P u b l i c ation of the Employers & Manufacturers A s s o c i a t i o n I n c
Issue 124 – April 2015 $6.30
BusinessPlus news | advice | learning | networking
Ross Roof Group celebrates 25 years
Inside • 3 vital features on innovation and R&D • How you can prevent losses: New thinking • Obituary - Sir Don Rowlands: Exemplary leader • All the latest employment changes • Sexual misconduct at work?
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On the cover...
The Employers and Manufacturers Association (Northern) Inc 159 Khyber Pass Rd, Grafton, Private Bag 92066, Victoria Street West, Auckland 1142 Ph: 09 367 0909 or 0800 800 362
Ross Roofing Group directors celebrate their 25th anniversary with a Russian customer, centre, Yulia Izvoschikova. At left is Michelle Baskett and Siva Mudaly and right, Cameron and Steven Ross. Their story on page 27
Email: ema@ema.co.nz Website: www.ema.co.nz Chief Executive: Kim Campbell Manager, Advocacy & Industry Relations: Mark Champion Manager EMA Learning: David Foley Manager, Strategy & Enterprise: Mauro Barsi
CONTENTS Advocacy
advice
04 Checking up on Australia
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Enforcement of minimum employment Standards to be strengthened
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Holidays Act calculations scrutinized for underpayment issues
05 Top business priority is to boost investment in R&D
13 in the lobby:
Potential for growth from export of services
Waikato Denis Quigan 07 823 9311
mob 027 203 0694
Russell Drake 07 838 0018
mob 021 686 621
back in the house
news
Bay of Plenty Terry Arnold 07 575 8401
13 Standards and Accreditation Bill
mob 021 662 656
Rotorua / Taupo / South Waikato / Whakatane Clive Thomson 07 348 0334 mob 0274 372 808
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Letter
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OBITUARY: Sir Don Rowlands, business and sports leader extraordinary
21 Ready to work passport goes to pilot stage
BusinessPlus Editor Gilbert Peterson Ph: 09 367 0916 gilbert.peterson@ema.co.nz Writer Mary MacKinven mary.mackinven@ema.co.nz
export 22 Go Global is back!
Ripeka Mikaere Advertising Sales Colin Gestro (09) 475 9313 colin@affinityads.com ISSN No. 1176-4953
Analysing patterns to prevent losses
12 employment chat:
More shifts for casual part timers, and dismissed for sexual misconduct!
16 TAX TIPS:
Booting R&D tax issues around
16 Tax modernisation programme launched
16 Tax collection on employee share schemes examined
23 Letter from Australia: Australia is predictable, especially with the right data.
features 19 retirement: Health and fitness... for the rest of our lives
Designer
10 RISK MANAGEMENT:
24 TRAVELLING WITH A PURPOSE: Are import tariffs a
Roger L Martin to visit
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necessary step for a developing nation? David Lowe reports
25 member noticeboard:
Villa Maria most admired wine brand in New Zealand, 4th in the world
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27 PROFILE: Roof tiler rebrands, expands
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ADVOCACY at work
EMA’s team of advocates delivers your concerns as the collective voice of business in the region to Government and local councils. Your membership of EMA gives your business that voice and adds strength to our collective representation. In addition, you benefit from the lobbying work of BusinessNZ of which EMA is the biggest shareholder.
Checking up on Australia EMA has been visiting similar business associations in Australia to learn lessons and gain ideas to improve our own services for members. The delegation to Australia comprised EMA, the largest shareholder in BusinessNZ, Kim Campbell along with other representatives of BusinessNZ including Business Central, Canterbury Employers Chamber of Commerce and the Otago-Southland Employers Association. EMA’s chief executive Kim Campbell and Mark Champion manager of advocacy and industrial relations, Mark Champion, were on the study trip to Melbourne, Adelaide, Sydney and Canberra. They discovered EMA’s counterparts there offer a similar suite of services and a campaign-driven approach to advocacy. EMA’s biggest and very successful campaigns have been “Rev Up” to increase transport funding and “Fix Auckland” leading to improved local government governance. Facebook abuse
EMA was called for its take on the highly publicised “offensive cake/ Facebook” employment story. The Human Rights Review Tribunal ordered Hawke’s Bay’s NZ Credit Union Baywide to pay a former employee $168,000 for a breach of privacy which caused “severe” humiliation, loss of dignity, injury to feelings and harm to her future career prospects. A photo of a cake she had baked and inscribed with insults to her former employer ended up on Facebook. The company used another employee
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to take a screenshot of the friendprotected image of the cake. The company then contacted recruitment agencies in Hawke’s Bay to warn against employing the cake-maker. EMA chief executive Kim Campbell was reported widely on NZME news sites saying the case was extreme and unique but proved any employers who considered trashing a worker’s reputation should think again. “If you do anything with [malicious] intent and don’t go through a transparent process, you’re liable to get yourself into trouble and ... probably rightly so,” he said. Mr Campbell said the rude cake was only intended for “internal consumption”, so to speak. The case showed employers should not abuse their power to circumvent social media privacy settings. “I’d be quite disappointed if there were a lot of employers who set out to wreck people’s career in a malicious way.” He did not believe the ruling would have a chilling effect on employers using Facebook to vet current or prospective employees. But it was a reminder all companies should ensure social media policies were clearly explained to employees. However Mr Campbell said many companies were still struggling to understand social media, let alone articulate a coherent social media policy for their organisation. cricket and pay rates
EMA was quoted on RadioNZ saying most businesses knew the Cricket World Cup semi-final game where New Zealand played South Africa was a special day, and likely to be pretty lenient with staff distracted by the game. EMA chief executive Kim Campbell said, “I think most employers recognise it’s a really important day for New Zealand, and if they can, they’ll set up a TV in the lunchroom.” But Mr Campbell warned workers not to skip out on their job. “If somebody doesn’t attempt to be
at work and goes to the pub to watch it, they better make sure they’ve had a conversation with their employer beforehand. Pay rates were also a hot topic when Statistics New Zealand released its latest figures. In The New Zealand Herald, spokesman for EMA Gilbert Peterson said, “Inflation is below 1 per cent - and this creates a really positive increase in pay since pay rates have increased by nearly 1 per cent more than that. “Of course this is not enough but it’s a real increase. To have wage movement significantly above the inflation rate is very positive.” Voice to government
EMA has submitted views on your behalf to Auckland Council and the Commerce Select Committee of Parliament. The issues and the highlights of the submissions follow: • On the Standards and Accreditation Bill. We support the Bill’s principles but have concerns around the nature of representation on Standards setting at international level. It’s critical Standards NZ is involved in setting Standards, eg, to help exporters enter international markets. • On the Auckland Council Draft Long Term Plan. The city rail link is a top transport priority to be expedited. We support a 3% rates increase over 10 years, if Auckland Plan projects are delivered. The business differential should go. Extra funding should be from Council asset sales and Government top-ups. • On the Auckland Regional Land Transport Plan. This document makes dismal reading. The levels of improvement predicted by adopting the Auckland Plan network are unambitious and inadequate to resolve Auckland’s transport problems. The Auckland Plan transport plan itself needs fundamental revision, with a mechanism needed to deliver greater funding.
