June 2013

Business is in favour of an integrated, long-term approach to developing major city infrastructure, says BusinessNZ. BusinessNZ Chief Executive Phil O’Reilly says Government proposals announced today for road, rail and tunnel infrastructure for greater Auckland will help address the congestion that is a huge productivity cost to New Zealand, and will bring greater certainty for future business planning.  “As the country’s major business centre, Auckland has significant transport needs that are best addressed in a coordinated way between central and local government and the private sector.  “Business looks forward to participating in discussion on how infrastructure costs can be shared between the Government and Auckland Council and how market-based approaches such as public-private partnerships and tolling may also be used to reduce the burden on taxpayers and ratepayers. “A transparent discussion on cost-sharing and private sector involvement is needed now,” Mr O’Reilly said.        

Recognition from the very top of Auckland’s transport issues is gratifying, the Employers and Manufacturers Association says.  “We welcome the Prime Minister’s candid recognition today of the transport congestion limiting Auckland’s productivity,” said Kim Campbell, EMA’s chief executive. “The government’s efforts to make an early start on the AMETI- East West link in particular are to be applauded. “We look forward to a more detailed dialogue on the ways and means that these projects could be funded and to accelerate their start date.”  

Its great news the government is backing Auckland’s city rail loop, the Employers and Manufacturers Association says.  “We’re very pleased Auckland’s transport issues are being heeded,” said Kim Campbell, EMA’s chief executive. “We’re confident the city rail loop will prove as important to Auckland’s development as the harbour bridge did over 50 years ago. “In fact work should get underway on it sooner than the proposed 2020 start date since the project offers many new and coherent opportunities for the growth and densification of inner city residential and work habitats.  “Auckland’s business community is on record as working consistently with the Council on integrated transport solutions for the city of which the rail loop is but one part.  “We will continue to work on complementary projects including the AMETI – East West road link, public transport, cycle ways and walkways.”  

The new workplace health and safety agency, Worksafe New Zealand, will be most welcome provided it comes with an entirely new organisation approach and culture, says Paul Jarvie, Health and Safety Manager for the Employers and Manufacturers Association. “Businesses are pleased to see the start of the new direction and journey for workplace health and safety just announced,” Mr Jarvie said.  “The Bill now before Parliament creates a new Crown agency dedicated to reducing harm in the workplace, and will take up many of the recommendations announced in the Workplace Task Force report in April this year.  “But injuries and ill-health are preventable, and only with a new way of doing things will we achieve safer workplaces. “Our members do not want business as usual, but rather a new invigorated, focused and modern regulator. “Simply changing the name with the same products, people and services is not acceptable.  “EMA sees this as a chance for business, Government and unions to collectively plan to achieve more productive and healthier workplaces.  “We look forward to working with the new agency and being involved in ensuring New Zealand workplaces become safer.”  

The BusinessNZ Planning Forecast indicates that the New Zealand economy is gaining traction. Export prices remain high, and economic growth is forecast to average just over 3 percent per annum out to March 2015.  Improved business and consumer confidence and continued solid growth prospects for China, New Zealand’s largest export customer, are among the positive indicators in this quarter, says BusinessNZ economist John Pask. However, growth prospects for Australia, New Zealand’s second largest export customer, are muted.  One concern in the domestic economy is increasing household debt levels. “Debt is increasing at a time when servicing costs are relatively low and interest rates are at historic lows. There is a danger that when interest rates rise again, households may get into strife if the economy falters,” Mr Pask said. The BusinessNZ Planning Forecast incorporates BusinessNZ’s Economic Conditions Index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures. The ECI sits at 19 for the June quarter, up 9 on the previous quarter and up 27 on a year ago. The BusinessNZ Planning Forecast for the June 2013 quarter is on www.businessnz.org.nz    

The new regulations announced today to protect migrant workers from exploitation are a positive step, the Employers and Manufacturers Association says. “The changes will help protect both workers and employers,” said David Lowe, EMA’s Employment Services Manager.  “Unethical employers are being given their notice, which is as it should be for both good employers and those being exploited.  “The new regulations send a strong message that the exploitation of people won’t be tolerated in New Zealand. “Employers who exploit migrants are putting at risk the operations of legitimate businesses.”    

Service sector expansion for May continued a solid run of recent expansion, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for May was 56.2. This was identical to the result for April, and given both March and February stood at 55.7 this represents a very stable and healthy level of activity for the sector (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous May results, the 2013 value was the highest since the May 2007 value. BusinessNZ chief executive Phil O’Reilly said that the healthy levels of activity, now evident for four consecutive months, is helping the sector follow a brighter path for growth than in recent years. “However, it is important to point out that the first few months of 2012 started out in a similar fashion, but faded during the winter months. Time will tell whether other recent and positive economic indicators for the economy will lead to further expansion in the service sector.” BNZ senior economist Craig Ebert said, “This is the strongest sustained growth pulse we’ve seen from New Zealand’s services sector since the economy began grinding its way out of recession back in 2009. No wonder the PSI jobs index is now turning clearly positive.” The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for May saw both options for measuring the PCI again increase. The GDP-Weighted Index (56.9) increased 0.6 points from April, while the Free-Weighted Index (58.2) rose 1.8 points over the same period. For the latter, it was at its highest level of overall activity since May 2007. All five main sub-indices were in expansion during May. While new orders/business (59.5) and activity/sales (56.9) both […]

The private members Bill that would allow employers to take on temporary workers to replace people going on strike needs a lot of thought and debate, the Employers & Manufacturers Association says. “At first flush employers could think the Bill a good idea without taking into account unintended consequences,” said Kim Campbell, EMA’s chief executive. “While its principles are worth exploring it could prove very divisive. “Right now we are focused on getting the current round of minor employment law changes bedded in. “New Zealand communities place a high value on fairness and the Bill could have consequences that would be considered unfair. “In spite of several high profile cases we have had 10 to 15 years of harmonious workplace relations and don’t want to jeopardise that. “We need to look carefully at the implications of industrial action on essential industries such as the ports and hospitals, as well as on small businesses. “Also employers don’t want to see the law changed every time there is a change of government and we can foresee law based on this Bill may not last.”  

The manufacturing sector recorded its highest level of activity for almost nine years, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).  The seasonally adjusted PMI for May was 59.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This is the highest level of overall expansion since June 2004. Compared with previous May results, the 2013 value was the highest since the survey began in 2002. BusinessNZ’s executive director for manufacturing Catherine Beard said that the May result showed strong activity in key aspects of the sector. “The key sub-indicators of new orders and production have both produced strong levels of expansion for May, which has significantly boosted the national figure. Also, after a lengthy period of time in the doldrums, employment picked up in May. “The strong result is mirrored in the comments from respondents, which were over 58% positive – the highest this year. A number of these comments outlined the improving building/construction sector, increasing offshore orders and new customers/opportunities for their business. The mood of the sector is typified by one respondent noting that after 5 years they now feel confident enough to hire extra staff.” BNZ Economist Doug Steel said that PMI results do not get much bigger than this, even globally.  “The pick-up is material. It puts upside risk to our manufacturing and overall economic growth forecasts over coming quarters. The strong result essentially gives us more confidence that the recent and forecast upswing in construction activity will flow through to manufacturing activity, with the usual lag.”  Given the strong national result, all five seasonally adjusted main diffusion indices were in expansion for May. New orders (63.1) again led the way with its highest result since July 2004. This was followed by production […]