Business News

BusinessNZ has criticised unions taking industrial action over the issue of starting wages. This morning FIRST union members set up pickets outside a supermarket in Royal Oak in Auckland.  “Picketing against a lawful activity is not what unions should be doing,” said BusinessNZ Chief Executive Phil O’Reilly.  “Companies that contribute strongly to their communities, offering employment and career opportunities to young people while investing heavily in their training, deserve better than this. “Offering a first step on the employment ladder to a young person is one of the most valuable things a New Zealand company can do. “A young unskilled person is disadvantaged in competing against more experienced and trained people in the labour market. Starting wages help young people gain experience and better equip them to be able to compete on stronger terms.  “Union activity against companies that support youth employment is ideologically motivated and is itself damaging to young people’s employment prospects,” Mr O’Reilly said.  

BusinessNZ has welcomed changes announced today to the Employment Relations Act. Most changes were announced prior to the 2011 election. Additional amendments to speed up processes Employment Relations Authority were also released today.  BusinessNZ Chief Executive Phil O’Reilly says the overall effect will be to make the Employment Relations Act simpler and more efficient and enable more flexibility in the workplace.  “Improving employees’ ability to seek flexible working arrangements and simpler arrangements around meal and rest breaks will be of general benefit. “Removing compulsion from parties involved in multi-employer bargaining, removing the compulsion to settle a collective agreement, and removing compulsion for new employees to join a collective agreement will allow for improved employment relationships.”  Mr O’ Reilly said that the proposed change to the rules around transfer of employees when contracts change hands, to include exemptions for all businesses with fewer than 20 employees, would need to be studied carefully to ensure unintended consequences did not arise.  “Overall, these changes will allow more flexibility and certainty for businesses, allowing for more growth and job creation,” Mr O’Reilly said.          

Employment law amendments introduced to Parliament today will help rebalance the workplace so businesses can adapt more quickly to changing conditions, says David Lowe, Employment Services Manager for the Employers & Manufacturers Association.  “Market and business conditions can change rapidly and it’s important kiwi firms can keep up, to preserve jobs and their business,” Mr Lowe said.  “The current law means change in unionized workplaces can be held up and that can be detrimental in the longer-term to employees and the business. “Unions and employers who can already make changes as they need to will find these law changes don’t affect them. “But where the parties fail to reach agreement the changes offer a way through, without threatening the business’s viability or jobs.  “Not all employees want a union to determine their livelihood when they start a job. So a proposed change will allow them a choice about whether they should join a union and take on union negotiated conditions, or decide to negotiate their own employment terms and conditions.  “This change will add to the flexibility needed in the modern workplace. “We have long said groups of employees should have a choice to bargain collectively with or without a union. On this the Government is maintaining the status quo requiring all collective bargaining to be through a registered trade union. “The changes recognising the special law for cleaners and catering staff involved with contractors (‘vulnerable’ workers) is difficult and complicated so we welcome its repeal for small businesses. “Keeping it in place for bigger businesses is a mistake as it is inequitable to give one business a commercial advantage over another just because they employ fewer than 20 employees.”  

Moves by the Government to develop more user friendly procurement rules that will encourage greater local industry participation in government tenders is long overdue and very welcome says BusinessNZ. Executive Director of Manufacturing for BusinessNZ, Catherine Beard, says this is something that BusinessNZ has been advocating for some time, and the new rules are a very positive start on a journey to getting more local firm input into government contracts. “Government is a big part of the economy, and wider government spending is responsible for approaching 40% of GDP in New Zealand. By making it easier for New Zealand firms to participate in government tenders somewhere in the supply chain, we will be building bigger and more internationally capable companies. “Taking into account the “whole of life” value of a tender is very important, rather than just going for lowest price. New Zealand firms often supply better quality products that will last the distance, backed up by local support, flexibility to tailor and speed of response. These factors should all be weighed up against cheaper imported products, which, if they fail makes them more expensive in the long run. “In addition to good quality from local suppliers, building bigger companies through better access to bigger projects has significant positive spin-offs for increased local investment and employment. “While this is a very good start on the road to better procurement processes, the proof will be seen in more of our small to medium sized companies being included somewhere in the supply chain of a government tender. “Barriers in the past have included lowest cost procurement with little regard to durability/suitability, short tender processes for large tenders, requirements to have large numbers of employees to be considered, and a lack of thinking about how to include NZ firms as tier 2, 3 […]

