Business News

Despite being presented as a ‘zero’ Budget, this year’s spending has been well focused on areas helpful for future growth, says BusinessNZ. With all new discretionary spending having to be matched by savings or tax revenues from elsewhere, Budget 2012 has nevertheless managed to reprioritise spending in a responsible manner, said BusinessNZ Chief Executive Phil O’Reilly. “Science and innovation have received significant funding this Budget, with big ticket items like the Advanced Technology Institute and the Performance Based Research Fund looking set to improve outcomes in commercial science and innovation. “New Zealand business increasingly finds competitiveness is dependent on innovation, and funding announced today for science and innovation initiatives will be well received by the business community. More funding for science and engineering tertiary courses also fits well with this. “The investment approach to welfare reform displayed in today’s Budget is highly positive, given the critical need for a more engaged, highly skilled working population. “Ongoing improvements in the tax system are also positive, although business would have liked to see more fundamental tax reductions to increase New Zealand’s international competitiveness. “The overall aim of getting the books back in the black is responsible and will be widely supported by the New Zealand community, although many would like to see a faster programme of reform in areas such as superannuation eligibility and interest free student loan expenditure. “It is to be hoped that a mandate for the decisions needed to grow the economy will emerge from the foundation of Budget 2012.”  

The forecast turnaround in the state of the nation’s accounts is highly dependent on bullish growth forecasts between now and 2016 say PwC. The other major contributor is rigorous control over crown spending. “We are surprised at the 29% increase in tax and GST forecast over the next four years” say PwC Chairman Mr John Shewan. “This is highly dependent on growth projections averaging 3% over this period.” Clearly, the Christchurch rebuild will have a significant impact on growth. It is sobering to note though that New Zealand has not managed average annual growth rates at these levels since the early 2000s, when the domestic and global economic climates were radically different. “The tax changes to limit the extent of deductions allowable against income from renting holiday homes does not go as far as expected,” says Mr Shewan. “It would have been reasonable to limit deductions to the actual days a property is rented but the Government has chosen not to go this far.” The Budget reflects impressive constraint on Government spending over the next four years. This constraint is in both core spending on departments and on transfer payments such as unemployment and domestic purpose benefits. The stand-out exception to the constraint framework is superannuation. Superannuation payments are forecast to increase by 29% over the next four years relative to an increase of just 1% in other areas. “The forecast hike in superannuation costs demonstrates the impact of the aging population,” adds Mr Shewan. “This is an elephant that will have to be addressed if we are to avoid inevitable hikes in taxes in the next few years.”  

We  hear that when the Christchurch rebuild is underway, Canterbury will be to New Zealand what Western Australia is to Australia. The place where work is available and skilled tradespeople are in high demand (as they are in other states of Australia, of course). If this is how the Christchurch rebuild is being seen then this is a golden opportunity to make the lot of workers better financially. Unless of course there will be thousands of workers still being paid the basic wage. And what is affordable? Will the workers flock into Christchurch without incentives to stay? Can their skills be rewarded for the job well done? -Doug Green  

  NASA astronaut Stephanie D. Wilson, a veteran of three space flights who has logged more than 42 days in space, will be making her next touchdown at this yearÕs eighth New Zealand International Science Festival taking place in Dunedin, from 30 June to 8 July 2012. Wilson was selected by NASA in April 1996 and, after completing two years of training and evaluation, qualified for her first flight assignment as a mission specialist. Festival director Chris Green says that having a NASA astronaut attend the 2012 festival is a “dream come true”: “At some stage of your life, you imagine what it would be like to be a NASA astronaut and travel into space. Festival attendees will be able to hear first hand from Stephanie what being an astronaut is all about Ð from the rigorous training it takes to become an astronaut to what they eat when they are on a space mission. We are really excited to secure her attendance for 2012.” In keeping with the festival theme of ‘what makes us tick?’, Stephanie Wilson will be involved in workshops for kids, a family fun quiz night, presentations in Wall Street Mall on the fourth of July (United States Independence Day) and a evening presentation open to the public. Originally from Boston, Massachusetts, Wilson completed her education at Harvard University, graduating with a Bachelor of Science degree in engineering science. She went on to gain a Master of Science in aerospace engineering from the University of Texas in 1992. Wilson was initially assigned technical duties in NASA’s Astronaut Office Space Station Operations Branch working with space station payload displays and procedures. She then served in the Astronaut Office CAPCOM Branch, working in mission control as a prime communicator with on-orbit crews. Following her work in mission control, […]

Recent events plainly demonstrate there is ample room for improving the bargaining processes leading to collective agreements, and the employment law changes announced today will go a long way towards achieving this, says David Lowe, Employment Services Manager for the Employers and Manufacturers Association. The changes will also re-instate an element of choice for employees who are not members of a union, Mr Lowe said. “Not everyone wants to belong to a union,” Mr Lowe said. “Individual employees should have the choice from the outset of starting work on whether they want to join a union; removing the mandatory 30-day union membership rule will reinstate that choice. “Employers will welcome the removal of the need to conclude a collective agreement. If the parties cannot reach an agreement they should not be bound to put the business at risk, as at present, and keep on negotiating endlessly. “The law on flexible working hours was designed to enhance or increase work place choices for employees but its effectiveness has been hindered by the bureaucracy required. “The other measures announced today will also help build confidence in the employment process and therefore help with investment and opportunities for employment.”  

