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Business Update - Wednesday 28 May 2003 Issue 75

Wednesday 28 May 2003 Issue 75

BEWARE PAY EQUITY SCHEMES Last week an official taskforce was set up to analyse how to establish pay equity in the public sector. If it results in a pay equity scheme, any public sector pay increases will have an unfortunate knock-on effect on private businesses. It’s important not to confuse pay equity with equal pay. Equal pay – a perfectly good concept - means men and women doing the same job, in the same circumstances, with comparable skills and experience, should receive the same rate of pay. Pay equity is very different – it involves centralised wage setting to try and close the statistical earnings gap between men and women. But the gap largely results from choices made by women (regarding qualifications, years in the workforce, occupations and industries worked in, hours worked etc). Centralised wage setting is not the answer to a situation resulting from freely made choices in a free society. For more information contact

HODGSON LISTENS Business NZ has consistently called for more focus on the ‘demand side’ in finding a solution to our dry-year power problems – getting a market, or exchange, operating that would allow consumers to sell power back to energy companies. It’s a call the Energy Minister has apparently taken heed of - this week he announced funding for the Energy Efficiency & Conservation Authority to make demand exchanges available nationwide. Pete Hodgson said the exchanges were expected to produce electricity savings of up to 100 GWh a year by 2005/06. "Any business that consumes between 5 and 10 GWh a year can profit from participating in a demand exchange and should contact EECA or their electricity retailer to express their interest," he said. Contact

Russia is apparently dragging its feet on ratifying the Kyoto Protocol (if Russia fails to ratify, the Protocol will not have the numbers to come into force). There’s competition between the EU and the US, with the EU suggesting rewards if Russia ratifies, and the US promising energy joint ventures with sweeteners attached. What might be holding back ratification? Russia, because of its defunct smokestack industries has a large volume of emission credits to trade with, but the capacity to formally account for these emissions is limited. And the ownership of the potential wealth generating credits is a major issue. Much of the source of those credits is now under the control of local government agencies, making it unlikely that the Russian government would be able to reap the benefits of ratification. Contact

REDUNDANCY MOVES IN OZ While redundancy is looming as an issue here - with the ERA review likely to recommend new redundancy impositions on employers – in Australia the Industrial Relations Commission is hearing competing submissions from business and unions on redundancy. The Australian Council of Trade Unions wants to double the existing redundancy safety net to provide 16 weeks pay for those made redundant, and 20 weeks’ pay for those aged over 45. The Australian Industry Group (Business NZ’s Australian counterpart) is asking the Commission to relax Australia’s redundancy laws to make it easier for businesses to restructure. The AIG says increasing redundancy entitlements will harm companies when they can least afford it, and making the payouts bigger for older workers would make companies less likely to hire them.

LAW SOCIETY COMPLAINT OVER PRIVY COUNCIL Attorney General Margaret Wilson has misled the public in her attempt to get rid of appeals to the Privy Council, says accountant Brian Connolly. He’s filed a complaint with the Wellington District Law Society over Ms Wilson’s repeated comment that “it is apparent that the Privy Council no longer functions as an effective court of appeal. It is increasingly referring cases back to NZ because of the inappropriateness of a foreign court deciding NZ cases.” Connolly says only two Privy Council cases have been referred back to NZ during the last century, and neither was referred back because of any “inappropriateness.” He says the Attorney General has made misleading statements that are likely to influence public attitudes, and she should be held to the same standards that are required of all members of the legal profession.

APPEALING OVERSEAS Those who wish to jettison the Privy Council disapprove of the thought of a right of appeal to an overseas body. Strange then, that they’re happy to be signed up to the Optional Protocol to the UN Covenant on Civil and Political Rights, which provides a right of appeal to an overseas quasi-judicial body: the UN Human Rights Committee. NZ has been part of the Protocol for 13 years, with never a squeak of protest from the anti-Privy Council brigade. Contact

COMPETITIVENESS BY DESIGN There’s a connection between design capability and high competitiveness, says Deputy PM Jim Anderton. Releasing the Design Taskforce Report yesterday, he quoted the World Economic Forum’s Global Competitiveness report that showed the top 25 countries for design ranking are also ranked in the top 25 for overall competitiveness. “A design-led focus immediately increases the value and quality of a product. This leads to greater export success through better visibility, brand awareness, increased sales and market share. Design creates the edge we need if we are going to sell our products at the top of the market on the basis of their excellence, instead of trying to compete at the bottom on price,” Anderton said.


OVERSEAS MERCHANDISE TRADE - IMPORTS The provisional value of merchandise trade imports for the month of April was $2,493m, down 10% from the same month in 2002, but 1.5% higher than April 2001. Overall, trend figures show merchandise trade imports have declined 3.7% since Aug 2002, following a flat six-month period. The main contributors to the decrease in April were crude oil & petroleum products (-$144m), aircraft & parts (-$108m) and mechanical machinery & equipment (-$56m). The irregular importing of crude oil, petrol, aircraft and aircraft parts means large fluctuations can occur in the value of imports from month to month. Offsetting the fall was a record number of new and used cars imported for a calendar month during April, as 7,375 new cars and 11,923 used cars were imported with a combined value of $313m. This compares with a combined monthly average of $260m for 2002. As the estimated value of merchandise exports for April was $2,510m, the estimated trade balance was a surplus of $17m, or 0.7% of exports. The April 2003 surplus fits towards the bottom of previous April surpluses, which have ranged from a deficit of 0.7% through to a surplus of 7.5% of exports.

PRODUCERS PRICE INDEX The PPI outputs index rose 0.1% during the March quarter, following no change in the Dec quarter. Over the March year the index rose 0.4%. The most significant contribution to the quarterly rise was from the electricity generation and supply index, which increased by 12.9% due to higher prices for electricity generation. The business services index was the other major contributor to the rise, up 1.2% due to higher legal fees. In contrast, the livestock and cropping farming index fell 8.6%, mainly driven by lower prices for sheep and cattle. The PPI inputs index remained unchanged for the March quarter, but fell 1.3% over the year. The electricity generation and supply index again made the most significant contribution to the March PPI inputs index, as lower lake levels from drier weather caused the electricity generation and supply index to rise by 18.6%. The major downward contribution came from the meat and meat product manufacturing index, which fell by 8.6%, reflecting lower prices for cattle, sheep and pigs. Higher output prices and lower input prices generally indicate a rebuilding of margins, a trend which is reversing significant input price rises in 2000-01.

Statistics courtesy of

- Pay equity scheme ‘completely unacceptable’
- Zoellick reaffirms realities
- Electricity package tackles dry-year supply but investment problems remain
- Local loop unbundling
- Privy Council decision must go to referendum

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