Business News

  -Adam Bennett* It only takes three questions to start your firm on a journey that could end with global recognition and practical support for your export strategy. In 2009, New Zealand took a bold step and re-cast the 45 year old Export Awards, creating the New Zealand International Business Awards. The Awards, run by New Zealand Trade and Enterprise with the support of Strategic Partner ANZ, is the country’s most prestigious awards programme for internationalising businesses. Like every new exporter, we were nervous and excited about the decision to change. But, much like all of you, we realised there was more to celebrate in global business than just selling containers of ‘stuff’. That’s why the programme recognises the new approaches businesses are taking to achieve international success. It is a celebration of the passion and vision of New Zealand’s most outstanding international businesses and business leaders. New Zealand manufacturers in particular have grasped this opportunity with enthusiasm. As we hear the litany of doom and gloom about manufacturing in New Zealand, it would be easy to assume that manufacturing is in crisis: that everyone is shutting down, packing up and leaving; and that no new jobs are being created or industries expanded. But previous winners like Sistema, Triodent, Simcro and Fastmount are proof that New Zealand manufacturing businesses are finding global success. Just hearing from past participants reassures me that we all can learn so much from their stories. Allin Russell from Sistema, winner of Best Use of Design category in 2012, reflected; “It does wonders for morale – the best part of winning was telling our hard working staff that we had won. It was like a football match, everyone erupted, beaming with pride. We’re now at the stage where we attend significant conventions around the world because […]

 A collection of 36 rare and historic Caterpillar tractors will stay in New Zealand – thanks to Ben Gough, executive director of Gough Group and his sister, Gina Satterthwaite. The Canterbury-based brother and sister have secured a deal which will see the machines and associated equipment remain here following the sale in Rotorua of the privately-owned New Zealand Caterpillar Experience. The Experience has operated for the last seven years, and is well known world-wide as a unique collection of rare machines. “When the owner, Lindsay Willis, contacted us to see if we were interested in buying the collection, it was too good an opportunity to pass up,” said Ben Gough. “The collection is uniquely Kiwi, and reflects the contribution the Caterpillar brand and the Gough Group has made to the development of New Zealand infrastructure and farming.” The unique legacy of the collection was also a key element in the decision for Gina. “The history of the machines is also the history of our family, so retaining it in New Zealand, rather than losing it overseas, was an easy decision for us,” she said. All the machines in the collection were sold or serviced by the Gough Group, and several of them are extremely rare, with only a handful of machines worldwide, including a 1928 Auto Patrol, one of only two known examples in the world, and a Speeder from 1937. Initially the collection will be moved to a private location for storage while designs are developed for its new long term home. Planning has not yet begun but the intention is to have the historic machines on public view again at some stage in the future.                                

Business commentator Rod Oram explained how energy efficiency can fuel business innovation and growth at an EECA Business process heat workshop, held recently in Auckland. Consuming energy worth more than $2 billion dollars every year, process heat systems (furnaces, boilers and ovens) are used in most industries – from bread making to milk powder production, and timber processing. EECA Business Project Manager Pramesh Maharaj says improved process heat systems efficiency is one of the biggest opportunities for New Zealand manufacturers to make cost savings, increase productivity and enhance green credentials. “The workshop was a great success. Having more than 50 process heat users and energy efficiency experts sharing their experiences and knowledge really helped raise awareness of the opportunities in process heat. “Participants particularly enjoyed hearing Rod Oram explain how process heat energy efficiency connects to the big picture for the national economy,” he said. Rod Oram also spoke about the critical need for senior level executives, particularly CEOs and CFOs, to make energy efficiency a business priority. The workshop included case study presentations from companies that have benefited from improved process heat efficiency. Highlights included wood processor Nelson Pine, that saved more than $2.5 million in two years through improved process efficiency and reduced heat wastage; and Energy Plant Solutions, which recently installed a 95% efficient boiler and heat recovery system for a new milk powder near Balclutha. Pramesh Maharaj says EECA Business expects to hold similar workshops over the coming months. EECA Business has grants available to assist businesses put six-monthly boiler tune-up regimes in place. Up to 40% of the cost of a two-year tuning regime (maximum of $5,000 per site) is available for sites with total boiler capacity of 1.5 MWt or more. See www.eecabusiness.govt.nz/boiler-tuning-grants There is part-funding towards base-level or investment-level energy audits of heat […]

-Dan Taylor -Trade Commissioner, Melbourne With a reputation for innovation, niche solutions and a strong results focus, New Zealand manufacturers enjoy a solid reputation in Australia. We also have the advantage of geography, language and legal systems, but New Zealand companies can’t be complacent, and still need to be smart operators to have the best chance of success across the Tasman. For companies that are smart and focussed, the attraction is clear. As well as being the only market of scale where we have geographic advantage, Australia remains New Zealand’s premier trade partner. The numbers are compelling – 23 per cent of our exports end up in the Australian market, representing NZ$10 billion annually. A quick look at the enormous breadth of the exported goods and services suggests that for almost anything New Zealand has to offer, there is a home in Australia. Australia’s recent economic success has been underpinned by a booming resources sector, and while prices have come down from their record highs, there is still plenty of upside. The once in a generation opportunities provided to New Zealand manufacturing businesses by the resources and mining boom remain, so long as companies focus on their core capabilities and are willing to put in the effort. WhatÕs particularly interesting from a manufacturing perspective is that as these mining and resources projects mature, they are moving from a construction focus to a focus on efficiency and productivity – an area where New Zealand manufacturers are well placed to take advantage of the opportunities. Investment into the sector is still strong, with $A260 billion of capital expenditure committed over the next 2 – 3 years, while export volumes are expected to triple from their 2001 levels by 2020. This drive for efficiency and productivity gains is also being seen in other […]

