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Business Update Monday 16 August


RMA REVIEW PARTIAL QUICK FIX The RMA review is looking like a partial quick fix to get a few improvements before the Greens' power intensifies around election time. There's not a lot of confidence that the review will fix the problem of differing rules and standards throughout the country. That would require funding to ensure that consent bodies are competent and formally accredited - something central government should be accountable for. This is just one of several areas where central government is pushing its responsibilities onto local government. Contact .

MORE ENERGY INTERVENTION The news that taxpayers are to underwrite part of SOE Genesis Power's development of a 385-megawatt gas-fired power plant is a concern. The Government is to guarantee part of Genesis' bank debt - rather ironic since Genesis has recently entered the expensive and risky exploration market without taxpayer backing. Electricity Commissioner Roy Hemmingway says: "The country needs more electricity generation but this is the wrong way to get it". Steve Barrett, CEO of privately owned Contact Energy agrees: "Contact would be most concerned if the taxpayer-backed guarantee were to blunt industry efforts to secure new gas sources". Business needs cost-effective and secure energy supplies - state-owned energy generators and retailers have so far proved not up to the challenge. Contact

POSITIVE SIGNS IN MANUFACTURING July was a good month for manufacturing, with the ANZ-Business NZ PMI showing expansion in many sectors, especially metal products, which reported an upsurge in new overseas orders, and machinery & equipment which reported a flow of new orders from domestic and overseas customers. Textiles, clothing, footwear & leather was the only sector to decline. Although seasonal activity caused a fall in expansion for some firms, most were still faring better than in July 2003. Some firms had reached production capacity and others were timing new contracts to avoid over-commitment. Labour shortages and exchange rates played a minor role in affecting activity in July. See ANZ-Business NZ PMI PMI for July 2004.pdf

AGREEMENT ON LOWER COMPANY TAX A sustained focus on lower tax for business appears to be paying off - a recent poll indicates most people now support cutting company tax. BRC Marketing & Social Research did the nationwide poll earlier this month. 59% of respondents said they favoured cutting company tax from 33% to 30%. Even among respondents on lower incomes, a majority still supported cutting the corporate rate. Business NZ's Changing Gear .

GLOBAL WARMING BOLLOCKS Celebrated botanist David Bellamy has come out against the Kyoto Protocol, saying it's unscientific and would waste trillions of dollars. He cites a recent scientific study that shows carbon dioxide doesn't cause global warming - it's the other way around, he says: it's global warming that causes increased atmospheric carbon dioxide, and that's a good thing since carbon dioxide brings increased plant productivity - while global warming is an entirely natural occurrence that has happened many times over the millennia, bringing increased productivity and prosperity. "Increase the amount of carbon dioxide in the atmosphere, double it even, and this would produce a rise in plant productivity. Call me a biased old plant lover but that doesn't sound like much of a killer gas to me. Hooray for global warming is what I say, and so do a lot of my fellow scientists." Kyoto is an issue for business because business will bear the brunt of any tax regime imposed on carbon emitting activities.

KEEP WORK-LIFE BALANCE IN BALANCE The NZ Government's current focus on work-life balance seems at odds with what's happening in Europe, where big companies like Siemens and Bosch are switching back to a 40-hour week. In France the 35-hour week has not helped create any new jobs for the 3 million unemployed and the rigid working week approach has failed to ignite the growth prospects of either France or Germany. While a balanced approach to work and leisure is sensible, it should not become a state-led exercise in rigidity - NZ's growth prospects would not be served by it. See: Guardian,3604,1279300,00.html



* The Household Labour Force Survey for June showed a continuing fall in unemployment to 4%, down 0.3 percentage points from the March quarter, the lowest unemployment in 17 years, and the strongest indication yet of a very tight labour market.

* The number employed rose by 18,000, driven entirely by males - there were 20,000 more males and 2,000 fewer females employed in the June quarter than the March quarter. The number not in the labour force remained at the March level, causing the labour force participation rate to increase slightly to 66.7%.

* Over the June quarter numbers in full-time work continued to grow (+14,000 or 0.9% over the quarter), while the number in part-time work rose 3,000 (0.7%).

* Much of the employment growth was in the Auckland, Bay of Plenty and Otago regions. Five of the 12 regions had a quarterly rise in employment, and 8 recorded a drop in their unemployment. Northland's unemployment rate was highest at 4.9% (although down from 6.6% the year before) and Southland's was lowest (2.1%).

* Manufacturing had a further increase in employment from the previous quarter (+3,500). Over the June year manufacturing employment increased by 6,300 to 292,600. The sector now makes up 14.7% of the total number employed, compared with 14.8% in June 2003.


* The Quarterly Employment Survey recorded an average hourly earnings increase of 2.2% to $20.28 in the June 2003 quarter. This follows a 0.1% and 0.9% rise in the March and Dec 2003 quarters respectively. Over the June year total earnings rose 4.4%.

* For the private sector average total hourly earnings increased 2.9% to reach $19.13, led by construction and finance & insurance.

* Earnings for the public sector fell 0.8% to stand at $24.63 per hour, following rises of 1.6% and 0.6% for the March and Dec quarters. The June 2004 result represented a 4.1% rise from June 2003.

* Manufacturing earnings rose to $19.39, compared with $19.06 in the Dec 2002 quarter. Of the 15 sectors recorded, personal & other services had the largest increase over the June year, rising $1.52 (+7.9%); manufacturing was ranked 11th.

* The Labour Cost Index (LCI), a less volatile indicator of wage and salary movements than the Quarterly
Employment Survey, also showed upward pay movements in the June 2004 quarter: up 0.6% overall, the largest June quarter increase since 1998.

* The LCI showed public sector salary and ordinary time wages rising 0.5% over the June quarter (2.6% over the June year) and quarterly overtime rates rising 1.6% (4.2% over the June year). For the private sector, salary and ordinary time wages rose 0.6% over the June quarter (2.2% over the June year), while quarterly overtime rates rose 0.9% (2.7% over the June year).

* Property & business services salary and wage rates rose 0.9%, the largest rise recorded for the June quarter. This was followed by metal product manufacturing and furniture & other manufacturing, both at 0.8%. Overall, manufacturing salary and wage rates increased 0.5% from the March to June 2003 quarters. For more information see


* The ANZ job ads for July (+3.4% to reach 33,732) confirmed the continued demand for labour. The July figures were 10.1% above July 2003.

* The Auckland region had the strongest monthly increase (+5.2%). Waikato had its fifth consecutive rise (+3.6%). There were moderate increases in Otago (+2.6%), Wellington (+1.7%), Christchurch (+1.4%) and Hawkes Bay (+0.9%). Manawatu had the only fall (-10.2%).

* Internet job ads increased 3.3% over the month and 13.6% over the year to reach 47,134, the highest number of internet job ads since the peak of April 2001. For more information see


* Business planning forecast September quarter 2004

* RMA - tune up or out of tune?

* Manufacturing expansion continues for July

* ANZ-Business NZ PMI for July 2004

* GST on rates not the real problem


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