The service sector in April displayed further signs of expansion, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for April was 56.7. This was up 2.5 points from March and the highest result for any month since November 2011. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The 2012 April result was also the second highest value recorded for that month since the survey began in April 2007. BusinessNZ chief executive Phil O’Reilly said that the upwards swing in expansion for April was built on elements of the index showing some historic highs. “Both business activity and new orders – which make up the greatest proportion of the overall result – again showed healthy levels of expansion. Adding further impetus, the level of expansion for employment was only bettered by a result going back to mid-2007. Likewise, one has to go back 4-5 years to see stocks/inventories and supplier deliveries at such a high level.” BNZ Senior Economist Craig Ebert said today’s strong PSI would help in calming nerves over the weak-looking PMI of last week. “With regard to employment, the PSI and PMI are both upbeat – good news for labour markets.” The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for April showed the two options for measuring the PCI still in positive territory, but a healthy service sector assisting in pulling up one of the measures. The GDP-Weighted Index (55.6) increased 1.1 points from March as the larger weighting of the service sector boosted the overall result. In contrast, the Free-Weighted Index (53.0) fell a further 1.8 points. All five sub-indices showed expansion in April. This was again led by new orders/business […]

Companies which accept online orders from Australia are being warned to tread carefully because they could be sued for infringing somebody else’s trademark. Intellectual property expert, Theodore Doucas of Zone IP, an intellectual property consultancy in Wellington (with an office in Sydney), says that in his experience – as a consultant and a former Assistant Commissioner of Trade Marks – a quarter of New Zealand companies that have filed their trademarks in Australia have had different objections raised by the Australian Trade Mark Registry (IP Australia). “That means up to 25 per cent of New Zealand companies which have their trademarks registered here may have their application with IP Australia fail because the mark is already taken or IP Australia do not consider it distinctive – it’s a huge and expensive problem for New Zealand companies who regard crossing the ditch as the next logical step in their expansion. “Don’t expect any favours from IP Australia. They have different case law and examination practice which they must apply.” He said it is important to remember that even a New Zealand company that is based here, but sells product in Australia over the Internet, is deemed to be trading in Australia and is at risk of falling foul of trademark laws. “There’s been talk about a single application, but it’s just that – talk. The offices don’t seem to be working together. We have had a lot of success registering trademarks in Australia, but most companies don’t think of trademarks in Australia when they’re just starting out in New Zealand. “In our experience, IP Australia is far more conservative than the New Zealand registry.” Mr Doucas said he knows of New Zealand companies that have been forced to rebrand in Australia – an expensive process. “One thing that start up companies […]

New Zealand companies need to be more active in undertaking cross-border mergers and acquisitions if we are to fully capitalise on our intellectual property, our clean-green image and the other advantages we have as a country. Martin Gray, Head of Lead Advisory for Grant Thornton New Zealand, said that New Zealand was on a par with the global average (30%) when looking at companies planning to grow through acquisition in the next three years, but below the global average (24% compared with 33%) for cross-border acquisition. “With our size, geographic isolation and intellectual property, it is imperative that we are above the global average when it comes to cross-border acquisitions. We need to be involved in thoseparts of the value chain that provide the greatest margin for the value we bring to the table. “Where is the New Zealand strategy to help our companies acquire businesses internationally so that they become more involved in this chain, thereby reaping larger profits? “For New Zealand our stars are aligned when you look at our products, our position in the market and our intellectual property in sectors experiencing strong growth,” he said. New Zealand companies seeking revenue and value growth identified three key drivers for attaining these goals: building scale (61%), accessing new geographic markets (59%) and acquiring new technology or established brands (41%). Gray has worked with a large number of New Zealand corporates on their international expansion, particularly into Asian countries. With over 25 visits to China alone he has first-hand insight into how Asian countries value New Zealand’s products and services. “Just look at how overseas companies are able to come to New Zealand and buy our companies for higher prices. Ratherthan complaining about what these companies are willing to pay, we should spend more time exploring why the price […]

The passing of the law requiring unions to conduct a secret ballot of their members before going on strike is a welcome step, says David Lowe, Employment Services Manager for the Employers & Manufacturers Association. “Virtually every time there is a strike the employers finds individual union members telling them they don’t support it and would prefer to work,” Mr Lowe said. “A few outspoken people can make it appear there is strong worker support for a strike when in fact there may not be. “Quite a few unions, such as the Engineers Union already conduct secret ballots so this law change really only affects a few unions like the Maritime Union which have resisted them. “While it will still be a year before secret ballots become mandatory, and two years before unions must change their rules, employers will expect them to be carried out for every relevant occasion from now on.”  

Manufacturing activity dropped back into contraction after four months of expansion, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for April was 48.0 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 5.8 points down from March, and the lowest level of activity since November 2011. For the first four months of 2012, the PMI has averaged 52.7, compared with 52.0 for the corresponding quarter in 2011. BusinessNZ’s executive director for manufacturing Catherine Beard said that after a positive first quarter to the year, the fall back in April was disappointing from the perspective of getting the sector back on track. “While the unadjusted results typically show a drop in activity from March to April, the fall for 2012 was sizeable, led by the key sub-indices of production and new orders. Also, the drop in activity was reflected in the pick-up of negative comments made by manufacturers. While there was no single reason for the poor showing, the high value of the New Zealand dollar, as well as low and slow demand, were the prevalent comments.” BNZ economist Doug Steel remarked “April’s PMI result was a significant dip. Equally though, just like we were reluctant to buy into the extreme strength in February as an indicator of rapid trend expansion, we are wary of taking April’s result as a signal of a new downtrend. The truth about the trend probably lies somewhere in the middle. It is encouraging that manufacturers, on net, are adding to staff levels.” Despite the fall in overall activity, two of the five seasonally adjusted main diffusion indices were in expansion in April. However, both production (44.6) and new orders (48.5) fell into decline, which makes up the […]