Business NZ Business Update 26/3/04

Dunne hits a chord.... Employees favoured over creditors....Heartland
business says no.....

Business Update

DUNNE HITS A CHORD United Future's Peter Dunne was interrupted by spontaneous applause when he told an audience of Wellington businesspeople today that the Employment Relations Law Reform Bill should be dropped. Speaking at an EMA Central function to present results from the Mood of the Boardroom survey, he said it was a key part of the reason for the Government's loss of popularity. The survey, run by the NZ Herald, Business NZ and regional business associations, showed that 90% of businesses surveyed considered the employment bill was bad for business. Contact: ssummers@businessnz.org.nz.

HEARTLAND BUSINESS SAYS NO Canterbury businesses gave a strong message to a select committee on the employment bill in Christchurch yesterday. Heartland companies turned out in force to show their disapproval of provisions that would drag them into multi-employer agreements or prevent them from paying good wages to staff on individual contracts. Their fears of being fined for rewarding staff on individual agreements were confirmed when they heard the Manufacturing & Construction Workers' Union tell the select committee that it would prosecute any employers who did so. "Our members say they have had enough Government intervention in their lives," Canterbury employers boss Peter Townsend told the committee. Contact: petert@cecc.org.nz .

HOLIDAY BLUES The complicated new Holidays Act comes into force next week, with subtleties still yet to be discovered by hapless employers. A biggie: all employment agreements, individual and collective, that roll wages and allowances together for ease of payment will have to be undone. This is to take care of the costs associated with the new requirement to pay time and a half on public holidays (the new Act says payment must be made in the pay period in which the public holiday occurred). So as well as the extra cost for the employer from the new time and a half rule, there's the additional cost of fiddling round with employment agreements. Remarkable, from an Act that was meant to simplify holiday pay. Contact your regional business association EMA Northern, EMA Central, Canterbury Employers' Chamber of Commerce or Otago-Southland Employers' Association to obtain the Guide to the Holidays Act or for training on the new Act's requirements.

EMPLOYEES FAVOURED OVER CREDITORS Two Acts were passed this week that give priority to employees over unsecured creditors in liquidation and insolvency situations. The Companies Amendment Act gives preferential treatment to wages, holiday pay, redundancy pay and reimbursement payments ordered in personal grievance cases, up to $15,000, before unsecured creditors' bills get paid. The Insolvency Amendment Act gives priority to unpaid wages, holiday pay, redundancy pay, any reimbursement ordered in personal grievance cases, child support payments and student loan repayments, up to $15,000, before unsecured creditors' bills get paid. The previous limit in both situations was $6,000, covering wages and holiday pay only. The two Acts are likely to come into force within the next 3 months. Contact: bburton@businessnz.org.nz .

EXPORT ORDERS PICKING UP Manufacturing conditions picked up in February, according to the latest ANZ-Business NZ PMI (performance of manufacturing index). The index increased 3.8 points from January to reach 55.2 for February (a PMI reading above 50 points indicates expansion and below 50 indicates decline) as firms returned to typical levels of activity following the holiday season. It was 2.2 points above the PMI of Feb 2003. Manufacturers surveyed remained concerned about the high dollar, though a number reported a pick-up in export orders. Contact summers@businessnz.org.nz .

MAORI WORK SKILLS A conference on meeting training needs of Maori is being held in Mangere next month. Most working Maori have not undertaken tertiary education and demographic changes mean Maori will make up a large proportion of the workforce in the future. This conference will look at how they and their employers can lift skill levels and improve productivity. Info from: www.kawaultd.com/wawcs018928/8928.html or jbaker@businessnz.org.nz.

GROWTH STATS

GDP FOR DEC 2003 QUARTER

* GDP rose by 0.6% in the Dec 2003 quarter, a little less than most forecasters had expected. This reduces annual growth to 3.5% for the Dec 2003 year.

* Service industries, up by 1.5%, contributed most to economic growth. Manufacturing activity showed little change during the quarter, while activity in the primary industry and the construction industry declined.

* Household spending remained buoyant, up 0.8% for the quarter, although investment in new housing fell by 3.1%.

* Business investment increased by 3.7% in the quarter, the increase largely due to increased spending on imported plant, machinery and equipment - up 10.6%.

* Export and import volumes both rose, with dairy export volumes rising particularly strongly - up 24.6% for the quarter. The main factor behind the increase in imports was a rise in imports of machinery and electrical equipment.

* EXPORT VALUES PROMISING

* The provisional value of merchandise imports was $2,394m in Feb 2004, up 3% compared to Feb 2003. Importation of several large aircraft was the main factor in the increase; these were partially offset by a 20% reduction in crude oil and petroleum imports (the large reduction is a measure of irregular, large shipments of oil).

* The major surprise was a large early estimate for Feb exports of $2,530m, up 9.5% on Feb 2004. This should be treated with caution, however, as Customs has moved to a new document lodging system making early estimation trickier.

* The large increase in exports was recorded despite an 11% increase in the exchange rate over the previous year as measured by the Trade Weighted Index. This implies that export volumes are growing at robust levels, despite the high dollar.

* The early estimate of exports results in an estimated surplus of $136m for the month of February, which is quite a turnaround compared to the very large deficits recorded in recent months.

* The release of Feb Exports data is due on 5 April.

REDUCED CURRENT ACCOUNT DEFICIT

* In another positive trade data surprise, the seasonally adjusted current account deficit decreased by $396m in the Dec 2003 quarter.

* Increases in foreign tourist expenditure, increased tax receipts from non-resident withholding tax on dividend payments and increased returns from goods exports were the main factors in the reduced deficit.

* The current account deficit for the year ended Dec 2003 was $5,936m.

* Most forecasters were expecting an increase in the current account deficit from 4.6% to around 5% of GDP, but it fell slightly, to around 4.5% of GDP.

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* MORE TOURISTS, FEWER MIGRANTS

* There were 238,000 short-term overseas visitor arrivals during Feb, up 7% on February 2003, each staying an average of 23 days in the country.

* The change in timing for Chinese New Year from February to January resulted in large falls in visitors from China and Hong Kong. However, there were 22% more visitors from Australia, 13% more from the UK, 16% more from Germany, and 10% more from Korea.

* There was an increase of 32% in the number of New Zealanders departing on short-term overseas trips, with large increases to Australia (up 34%), India (up 95%), China (up 44%) and Fiji (up 24%).

* Permanent and long-term (PLT) arrivals exceeded departures by 3,400 in Feb 2004, compared to 6,700 in Feb 2003.

* There were large net annual inflows from the UK, China, India and Japan. The net outflow to Australia was 10,600.

* Falling net migration should have a dampening effect on the domestic economy, but the rate of decline appears to be slower than the Reserve Bank and Treasury have been forecasting, perhaps indicating that official forecasts for growth in the domestic economy for 2004/05 have been a little pessimistic.

WHAT'S NEW on www.businessnz.org.nz

* ANZ-Business NZ PMI for February 2004

* Business speaks out

* Growth claims not supported

* Use tax policy to get growth

ENDS

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