Business Update Friday 18 July 2003 Issue 81

Business Update Friday 18 July 2003 Issue 81

MORE COUNCILS SHOULD AXE DIFFERENTIAL The Auckland Regional Council made a good call in axing the business differential and in this regard the aggro it’s receiving is misplaced - the notion of businesses subsidising and sheltering residential ratepayers is one of the biggest impediments to business growth. More councils should get rid of the differential, even if it means taking real heat.

COUNCILS TAKING THE HEAT FOR GOVERNMENT The heat the ARC is feeling over its rates is to a great extent the fault of central government, as it continues to offload the delivery of particular national strategies – like public transport - onto local government. The Local Government Act means there is no end in sight.

BUT COUNCILS MUST TRIM SPENDING But local government must still take a large share of the responsibility for rates rises – undisciplined spending by many councils is simply over the top. The rates revolt in the Auckland region may be the first of many as local bodies increasingly indulge in the greater powers given them by the Local Government Act. The idea of local bodies getting a power of general competence was imported from the UK – but in the UK that power is modified by a system to cap rates. Contact nclark@businessnz.org.nz.

SKILLS TRAINING HELPS FIRMS COMPETE A Business NZ-Industry Training Federation survey shows workplace and industry training is valued as a contributor to company competitiveness and profitability. 90% of firms surveyed said they currently provide training and 95% said they intended to provide training over the next year. The mean amount of training provided over the previous year was 3.7% of total payroll (compared with 3.5% in a 1994 Employers’ Federation survey). 65% of the firms engaged in training use national skill standards. 479 companies belonging to EMA Northern, EMA Central, Canterbury Employers’ Chamber of Commerce, Canterbury Manufacturers’ Association, and Otago-Southland Employers’ Association took part in the survey. The survey report and summary are on www.businessnz.org.nz under ‘what’s new’. Contact jbaker@businessnz.org.nz.

MAHAREY LAUDS SKILL TRAINING Associate Education Minister Steve Maharey said the survey showed the great potential for workplace and industry training. “Too many people are defaulting to study in universities when a career begun with a modern apprenticeship might well be more fulfilling and rewarding.” He said many traditional manufacturing and primary industries have been transformed by new technology into high tech workplaces comparable to the best-equipped surgeries and laboratories.

TRADESPEOPLE SOUGHT FROM OVERSEAS Following the Government’s recent revamp of immigrant criteria, the Immigration Service’s new ‘priority occupations’ lists for permanent/long term immigrants released this week include trades (electricians and automotive mechanics) for the first time. The list for temporary work permits contains skilled building trades occupations and quantity surveyors. Contact jbaker@businessnz.org.nz.

WATCH OUT FOR ENERGY OVER-REGULATION Cabinet’s Economic Development Committee says safeguards are needed as the Electricity Commission has been given powers that are highly intrusive into commercial activities. A timely call, since some are calling for the Electricity Commission to become an ‘Energy’ Commission and centrally regulate electricity generation and gas supplies and direct the extraction and use of coal. Contact pwhitehouse@businessnz.org.nz.

LINE COMPANIES WINDING DOWN RURAL SERVICE? Under the Electricity Act 1992, a distribution company’s ‘obligation to supply’ ceases on 31 March 2013. Anecdotal evidence suggests line companies may be winding down asset investment in rural and remote areas. Among other things, this could impact on the ability to establish wood processing facilities in forest harvesting areas. Business NZ says the Electricity Commission should require all distribution companies to publicly release a security of supply report out to 2013, including information on any plans to discontinue supply post 2013. Contact pwhitehouse@businessnz.org.nz.

TIGHTER BORDER SECURITY COMING A significant tightening of border security is on the way. The Border Security Bill, currently before Parliament, is the Government's response to security measures introduced unilaterally by the

US following the Sept 11 attacks. The Bill would increase enforcement powers and electronic information gathering by Customs and Immigration. Related initiatives, such as x-ray screening at ports and a Secure Exports Partnership scheme would also help maintain NZ’s reputation as a low risk country and help NZ reach a border security agreement with the US (rather than certifying individual ports). Some consider a border security agreement with the US to be more valuable than a free trade agreement. The security provisions would probably increase compliance costs, but the cost of doing nothing would be greater. Contact nclark@businessnz.org.nz.

