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Business NZ Update

ARC differential danger - Holidays Act blooper - Outsourcing hot potato

ARC DIFFERENTIAL DANGER Business ratepayers all over NZ could have much to lose if the Auckland Regional Council imposes a differential rates system - because other regional councils might follow suit. The ARC's 2004-2014 community plan is looking at the option of making business ratepayers pay 1.5 times as much as residential ratepayers. Business ratepayers are a small sector of the community and vulnerable to the majority voting against them - the Local Government Forum says it's undemocratic to allow a majority to impose a monetary burden on a minority. NZ businesses already have to contend with a differential in many city and district councils and already pay disproportionately more rates than residential ratepayers. Contact nclark@businessnz.org.nz.

ANOTHER BUSINESS DIFFERENTIAL - FIRE A revamp of fire service funding could be costly for business. The Department of Internal Affairs' review appears likely to recommend property-based funding for the fire service. This could turn out to be as unfair as the current insurance-based funding system. The current system levies only those who purchase insurance, allowing those who do not insure their property to free-load on those who do. In the same way, a property-based system could levy only those who own property, giving others a free ride. Instead of introducing a differential biased against the business community, the fire service should be funded equitably, from everyone's taxes. Business NZ will be watching the progress of the review. Contact pwhitehouse@businessnz.org.nz.

HOLIDAYS ACT BLOOPER Another blooper in the Holidays Act has come to light - an employee can throw a sickie on a public holiday and still get paid rate and a half. The Labour Department says rate and a half must be paid because the relevant daily pay definition says you must pay what the employee would have received if he or she had worked. So it's quite possible to throw a sickie and still get the penal rate. You don't need a medical certificate for one day's absence. Contact bburton@businessnz.org.nz

EMPLOYMENT BILL TREATS EMPLOYEES AS A COMMODITY The Employment Relations Law Reform Bill treats labour as a commodity, EMA's Alasdair Thompson told the Select Committee in Auckland last week. "If the bill succeeded in pushing people into unions and into the old style multi employer collective agreements along the lines of national awards, businesses again would be forced to treat their staff as a bulk lot without their individual contributions to bring to their workplace." EMA led a 200-strong delegation into the select committee hearing to emphasise the depth of business opposition to the bill. This week the select committee will hear the submissions of 27 businesses and organisations in Dunedin.

80s REFORMS BROUGHT GROWTH IN THE 90s The 1980s reforms are likely to have raised NZ's per capita GDP says a recent Treasury paper NZ Economic Growth: An Analysis of Performance and Policy. The paper says the reforms of the 1984-93 Governments paved the way for growth more than four times bigger in the 90s than the 80s. But the paper also highlights some of NZ's enduring problems - low capital accumulation, a slow rate of infrastructure growth, and a comparatively low level of basic educational achievement among younger NZ workers - that must be fixed to get living standards as good as those in the highest-growth countries. The paper, which also recommends a flat tax for economic growth, is on www.treasury.govt.nz .

AUSTRALIA TRUMPS NZ ON COMPETITIVENESS Australia has shot up the world competitiveness index, coming in fourth behind the US, Singapore and Canada in the 2004 survey. NZ has slipped from 16th to 18th. The survey ranks countries on their environment for business competitiveness. High corporate taxation and high indirect taxation are among the issues responsible for NZ's slide. Contact nclark@businessnz.org.nz.

OUTSOURCING HOT POTATO Outsourcing (contracting out) is becoming a political issue in several countries. State governments in Australia are attempting to redefine independent contractors as employees, to re-regulate commercial contracts through labour law, and to make all companies in a contract chain responsible for payments to the person at the bottom of the contract chain in the guise of protecting vulnerable workers - the moves are being firmly contested by Australian contractor organisations. In the US, outsourcing to other countries is becoming an issue in the Bush/Kerry presidential contest, leading both contenders to talk protectionism in varying degrees in the face of a sluggish US job market. However the Federal Reserve Bank of New York says all that's happening is that jobs are disappearing from some sectors, like manufacturing, and being created in new ones, like mortgage broking, and the lag between the two is causing the slow job market - outsourcing is not the villain. (The Bank says the current situation is like the 'jobless recovery' of the early 1990s that eventually created the longest economic expansion since WWII.) Meanwhile, outsourcing seems to be both officially funde

PAY EQUITY REPORT COMING A report on pay equity proposals for the public sector is due this week Business NZ's Simon Carlaw says businesses would have significant concerns over a public sector scheme creating pay benchmarks that could raise expectations in the private sector, where there is a competitive environment and no underpinning by tax revenue. There was also concern at the costs of setting up an arbitrary centralised wage-fixing mechanism that would be required for a pay equity scheme to be set up. Pay equity as instituted by the previous Labour Government was recognised as an inhibiting factor on business growth and the economy, and as a result was one of the first pieces of legislation overturned when the National Government came into power in 1990.

GROWTH STATS

MARCH 2004 HIGH POINT FOR BUILDING CONSENTS

* Seasonally adjusted building consents declined by 6.1% in March but were still higher on a year on year basis.

* 3,037 building consents were issued in March, the highest March total since 1976. Total consents for the year to March were 31,423, an 11% increase on March 2003 and 62% higher than 2001. Between 2001 and 2004 residential consents values doubled.

* Estimated resident population data, also released this week, shows that population growth has slowed, but still rose by 56,700 (1.4%) in the year to March. Consents for new residential dwellings in the year to March numbered 31,423, of which 5,089 were apartments.

* Non-residential building consents increased by 53% from March 2003 and by 14% for the year ended March.

* There was growth in most categories, including an 11% increase for factories and industrial buildings in the year to March. Hotels & motels, shops & restaurants and office & administration buildings also had strong growth.

* The trend growth rate in March was a 0.9% increase from the previous month, the lowest month on month result since May 2003. The trend growth rate has been slowing since Oct 2003

IMPORTS RISING

* Imports in March 2004 were 10.4% higher than in March 2003 and increased by 7.1% on a seasonally adjusted basis from Feb

* Imports from China are still growing strongly, rising by 44% in March and 12% in the 12 months ended March. Total imports increased by just $187m over the 12 months ended March, an increase of 0.6%. Over this period imports from China increased by $308m, while imports from our three largest suppliers (Aust, US and Japan) all declined over this period

WHAT'S NEW on www.businessnz.org.nz

* New Chief Executive for Business NZ

* Manufacturing activity picks up in March

* ANZ-Business NZ PMI for March 2004

* Tauranga and Taranaki top metropolitan and regional councils

* Hot Councils 2004 Award full ranking list

* Hot Councils fact sheet Maori Business and Government address

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