ADVOCACY By Kim Campbell
Top business priority is to boost investment in R&D Last October after the general election, Economic Development Minister Steven Joyce was quick to state his top priorities for this parliamentary term. They were to lift private sector spending on R&D, address a shortage of engineers and IT people, and keep on track to boost exports from 30 to 40 per cent of the economy by 2025. So how’s that going? First, I would have thought the latter two objectives depend significantly on the former. If we can lift private sector investment in R&D, the other two will become more achievable. But Mr Joyce’s agenda is absolutely the right one. Figures just released by Statistics NZ show business investment in R&D increased two per cent a year from 2012 to 2014, less than GDP growth over that time. By far the majority of it was spent in the computer services sector with a drop off elsewhere. Slightly more encouraging were the numbers of researchers, technicians and the like. These increased about five per cent a year over the two year period. In three blogs in February the chief economist of the Ministry of Business, Innovation and Employment, Roger Proctor, succinctly made the case why R&D is so important. He posed the question: Where does income growth come from? Answer: Increases in productivity where new things are produced which people are willing to pay more for than they cost to produce, and producing new things we already produce with fewer resources. In a word, innovation. So where does innovation come from? Answer: Well, the business environment can have a lot to do with it. Mr Proctor wrote: “People working for businesses are continually trying to think of new and better ways of doing things.” They build on existing knowledge, but they don’t know if they will be successful, so “it is impossible …to optimize expenditure on innovation.” The importance of building our
capacity to innovate to achieve growth cannot be overstated; boosting investment in R&D, though not the whole answer, is certainly a major cornerstone for it.
“R&D by its nature invariably creates both a private as well as a public good. Likewise investment in innovation will in general boost productivity, able to be captured not only by the company undertaking the research, but also by the wider community where the company’s stakeholders reside. Given this its no surprise businesses think incentives to invest more in R&D would give their performance the most lift.” But increasing investment in R&D amongst our businesses is proving troublesome. A month after Mr Joyce made his pronouncement, a report by Grant Thornton International said, far from
making up ground, New Zealand was slipping even further behind our trading partners in our R&D commitment. A net 20 per cent of New Zealand companies were expected to increase their investment in R&D, the report said, much less than our major trading partners China (36 per cent), Australia (31 per cent) and the US (27 per cent). The Grant Thornton report confirmed what is widely known. The OECD publishes an annual report on the investment of its 31 member countries, Main Science and Technology Indicators and the 2014 edition, along with US National Science Foundation data from more countries, paints New Zealand in a depressing R&D light. Our commitment to R&D relative to GDP ranks us 21st in an eclectic group of nations at 1.3 per cent, below the world average of 1.6 per cent, behind Portugal (1.5 per cent) and the Czech Republic (1.9 per cent). On the bright side perhaps, we remain ahead of Russia (1.1 per cent), Turkey (1 per cent) and Morocco (0.7 per cent). Israel and Korea jointly top the list at 4.2 per cent. Understanding why New Zealand companies don’t invest more in R&D maybe over rated as an intellectual challenge; our businesses are as risk averse and canny as any of the trading partners we are compared to. But all of them can access big tax incentives to offset their R&D spend while we are one of the tiny few in the developed world that doesn’t incentivize R&D through the tax system. Our businesses also are fully aware of the reason most countries do this, which is that R&D, by its nature continued page 6 BusinessPlus
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NEWS
Roger L Martin to address Auckland conference Roger L Martin rated Number 3 as the world’s most influential business thinker and strategist is scheduled to present in Auckland on July 21. He is renowned for work on design and integrative thinking and strategy innovation, which will be addressed in his Auckland seminar. His Auckland seminar is entitled, ‘Playing to Win – How to make strategy work in a complex and unpredictable world,’ also the title of his most co-authored recent book. He has published 8 books in all and 20 articles for the Harvard Business Review. Roger, a Canadian, is credited as follows:
• Thinkers50 - Top 3 on the biannual ranking of the world’s most influential business thinkers, alongside Clayton Christensen (The Innovators Dilemma) and Kim Chan & Renée Mauborgne (Blue Ocean Strategy) • BusinessWeek - One of the 27 most influential designers in the world • BusinessWeek - One of the seven global “Innovation Gurus“ • Harvard Business Review - One of the 12 “Masters of Innovation” Roger has worked closely with company board’s at Lego, Boeing and Proctor & Gamble among others. EMA is pleased to be a partner of
LETTER I would like to make a brief comment on some of the tabled figures presented in the article ‘Pay trends for 2015 –steady as she goes’ in the March 2015 edition of Business Plus. Accurately determining meaningful pay trends is not easy, as the article’s author states at the beginning, but a table of ‘average movements’ by ‘Job Family’ is then presented which appears to be so far disconnected from the real general situation as to not be worth presenting at all, with the Local Authority ‘Job Family’ topping the charts with a staggering indicated 2014 average movement of 17%! Whilst it would be hoped that nobody is naive enough to believe this or some of the other figures in that table (retail sector pay rising by 10.1% whilst food retail pay falls by a similar proportion?).
Business Influentials in presenting Roger here. Emails promoting this event where you can register will be sent to you shortly
I fear that presenting such an outrageous increase for local authority pay is only likely to further fuel often misguided views that local authorities are not properly focussed on efficiency and cost savings. Dave Clibbery Chief Executive and Engineering Manager Otorohanga District Council The editor responds: I agree. Pay trends recorded over a single year are not trends at all. Previously BusinessPlus has run tables showing pay rates averaged over three year periods. Even then they should be considered as a guide. This year we didn’t have the three year average changes available. The ‘Job Family’ table should not be relied upon and our apologies.
continued from page 5 invariably creates both a private as well as a public good. Likewise investment in innovation will in general boost productivity, able to be captured not only by the company undertaking the research, but also by the wider community where the company’s stakeholders reside. Given this its no surprise businesses themselves think incentives to invest more in R&D would give their performance the most lift. Before the election Grant Thornton asked businesses what policies would best aid their growth. The answer from 89 per cent of them was they wanted incentives to invest in R&D. The same finding came through
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loud and clear in another survey at the same time undertaken by Export NZ. Business support for government incentives to boost their R&D investment rated at the top. Unfortunately these messages have been muddied by a steady bleating about what some see as corporate welfare going into business related science and R&D investment, and its true New Zealand tries to stay in step with other OECD countries, not through tax incentives for R&D as the great majority do, but through an elaborate system of grants made to businesses judged best able to make use of them. The corporate welfare camp argues this spending is misplaced.
They say if R&D is important to business success, businesses will invest in it to realize their ambitions for growth, and treat it as any other investment in such as capital plant or market development. But who cares what we call it. As far as national productivity is concerned, intervention works, and it works in spades through tax incentivized R&D as other countries are demonstrating. Unfortunately, our system of science related grants has opened a Pandora’s Box, and the struggle to close it may require an alternative policy route. More on that next time. Kim.campbell@ema.co.nz
OBITUARY
Sir Don Rowlands, business and sports leader extraordinary Don Rowlands, born 1926, passed away on March 18th. He began life in Owhango where his father was a sawmill manager. Sir Don’s work life started out as an engineering apprentice at McEwans in Auckland, then he worked for Mason Brothers Engineering where he began his rowing career as part of a business house competition. He worked for a time in Thames at Charles Judd Ltd before embarking on a 48 year career at Fisher & Paykel. Sir Don became chief executive and a director of Fisher & Paykel Industries for 23 years, from 1978 to 2001. He was also chairman then a director of Mainfreight, a director at Hamilton Jet, Progressive Enterprises, Nestle, Henderson Pollard and Champion. Sir Don was President of the Auckland Manufacturers Association in 1986/87 (now EMA) and President of the New Zealand Manufacturers Federation in 1988. Sir Don leaves behind his wife Lady Coralie, son David and extended family. We extend our sincerest condolences. Business achievements
Under Sir Don’s tenure of 23 years as chief executive of F&P the company: • Listed on the NZ Stock Exchange • Exported its millionth appliance • Purchased HE Shacklock • Developed the humidifier • Established F&P Medical in the US
• Launched the ‘Gentle Annie,’ and later the Smart Drive clothes washers • Joined the Whitbread round the world yacht race in 1989/90h • Built major manufacturing plants in Brisbane • Separated F&P Appliances from F&P Healthcare • Expanded markets to over 80 countries including Europe • Launched the two drawer dishwasher • Expanded international revenue to 70% of total revenue Rowing
Sir Don won nine New Zealand national rowing titles in the single sculls, double sculls and eights between 1948 and 1957. At the 1950 British Empire Games he won silver as part of the men’s eight, and in the Vancouver Games the gold medal in the men’s single sculls. Sir Don served as a New Zealand rowing selector between 1960 and 1977. He managed the national rowing squads at the 1962 British Empire and Commonwealth Games in Perth and at the 1997 World Rowing Championships. He was chairman of the organising committee for the 1978 World Rowing Championships at Lake Karapiro and patron of the 2010 World Rowing Championships there. Between 1974 and 1992, he was the New Zealand and Australian
0800 223 729 Ace Payroll for New Zealand employers.
