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Thurs 5 Aug 2004 Issue 113 - Business Update

Thurs 5 Aug 2004 Issue 113

COMPULSORY ARBITRATION IN THE WIND Like the NZ Government, the Australian Labor Party may be looking to introduce compulsory arbitration. Labor has floated the idea of letting the Australian Industrial Relations Commission intervene if employers and unions can’t reach agreement in bargaining. Labor’s critics says it’s not possible to bargain if you can go to arbitration at will – it would just lead to forced wage increases without productivity increases. The move’s similar to a provision in NZ’s Employment Relations Law Reform Bill that would let the Employment Relations Authority impose settlements.

COUNCILS SEEK UNDUE INFLUENCE FOR MINISTER Local Government NZ’s submission on the review of the Resource Management Act proposes an unacceptable level of ministerial influence – for any major proposal the Environment Minister would have the power to convene an officials group, then receive and rule on its recommendations. With no mention of independent review, the proposal would give the Minister significant unchecked power. RMA processes are already compromised by inconsistency and unaccountability (almost half the consent authorities have refused to be audited on the way they process consents) – giving a single politician veto power over major projects wouldn’t help. Contact

NO STACKED DECK Is there always an inequality of power in employment relationships? (the Employment Relations Law Reform Bill is based on the principle that employers always have more power than employees) Not so, said Chicago law professor Richard Epstein in Wellington this week – if there was an inherent imbalance in favour of the employer, it would lead to wage rates much lower than they are. He said employment law is all about restricting the freedom to contract at will, on an assumption that this protects vulnerable workers – but such restrictions (on pay levels, ability to terminate etc) actually make it harder for them to get work, by making it more complicated for employers to employ them. More ability to contract at will could mean more terminations, but would vastly improve the chances of finding another job, he said.

AUCKLAND CONGESTION WORSE THAN AUSTRALIA Traffic congestion in Auckland is worse than Sydney or Melbourne, says an AA-commissioned report on the adequacy of NZ roads. The report, also supported by Business NZ and EMA Northern, quantifies the benefits of four proposed initiatives - in Auckland, Tauranga and Wellington and for more passing lanes nationally. The report will be launched at events on 25 August (Auckland and Tauranga) and 26 August (Wellington). Contact

ACC COULD HAVE GONE LOWER ACC proposed levy rates for 2005/06 would keep the average composite levy of $1.21 per $100 liable earnings (though with increases for meat processors and professional rugby players among others). ACC had the option of proposing a lower rate but have recommended an unchanged rate now that they wouldn’t need to increase later, in the interests of long term stability – probably not the recommendation employers would have wanted. ACC says it's looking at introducing a safety incentive scheme for small employers and the self-employed to increase injury prevention awareness and improve levy payer equity. Contact

ADVOCATES ACCOMMODATED The Lawyers and Conveyancers Bill is back from select committee, with a change recommended by Business NZ and others. It originally allowed advocates and non-lawyers to appear before a court if this was permitted or required by any act or regulation, but not to do anything else (e.g. to give advice in relation to such proceedings or to give assistance in drafting, settling or revising documents for filing in those proceedings). The amended Bill now allows those other activities too. Contact

ELECTRICITY INVESTMENT NEEDED No wonder the Australians were falling over themselves to buy Contact Energy, says the Electricity Networks Association: our electricity prices have rocketed past Australia’s, and with further price hikes on the way, the party has only just begun. NZers pay $143 more a year than Australians for the same volume.

What’s needed is more investment in power generation and infrastructure: “It’s to be hoped that the Electricity Commission will see the reinvigoration of the market’s investment signaling processes as its primary goal.” Contact

VOODOO CASE COSTS EMPLOYER Mr Nutter was dismissed by Telecom after some episodes involving collecting a colleague's hair and fluff from the carpet, a reference to a voodoo doll, and a red rose for a birthday. His claim for unjustified dismissal was dismissed by the Authority but upheld by the Employment Court who awarded 12 months lost salary and $10,000 compensation for humiliation (reducing both amounts by 50% for contributory conduct).

Telecom appealed to the Court of Appeal and Mr Nutter, appearing in person, took the opportunity of cross-appealing the remedies. The Court of Appeal upheld the unjustified dismissal saying the conduct didn’t warrant dismissal particularly given the lack of a previous written warning. The Court also said remedies should be increased to 18 months loss of salary. Moral of story: workplace friendships are a perilous thing for employers (and courts) to have to deal with.

GROWTH STATS UNUSUAL TRADE DEFICIT IN JUNE Import data for June indicate a trade deficit of $399m, larger than June 2003’s deficit of $234m and in strong contrast to May’s $661m surplus. The deficit at 14.8% of exports contrasts with an average surplus at 3% of exports for the last decade. Over the June 2004 quarter there was a $71m surplus, compared with a $443m deficit for the March quarter and a $153m deficit for the June 2003 quarter.

The larger trade deficit for June 2004 compared with June 2003 was due to a 24.3% ($605m) increase in imports, compared with only a 19.5% ($440m) increase in exports. The higher value of imports in June 2004 was due to imports of armoured motor vehicles, petroleum & crude oil and machinery & equipment. Over the June quarter imports of crude oil rose 44.7%, following falls in the previous two quarters, while the absence of large aircraft imports saw a big drop in capital transport equipment import values from $408m during the March 2004 quarter to $26m for the June 2004 quarter.

There was an increase in imports from 22 of the top 25 countries NZ imports from, when comparing June 2003 with 2004. The United Arab Emirates and Brunei Darussalam entered the top 25 countries, while the Asian region recorded a 34.8% increase in imports to NZ compared with a rise of 23.5% for Europe. Over the June 2004 year, the value of merchandise imports was $33,390m, 3.8% ($1,229m) higher than the June 2003 year. With the estimated value of exports at $29,858m, the estimated annual trade deficit stands at $3,532m, or 11.8% of exports.

BUILDING CONSENTS CONTINUE UPWARDS There were 3,447 building consents issued in June, the highest monthly total since May 1974. This included 2,470 consents for new dwelling units (excluding new apartments), higher than the 2,118 recorded for June 2003, and 1,681 for June 2002. Over the June 2004 year consents for 32,851 new dwelling units were issued - the most for a June year since 1974. Despite these strong figures, the trend series for new dwelling units has been declining since January 2004, following a period of increases that began in April 2003. Thirteen of 16 regions had an increase in new dwelling units when comparing June 2004 with 2003. The largest increase was in Auckland (+478 units), followed by the Bay of Plenty (+281 units) and Wellington (+159 units).

The Auckland region contributed 39% (1,336 units) of the total number of new dwelling units during the June 2004 year. The value of non-residential building consents issued in June was $335m, compared with $251m for June 2003 and $210m for June 2002. Highest values were in office & administration buildings ($79m), storage buildings ($49m) and factories & industrial buildings ($39m). Over the year ending June 2004, the total value of factories & industrial building consents was $415.3m, compared with $345.2m for the June 2003 year. For more information visit

WHAT’S NEW on Local body candidates – stop and think Council spending, not GST, still the issue Country of origin labelling for food Court case highlights agenda behind mecas


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