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Business NZ Update Issue 83

Business NZ Update Friday 1 August 2003 Issue 83

HOLIDAYS ARGUMENTS STARTED ALREADY The Holidays Bill has been written by lawyers for lawyers and the arguments over what it will mean in practice have already started, retailers rep John Albertson told a select committee yesterday. He said mandatory penal rates for all work on public holidays will cost retailers up to $34m a year and the additional cost of the sick and bereavement leave changes are likely to add up to a further $34m a year. The proposed extra week of annual leave would cost the retail sector another $68m a year. He said the Bill was a nightmare for employers, and urged the select committee to get it rewritten in understandable language. Contact

RODNEY’S TOO GENEROUS The only thing wrong with Rodney Hide’s Local Government (Rating Cap) Amendment Bill is that it’s too generous - capping rates at the rate of inflation plus a margin would likely mean councils treating the cap as a minimum and meanwhile increasing user charges. But it’s a step in the right direction, and ratepayers facing big increases should make sure their MPs refer the Bill on for detailed consideration. Also needed is a reversal of local government’s power of general competence, which encourages councils to spend like sailors. Councils should be re-oriented back to providing core services only. Contact

BARRIERS TO INVEST Investors may be hesitant to invest in New Zealand, NGC’s Greg Martin said in a speech in Wellington this week. Problems included a lack of confidence in future energy supply, ‘regulatory creep’ and a corporate tax rate three percentage points above the international average. He said the energy supply issue was not intractable as more oil and gas reserves were likely to be found, although NZ was competing for exploration capital against lower cost, lower market risk regions and should therefore compete strongly in the areas like taxes and compliance costs. “With uncertainty around energy supplies, NZ may find it harder to attract the investors, who feed economic growth, which in turn drives energy supply growth and improves supply availability and reliability.” He said NGC was proposing a $475m capital return to shareholders as there were no immediate investment opportunities in NZ. Contact

RESERVE GENERATOR RAISES QUESTIONS The Government’s rather hasty plan, announced this week, to set up a state-owned reserve electricity generator at Whirinaki raises some questions:

Wasn’t this what the Electricity Commission was meant to do? (decide how to manage dry-year risk)

Is dry-year reserve the best option, compared to e.g. mandatory hedges? Again, wasn’t the Electricity Commission meant to decide that?

What will happen once the Maui gas allocations are decided and there’s more gas available – won’t that make a distillate power station (like Whirinaki) a much more risky proposition?

Who’ll bear the risk? (not the Government, but us, the levy-paying consumers)

Since Contact Energy had originally proposed to build the Whirinaki plant itself and already had the consents to do so, why not let Contact bear that risk?

Contact is the only major generator that’s not state owned – and now the state is getting involved in its operations too. Are we heading back towards total state domination of electricity again?


CREEPING NUMBERS Here’s what happens when you get ‘regulatory creep’ and growing state intervention – lots more public servants. The Ministry for the Environment currently has 21 job vacancies posted on its website…

AGREEMENT ON SKILLS Business NZ’s Simon Carlaw and the CTU’s Carol Beaumont held hands with Associate Education Minister Steve Maharey in an unprecedented display of solidarity in Petone yesterday. The occasion was the launch of Skill New Zealand, a project aimed at achieving 250,000 people in workplace training by 2007. The project supports the CTU’s desire for higher skilled workers and Business NZ’s agenda of increased economic growth delivering higher living standards for everyone.



MODEST RISE IN MANUFACTURING The latest ANZ-Business NZ PMI shows manufacturing activity lifted slightly in June but continued to hover round the threshold mark between expansion and decline. The June PMI was 53.2, up from 49.6 in May (a PMI reading above 50 points indicates manufacturing is generally expanding; below 50 indicates it is contracting). It was the first time since March that manufacturing has shown general expansion. All sub-indexes recorded expansion, however manufacturers noted a slowing in demand and commented on compliance costs and the high $NZ. The June PMI performance – moving towards modest expansion after two months of decline - returns NZ to a level similar to that prevailing in Australia. Full details are on under ‘what’s new’.

RECORD DEFICIT AS IMPORTS RISE (JUNE 2003) Imports in June were valued at $2.49b, up 8.4% from June 2002. Over the quarter, imports were up 1.3%, following declines of 1.7% during the March quarter and 2.4% during the Dec quarter. Biggest increases during June were in vehicles, parts and accessories (+$65m), aircraft and parts (+$36m) and petroleum and petroleum products (+$33m). More than 21,000 cars were imported in June, a 20% increase over June 2002 (though the June 2003 amount is below the record levels of the previous two months - 23,231 in April and 25,031 in May). As the early estimated value of merchandise exports for June was $2.26b, the estimated trade balance was a deficit of $230m, or 10.2% of exports. This is the largest deficit recorded for June during the last 10 years, when average trade balances for a June month was a surplus of 6.3% of exports.

RECORD BUILDING BOOM FUELLED BY IMMIGRATION Building consents were issued for 2,386 new dwellings during June, the highest June figures since 1976. Over the June year, there were 29,068 consents issued, up 29% (or 6,535) on the previous year, also the highest figure for a June year since 1976. The driving force is new apartments – data is volatile from month to month, but the June 2003 year had 5,969 new apartment consents, up 88% on the previous year. All regions except Gisborne had increases in new dwelling units in June compared with June 2002. Largest increases were in Canterbury region (+134 units), Auckland (+77) and Northland (+71). Auckland had the largest share (36%) of new dwelling units during June. Consents for residential buildings during June were worth $487m; non-residential consents were worth $251m. Consents issued for shops, restaurants and taverns were worth $55m and for factories and industrial buildings, $32.9m. Over the June 2003 year, the total value of consents for all buildings was $8,301m, up $1,197m (17%) on the previous year. Stats courtesy of


Manufacturing picks up

ANZ-Business NZ PMI for June 2003

Cap on rates increases timely

Tripartite initiative on workplace learning

ACC – fault or no fault?

Political science taxes growth

Workplace drug testing

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