Don Rowlands
representative on the International Rowing Federation. Honours
Sir Don was awarded an MBE in 1973 and a CBE in 1979 for services to rowing and business, and made a Knight Companion of the New Zealand Order of Merit in the 2015 New Year Honours. He was named a member of the New Zealand Olympic Order in 1991, the leadership award at the 2005 Halberg Awards, and inducted into the New Zealand Business Hall of Fame in 2014. Just prior to Christmas last year, Sir Don was also awarded the Order of Australia, Honorary Member General Division 2014. What others say
Sir Peter Snell said Don Rowlands worked by helping to empower others and “in my opinion [Don] is peerless as an administrator and no other champion athlete has matched his successful business career. “[His] contributions to New Zealand may be greatly underestimated because of his low-profile leadership style, which is to empower others and not take credit for accomplishments under his management.” A friend Phillip Nolan said: “He really does care more about what he is doing than himself, and that’s really what leadership is ... He is an extraordinary man and completely selfless.”
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ADVICE
Enforcement of minimum employment An increasing number of cases involving serious breaches have forced the government’s hand in developing a package of measures to strengthen the enforcement of employment Standards. The Ministry of Business, Innovation and Employment’s Labour Inspectorate is investigating breaches involving migrants and other vulnerable groups and systemic breaches. Migrant exploitation involves underpayment of minimum pay and other job entitlements and is often accompanied by such as sub-standard accommodation. Its reported to be particularly an issue in Auckland and the Canterbury rebuild. Not meeting minimum employment standards can result in economy wide dysfunction including: • anti-competitive behaviour • harm to New Zealand’s international reputation as a place to do business and work • low productivity workplaces • poor employment relationships The changes proposed will be reflected in an Employment Standards
Bill to be introduced into Parliament this year. Here’s a summary of them. Tougher sanctions
While penalties at the Employment Relations Authority will remain the same for minor to moderate breaches, more serious breaches, such as exploiting employees will be heard by the Employment Court and carry maximum penalties of $50,000 for an individual and $100,000 for a company. Other non-monetary sanctions include the public naming of employers. Individuals also face the possibility of being banned as employers if they commit serious or persistent breaches. Significantly, persons other than the employer will also be held accountable for breaches if they are found to be knowingly and intentionally involved. This could include officers
of the company, directors and other senior people in influential positions responsible for the management or administration of a significant part of a business. It could also include parties in a contractual relationship with the employer, for example a consultant who assists the employer manipulate a corporate structure to avoid compliance with minimum Standards. A person would only be liable if they are knowingly involved in breaching employment Standards. A person will also not be liable if they took reasonable and proper steps to ensure compliance, or if they reasonably relied on information supplied by another person. Clearer record-keepinG
The Employment Relations Act and Minimum Wage Act currently have different requirements for recording time worked and this can lead to
Holidays Act calculations scrutinized for The Ministry of Business, Innovation and Employment is seeking feedback from employers to obtain detailed information on the challenges in meeting the demands of the Holidays Act 2003. They want to know the difficulties with: • Recordkeeping • Variable hours • Additional payments • Payroll setup • Employee understanding of the Act Record keeping
Issues are: a) Setting the payment rate applying to annual leave. Holiday pay must be at
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the greater of ordinary weekly pay or average weekly pay. If this is not done it causes significant miscalculations, particularly where employees have worked variable hours, and/or their hours have included overtime rates. b) The payroll system not recording, or doesn’t have a function to record paid days. For the purposes of complying with bereavement leave, alternative holidays, public holidays and sick leave requirements. Employers must keep holiday and leave records for all employees for not less than 6 years. c) Employers must use relevant daily pay or average daily pay to calculate
bereavement leave, alternative holidays, public holidays and sick leave. If it is not possible or practical to calculate an employee’s relevant daily pay, or the employee’s daily pay varies in the pay period in question, an employer may use average daily pay. If an employer instead ‘guesses’ it is possible that it will lead to relevant daily pay being incorrectly determined. Employers must include all regular taxable payments in the calculations of payments for leave. If the regular taxable allowances, productivity, incentivebased payments or commission are not included in the payment for leave, the
ADVICE
Standards to be strengthened difficulties in assessing whether low salaried and piece workers are receiving adequate pay. Changes proposed address this issue by making recordkeeping requirements for wages, time, holidays and leave consistent across all employment legislation. Infringement notices will be introduced for clear-cut breaches of these obligations with a maximum penalty of $1,000 per breach and a cap of $20,000 for multiple breaches. The key requirement is for employers to produce a record of the number of hours worked each day in a pay period, and the pay for those hours. Employers will have some flexibility as to what form this record takes, but it must be in an easily accessible form available on request from a labour inspector. The additional tool for labour inspectors should also help reduce the need for proceedings at the Employment Relations Authority or Employment Court. More tools
Enhanced information sharing powers
with other regulators will be introduced for such as Immigration New Zealand, the Companies Office and Inland Revenue to improve the ability of labour inspectors to identify and investigate alleged breaches. Labour inspectors will also be able to request any record or document from employers they consider will help them determine whether a breach has occurred, for instance financial records or bank statements. All information shared will be subject to Privacy Act protections. Labour inspectors will need to have a reasonable belief that the records and documents they request will assist in determining whether or not a breach of an employees’ minimum entitlements has occurred. Changes to Employment standards cases
Currently the Employment Relations Authority has a statutory obligation to refer employment standards cases to mediation along with other employment
relationship problems. The issues with this approach are that alleged standards breaches are matters of fact to be determined rather than matters suitable for mediation. Mediation cannot provide the enforcement outcomes sought, and it can result in a case being prolonged if it ends up back in the Authority anyway. The Authority will still be able to refer Standards cases to mediation if they are mixed up with other employment relationship problems, or if it considers that mediation will contribute constructively to addressing a problem. However the statutory obligation to direct Standards cases to mediation will be removed. The changes mean more employment standards cases, particularly those of a more serious nature, will be resolved at the Authority or Court. The ability for an employee to seek a penalty for minimum entitlement breaches will be extended to breaches of the Minimum Wage Act and Holidays Act. Currently this is only possible for breaches of the Wages Protection Act.