In the last quarter of 2012 Smart Waikato’s Youth Employment Survey was conducted to gauge the work experience and employment situation for 15 to 24 year olds. About 280 Waikato employers representing approximately 12,000 Waikato employees responded to the online survey. Overall there is a considerable lack of engagement from Waikato employers in terms of linking youth into their workplace. There are various reasons cited for this including businesses not having enough work, the relatively high expense of employing young people compared with experienced people, the poor work ethic and attitude of some youth, and difficulty in accessing youth of a high calibre. However, there were a significant number of respondents who would consider offering more work experience opportunities, internships, apprenticeships, cadetships and jobs to youth if barriers were removed. More than half of the respondents to the recently-released survey offer no work experience to young Waikato based students or jobseekers and 42 percent employ no 15 to 24 year-olds. 82 percent of employers did not offer internship opportunities. It is time for employers to form better relationships with tertiary providers and secondary schools, providing better career pathways for young people. Smart Waikato’s BEST Youth initiative aims to assist in this process.  Referrals top tool for employing the young It’s a case of not what you know but who you know for young Waikato job seekers, according to results of a new survey of employers. The Smart Waikato’s Youth Employment Survey showed most bosses surveyed use referrals as their number one tool for hiring young people. The survey of 280 bosses with about 12,000 staff showed 54.8 per cent of respondents used referrals as their favourite recruitment channel, followed by the internet at 40.5 per cent. Qualifications are low on the priority list for bosses looking for young talent, with […]

 The NZ Power announcement proposes changes and regulation in the electricity market that are a positive move towards addressing long standing issues in our electricity market after the Bradford reforms in 1998, say the New Zealand Manufacturers and Exporters Association (NZMEA).  NZMEA Chief Executive John Walley says, “In 2006 we researched and produced a report “Will it take more Blackouts before we see the light?” that considered the electricity supply issues in New Zealand. This research was sparked early in the last decade due to our growing concerns of supply stability and cost of electricity. We identified three main concerns with the current system: 1. The cost impact of the long run marginal cost model. 2. An incentive for generators to game the system. 3. A system bias to build new generation late and in small increments. “The NZ Power proposals go a long way to addressing our concerns, it has taken a while, but better late than never.” “The single buyer, average cost model does not have the same opportunity for gaming as it pays the generator a fair price based on the cost of supply and can ensure all low cost supply is in the market.” “There is no doubt that prices will fall.” “In supply terms the incentives change from small incremental increases in generation, to larger increments of generation. The single buyer operating an average costs system is not incentivised to keeping the highest cost suppliers in the market.”  “The NZ Power proposal addresses our long held concerns about the New Zealand electricity supply system. Manufacturing exporters are under severe cost and margin pressure; it would be good to see some comparative advantage against our trading partners for once.”  “It is worth noting that many large industrial users buy at close to a margin over actual […]

The Commerce Commission has commenced the process for setting new maximum prices and new quality standards for Orion New Zealand Limited (“Orion”).  Orion has submitted a Customised Price-Quality Path (CPP) proposal to change the maximum prices that Canterbury consumers will pay for electricity lines services and to set new required quality standards for those services. The Commission invites interested parties to comment on the Orion proposal by 17 May 2013.  The Commission has today released a Process Paper to explain how interested people can have their say on Orion’s proposal. The Commission’s Process Paper and Orion’s CPP proposal are available on the Commission’s website at: http://www.comcom.govt.nz/orion-cpp/ The Commission also proposes to release an issues paper around 29 April 2013 setting out its preliminary list of issues and questions on the Orion proposal. Submitters will be able to consider those issues and questions when commenting on the Orion proposal. The submissions from interested parties will assist in informing the Commission’s draft decision on Orion’s price-quality path. The draft decision is expected to be released in July 2013 for further public comment. A final decision by the Commission is currently scheduled for November 2013.  Background Orion’s current maximum prices and its quality targets are set in a price-quality path determined in 2009. To alter those prices and targets Orion has made a CPP proposal which may lead to changes in its prices and quality standards from 1 April 2014, for the following five years.  The Commission has examined Orion’s CPP proposal to decide whether the proposal complies with the Commission’s rules for the process and content for a CPP application. These are set out in the Electricity Distribution Services Input Methodologies Determination 2012 at http://www.comcom.govt.nz/electricity-distribution/. The Commission asked for more information from Orion to ensure the CPP proposal fully met the requirements […]

