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Business Update Issue 84

Business Update Issue 84

ACC LEVY PLANS ARBITRARY, UNFAIR Proposed ACC levy increases in the employer account are unfair. The proposed average 6% increase in the employer levy means some firms will face big increases or decreases quite arbitrarily. Those facing increases up to 27% may have good safety records, but will be penalised because they belong to a particular industry risk group. Workplace safety should be encouraged with good incentives, e.g. experience rating, where firms are levied according to their individual safety record. The current system (industry risk groups plus the partnership employer schemes) is defective: the groupings dilute the incentives, while the partnership programme is compliance-ridden and too expensive for small firms. ACC blames lower interest rates for the need to increase levies, but a more fundamental issue is ACC’s 15% prudential margin in its reserves. Prudential margins may be appropriate for insurance companies operating in a competitive market, but not for a statutory monopoly which has no need for them. The proposed levies are on under ‘products and levies’. If you would like your views to be included in Business NZ’s submission on the levy, contact

GOVT WANTS COLLECTIVE AGREEMENTS DOUBLED The Government wants to get a third of workers into collective employment agreements, the Minister of Labour said at a public meeting this week. That would mean more than a doubling of people in collective agreements – currently 15% are in collectives – and a similar increase in funding for unions. Presumably the yet to be sighted review of the Employment Relations Act will provide some of the means for this to happen.

LESS POINTY HEADED Congratulations are due to Associate Education Minister Steve Maharey for emphasising skills training in yesterday’s priority statement for tertiary education; it’s high time that tertiary education - including university and polytech business schools - focused on real skills needed by NZ business. Maharey says the emphasis on skills training reflects the continuing demand for skilled workers and the emergence of skill shortages in some regions. The statement is on

MEDIATION UNDERMINED BY ERA A flaw in the mediation process may have been uncovered in a recent case, says legal firm Phillips Fox. The case, Tarawhiti v NZ Post, confirms that parties may be able to say anything they like in mediation, without those statements being used against them in later adjudication procedures. “Before the Employment Relations Act, if a party said one thing in mediation, and then gave evidence in the Employment Tribunal or the Employment Court which contradicted what had been said at mediation (so that the party had to be lying, either at mediation, or in Court), the party could be cross-examined on what had been said at mediation,” Phillips Fox says. But the ERA (Section 148) requires all parties in a mediation to keep all statements or documents in the mediation confidential, therefore: “…it is now not possible to expose lying behaviour if a party says something different to what they said in mediation when they give evidence in the Employment Relations Authority or the Employment Court. The lesson is that statements made during employment mediations have to be treated with scepticism, because there is no effective sanction if a party tells lies.”

TAXES PROPPING UP BUSINESSES Concerned at the propensity of the Government to use taxpayer funds to get involved in private sector business? Here’s what’s happening in France: The otherwise conservative, pro-market French government has in recent months given a credit line worth 9 billion euros to France Telecom help it avoid bankruptcy, given tax breaks and loan guarantees to energy company Electricite de France, and has failed to call in a rescue loan it granted to French computer group Bull. This week it announced it would buy up to 30% of huge multinational engineering firm Alstom, to prevent it from failing. The moves are not going down well with the EU competition commission, which has started an investigation on suspicion of the French government “illegally propping up” France Telecom.

NEW SECURITY RULES FOR EXPORTERS The Customs Service advises that from next March:

Export entries must be lodged before goods are loaded for shipment

Entries must be lodged electronically

A Customs delivery order will be provided when an entry is lodged and cleared

Customs is also proposing a Secure Export Partnership Scheme, a voluntary agreement between exporters and Customs to reduce risk. More information is on


BIG TRADE DEFICIT IN JUNE Merchandise exports for June were valued at $2,240m, $20 million (9%) lower than the earlier estimate. With merchandise imports valued at $2,490m, that meant a June deficit of $251m (11.2% of merchandise exports, compared with a 6.3% average surplus recorded for June months over the last decade). As a percentage of exports, the 2003 June deficit was the largest since the 39.7% recorded in 1975. The export value for the June was $377m lower than that of June 2002, mostly because of milk powder, butter and cheese (-$130m), casein and caseinates (-$40m) and wood pulp and waste paper (-$35m). In contrast, ships, boats and floating structures increased by $21m. Over the June quarter, merchandise exports fell by 4.1%, the seventh fall during the last eight quarters, with exports now 16.3% lower than their peak during the June 2001 quarter.