underpayment issues employee will likely be underpaid for their leave. Keeping on top of who works when Example: Changing hours means entitlements and payments will fluctuate. Simply paying an employee for any holidays or leave taken can lead to noncompliance. If additional payments are included Example: Are overtime, bonuses, other types of performance-based payments included in gross earnings? Are they regular? Payroll setup is integral to a wellfunctioning system and system maintenance is just as important Example: Is the system able to
calculate all the provisions in the Act and collect the necessary data? Employees also find the Act difficult Example: employees with the same job, but with differing hours can lead to differences in payments for leave and holidays. MBIE wants information on these to understand: • what, if any, specific calculation issues you are experiencing • how many employees are affected • the potential monetary value • why these miscalculations have occurred, and • solutions to address any errors. Non-compliance
The Ministry’s goal is to work constructively with employers, payroll providers and others to achieve consistent compliance with legislated minimum employment standards. If issues are raised concerning payroll systems, the Ministry’s approach will be to allow employers and their business support providers the opportunity to properly resolve any non-compliance without recourse to enforcement and/or penalties. Any information provided will be aggregated anonymously with information from other employers and payroll providers and unable to be identified. BusinessPlus
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RISK MANAGEMENT By John Barley
Analysing patterns to prevent losses The tempo is increasing as the business community seeks to understand the impending changes to the Health & Safety regime. The increased fines and the requirements for compliance are foremost in the minds of business owners and there is a degree of fear as we seek to avoid the penalties. But are we viewing the new proposed regime in the right way? Let me explain. Insurance policies are based on two provisos. The incident has to be: 1) Accidental, and 2) Unforeseen But think of it this way - if the loss was truly unforeseen the insurance companies would not insure the risk. Because the event is foreseen the insurers can measure the probability of the event occurring and thus they are prepared to insure the risk. The odds are in their favor. They know there is the probability of this type of claim. It’s just a matter of when. Many business owners are now focusing their efforts on raising their excess levels, increasing security and focus on risk management with the aim of controlling premiums and preventing another incident of the type which may have previously occurred. This is a subject raised in ‘The Failure of Risk Management’ by D W Hubbard. So what is the solution? The solution is “prevention” before the loss occurs. This is accomplished by analysis of the patterns in the immediate environment. It is about analysing the impact of the human element. Nothing happens 90% of the time unless there is human interaction with a physical object. For those who love the technical side….my research has considered the complexities of how the environmental factors impact over a period of time to create an event. But the ratio of “event” dollar loss to quantifiable value of loss is not a ratio of 1:1. The ratio is 1:3 due to flow-on consequences not normally appreciated. As time moves forward the ratio multiplies depending upon the loss. (Utilising the fundamental laws of nature) This increase takes into account known and unknown costs. I have
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used the formula for the volume of cone (see diagram). The base of the cone on the left contains the factors of the environment that will come together over a period of time to cause the event. The need to understand the patterns within the factors determines the ability to change before the event occurs. The solution is, basically, to prevent the loss from occurring by changing the patterns within the immediate environment by being aware of choices available. If preventative measures have not been put in place then the individual has clearly not stopped to think before the action - resulting in loss or injury to themselves and/or to others. So the Health and Safety Act is actually going to force us stop and think before we act. If we fail to do this and there is an incident, then business owners will be fined. I know which option I’d prefer. The great thing is that by thinking one step ahead of the prevention model, and looking more deeply at the issues that impact on overall organisational health (including employee health and business
culture), a business will often experience gains in terms of profitability and productivity. We are so excited about the spin off benefits possible that we are bringing Brian Fielkow (business coach, speaker and author of Driving to Perfection) to New Zealand later this year for a one day workshop. Brian has experienced these benefits in his business and will be sharing his experience on how he achieved increased profits and productivity, along with reduced claims and insurance costs. Businesses may be surprised at the outcomes that can be achieved through a change in thinking.
John Barley is CEO of Barley Insurances Ltd/RiteTrack www.barley.co.nz – insurance www.ritetrack.co.nz – loss prevention, resilience, productivity
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EMPLOYMENT CHAT
More shifts for casual part timers, and One of my casual employees is saying she doesn’t get enough shifts from me and now she is constantly unavailable when I ask her to work. Does that mean she has resigned? – Beth Dear Beth Always look at your employment agreement as signed by your employees to remind yourself of the legal situation, and who can do what. Casual employment agreements must be in writing; the casual nature of the relationship should be clearly articulated from the start. The nature of casual employment means there can be no ‘resignation’ because the employee can accept your offer of work, or not, each time you offer it, even if it’s offered on a regular or irregular basis. (See our guide, A-Z of Employing Casual Employees on ema.co.nz.) The Courts have maintained a strong disdain for employers who have seemingly used the label ‘casual’ incorrectly and as a means of avoiding their obligations under the law. Casual employment is work: • “as and when required”, and • where there are no fixed days or hours of work, and • offered though the employer has no obligation to offer it, and
• accepted when the employee has no obligation to accept it, and • where there is no continuity of employment, and • where the engagement is short and casual in essence. The casual employee has freedom of movement, in other words the right to accept or reject the offer contained in the roster. When a casual worker rejects an offer of work, they have not resigned. So if this person is not available enough, you will need to find other staff to cover your needs and let her know you are doing this and that further offers of work will be much less likely or not available at all (be as specific as you can). When engaging employees on a casual basis it is extremely important that the relationship is managed. Employment relationships can change over time so consider putting in place a review process to ensure you are satisfied the terms of employment reflect the real nature of the relationship. Some helpful management tools can be: • Differently coded or colour coded time sheets can help you separate permanent and casual staff from the shop floor through to pay roll, for different treatment; • Attaching the employment agreement to the casual employee’s timesheet can serve as a reminder of the terms of that relationship;
• Loading alerts and add-ons into your payroll software can assist you to review your casual employment relationships on a regular basis; • Providing an information sheet and tick box for line-managers who may be responsible for engaging and managing casual employees; • Making the correct management of casual (among other) employees a key accountability of the managers responsible for managing your staff.
We dismissed Henry for serious misconduct after we investigated a complaint from a customer who said he had been sexually harassing a number of women at their location out of town where he had to stay over. We said he had damaged the reputation of the business and as a consequence brought the business into disrepute. Then Henry claims unjustified dismissal. How can he? - George Dear George Where you suspect an employee has committed misconduct or serious
Advice and Support when you need it! We’ve got a team of advisors, lawyers and consultants who’ll do more than take the case - they’ll help you build a workplace for the future.
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A free, confidential telephone service providing employers with up to date, direct and practical advice.
Our member only resources allow you to download templates for all the difficult jobs that face employers - like Employment Agreements and OH&S.
Free call AdviceLine, NZ 0800 300 362, AU 1800 300 362 or visit our website, www.ema.co.nz
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EMPLOYMENT CHAT
a dismissal for sexual misconduct! misconduct it is critical that you investigate your concerns sufficiently. Also consider the weight of the customer’s complaint: How much detail did she provide and did she take any action against Henry such as a trespass notice? How serious was the alleged harassment? It is also important that all relevant information is given to the employee in advance of any investigative/disciplinary meetings, so he has an opportunity to consider that information and respond adequately to it. The Employment Relations Authority might rule that the decision to dismiss was not the action that a fair and reasonable employer could have made. At this point in time you need to review your investigation and dismissal procedures (with the help of our employment relation consultant if you like) and consider mediation and settlement.
I have tried and tried to get Leo to follow instructions but he won’t always, and this leaves a backlog of work for other people, and so I’m firing him. Anything wrong with that? – Andy Dear Andy Are you sure your instructions have been clear and understood? Does Leo
“All relevant information must be given to the employee in advance of any investigative/ disciplinary meetings
have the training and resources to follow instructions safely? Have you checked why Leo hasn’t always done what he was told? The fact that he is sometimes compliant and helpful and at other times not, suggests there are reasons that could be addressed. Check his employment agreement for clarity on his role and responsibility. Perhaps start with a chat with Leo about that, and if the issues continue, formal performance management may be required. If the matter ends up boiling down to insolence or a failure to follow reasonable instructions you could conduct a disciplinary meeting on those grounds. • By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s AdviceLine. All names are fictional.The information in this article is a guide only and not to be used as business
advice without further consultation. EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within New Zealand), and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email advice@ema.co.nz or read or print information such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, at www.ema.co.nz
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BusinessPlus
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IN THE LOBBY
Potential for growth from export It’s well understood that New Zealand needs to export more. Our population and marketplace aren’t big enough to generate growth just from domestic trading, and we need to sell more in overseas markets to increase our wealth and standard of living. There are many outstanding New Zealand companies doing just that producing goods for export, either as complete products or as components of international supply chains. Many companies are also exporting services - consulting, accounting, architecture, engineering, design,
production of physical goods. These are becoming increasingly important. Services such as research & development, design, engineering, distribution and marketing services add enormous amounts of value to manufactured products.
