Business News

The service sector remains in expansion mode, but not at the level as last month, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for November was 54.1. This was down 4.0 points from October, although still higher than results from June to September (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous November results, the 2012 value was the third highest recorded since 2007. BusinessNZ chief executive Phil O’Reilly said that the comments from respondents outline a distinct difference when examining those who have seen activity expand, compared with those that have not. “In November, 65% of comments were positive, compared with 62% in October and 47% in September. The increase is obviously good news, but the types of comments received are more specific to a particular reason such as better weather conditions, detailed Xmas prospects or certain tourist opportunities on the scene. In contrast, those still struggling are often more general in their comments, with a lack of customers/orders being the primary concern.” BNZ Head of Research Stephen Toplis expects 2012’s theme of slow progress, despite continuing struggle, to continue into 2013. “New Zealand’s economic outlook for calendar 2013 is unspectacular, but against a global backdrop of significant distress, this is not a bad place to be.  “We are forecasting GDP to expand an annual average of 2.3%, mainly due to significant forecasted increase in construction activity. This will be accompanied by heightened consumption in durable goods.”  The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for November continued to show the two options for measuring the PCI in expansion, although down from October. The GDP-Weighted Index (52.2) decreased 5.1 points from […]

A joint study by the Australian and New Zealand Productivity Commissions has failed to respond to the challenge of moving the trans-Tasman relationship to a new level. That is the view of the Australia New Zealand Leadership Forum (ANZLF). Strengthening Trans-Tasman Economic Relations has made detailed and in most cases useful recommendations in a range of areas, but they are largely unquantified in terms of economic benefits, and taken together will not deliver the step change that is required to enable the two economies to compete more effectively in the Asian century.  “It is particularly disappointing that the report hedges its bets on the biggest issue of all – double taxation,” said Australian ANZLF co-chair Rod McGeoch.  “Currently, companies based in Australia or New Zealand with operations in the other country have their profits taxed twice, since neither country recognises the other’s system for offsetting tax credits. The result is that Australian equity investors effectively pay 60 cents in the dollar on their investments in New Zealand and New Zealanders effectively pay 53 cents in the dollar on their investments in Australia. This is a significant disincentive to trans-Tasman business.” New Zealand ANZLF co-Chair Jonathan Ling said it was surprising that the report recommended removing investment restrictions to realise the benefits from the free movement of capital, yet kicked for touch on mutual recognition of tax credits, leaving it to the two Governments to decide. “Our research, which was undertaken with the support of numerous trans-Tasman corporates and which we shared with the Commissions, shows that movement on this issue would transform the investment relationship, add to GDP and net welfare gains in both countries and result in improved competitiveness and productivity,” said Mr Ling. Mr McGeoch and Mr Ling urged the Australian and New Zealand Governments to seize the […]

  The failure to make a firm recommendation on the mutual recognition of imputation tax credits clouds the value elsewhere in the joint report, Strengthening Trans-Tasman Economic Relations, just released by the Productivity Commissions of New Zealand and Australia. The Employers and Manufacturers Association says the failure not to come out strongly in favour of mutual recognition of the tax credits suggests, despite all the analysis put up to the contrary, that at least $300 million of benefit to our trans Tasman economies is not important. “The Productivity Commissions shy off from the single most significant impediment to the development of CER,” said Kim Campbell, EMA’s chief executive (pictured). “Mutual recognition of tax credits is by far the most important outstanding issue,” Mr Campbell said. “At stake is New Zealand’s very ability to build and retain world scale companies head quartered here. “So long as the issue remains unresolved, the risk is their head offices will always migrate to Australia. “Under the present regime, when the success of a New Zealand company means it attracts more shareholders in Australia than here, then those shareholders will always oblige the company to transfer its head office to Australia. “There have been several high profile examples of this modern day economic colonialism; the Australian government is reluctant to act on it because Australia is benefiting from the value created by New Zealanders. “It’s extremely disturbing, and we urge our Prime Minister to redouble New Zealand’s efforts to resolve it. “Continuing the present arrangement also reduces the returns that Australian businesses with operations in New Zealand can achieve.  “It’s a pity the Productivity Commissions didn’t take into account these longer term implications in their economic analysis as other recommendations in the report are most worthwhile.  “For example the concept of a trans Tasman visa […]

New Zealand’s manufacturing sector continues to meander along in a tight band as we head towards the end of 2012, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for November was 48.8 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 1.5 points down from October and means the index has only ranged by 2.8 points over the last six months. Over the last quarter, the PMI has averaged 49.2, and the year to date at 51.0. BusinessNZ’s executive director for manufacturing Catherine Beard said that the November result continues the general pattern seen both here and offshore for the manufacturing sector. “The last six months have seen little to write home about in terms of New Zealand manufacturing. Sluggish production and new orders has meant the overall result has had little chance to show stronger activity levels, while employment in the sector remains in contraction. However, we are no different from most other countries at present, as the JPMorgan Global PMI remains in decline, along with our closest economic neighbours across the Tasman fairing worse than us with overall activity down to 43.6. BNZ economist Doug Steel said there were still many factors influencing manufacturing – some positive and some negative.  “While the overall results have been relatively stable of late, there continues to be considerable variation in the details. The accumulating evidence of improvement in construction activity gives some cautious optimism for 2013, amid some obvious strong headwinds such as the strong NZ dollar and patchy international demand.”  Two of the five seasonally adjusted main diffusion indices were in expansion in November. However, the key indices of production (49.3) and new orders (50.0) showed minor contraction and no change respectively. […]