HIGH DOLLAR POUNDS NZ COMMODITIES World prices for NZ commodities remained largely unchanged in the first half of 2003, but commodities expressed in $NZ continue to trend downwards as the $NZ continues to rise. The ANZ world commodity price index rose 0.8% in July to reach 120.3, close to the 120.1 recorded in January. The main contributor to the rise was a lift in beef prices (+7.1% during July), which had previously been nearing a low. Most other commodities experienced an increase, with falls for apples and kiwifruit largely due to seasonal effects. Despite the $NZ falling off its peak early in July, it strengthened during the month so the $NZ commodity price index fell 0.6%, which was 10.8% below July 2002.

WAGE INFLATION UP The effects of a tight labour market continue to show through in wage inflation as the Labour Costs Index showed salary and wage rates (including overtime) increased by 0.5% over the June quarter, and on an annual basis were 2.3% higher, unchanged from the year ended March. The annual increase for the March and June years was the largest since the Sept 1997 year. Private sector salary and wage rates rose 0.5% during the June quarter, and were 2.2% higher than in June 2002. Public sector rates also rose 0.5% during the June quarter, and were up 2.6% over the year. By industry, the strongest annual movement was for education (+3.8%), while the construction industry had its highest annual increase in a decade

(+2.5%). By occupation, the largest annual increases were for professionals (up 2.9%).

QUARTERLY EMPLOYMENT SURVEY: EARNINGS, FILLED JOBS UP The QES released this week showed average total hourly earnings increased 1.1% during the May quarter and 3.7% over the May year. Over the year average total hourly earnings for the private sector rose 4.6% to $18.34 and public sector earnings rose 2.3% to $23.72. The electricity, gas & water sector had the highest average total hourly earnings of $27.62, followed by finance & insurance at $26.45. Manufacturing came 10th out of 15 at $18.94. The number of full-time equivalent employees did not increase significantly during the May quarter, but did rise 2.2% over the May year. This is smaller than the annual increases of 3.4% and 3.6% for the Feb 2003 and Nov 2002 years. Another measure of employment, filled jobs, increased 1.2% during the May quarter, which follows a decrease of 0.5% for the Feb quarter, and an increase of 2.4% for the Nov quarter. Annually, the total number of filled jobs increased by 2.3%, led by education (+9,300), health & community services (+5,100) and business services (+4,900).

HOUSEHOLD LABOUR FORCE SURVEY CONFIRMS UNEMPLOYMENT DOWN Given the recent slowdown in the economy the HLFS released today was expected to show increased unemployment in the June quarter. But unemployment actually fell 0.3 percentage points to reach 4.7%, the lowest unemployment rate since the Dec 1987 quarter, due to an increase in those employed (+15,000 or 0.8%), as well as a fall in those unemployed (-4,000 or 4.3%). For the first time, the working age population now stands at just over 2 million. Despite the increase in the number employed, the labour force participation rate stayed flat, falling 0.1 percentage points from the March quarter to 66.2% (due to those who were not in the labour force increasing at a higher rate than the increase for the total labour force). Over the June year the number employed increased by 37,000, while those unemployed fell by 7,000. The working age population increased by 64,800 over the year, while more than half of the increase (34,100) was due to continued net gains in permanent and long-term migration.

WHAT’S NEW on http://

ACC levies structurally unfair

Skills are what we need

Cap on rates increases timely

ANZ-Business NZ PMI for June 2003

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