“OECD research shows barriers to the export of services are much more damaging than barriers to goods” communications services, intellectual property services, financial services and others. As well as goods and services, there is also a third category of exports – services that are used in the
OECD research* shows that services now add more value to manufactured goods than the physical components of those goods. This is an important issue for New Zealand, where far fewer businesses
export services than goods. The potential for growth from the export of services is vast, so what is holding back exports of services by New Zealand companies? The OECD research says the main barriers to export of services are restrictions on foreign investment (making it harder to raise capital to develop the business), lack of recognition of qualifications earned abroad (making it harder to access skilled employees), restrictions on the movement of people (making it harder to make international connections), and lack of regulatory transparency (creating red tape). These kinds of barriers are all within the power of the Government to remove. These are areas where EMA and BusinessNZ advocate to
Standards and Accreditation Bill back in the house The Commerce select committee has reported back to Parliament on the Standards and Accreditation Bill and made some recommendations. Changes to the Standards system aim to ensure it is viable and wellfunctioning and meets the needs of business, regulators and consumers into the future, said Commerce Minister Paul Goldsmith. “Standards underpin billions of dollars of exports and enable New Zealand firms to be internationally competitive,” he said. “They provide for access to markets, interoperability of technology, and give quality assurance for the products and technologies that New Zealanders use on a daily basis at home and at work. The main changes recommended by the Select Committee provide for a more flexible and proportionate approach to managing actual and perceived conflicts of interest for members of Standards development
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committees. They also make it clear that New Zealand will continue to be involved in the development of international standards. Key aspects of the Bill include: • Establishing a new independent statutory board to approve New Zealand Standards and membership of Standards development committees; • Retaining and strengthening key elements of the current arrangements, such as codifying in legislation the role of technical experts in developing Standards; • Locating the Standards development function in the Ministry of Business, Innovation and Employment ensuring closer alignment with government objectives such as economic growth, international trade, innovation and health and safety; and • Strengthening existing cost recovery, by providing for full
lifecycle costing of Standards and improved access to Standards. The Bill will also repeal the Testing Laboratory Registration Act 1972 and incorporate its provisions into the Standards and Accreditation Bill. Minor changes aim to better reflect the Testing Laboratory Registration Council’s accreditation activities, including renaming the Council the Accreditation Council. The Bill now heads to Parliament before finalising and passing into law. Standards New Zealand and the Standards Council will continue to provide support for Standards development, approval and access during this time. EMA has been deeply involved in the re-design of the Standards system from the outset. For more information visit http://www.med.govt.nz/business/ standards-conformance/standardsand-conformance-infrastructurereview
Phil O’Reilly
of services Government for improvement to relevant laws and regulations. The OECD research shows such barriers are much more damaging to services than to goods. Services most harmed include computer services, legal services, air transport, maritime transport, telecommunications, financial services and insurance. Basically, these are ‘connector’ services - connecting people, companies, cities and countries so that information, ideas, finance, goods, services and people can flow between them. This interconnecting and enabling role of services makes them more vulnerable to blockage by restrictive regulation. Services used in the production of export goods are particularly important because such goods increasingly originate from global value chains. Global value chains (GVCs) have
changed the world of manufacturing and exporting, and are undoubtedly the biggest element in international trade today.
services exported by New Zealand companies are not made uncompetitive through restrictions and barriers created by regulation.
“Branded international products are increasingly ‘made in the world’ from components and services sourced from many different places” Branded international products are increasingly ‘made in the world’ – they are made from components and services sourced from many different places. The process of manufacturing these products creates a chain of activities that can span many countries. Exports created from these global value chains can be more competitive than exports wholly originating in a single country, as long as all the inputs to the GVC are themselves competitive. That’s why it is important that
New Zealand goods rightly have a great reputation for competitiveness in international markets. Improving some of our regulations to ensure that services exported by New Zealanders are equally competitive will bring economic dividends. Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz
* The Impact of Services Trade Restrictions on Trade Flows OECD 2015
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TAX TIPS Jo Doolan
Booting R&D tax The OECD report into Tax Incentives for Research and Development: Trends and Issues tells us “Given the contribution of research and development to the productivity growth, economic performance and the achievement of social objectives, it is generally agreed that governments have a role in encouraging appropriate R&D levels and expenditure.” Successive NZ Governments have called for productivity growth and despite this our approach to encouraging R&D spending by the private sector has been treated like a playground seesaw and this has led to R&D being treated like a political football rather than a solid platform on which businesses can build. Words like “a value add economy” are easy to bandy around; in reality this requires a generational change and the essential element of this is certainty around the rules. National canned Labour’s R&D tax incentives in favour of personal tax cuts; and we are now in the third term of National and have a bill outlining the new measures that were announced in the last budget. . The Taxation (Annual Rates for 2015-16, Research and Development, and Remedial Matters) Bill outlines how the new cash out scheme for
R&D tax losses will apply for the income years commencing on or after 1 April 2015. The scope of this is rather limited and it is best described as timing rather than a permanent difference. To qualify you need to firstly to be
“If you spend on qualifying R&D then you can cash out your tax losses by claiming a credit in your tax return rather than carry these losses forward to offset against future profits” in a tax loss position and if you spend on qualifying R&D then you can
cash out your tax losses by claiming a credit in your tax return rather than carrying these losses forward to offset against future profits. If you are to be eligible, you also have to spend at least 20% of your total labour costs of Labour on R&D staff. You can contract out R&D however the amount spent on contracted R&D is a smaller amount, only 66% of actual is included for the purposes of the four tests included below. In addition the R&D (contracted or otherwise) must be performed in NZ and must be novel (cosmetic or routine changes won’t qualify). If you sell the intellectual property arising from the R&D then there is a claw back of the benefit and the tax loss is reinstated. The maximum amount of cash you can get is based on 28% of $500,000 of tax losses in the first year
Tax modernisation programme launched The first of two public consultations designed to modernise and simplify the tax system has been released. (BusinessPLUS will run a full report on the provisions outlined in the next edition) “We need to make tax simpler, “said Revenue Minister Todd McClay in launching the discussion documents. “New technology can help achieve that.” The first document, Making Tax Simpler – a Government green paper on tax administration seeks feedback by 29 May 2015. The second consultation document, Better Digital Services outlines proposals for greater use of
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electronic and online processes to allow faster, more accurate, and more convenient interactions with Inland Revenue. Consultation on that one closes on 15 May 2015. Mr McClay said “We are already working with New Zealand software development companies on solutions to simplify and significantly reduce the amount of time businesses spend on tax compliance. “A working group with 20 representatives from small, medium and large software developers has been meeting since October last year to co-design how GST and PAYE information can be transferred to IRD in the future.
“In tandem, IRD is working with MYOB and Xero on how we can simplify tax processes for small businesses. “The scale of the change proposed for the tax administration is unlike anything we’ve contemplated before and the proposals contained in the consultations launched will affect us all at some level. “This is your chance to help us build a simpler tax system because a simpler system is a better system” Mr McClay says. To make a submission or to read the full details of proposals, go to www.makingtaxsimpler.ird.govt.nz
TAX TIPS Claire Dilks
issues around ($140,000), with and the eligible loss amount of the loss increasinges by $500,000 a year until it reaches $2 million of tax losses in 2021; so at the top end in $2021 you can receive get $560,000. The obvious point is we are likely to have another change of Government by then and yet another R&D regime introduced. The tests are applied on a group basis that includes partnerships and look through companies. and any listed companies or groups with overseas companies, along with certain crown entities do not qualify. This is rather narrow as the benefits are really going to be limited to New Zealand resident start-up companies who do not have any offshore subsidiaries or overseas ownership. So in summary and assuming no foreign ownership or foreign subsidiaries, four new tests will determine the cash out amount The tax loss cap as outlined. 1. The company’s net loss for the year 2. The company’s total R&D expenditure for the year, and 3. 1.5 times the company’s R&D
labour costs for the year 4. The tax loss cap as outlined. Hats off to this one as the four tests are simple and this means the compliance costs will not be onerous.
what the Government should be encouraging? What is important is developing an intergenerational mind-set that appreciates the value of R&D to grow a value add economy.