Inland Revenue’s latest tax tightening proposals will hit smaller businesses the hardest with extra compliance costs, the Employers and Manufacturers Association says. “The impact of the new taxes on car parks along with the proposal to tax the personal use of mobile phones and laptops will aggravate compliance costs for all businesses but especially SMEs,” said Kim Campbell, EMA’s chief executive.  “Its absolutely not worth IRD proceeding with this.  “A recent national survey or ours found 47 per cent of employers allow the personal use of smart phones, and 35 per cent allow personal use of tablets and laptops provided for business purposes. “72 per cent provide free car parks for their staff. * “Trying to tax things like this will simply see many employers ceasing to provide them. “Their employees won’t be happy, employers don’t want to do it, and the tax revenues collected will be at best miniscule.  “The cost to SMEs of tax compliance is typically three times more per person employed than for larger firms.  “IRD’s policy advisors would be much better directed to work out how New Zealand could cut its company tax rate thereby attracting more overseas companies to pay their tax here and lift their revenues rather than stalking small dividends like this. “At the same time cutting the company tax rate would boost investment. “Some of the thinking on taxing specialised work clothing, meals and accommodation allowances also needs to be reworked.”

BusinessNZ is not convinced of the merits of IRD proposals for taxing employee allowances.  The IRD proposals are aimed at making the rules easier to apply, but BusinessNZ Chief Executive Phil O’Reilly says the overall effect could be to make them more complex.  “The proposals contradict the Government’s stated goals around improving public services and removing compliance costs.  “Small businesses in particular could be faced with greater payroll and accounting costs. “There would be increased difficulties in working out expenditure in areas like protective or specialist clothing, travel accommodation, or use of communications devices. “An example is the proposal to tax any employee expenditure payment on smartphones and other communications devices, when there is mixed work and private use. “Given the increased blurring of the lines between work and personal time, the rapid changes in technology and increased nuances between ‘use’ and ‘cost’ with bundled services, this would be a backward step.  “The difficulty of determining what is work and personal time may be undermining the important principle that employees should not be taxed when there is no private benefit.  “Blunt tax changes in this area could lead to employers restricting teleworking, or even restricting the use of communications devices because of tax compliance costs. Given the need for greater use of technology and innovation, this is the opposite of what should be happening. “BusinessNZ believes the proposals should be withdrawn until formal feedback can be sought from taxpayers and interested parties.”      

Proposals by Inland Revenue to tax the personal use of work mobile communication devices like mobile phones, tablets and laptops are both unenforceable and contrary to government’s ambition to lift workplace productivity, the Employers and Manufacturers Association says. “Our members are angry about the IRD tax proposals,” said Kim Campbell, EMA’s chief executive.  “We’re being told at our current briefings that businesses think they’re not only unworkable, unenforceable and would collect tiny amounts of tax, the thinking behind them is also antiquated.  “On the one hand we have Communications Minister Amy Adams recently praising the workplace flexibility we now have with such devices, so anyone can work partly at home or elsewhere, and on the other we have IRD saying they need to tax these things because there’s been an increase in “working outside the traditional office environment.” “We think its petty and counter-productive. “If these so called ‘perks’ taxes proceed businesses will simply stop providing mobile phones and the like to employees, and employees will simply stop doing some of their work at home.  “Employers and employees will lose out, and so will IRD as productivity, output and tax revenues fall. How dismal is that!  “IRD has muddled its thinking over some of its other perks’ proposals too, to tax some workplace clothing, meals and accommodation allowances. “All these issues need far more thought.”  

BusinessNZ has welcomed the clarity provided by the Supreme Court’s decision on the proposed share offer for Mighty River Power.  Chief Executive Phil O’Reilly says the partial float provides a significant opportunity for the development of New Zealand’s capital markets and for wider investment possibilities for New Zealanders.  “The decision will provide a boost to business confidence and confidence in capital markets.  “The Court’s unanimous decision gives a clear way forward and the Government should now promptly execute its plan for the benefit of all New Zealanders.”  

The Government’s final report under the Business Growth Agenda lists useful undertakings to enable better access to capital, says BusinessNZ. Building Capital Markets is a useful component of the Agenda to build the New Zealand economy, says BusinessNZ Chief Executive Phil O’Reilly. “However, for it to achieve the Government’s goal of New Zealand becoming a magnet for foreign investment, much more must be done.  “The OECD’s Going for Growth report on the New Zealand economy, just released, says its top priority for change would be for New Zealand to “reduce barriers to FDI and regulatory opacity”.  “The OECD’s three recommendations are that FDI screening requirements should be clarified, that Ministerial discretion over FDI bids be removed, and that the revised Regulatory Standards Bill be passed. “These three simple actions would do more than anything else to improve the flow of investment and allow New Zealand businesses to get on with growing exports. “Business is supportive of these simple changes. The vagueness of FDI rules and Ministerial power over them are significantly constraining investment flow to New Zealand. The Regulatory Standards Bill would require all planned new legislation to conform to standards of transparency, accountability and cost-benefit efficiency. This Bill should not be left languishing on the Order Paper with little chance of being advanced, as is currently the case. “The Government’s initiatives listed in Building Capital Markets are welcome. Changes to foster more efficient private capital markets, along with better equities law and increased support for venture capital programmes are positive.  “But if the Government is serious about the goal of making New Zealand a magnet for investment, it must concentrate on fixing the investment and legislative rules that are holding us back.”