The winners of the Sustainable 60 awards are showing the way for all New Zealand companies, says Penny Nelson, Executive Director of the Sustainable Business Council (SBC).  “The range of innovation was enormous, from Powersmart Solar that has supported Tokelau to become 100% solar powered, to Aohanga Incorporated – a sheep, beef and forestry agribusiness that has a 100-year plan and is governed with its grandchildren in mind.  Ms Nelson said it was inspiring to see the SBC member companies doing so well, including: Meridian Energy – Winner of the Environment category. Meridian commented that “their approach to environmental management supports a license to operate in some of New Zealand’s most treasured landscapes.” Westpac NZ – Large Business winner. Westpac was acknowledged for reducing environmental impacts and providing products to assist clients to move to a low carbon economy and being an active member of the community. Westpac said “sustainability isn’t discretionary even in tough times.” Landcare Research – Runner up in the large business category. Judges commented that sustainability is so embedded in Landcare Research that if you took out the Board and the management team it would keep going. “It is companies that can lead the way in sustainable business practice. Congratulations to all those who are walking the talk and providing a positive example to us all.”  

The award of 10 new exploration permits is a step towards better development of New Zealand’s petroleum resource, says BusinessNZ. Chief Executive Phil O’Reilly says New Zealand’s oil and gas resources have the potential to create significant economic growth and moves to responsibly develop them are in the national interest. He said the block offer approach was a useful development.  “Changing to block offers allows competitive bids, helping us get a better deal from exploration companies both in terms of engagement with communities and revenue received.  “The distribution of permits in different regions is positive for the communities concerned and the overall revenue will be a welcome addition to the economy. “Unlocking our petroleum resources requires leadership, and the Government is to be congratulated for advancing this important initiative.”        

The Sustainable Business Council says today’s Building Natural Resources report is a critical part of the Government’s Business Growth Agenda. Sustainable Business Council Executive Director Penny Nelson says the vast number of businesses leveraging off New Zealand’s natural resource base makes it imperative that all business becomes greener, rather than a select few. “The quest for a more sustainable economy comes down to decisions about resource use made every day by businesses all over New Zealand. “Businesses that are members of the Sustainable Business Council are keen to work in partnership with communities and local and central government on initiatives identified in the Building Natural Resources report. “Developing indicators to measure our progress in greening economic growth, supporting the growth in capability of individual businesses, and scaling up resource efficiency in business are among the many avenues to greener growth.  “Getting a large scale increase in export growth while steadily improving the quality of our environment is the goal ahead of us.  “That goal is hampered by the often polarised debate around the use of natural resources. Better dialogue among businesses and communities leading to decisive, responsible development of our resources will help bring the goal to reality,” Ms Nelson said.    

BusinessNZ has welcomed the latest report for the Business Growth Agenda, Building Natural Resources.  “The Government’s vision of improving the quality of our natural resource base while sustaining growth in key sectors is both challenging and appropriate,” says BusinessNZ Chief Executive Phil O’Reilly.  “Our land, freshwater, farms, forests, minerals, marine resources and energy sources are the springboard for much of New Zealand’s wealth and will be the basis for a key objective of the Business Growth Agenda – growing exports to 40 percent of our GDP by 2025. “This will require buy-in from all sectors of New Zealand as we take a sustainable approach to resource development. It is an area where partnership is important – business, Maori business, communities, central and local government all have a role to play separately and in partnerships. “Business supports the approach of greening the whole economy, not just particular sectors. This means every business in New Zealand, small or large, can play a part. “BusinessNZ is ready to partner with others to urgently progress a number of projects to help unlock our natural resource wealth.” Mr O’Reilly said key projects included: • Developing indicators to measure progress on greening economic growth • Partnership projects with Maori business relating to natural resources • Support work alongside the ETS to reduce New Zealand emissions. • Integrating different capacity building programmes for business “Innovative and sustainable use of natural resources should be the shared focus of business of all kinds, central and local government and communities as we seek to grow our exports and economy.”      

Telecom’s flat-rate data roaming prices from Friday next week have brought a cheer of approval from business, particularly exporters. “Gone are the days when the shock of an enormous phone bill greeted the business traveller’s return from an otherwise successful sales trip abroad,” said the chief executive of the Employers and Manufacturers Association, Kim Campbell (left). “This is a strong, positive move from Telecom,” he said. “Our long held view is that roaming charges required an overhaul, so it most gratifying to see Telecom announce the $6 per diem cap to apply in Australia, and the $10 cap apply in another eight of our major trading partners including the US and China.” “It will ensure our business travellers can more freely use their usual phone numbers when overseas, and for roaming charges to become far more a controllable cost. “It will also ensure roaming charges become a competitive factor between mobile telco providers, less a matter of speculation and unpredictability.”  

According to IDC international head Christopher Holmes Asia-Pacific manufacturers will look toward new technology, new markets, and lower cost operations in order to keep their head above water in 2013, according to research firm IDC. In its latest manufacturing insights market report IDC said the next 12 months would be difficult for APAC manufacturers, and companies would need to make changes to stay competitive. Holmes said the shift toward setting up in different parts of the world with low cost centres would be central to many strategies. “From a technology perspective, the shift to supporting multiple plants/operations in different parts of the world is going to require the organisation to think about how they make decisions, and what information they need to make those decisions,” he said. “Getting the information from different parts of the world in a format that will allow for fast, effective decision making will be key for 2013.” Holmes said business analytics would be the “new technology of choice” in 2013, with “mobility, cloud, and social business” all attracting more focus. Source: Manufacturers Monthly