“Cash is king, but the realm is small. These provisions are effectively an interest free loan from the Government...but using R&D as a political football will never create a platform with the certainty to achieve this” Cash is king, but the realm is small. These provisions are effectively an interest free loan from the Government. The cash flow benefit to start-up R&D companies is welcome. However, the limited scope of the regime is disappointing. Many New Zealand owned R&D businesses will be excluded due to dipping their toes into overseas waters. Surely this spirit of entrepreneurial growth is exactly
This is more than just fancy words. There is no question that we have to diversify and given the distance New Zealand is from the rest of the world this has to be through innovation. But using R&D as a political football will never create a platform with the certainty to achieve this. Joanna Doolan is a Tax Partner with EY and Claire Dilks is a Senior Tax Manager with EY.
Tax collection on employee share schemes examined An Inland Revenue officials’ issues paper is seeking feedback on options to simplify the way tax is collected from employees participating in employee share schemes. Revenue Minister Roger McClay said employee share schemes, where employers offer shares in the company to employees, are often used to encourage staff retention and motivation. The value of these shares is treated as an income substitute under the current tax rules, but unlike most employment
income, are not subject to PAYE. Instead, employees who receive share scheme benefits must file a tax return and account for the tax on the value of the shares themselves. Mr McClay said the rules appear onerous for employees, who may not realise they must file a return, and may also be a deterrent to participation in employee share schemes so “we are looking at options.” The issues paper, Simplifying the collection of tax on employee share schemes, seeks public
feedback on the scope of the problem, and suggests possible solutions, including whether shares should be taxed at source through the PAYE or FBT rules and whether either option should be compulsory. Officials are also interested in hearing from employers to find out how any possible changes to the rules might affect them, with a view to minimising any related compliance costs. The issues paper is at www.taxpolicy.ird.govt.nz BusinessPlus
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Keep your nger on the pulse Your people are one of your biggest assets. To make sure your business is performing at its best you need to get their pay and benefits ‘just right’. That’s where we can help. Using our market intelligence you can keep your finger on the pulse of market trends and act with confidence. The National Employers Wage and Salary Survey covers 216 positions. Our comprehensive reports include splits by industry, location and revenue bands: Salary reports: Reflect Salary ranges by position, location, revenue bandings and industry. Beneets and Conditions reports: Position specific analysis of benefits and conditions. You’ll find sample reports as well as a full list of positions and descriptions on our website.
www.nzsalarysurvey.co.nz The
National Employers Wage and Salary Survey is a joint venture between
RETIREMENT By David Shannon BusinessPlus Series: The fourth on Retirement Planning.
Health and Fitness ... for the rest of our lives We are fortunate to live in extraordinary times. Thanks to continuing medical and scientific advances, our lives are getting longer. A New Zealander born today has a projected average lifespan 20 years longer than someone born in 1925. For the first time in history, the number of people over 65 exceeds those under age 15. Our longevity is a remarkable achievement, but an aging society presents challenges as fundamental and pervasive as climate change. The real challenge we face is to adapt to a world built quite literally by, and for the young into a world that supports and engages populations that live beyond 100 years. Indeed, the very concept of our working lives ending in our 60s no longer makes good sense. While some may feel older people lack the qualities of younger people, they are ignoring a growing new resource right before our eyes: Citizens who have deep expertise, emotional balance and the motivation to make a difference. Watching our health
Unsurprisingly, our health is one of our foremost concerns as we age – and it becomes even more pertinent as we approach retirement. How we deal with our health at this stage of our lives is critical to the success of our retirement. The first crucial step is to understand what we are talking about as ‘Our Health.’ “Health is not just the absence of disease, but a state of physical, emotional and social well-being.” The World Health Organisation In considering the myriad health issues we may face in retirement, we must look at both our mental and our physical well-being. Sound mental health
Sound mental health is absolutely essential; it features three key elements:
• A sense of purpose which is achieved through service to others: hobbies and outside interests, recreational activities, involvement at home or in the community. • A sense of security and independence based on a combination of good physical health, sound financial resources, solid personal relationships, and support from friends and family. • Faith, spiritual belief, personal integrity and ethical standards – all of which can enhance mental health, particularly in challenging times. Sound mental health also depends on communion with other people at least some of the time. Warm, friendly relationships and having someone to talk to play a key part in what is going on both inside the family and in the community. On the other hand, happiness and well-being can be undermined by stress - which affects us all at some time in our lives. Stress affects us in different ways, leading to loss of sleep, depression and even illness. Growing stress is the most common indicator of more serious health problems. Developing a positive attitude is the first step in controlling stress. • Get to know yourself and your capabilities • Don’t push too hard; plan times where you are not rushing • Set small goals and celebrate their achievement • Enjoy yourself, learn to unwind, switch off and relax • Spend time at your favourite pastime or take up a new hobby • Practice a relaxation technique; learn to breathe slowly and deeply • Look after your physical health Four keys to good physical health
Professional health care is worth the investment in time and money. Regular check-ups are essential,
including for eyesight, hearing and dental. Physical activity not only helps us to keep fit, it is a great safety valve for stress. Our bodies are designed to move and they work better when kept active. Exercise should be regular and enjoyable. A healthy and varied diet. Allow yourself time to sit down to a proper meal at least once a day. Every day’s food intake should include vegetables, grains and fruits. Sleep. Simple - we need regular sleep Remember: • Old age does not necessarily mean health problems. Reducing health risks now means that many common “conditions” of old age need not occur. • The most important factor governing health is a positive mental attitude – optimists are healthier people! • If you are aware of any health problem, or concerned about any possible symptoms, seek advice right away. Don’t put it off. • A healthy lifestyle, the right weight, exercise, diet, relaxation, no smoking, and limited alcohol are the secret to longer life. In summary: Treat your body properly, and it will last you the rest of your life! In our Next Issue we will look at some of the options and strategies available for funding our retirement years.
For more information on Retirement Planning and the availability of Seminars for your employees, refer to the website www.pretire.co.nz or email rpseminars@xtra.co.nz or phone 04 567 7512. BusinessPlus
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INNOVATION
Industrial innovation under scrutiny The professor set out to answer the riddle why the role and importance of ‘low tech’ industries has changed only marginally over the past 10 years. He said they have demonstrated surprising stability yet they are often overlooked by the public and policy makers whose focus is on new technologies and high tech, and the next big thing such as a Google or a Xero. His research shows low tech companies are in fact innovative, and high tech, but in quite specific ways. But first some definitions from the OECD which catalogues industrial sectors by their R&D intensity. These are: High-tech - R&D ratio of expenditure/turnover>5% Aircraft and spacecraft, Pharmaceuticals, Office accounting and computing machinery, Radio, TV and communications equipment, Medical, precision and optical instruments
Medium-high-tech - R&D ratio of expenditure/turnover>5%- 3% Electrical machinery and apparatus, Motor vehicles, trailers and semitrailers, Chemicals excluding pharmaceuticals, Railroad equipment and transport equipment, Machinery and equipment n.e.c.
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Photo courtesy of the University of Auckland Business School
Professor Dr Hartmut Hirsch-Kreinsen of Germany’s Dortmund University who is visiting Auckland University explored current thinking on so called ‘low-tech’ industries and why they remain fundamentally important to economic success at a seminar last month.
