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Business Update October 13 2004

Does United Future support business?......STV shambles......Close call on Aussie employment law......

Wed, 13 Oct 2004

DOES UNITED FUTURE SUPPORT BUSINESS? Parliamentary debate yesterday produced a surprise - the United Future party suddenly appeared to favour the Holidays Amendment Bill. United Future's support for the Bill will effectively allow the Bill to pass, since the Greens are not supporting it. The Bill purports to fix problems with the Holidays Act, but fails to fix the main 'relevant daily pay' problem that's savagely increasing payroll costs in manufacturing and health enterprises. The question has to be asked - does United Future actually support business?

STV SHAMBLES Problems with counting local body votes under STV aren't the half of it - expect more problems with the makeup of councils if STV spreads, says the Local Government Forum. The Forum, which represents business ratepayers affected by local government, says STV is not the best method for electing councils. Recycling surplus votes from successful candidates to less successful ones, as STV does, dilutes representation of popular mainstream candidates who are in touch with the need for economic growth, and elevates fringe candidates whose vote was smaller precisely because their policies were not in touch with mainstream community values. The fact that STV has been promoted so heavily by the Greens should be a warning - it's not good for economic growth.

POWER TO REGIONAL COUNCILS The makeup of regional councils will have to be watched more carefully in the future too - proposed changes to the RMA will restore a lot of power to direct and control the use of private land, as under the old Town and Country Planning Act. This power had been taken away when the RMA was passed, and replaced by powers relating to the environmental effects of the use of land. But the changes proposed by the Minister for the RMA will restore power to regional councils, allowing them to 'allocate natural resources' and 'promote sustainable urban form'. The Minister says this is to "allow regional councils to provide more certainty" but critics say it equates to the power to direct and control the use of land. If so, developers could be in for a rough ride in areas where regional councils take an anti-development approach. > CLOSE CALL ON AUSSIE EMPLOYMENT LAW The defeat of Labor in Australia's election on Saturday has saved Australian business from an unwelcome industrial relations system. Labor's industrial relations policy included more compliance requirements for employers, increased scope for industry-wide awards, no statutory provisions for individual agreements, restrictions on casual employment, less employer protection against secondary boycotts, restrictions on working hours and "good faith" requirements that would have tilted the balance further towards collectives. The election result bolstered the AUS$ and pushed the Australian sharemarket to a new high.

NZ EMPLOYMENT LAW CONCERNS Here in NZ an equivalent employment policy - the Employment Relations Law Reform Bill - is grinding its way through the committee stage in Parliament now, with its eventual passage a strong likelihood since the Government has the numbers to push it through. Perhaps that's why the debate on the Bill has been less than edifying so far, with most MPs supporting the Bill speaking in generalities only, not addressing specific concerns raised by Opposition speakers. Those concerns are set to become a reality for NZ employers in the future as the legislation overtly favours collectives, reduces the ability to use individual agreements, compromises commercial confidentiality, creates a minefield of "good faith" traps and reduces employers' right to manage.

NEW TEST HARMS EMPLOYER RIGHTS The employer's right to manage is threatened by the Employment Relations Law Reform Bill's new 'test of justification' for managerial action, says Business NZ's Tim Cleary. Addressing employer groups in Nelson yesterday, he said comments in the Explanatory Note to the Bill imply the legislation may allow the Court to substitute its decision for the employer's, a departure from accepted legal thinking (currently the Court must decide whether the employer's action fell within a range of possible reasonable actions, not whether the Court would have decided differently from the employer). Allowing the Court to substitute its decision for the employer's - in redundancy, dismissal or other situations - would severely impact on the employer's right to manage, he said.

TAX COMPLIANCE SURVEY Inland Revenue wants small businesses to take part in a Colmar Brunton survey on tax compliance costs. Around 5,600 businesses have been invited to take part. The survey starts tomorrow and will end on 19 November. IRD guarantees businesses' confidentiality, saying IRD will not know who responded, and all results will be anonymous. More information is available on phone 0800 833 445.


LARGEST AUGUST TRADE DEFICIT SINCE 1982 * The provisional value of exports for August was $2,367m (up 2.8% on Aug 2003), and the provisional value of imports was $3,085m, giving a trade balance of a $718m deficit, equivalent to 30.3% of exports. A deficit is typical for an August month, but the latest result is the largest August deficit as a percentage of exports since 1982. * Kiwifruit largely caused the higher value of fruit in August, with its value up 46.6% and its quantity up 5.7% from Aug 2003. Most was exported to the EU. * Except for Germany, nine of NZ's top 10 export destinations recorded higher value for Aug 2004 than Aug 2003. * Exports were worth 3.9% more in the Aug 2004 than the Aug 2003 year. This means the trade deficit for the year was $3,830m, or 12.7% of exports.

HOUSING MARKET LOSING STEAM * Consents for new dwelling units fell from 2,704 in Aug 2003 to 2,296 in 2004. Excluding apartment units, there was still a drop, from 2,390 to 2,012 over the same period. Overall the trend for new dwelling units has been declining since January 2004. * Only six of the 16 regions recorded more residential consents in Aug 2004 than in Aug 2003, notably Hawkes Bay (+35 units), Waikato (+34 units) and Canterbury (+29 units). The largest falls were in the two largest regions, Auckland (-251) and Wellington (-161). * The value of non-residential building consents was $308m in August, compared with $212m for Aug 2003. Shops, restaurants and tavern consents were worth $57.2m and factory & industrial building consents $50.8m. Overall, the value trend for non-residential consents has been increasing.

INCOMES RISING * The NZ Income Survey shows incomes rising, up 2.6% from the June 2003 to 2004 quarter, to reach a weekly average of $554. * The proportion receiving wages and salaries increased slightly from 2003 to reach 51.4%, while the proportion receiving investment income continued to fall from 31.8% to 28.6% for 2004. * The 45-49 year age group has the highest income (from all sources) - an average of $795 per week, followed by the 40-44 year age group ($746). For income from employment only, the 45-49 year age group again did best ($917). * The trend shows females continuing to improve their income position relative to men - 30.3% of the top income quintile was women, compared with 25.6% in 1997 when the survey began. Women now earn on average 85.8% of what men earn on an hourly basis, compared to 82.8% in 1997. * The manufacturing sector was 5th out of 9 sectors in pay rates, with an average hourly rate of $18.38, up one place in the ranking from June 2003. The highest value was for business & financial services at $23.05.

OVERALL LABOUR COSTS UP * Overall labour costs for the June 2004 quarter were up 1.8% on the June 2003 quarter, smaller than the 2.2% increase from the June 2002 to 2003 quarters. * Wages and salaries rose 2.3% over the June 2004 year, while non-wage labour costs decreased 0.6% (the first annual fall since the June 1999 quarter and the third since the Labour Cost Index began in 1992). * Annual leave and statutory holidays costs fell 0.7% over the June 2004 year, while workplace accident insurance costs rose 0.5% as rises in salary and wage rates were offset by falls in ACC levy rates. Other non-wage labour costs (i.e. vehicles, medical insurance etc) fell 1.5%. * Labour costs increased 0.9% in forestry & logging, 1.7% in manufacturing, 2.6% in construction, and 2.8% in personal & other services. Labour costs rose 1.8% in the private sector and 2% in the public sector. More information is on

WHAT'S NEW on * Holidays & employment legislation - Cleary address * Holidays problems still not fixed * Big Kyoto liability looming * Spend-up or tax relief > > --- Outgoing mail is certified Virus Free. Checked by AVG anti-virus system ( Version: 6.0.746 / Virus Database: 498 - Release Date: 31/08/04


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