’s hope the politicians do the same with the “spiritual interests” lurking in the Land Transport Management Bill that could also hold up new roading developments. Contact

ELECTRICITY – FIX THE DEMAND SIDE TOO With electricity shortages looming, this week Meridian announced a new windmill farm and Michael Cullen hinted at possible Government moves to subsidise new generating capacity. Getting more supply is crucial to settling down crazy electricity price spikes, but better demand management is important too, says Business NZ’s Simon Carlaw. Moves to make time-of-use meters more affordable – so consumers can sell back unused power – would make consumers more responsive to energy supply issues. A ‘demand exchange’ could be set up as soon as the new electricity governance body comes into existence, Carlaw says. See: Tilting at Windmills under ‘what’s new’ on http://

REDUNDANCY BILL BUMPS SUPPLIERS DOWN THE QUEUE The Status of Redundancy Payments Bill would tip the balance too far in favour of employees over other unsecured creditors, Business NZ’s Anne Knowles told the commerce select committee this week. The Bill aims to give preferential status to redundancy payments (putting them at the head of the queue, along with wages and holiday pay). It would also remove the current limits ($6,000 if the employer is a company, $1,500 if the employer is an individual) on the wages and holiday pay workers can get if a business goes into receivership or liquidation. Knowles said there should be some limitation on liability for wages and salaries accrued, otherwise suppliers could miss out on getting back any of their money owed – this could lead to knock-on insolvency or business closures for supplier businesses. Business NZ’s submission on the Bill is under ‘what’s new’ on http://

HEALTH & SAFETY INFORMATION The Health & Safety in Employment Act became law this week. For a brief guide to employer responsibilities under the new Act, go to: For health & safety posters in Samoan, Tongan, Chinese, Korean, Thai, Cambodian or Japanese, email And regulations for ‘prescribed matters’ are available at Bennetts bookstores or can be ordered through Whitcoulls stores. These provide a form for keeping a register of accidents and for notifying accidents and serious harm, the qualifications needed to be a health inspector, and hazard and infringement notice forms. Contact


HOUSEHOLD LABOUR FORCE SURVEY With jobs ad numbers softening, business activity slipping and business confidence slumping, most commentators expected the unemployment rate to increase around 0.3-0.4 percentage points in the March quarter. But the actual increase was only 0.1% (up 5% for the March quarter). Despite a rise of 9,000 people classified as employed, an increase of 1,000 in unemployed was enough to tip the scales in favour of a slight lift in the unemployment rate. During 2002 the number of those not in the labour force increased each quarter, and the March 2003 quarter continued the theme: those not in the labour force increased by 10,000, causing the labour force participation rate to fall 0.1 percentage points to 66.2%. The continued increases both in those employed and those not in the labour force are partly due to further net gains in long-term migration (up 11,400 over the March quarter) helping lift the working age population by 19,000 to 3,012,800; over the March year the working age population rose 61,700. Over the year numbers employed in manufacturing fell 4.9% (14,600) to reach 281,900. At the same time, the Quarterly Employment Survey showed an increase in the number of filled jobs in manufacturing, up 1.3% (3,300) over the Feb 2003 year, to reach 250,600.

LABOUR COSTS Salary and wage rates including overtime increased by 0.6% over the March quarter, and were 2.3% higher on an annual basis. This follows a 0.5% increase over the Dec quarter and a 2.1% increase over the Dec year. The annual increase in the March year was the largest since the Sept 1997 year. By industry, the largest rise in all salary and wage rates for the March quarter was in forestry & logging (up 2.1%), while the largest rise over the March year was the education sector (up 3.5%). For manufacturing, overall salary and wage rates were up 0.5% for the quarter and 2.2% for the year.

QUARTERLY EMPLOYMENT SURVEY The QES showed that average total hourly earnings for all workers did not increase significantly during the Feb 2003 quarter, increasing just 0.1%, and in line with historical and seasonal patterns. Over the Feb year average total hourly earnings increased 2.3%, less than the 3.6% recorded for the Nov 2002 year. While public sector average total hourly earnings increased by 1.3% during the Feb quarter, public sector earnings stayed relatively unchanged. Over the year, public and private sector earnings increased by 2.0% and 2.5% respectively. By industry, the electricity, gas & water sector had the highest average total hourly earnings of $27.39, followed by finance & insurance at $26.20. Manufacturing was ranked 11th out of 15 at $18.65. The number of full-time equivalent (FTE) employees remained flat during the Feb quarter, increasing only 0.1%. Annually, the number of FTEs increased by 3.4%, compared with increases of 3.6% and 3.7% in the Nov 2002 and Feb 2002 years respectively. The change in the total number of filled jobs was also relatively flat over the Feb quarter, increasing 0.5%. Annually, the number increased by 3.2%, with strong contributions from health & community services (up 8,700), education (up 8,000) and accommodation, cafes & restaurants (up 7,200). (Statistics courtesy of http://

COMMODITY PRICES World prices for NZ’s export commodities continued to slip during April, with the ANZ world commodity price index falling 0.8% from March. Although higher prices were received for early season apples, wood pulp and venison, this was not enough to offset the fall. However the index is still 4.1% higher than in April 2002. The NZ dollar index also fell by 0.4% during the April month, remaining 29% below its peak two years earlier. ANZ noted that prices for export commodities had largely consolidated gains made since mid 2002 (despite the higher NZ dollar eating into export returns and rural incomes), placing increased reliance on the domestic economy to sustain growth.

WHAT’S NEW on http://

Tilting at Windmills

Submission on the Status of Redundancy Payments Bill

Overview of legislative changes

Health and safety in the workplace

Electricity – make the demand side work

Brief guide to the Health & Safety in Employment Act

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