Profess Hartmut Hirsch-Kreinsen
Medium-low-tech - R&D ratio of expenditure/turnover>3% - 0.9% Building and repairing of ships and boats, Rubber and plastics products, Coke, Refined petroleum products and nuclear fuel, Basic metals and fabricated metal products Low-tech - R&D ratio of expenditure/ turnover>0.9% - 0% Manufacturing n.e.c., Recycling, Wood, pulp, paper, paper products, printing and publishing, Food products, beverages, and tobacco, Textiles, textile products, leather and footwear
Professor Hirsch-Kreinsen pointed out just 7% of employment is in the high tech sectors in Europe - 93% are employed almost evenly across the other three sectors: low tech, medium high, and medium low tech sectors. The finding flies in the face of the view that knowledge is a productive force with competitive advantage achieved through high-tech products and with new technologies and hightech sectors as the engines of growth. The professor itemized the innovation strategies and economic benefits that are adopted and delivered by the lower tech industries. These include: • Step-by-step product improvements • Incremental product innovations • Small batches but also large scale production • Relatively stable market segments • Very often regional linkages and close proximity to important customers • Flexible and fast delivery capabilities • Only limited level of automation • Semi-skilled or unskilled a ‘taylorist’ work organisation
NEWS
Ready to work passport goes to pilot Today’s employers looking for a range of skills in the students they want to employ may not find any way to assess them from their school report. The skills sought after are as much about employability and work readiness which schools to date don’t score students on. So EMA joined forces with COMET, Auckland Council and other organisations to develop a work ready passport, a “Licence to Work.” The Licence to Work is your Certificate of Employability, a way for youth and employers to assess and verify a student’s employability skills. EMA has found that to get youth engagement about their future careers more effective school-towork transitional arrangements were needed. In our Election Manifesto EMA also called for an Employment Readiness Certificate to be issued to all students leaving school, so a meaningful assessment can be made available to employers of their skills in reading, writing, mathematics, on time attendance and attitude. The Licence
to Work answers this need. The employability skills in the Licence have been categorised as either essential and desirable. Essential skills are: • attitude • communication • team work • willingness to learn and • commitment.
Desirable skills are: • motivation, • thinking, • self-management and • resiliency. Work readiness skills also includeacademic, technological, support, transport, safety, health and well being, career knowledge, work search skills, work readiness, work experience and work ethic. The next stage in the project to run a pilot study on the Licence for term 2 at Tangaroa College, Sir Edmund Hillary Collegiate, Papatoetoe High School and STRIVE Community Trust. Facilitators from Careers NZ are being trained to implement the development of employability pedagogy and a process for observing and learning from implementation which involves the teaching of employability and work readiness skills for students. EMA’s Pathways to Employment Trust is a contributor to this project. Members enquiring further information please contact Michael Burgess at michael.burgess@ema.co.nz
They also have customer-oriented strategies which: • Target flexible innovations at turbulent market segments and for specific demands • Upgrade functional and technical aspects of products, using intelligent and continuous modification of existing products • High proximity to customers • Skilful branding strategies and the expansion of product-related service activities • Low costs and high flexibility based on specific process capacities (eg logistics) and a flexible work organization Their processes may be specialised for example in: • Companies with highly automated and integrated manufacturing processes continuous optimization of process technologies • Outstanding technological capabilities mostly of the
production management and the skills of staff on the shop-floor • Constant improvement of the product quality quasi as a byproduct • Low costs and high quality of products based on the outstanding process capacities and a skillbased work organization They also work at developing specific and new manufacturing capabilities in: • R&D • simulation • deepdrawing • welding • assembling The professor noted that policy makers and the public frequently underestimate or ignore the relevance of practical knowledge where: • Innovation is part of the ongoing internal process • Innovation as a ‘trial and error’ process • The high value of learning by
doing and ‘learning by using’ • The capability to manage networks and cooperate with external partners He emphasised the capacity to integrate external knowledge and high-tech components is highly valuable but not measured. The associated skills to monitor and evaluate external technological development, and network with hightech firms and scientific organisations, are likewise undervalued. Furthermore low tech firms are the recipients or buyers and users of hightechnologies and they also transfer, communicate and act as carriers of high-technologies. The professor said the implications of the research should aim to remedy the shortfall apparent by focussing on low-tech’s practical knowledge and absorptive capacities, especially of SMEs, and support the development of their networking and integrative capacities. BusinessPlus
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Go Global is back! Go Global is back with more stories from New Zealand export stars who have made it on the world stage. What sets them apart in international markets? Learn from their hard won experiences taking their products to the world. Here we list just a few morsels of information from what our key confirmed speakers will be giving you at Go Global 2015. Hunter
Jane Hunter, known around the world as the First Lady of New Zealand Wine, is owner, viticulturist and managing director of Hunter’s Wines since 1987. She has lead the company to outstanding local and international success as one of New Zealand’s ground-breaking premium wine labels. Through Jane’s strong determination, together with the talents of her winemakers James Macdonald and Inus van der Westhuizen, and General Manager Peter Macdonald, the original Hunter vineyard area has increased by 4 times its original size and the company’s annual output has grown to around 100,000 cases of wine, of which 90% is exported. Jane has been honoured with an OBE in 1993, recipient of the inaugural Women in Wine Award in the UK in 2003, a Companion to the New Zealand Order of Merit in 2009. Magic Memories
John Wikstrom is passionate about evolving the importance of guest memories, and how a well-designed experience
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can layer across an entire attraction improving the guest experience, extending attractions brands, and be a significant revenue earner AFT Pharmaceuticals
Dr Harltey Atkinson developed a world-first patented combination analgesic, Maxigesic®. For him R&D is a passion, particularly in the area of orphan drugs (those needed for rare conditions). AFT Pharmaceuticals is currently developing four key IP based developments and has out-licensed its technology to over 40 countries where sales will contribute over the next years, significantly transforming AFT’s business. His company is targeting over $80 million in sales this year. Alan Gourdie - Designworks
Alan Gourdie is a specialist in business strategy, brand design and marketing automation focussed on the branded food, telecommunications and services sectors. Typically he has worked with international companies wishing to reach into new global markets and deploy contemporary brand, product and channel development practices. Current clients include Fonterra, Griffins, Burgerfuel, Supershuttle, Designworks and The Warehouse Group. The Snowball Effect
Snowball Effect is New Zealand’s leading equity crowd funding platform. Snowball Effect launched New Zealand’s first offer in August 2014, and has since raised over $5 million for 6 companies. All offers have been successful to date. Josh Daniell began his professional career as a corporate lawyer with a
focus on M&A, public securities offers, and commercial law. He then started and operated a freelance business consultancy, Soup Kitchen. Building on his passion for early stage businesses and the fast-growing crowd funding phenomenon Straker Translations
Straker Translations is well on its way to achieving a growth rate of 50% a year having cracked Grant Straker the online advertising market by leveraging sales from Google AdWords, among other streams. Register for Go Global at www.nzgoglobal.co.nz
Hear about the latest innovations and technology trends relevant to NZ exporters. Our mix of keynote speakers and discussion sessions allows you more opportunity to engage with exporters and those who support them. Remember to check for updates and the final programme which is available now. Save the date in your calendar, register today and we look forward to seeing you at Go Global 2015.
Letter from Australia Marketing Specialist Bella Katz
Australia is predictable. Especially with the right data. Recently I wrote about the pressure being exerted on New Zealand suppliers by Coles and Woolworths. The same pressure that their Australian suppliers know all too well. Not long after, I also wrote about the clothing industry and the onslaught of international players opening flagships across Australia. Again squeezing the life out of some Aussie brands. Like you, Australians are anxious about the future of their business and, given the constant arrival of new global brands, are asking: If an equally good, or much better product in our category hit Australia tomorrow – what would we do? For those New Zealand companies whose major trading partner is Australia, I imagine that same question is a big part of the business strategy. With multiple scenarios and contingency plans created. Despite what’s in the news right now, I feel like this moment is as good a time as any for New Zealand companies and Australian business opportunities. For the right company and product, there is always a market. For those armed with knowledge, there’s a market for good New Zealand products and services right now. Over the years, I’ve found that there’s one main attribute emerging from every successful company I write about. The
business leaders are big proponents of investing in research. They can predict the market behavior their niche customers are likely to take, products they’re likely to buy and distribution channels they’re likely to use. Several years ago an architectural hardware company I worked with was preparing to exit from the restoration niche, a niche they had built their name in. Market share was down significantly and they believed restoring houses authentically was a thing of the past. What the research revealed, however, was that restoration still had a very strong niche. But because of various internal business issues and failings, they had lost market share to a competitor previously off the radar. On the flip side, several stories I’ve recently read remind me that when users of research do it well, they do it frighteningly well. Firstly, Amazon and its extraordinary ‘anticipatory shipping’. Amazon’s data and data usage is so advanced that apparently it can predict what you will purchase and when, before you’ve consciously made that decision yourself. Amazon then preships your product to a warehouse close by, in anticipation of the imminent day you order it. Secondly and equally impressive
is Netflix and the way it understands what viewers want to watch on television. House of Cards, far from being an accidental hit, is the result of such powerful data mining that the combination of a) political drama b) Kevin Spacey c) David Fincher and d) binge TV viewing was predicted to be a success before you knew you wanted it. You may not have the capabilities of Amazon or Netflix, but industry research, even at its most simple, is a business tool you need in your armoury. Don’t let Australia become unpredictable to your business and unravel a genuinely good product or service that you have.
