Parliament Moves On Electricity Price Crisis
Responding to business concerns about extreme and volatile electricity prices, Parliament yesterday announced an
inquiry into the NZ electricity industry, to cover:
generation company requirements to give security of supply in dry years
the workability of separating generation and retail activities
getting genuine competition with no barriers to switching suppliers
whether line company profits have been excessive
the valuation of line companies’ assets when they were corporatised in 1993 and resultant charging decisions
how asset revaluations should have been treated for the purposes of price-setting
whether further reforms are needed so lines companies get a fair return on capital and consumers are charged fair prices
While these terms of reference do not cover all issues that are troubling the industry and there is the usual potential
for political considerations to dominate, it is another sign that the Government is at last treating the issue with the
seriousness it deserves. Submissions are due on 22 May. Contact: pwhitehouse@businessnz.org.nz.
REDUNDANCY TO THE TOP OF THE QUEUE?
A private members bill that would give redundancy payments priority over unsecured creditors would be detrimental to
business. The Status of Redundancy Payments Bill would also remove the top limit on the amount employees could recover
for wages/salaries and holiday pay. This would tip the balance too far in favour of employees over other unsecured
creditors. Businesses that were unsecured creditors would be moved down the priority list, making further smaller
business closures likely. If you would like to contribute to Business NZ’s submission on the Bill, please contact
ssummers@businessnz.org.nz.
PRIVY COUNCIL ACCESS ESSENTIAL FOR BUSINESS
There would be real dangers in replacing Privy Council access with a supreme court stacked with politically appointed
judges lacking in commercial expertise. Past decisions by NZ courts have shown limitations in commercial cases (e.g.
overruling contractual arrangements freely entered into) - we would have been stuck with these had they not been
overturned by the Privy Council. The Privy Council is a powerful protection against inconsistent decision-making in
commercial cases (many NZ cases taken to the Privy Council are commercial ones). NZ’s small population means we have a
relatively small pool of judges available and equipped for important commercial decisions; having recourse to the Privy
Council has helped make NZ’s legal system stable and attractive for foreign investment – this should not be compromised.
Moves are building to get a referendum on the issue – please vote to keep access to the Privy Council in the interests
of stable, consistent commercial law. Contact: bburton@businessnz.org.nz.
UNUSUAL SUGGESTION FOR SURPLUS
Fiscal data released by Treasury today for the first 8 months of the 2003/03 year show a surplus of $2.8 billion - $900
million more than forecast - largely due to lower government spending and higher than expected tax revenue, especially
from personal income tax and GST. This will not continue. Last week the Finance Minister suggested that more should be
spent on state housing, in part to boost the economy. Most businesses would regard tax relief or investment in
infrastructure as a more effective way to boost the economy and grow exports; roading infrastructure in particular is
crying out for more investment. Contact: nclark@businessnz.org.nz.
BAD NEWS FOR ROADS
The Land Transport Management Bill, currently before select committee, will not solve the current under-funding of
roads. It will result in less money for roads, more delays and more political interference. Less money for roads means
not enough passing lanes, inadequate roading to service the manufacturing, farming and forestry sectors, and continued
gridlock on Spaghetti junction and the Paremata roundabout. Business suffers and safety is compromised when roading is
inadequate. To find out more, check Bad news for roads on www.businessnz.org.nz.
‘GOOD FAITH’ UNCERTAINTY
The ‘good faith’ concept is still causing problems for employers. Yesterday the Auckland City Council lodged an appeal
against a recent Employment Court ruling on PSA v Auckland City Council. The Court ruled that the City Council breached
good faith by not consulting the union sooner about a consultant’s cost-cutting recommendations and said consultation
had to be with a union even if union members might not be affected. The ruling also said parties to an employment
agreement have to be ‘energetic’ in displaying good faith behaviour. But no definition exists of what that might mean.
The judgment also gives no guidance on what constitutes a proposal, or what it means to ‘pursue’ a proposal, or when an
employer should consult over a proposal. Business needs more certainty on the issue – Business Update will report on the
appeal as it progresses. Contact: aknowles@businessnz.org.nz.
GROWTH STATS
WORK STOPPAGES
There were 14 stoppages in the Dec quarter (8 full strikes, 4 partial strikes, 2 lockouts). Relevant details for Dec
quarter (comparison with the Sept quarter follows in brackets): number of stoppages: 14 (11); employees involved: 2,875
(14,749); person-days of work lost: 1,922 (23,461); estimated loss of wages and salaries: $295,000 ($3.4 million). Over
the Dec 2002 year, work stoppages numbered 46 (the sixth consecutive year that the number of stoppages has not exceeded
50). The 46 stoppages involved 23,309 employees and the loss of 34,398 person-days of work. Manufacturing had 14 of the
46 work stoppages; health & community services accounting had 11. Education had the largest number of individuals involved: 17,249, which was 77%
of the Dec year total.
RETAIL TRADE
Seasonally adjusted total retail sales for Feb were up 0.9% on Dec, the fifth monthly increase in a row. Core retailing
group sales were up 1.7% (excludes motor vehicles services and retailing). Eight out of the 15 storetypes recorded
increases in seasonally adjusted sales, led by accommodation, hotels & liquor, up $40.1m (largely because of strong accommodation results), and motor vehicle services, up $19.8 million.
Motor vehicle retailing was down $35.1 million. The Feb increase in seasonally adjusted sales came totally from the
North Island which recorded a 1% increase in sales. South Island sales decreased 0.5%, with Canterbury falling 0.8%, and
the rest of the South Island down 0.2%.
COMMODITIES
Seven consecutive monthly increases in commodity prices came to an end in March, as the ANZ world commodity price index
eased 0.1% from February. Lower world prices for timber, wool, aluminium, dairy products and venison offset higher world
prices for wood pulp, logs, lamb, beef, seafood and skins, however the index still remains 5.2% higher than in March
2002. The NZ dollar index also fell by 0.3% during the March month, as the NZ$ strengthened on a month-average basis
against the US$ and British pound. The NZ dollar index is now 15.5% below the same time last year, and 28% below its
peak in April 2001. ANZ noted that some commodities (e.g. wool and beef) had been affected by the Iraq war, while others
(e.g. wood pulp) were unaffected.
EXPORTS
Merchandise exports for Feb were valued at $2,323m, $17m lower than estimated. The $4m merchandise trade surplus was
considerably lower than normal for Feb months. The 2003 Feb surplus was 0.2% of merchandise exports, compared with an
average of 10% over the last decade. The provisional value of merchandise exports was $300m lower in Feb 2003 than Feb
2002, largely because of falls in dairy products (-$110m), aircraft (-$64m) and wood (-$56m). Meat and edible offal
increased by $26m. Export values were lower to most countries including Japan (-$70m), Australia (-$55m) and the
Republic of Korea (-$47m). Over the past few months, China has overtaken both the U.K and the Republic of Korea to
become NZ's fourth largest export market.
WHAT’S NEW on www.businessnz.org.nz
Business and Maori want referendum on Privy Council
Bad news for roads
Good faith definition lacking
GATS offer gets it right
Manufacturing conditions remain steady