Business Update

Property rights endangered....MFAT on wrong track....Resource Management Act changes bring trouble

THANKS POLITICIANS The Land Transport Management Bill is set to become law within the next 24 hours - rammed through against the interests of NZ road users. Two parties can share the blame for this law that will stymie road development: 1) The Greens, whose Bill it is and whose agenda it serves. 2) Labour, who allowed roads to be traded for the Greens' political support, reducing this important issue to a simple numbers game. The deals struck between these two parties call into question the value of Parliamentary process. The new law will neither fix the problem of too much road users' money being spent on non-roading purposes nor accelerate the development of the national roading network. Think 'Green' when you next see red while stuck in traffic. Contact nclark@businessnz.org.nz .

MFAT ON WRONG TRACK The Ministry of Foreign Affairs & Trade is continuing to yap up the wrong tree over Kyoto. The UN Framework Convention on Climate Change meets in Milan next month, and MFAT is proposing that Energy Minister Pete Hodgson's key focus should be encouraging Russia to join the Protocol. Suggestions for encouragement have included monetary inducements or waiving normal requirements for Russia's entry to the WTO. This is wrong - NZ representatives should not be engaging in dialogue over sweeteners for unwilling signatories. Instead the UNFCCC should be considering the best course of action to minimise greenhouse gases in the likely event that the Kyoto Protocol does not proceed. Contact pwhitehouse@businessnz.org.nz .

LOCAL LOOP UNBUNDLING ATTACKS PROPERTY RIGHTS Local loop unbundling would have serious consequences for the business environment. Business NZ does not have confidence in the model used by the Commerce Commission to predict the effects of unbundling. The model is based on the assumption that broadband prices will remain static in real terms over time, yet prices are already reducing and are likely to continue to reduce, as have prices for all previous technological developments. Business NZ's submission to the Commerce Commission says the benefits from any of the unbundling options would be outweighed by the negative impact on investment, property rights and technological development. Regulation requiring unbundling would send the message that ownership of assets in NZ can be overridden at the will of the government. Contact ssummers@businessnz.org.nz

RMA GETTING WORSE Changes to the Resource Management Act could mean more blockages to the economy and more problems for property rights. The RMA Amendment Bill (Energy & Climate Change) would require decision makers to favour renewable sources of energy over non-renewables. That bias would be OK in a situation of adequate energy supply, but our energy supply problems are causing loss of business and loss of investment. Giving preference to renewables before they are cost-effective just hamstrings the economy. All energy supply options should receive equal treatment during the transition phase towards renewable energy.

PROPERTY RIGHTS FURTHER ENDANGERED Under the amended law, decision makers would also be required to have regard to the effects of climate change, including increased risk of flooding and erosion. This could further erode property rights if a local council allowed the amendment to be misused. Consent authorities are already able to limit development if the flood risk is too high. This amendment could be used by those opposed to a particular development when no other reasonable grounds of objection exist. Citing extreme weather events is not a good enough reason to bring in yet another barrier to development. For example, recent flooding in the Coromandel and associated property damage is more a consequence of underinvestment in flood management infrastructure than the 'effects of climate change'. Fixing the underinvestment would be more sensible than requiring consent authori

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DANGERS IN CORPORATE GOVERNANCE RULES The Securities Commission's questionnaire on corporate governance should not be used to impose rules

on business, says Business NZ. The questionnaire (on www.sec-com.govt.nz ) is expected to produce a set of principles - not rules - to be used as a guide to corporate behaviour, but the danger is that another government agency may subsequently try to make rules based on the Securities Commission's findings. A recent governance survey by the Institute of Chartered Accountants (ICANZ) found that "the great majority of the business community carries out its work in an honest and professional manner." Imposing governance rules would not deter a company determined to act dishonestly, but would impose extra compliance costs on the vast majority of law-abiding businesses. Overseas companies have already started to de-list from the Nasdaq because of the increased costs of new US corporate governance rules. The small size of most NZ enterprises would make the

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GROWTH STATS

SEPT TRADE DEFICIT HIGHER THAN USUAL

* The provisional value of imports for Sept was $2,951m. With an estimated value for exports of $2,230m, this gives an estimated trade balance of a $721m deficit. Sept months usually record a deficit, but this was the largest since 1984.

* Imports were 5.9% ($164m) higher for Sept 2003 than Sept 2002, largely because of petroleum & products (+$84m) and vehicles, parts & accessories (+$80m). The increase was partly offset by a fall in import values for plastics & plastic articles (-$19m) and other chemical products (-$13m).

* Over the Sept 2003 year, the value of imports was 0.7% ($221m) less than for the Sept 2002 year.

SLIGHT INCREASE IN EARNINGS

* The Sept Quarterly Employment Survey showed continued growth in demand for labour and in employee earnings, although lower than market expectations. Average total hourly earnings across all sectors increased 1.2% during the quarter, and 3.1% during the Sept year.

* Total average hourly earnings were $18.92 for the manufacturing industry, 4.4% higher than for the Sept 2002 quarter.

* Total weekly paid hours fell 0.9%, while total weekly gross earnings remained steady during the Sept 2003 quarter.

* Although the number of full-time equivalent employees fell 0.4% over the Sept quarter, this fall was not statistically significant. Over the Sept 2003 year the number increased by 2.5%.

MORE NZ BUSINESSES

* According to Statistics NZ: in Feb 2003, there were 294,954 non-farming enterprises in NZ, up 4.8% from Feb 2002, and 29.6% from Feb 1997.

* 97 of 100 businesses engaged fewer than 20 full-time equivalent (FTE) persons, while only 1 in 200 businesses engaged 100 or more FTEs.

* Property & business services was the largest industry by number of enterprises with 97,836 enterprises engaging over 203,000 FTE persons.

* The manufacturing industry was the largest employer with approximately 254,810 FTE persons.

SEPT BUILDING CONSENTS HIGHEST SINCE 1973

* 2,989 building consents were issued in September, the highest Sept total since 1973.

* Excluding apartments, the total was 2,342, the third-highest total recorded for any month (since Jan 1990 when apartments were able to be separated from the total).

* The total includes 647 consents for new apartments, the highest number so far for 2003.

* Twelve of 16 regions had an increase in new dwelling units when comparing Sept 2002 with 2003. The largest increase was again in Auckland (+311 units). Wellington had the largest decrease (-64 units).

* The total value of non-residential building consents was $256m for Sept, compared with $212m for Aug and $279m for Sept 2003. Hotels & motels had most consents in Sept ($58.3m), followed by shops, taverns ($37.8m). Consents for factories & industrial buildings, worth $24.3m, were lower than Sept 2001 ($41.5m) and Sept 2002 ($26.4m).

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

* RMA - more of the same

* Submission on Resource Management (Energy & Climate Change) Amendment Bill

* ACC listening

* Holidays 'gift' brings unease

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