Labour’s proposal of a centralised buying agency for electricity could only bring electricity prices down through massive taxpayer subsidies, says BusinessNZ. Chief Executive Phil O’Reilly says the proposal would destroy a functioning market and replace it with heavy-handed bureaucracy.  “Inserting an army of bureaucrats between power generators and retailers would destroy price signals, so prices would not reflect the cost of generation.  “In that situation, the taxpayer would continue to pay ever higher subsidies of the electricity system. This is not sustainable. “The Electricity Authority said only yesterday that the electricity market is as competitive as it has ever been. It can always be improved, and this is where the focus should be.  “It’s only competition that can drive prices down. Governments can’t do this, not without subsidising the sector from taxes.  “A state-controlled sector as envisaged by Labour would drive out private investment. Why would the private sector invest in generators when the state can determine the prices they can charge, while subsidising state-owned competitors?  “The private sector power companies would have to seriously consider their future in the market. Those who have invested heavily would basically find their profits confiscated. “Interfering in the market in this way would send a signal to the rest of the world that it is not safe to invest anywhere in New Zealand. The knock-on impact from that, on jobs and growth, would dwarf any short-term benefit from artificially reduced electricity prices,” Mr O’Reilly said.    

Service sector expansion for March was almost identical to the previous month, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for March was 55.4. This was only 0.1 point down from the previous month, following a 2.5 point increase in February (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous March results, the 2013 value was the highest since 2010.  BusinessNZ chief executive Phil O’Reilly said that consecutive and consistent levels of healthy expansion in the service sector have been few and far between over the last few years, so the current result is encouraging.  “Like the main result, the proportion of positive comments from respondents (64.7%) was all but identical from last month. Weather conditions dominated actual comments made, with many finding the fine weather a boost for activity. However, others providing negative comments have outlined the drought as a constraint on growth.”  BNZ senior economist Craig Ebert said, “There are question marks about the sustainability of the recent housing market upswing. However, the recent hot spots likely helped the March PSI to its still-strong reading for March, via real estate, legal and financial services.”  The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for March saw both options for measuring the PCI edge lower from February, but still in healthy territory. The GDP-Weighted Index (55.2) decreased 0.2 points from February, while the Free-Weighted Index (54.4) fell 1.3 points over the same period. Despite the dip, the last three months have shown a level of consistent expansion not seen since early 2010. Four of the five main sub-indices were in expansion during March. Again, leading the way was new orders/business (58.4), which […]

 While New Zealand as a country becomes greener in its thinking,  it still lags well behind the world in the actual adoption of policies such as alternative fuels for vehicles. New Zealand is at the bottom of a list of 40 countries for businesses considering, or having already introduced, alternative fuels for their vehicles. Simon Carey, Partner, Grant Thornton New Zealand, said that only 7% of the companies surveyed had considered or were using alternative fuels against a global average of 24%. Japan (48%) led the way followed by Malaysia, the Philippines and Turkey, all on 46%. The United States was 27%, the United Kingdom 24% and Australia 15%. “At first glance the figures look terrible, but need to be put into perspective in light of the make-up of the New Zealand economy, our geography, and the improving awareness and acceptance of green initiatives. “There is certainly a lot of work to be done, but we are moving in the right direction,” he said. Carey cites the lack of big businesses in New Zealand as a key factor at our lack of adoption of alternative fuels, and the logistical headaches caused by our elongated country and rugged terrain. “Basically we are a country of small to medium sized businesses that do not have the balance sheets and fleet size to make an impact. And for many of these businesses, since the Global Financial Crisis, the last few years have been all about survival rather than adopting green initiatives, which might put pressure on their bottom line. “Half of the New Zealand businesses noted cost as a deterrent while 37% were concerned about the difficulty in refuelling or recharging their vehicles given New Zealand’s ribbon-like infrastructure,” he said. Carey said that all was not necessarily gloom and doom as shown by […]