Business News

South Island businesses are increasingly bullish, outshining their northern counterparts, according to the latest Grant Thornton IBR survey. Simon Carey (pictured), a Christchurch based partner of Grant Thornton New Zealand Ltd, said that over the next year, 73.20% of South Island businesses expect an increase in revenue or turnover compared with 65.4% in the North Island. Overall 65% of southern businesses are very or slightly optimistic compared with 57.2% in the North Island. He said that the Christchurch rebuild was a major factor in the growing confidence. “Last year (2012) I think it’s fair to say that many businesses have been watching from the sidelines as they wait for the city’s blueprint to be finalised and the way cleared for rebuild activity. We’re now almost at that stage and businesses are optimistic about what lies ahead,” Carey said. “Clearly there will be benefits across the country and in the past year we have already seen some businesses opening an office in Christchurch or expanding their operations, poised for the economic spin-offs which are set to accrue.” Carey said that while the Christchurch rebuild will have a significant positive impact on the South Island economy for many years to come, the importance of the agricultural sector cannot be under-estimated. Commodity prices remain strong and dairy numbers are growing. “With large irrigation schemes such as Central Plains Water about to kick off, the importance of agriculture in the South Island will continue to grow. Minister Gerry Brownlee is quoted as saying that for every $1 billion invested in irrigation it will return $1 billion year-on-year. Over $1 billion is earmarked for investment in irrigation in Canterbury alone over the next few years.” Carey said that both South Island and North Island businesses expect profitability to increase – 64.90% and 67.30% respectively while […]

Young New Zealanders must not be left behind in acquiring digital literacy skills, says BusinessNZ. Commenting on the Education & Science Select Committee’s Inquiry into 21st century learning environments and digital literacy, BusinessNZ Chief Executive Phil O’Reilly said digital capability is a key issue for jobs and the economy.  “Recognising that the school system has to do more to ensure that all students have the digital literacy skills needed to succeed, and investigating the changes required to ensure more young people become digitally competent are valuable outcomes of this inquiry,” Mr O’Reilly said.  “Digital literacy skills, along with numeracy, literacy, problem solving, collaboration, and critical thinking skills are fundamental building blocks for employment. “ICT skills are in demand and provide people with these skills with good careers. The development of ICT and science education requires particular attention to ensure that our future workforce is able to meet the needs of competitive businesses. “It is critical that action is taken and that there is focus on those recommendations that will ensure that our future workforce has the skills to compete in the global economy. “The Committee’s recommendations in this important area show a welcome measure of cross-party support,” Mr O’Reilly said.  

The Employers and Manufacturers Association is backing the increase in the fuel excise tax over the next three years, as an important and efficient source of revenue for growing the economy. “Raising the excise tax on fuel again is an important investment needed to fund New Zealand’s infrastructure deficit,” said Kim Campbell, EMA’s chief executive. “Rather than cynical the issue is more important than balancing the books within a given time frame,” he said.  “New Zealand urgently needs to build better roads to lift our productivity and work life balance.  “Raising the funds required through the fuel tax is the most efficient method available as it simply costs less to collect in this way than any other. “But it would be helpful if there were renewed assurances that all the funds raised will be hypothecated for investing solely in land transport infrastructure. “Prior to the recession kicking in, regular increases in the fuel excise tax at about three cents a year were introduced in 2009 and generally accepted as necessary to accelerate road building. The increase was not implemented last year, though there has been the expectation it would be re-installed when conditions allowed. “The additional infrastructure able to be funded like this represents an investment in the country’s future growth so everyone stands to benefit.”  

The argy bargy between Auckland and Wellington over who should decide whether Auckland should complete Auckland’s inner city rail link, or when, is classic comedy, and besides it largely misses the point, says the Employers and Manufacturers Association. EMA’s chief executive Kim Campbell said Transport Minister Gerry Brownlee will win no friends in Auckland with comments like those  when the minister said: ‘the Ministry of Transport and the Government’s NZ Transport Agency will continue to work on the best and most cost effective solutions for freeing up central Auckland congestion now and into the future. “Comments like these are unhelpful,” Mr Campbell said. “They’re Tui moments – yeah right,” he said. “The rest of the statement will also only help unite Auckland behind the Mayor’s resolve to get work swiftly underway on the CRL. “Wellington appears to have a strange idea that Auckland’s transport woes are fixed. So why are taxpayer funds going into a report such as this latest one by SKM which the government has no intention of adopting?  “It’s obvious to everyone in Auckland that the CRL and the AMETI eastern corridor with an East –West link across the central southern city are urgent, as much to ease transport congestion as to facilitate the growth of the city. “But projects like these have very long lead times, so we need to get into detailed planning of them now, and remind ourselves the world will not always be in recession. “Mr Brownlee and his teams of naysayers in Wellington need to consult the government’s economic growth agenda where it talks of export growth in particular and where and how the government’s aspirations for exports can be achieved. “Without far more investment in Auckland’s transport infrastructure there’s no way we can lift exports from 30 to 40 per cent […]

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.”