STANDARDS DISPUTE Manufacturers in NZ are perplexed at the actions of Standards Australia, the body that administers industrial standards in Australia. Standards Australia has given notice that it wants to pull back from working on joint standards with Standards NZ. Joint standards are important to NZ manufacturers, since Australia is the largest market for NZ manufactured exports and many manufacturing companies operate in both markets. Currently there are around 1500 joint standards. Standards Australia says it wants a 'fair and equitable' sharing of resources, though Standards NZ says it is complying fully with the existing agreement between the two organisations. There are structural differences between the two bodies: Standards NZ is a crown entity, a standard-setter (not a certifier) and is relatively small (47 staff, $7m turnover), while Standards Australia is a company with a substantial certifying business as well as being a standard-setter, with 350-400 staff and over $100m turnover. It’s not known why Standards Australia is taking this course of action. Negotiations between the two bodies over the coming weeks will be critical. Contact nclark@businessnz.org.nz.

OCEAN OF OPPORTUNITIES Work is continuing in developing policy to cover the fourth largest exclusive economic zone in the world. The area of NZ's oceans is about 15 times larger than the area of land, covering around 4m square kilometers - a huge resource and wealth generating opportunity. Business NZ helped with a report published by the Centre for Advanced Engineering: Economic Opportunities in NZ's Oceans (will be available at www.oceans.govt.nz). A preferred policy approach will be sent to Ministers this month although recent pronouncements re ‘ownership’ of the oceans and seabed may complicate the policy. Contact pwhitehouse@businessnz.org.nz.

GROWTH STATS

FUEL PRICES DOWN, HOUSING UP - INFLATION STATIC There was no change in the CPI for the June quarter, despite numerous predictions of an increase. Six of the 9 groups making up the CPI recorded increases but the fall in the transportation group (-2.6%) was strong enough to counter the other rises. The transportation group included price falls for petrol (-9.7%), cars (-3%), diesel (-16.2%) and international air travel (-0.7%), reflecting the high $NZ. The food group recorded a slight fall (-0.3%). The housing group had the biggest growth (+1.3%), mostly due to further rises in the purchase and construction of new dwellings; 82% of those who increased construction prices blamed it on rising costs of construction materials. It was the 17th consecutive quarterly increase in construction prices. Household operations prices rose 0.5%, largely because of electricity prices (+1.8%), which are now 4.8% higher than in the June 2002 quarter. Annually, inflation stood at 1.5% over the June 2003 year, and is the lowest annual inflation outcome since the March 2000 year, when consumer prices also rose by 1.5%. With annual inflation so low and the economy slowing, there will be added pressure on the Reserve Bank to cut the official cash rate at its review next week.

SOUTH ISLAND HOSPITALITY MAKES STEADY GAINS Accommodation figures for May 2003 compared with May 2002 show 7 of the 12 regions recorded more guest nights for short-term accommodation, with the largest increases in absolute terms in the Wellington region (+19,000 or 14%) and Nelson/Marlborough/Tasman (+10,000 or 12%). The largest falls were for Auckland (-10,000 or 3%) and Bay of Plenty (-6,000 or 3%). Three of the five accommodation types recorded increases in May, led by caravan parks/camping grounds (+ 9%), while hotels fared worst

(-6%). Guest nights for the North Island were up 2% in May 2003 compared with May 2002. Trends for the South Island show that guest nights have been increasing slowly since August 1997, and SI guest nights were up 4% in May 2003 over May 2002. Stats courtesy of www.stats.govt.nz

WHAT’S NEW on www.businessnz.org.nz

CPI result enables a desirable rates cut

Petition for retaining access to the Privy Council

Holidays Bill Submission

Skills training an investment that pays off

Skills & Training Survey Report

Skills Survey Summary of Findings

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