• Bella Katz is an Australia-based brand and marketing consultant and advises New Zealand companies exporting to Australia. She is also a New Zealand expat, calling Australia home for over a decade. +61 (0) 410 400 657 bella@bellakatz.com.au Bella on LinkedIn www.bellakatz.com.au
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TRAVELLING WITH A PURPOSE By David Lowe Part II of our reports from our man in Timor Leste , David Lowe, who is serving a two year VSA stint in Timor L’este. David was formerly manager of advocacy and government relations for EMA
Are import tariffs a necessary step for a developing nation? Timor-Leste’s private sector has been raised on Government reconstruction contracts funded by the oil and gas in the Timor Sea. In doing so the Government has created a dependence on itself which means the private sector often sees Government as the solution to its issues. This dependence means the business sector is ill equipped to deal with the time when oil and gas will run out, and Government can no longer single-handedly turn the economic wheels. Shortly Timor-Leste intends to join the ASEAN Free Market, the timing for which worries the Timor-Leste Chamber of Commerce. Joining ASEAN?
The pig pinched my jandal off the porch and ate it.
Local businesses are not yet in a fit state to foot it with the experience of businesses from the wider ASEAN community. There is concern foreign business will roll over the top of local business. Upskilling the Timorese has barely commenced and skilled migrants will have visa-free access to jobs that locals hope someone would train them to do. While there are always swings and roundabouts in these free market deals, in this case we have an entire nation, only 13 years old, being placed on the same footing as well developed nations like Singapore and Malaysia. An analogy is with youngsters playing rugby starting off with touch footie on half a field; once basics are learned they move on to tackle rugby with pushing in scrums coming later still. But shutting out the world is like not playing at all, and its not the answer. Timor-Leste needs time to wean itself off Government contracts and learn the ropes of independent, private business. Over $US300million of imports come from Indonesia each year alone, so it seems manufacturing must have some chance of success if only local
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BusinessPlus
manufacturers can get started. So import tariffs may have a place in Timor-Leste to enable local business to get underway, and importantly, those tariffs need sunset clauses to ensure they are part of development, not a protectionist regime forever. We all know they inevitably must come to an end at some point, and if tariffs are left in place too long, the transition to their end will be the more painful. The Government has just agreed to Heineken building a plant in TimorLeste – creating 1000 jobs - in a deal reminiscent of what New Zealand does to attract the film industry. While on the right track it is still a Government to Business deal, not a business to business deal.
SH1 in Timor-Leste
The roads
The nation’s roads are in such a state as to where Timor-Leste might aspire to develop an international Motor-X
team. Four wheel drives take up to 10 hours to cover 300 km. More important, businesses cannot get their goods to market. Instead families sit on dusty roads waiting for someone to stop and buy. Adequate roading is many years away from being solved. In the meantime rural subsistence farming families need a better future. There are many co-operatives designed to help, but they compete with each other delivering no real benefit for the farmer. Co-operatives
Staff at Chamber of Commerce Timor-Leste
Politely I was told that too often cooperatives take goods to market but the returns all just ‘disappear up in to the sky’. The Chamber of Commerce supports regulated monopoly cooperative arrangements in key sectors, such as coffee. Small farmers would have a guaranteed price and access to expert marketing and sales assistance with local collection hubs. Zespri and Fonterra are models. And if the produce and money disappear ‘up in to the sky’ it is clear where to look for it - the plan would be to implement a regulatory framework to resolve it. It is all about creating policy that meets the needs of the times. Tariffs and regulated monopoly cooperatives are not the end plan, but if any progress is to be made at all they seem to be necessary points on the journey.
Member noticeboard
Villa Maria most admired wine brand in New Zealand, 4th in the world Industry judges for one of the most respected global drink journals, Drinks International, has named Villa Maria as the fourth most admired wine brand in the world. And it was the only New Zealand winery to make the top 10 list. More than 200 of the world’s top masters of wine, sommeliers, educators and journalists took part in the annual poll, which pits wine brands from all regions, styles and qualities against each other. The experts measured the brands against the following list:
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The wine should be of consistent or improving quality. • Reflect its region or country of origin. • Respond to the needs and tastes of its target audience. • Well marketed and packaged. • Have strong appeal to a wide demographic. The editor of the World’s Most Admired Brands, Holly Motion, says, “The Academy is no longer turning to new brands, but rather drawing from a pool of established names that have proven themselves to be consistent, respected global leaders.” Sir George Fistonich, founder and chief executive of Villa Maria Estate, was elated with the accolade. He says, “To be number one in New Zealand and fourth in the world is truly phenomenal, especially considering there is estimated to be over 100,000 wineries globally. “It’s such amazing recognition for Villa Maria as well as New Zealand. New Zealand is a very young wineproducing country so to achieve fourth place, in such a prestigious competition, with old world leaders such as Torres, Chateau d’Yquem and Chateau Margaux is a huge source of pride. I’m incredibly proud.”
The top 10 wine brands:
1) Torres (Spain) 2) Vega Sicilia (Spain) 3) Penfolds (Australia) 4) Villa Maria (New Zealand) 5) Chateau d’Yquem (France) 6) Casillero del Diablo (Chile) 7) Ridge (USA) 8) Chateau Margaux (France) 9) Guigal (France) 10) Cono Sur (Chile)
International Business Award winners to address Go Global
Two of the big winners of the NZTE International Business Awards last month - Magic Memories and Miraka – are to present at the Export NZ annual conference Go Global on May 14th. Magic Memories swept up four awards including the coveted Judges’ Supreme Award for International Business, while Miraka took out the award for Māori Excellence in Export. Having these winners speak at Go Global will really add value for everyone attending the conference, said Catherine beard, Export NZ’s National Manager. “Learning direct from them how they achieved their success and what they have learnt from their experiences along the way is priceless value,” she said. Other star speakers at Go Global will include Jane Hunter of Hunter’s Wines and Alan Gourdie of Designworks. Register for Go Global at www.nzgoglobal.co.nz BusinessPlus
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Out & About Pictured at these EMA courses in Auckland: Team Leader Toolbox – Managing Team Productivity Issues, National Certificate in Occupational Health and Safety – Workplace Safety (Level 3), Mental Resilience – Reducing Stress and Building Mental Strength, Tailored Training for Auckland Transport – Quarterly Health and Safety Workshop, and Human Resources Management – an Introduction.
James Lee [Hanyang]
Barbara Hawkins [Douglas Pharmaceuticals] and Amelia Rowley [AWF Group]
Tracey Hudspith [Page Macrae]
Jada MacFie [Watercare Services]
Amy Donaldson [Orangewood]
Sharon Kane [Te Korowai]
Kim Forlong [Forlongs]
Steve Temple [Drill Force NZ]
Kathryn Harvey [Marketplace Media]
Grant Prujean-Smith [Amcor] and Mike West [Tapper Transport] Richard Davis [Auckland Transport]
Member noticeboard By Mary MacKinven
Roof tiler rebrands, celebrates 25yrs On its 25th anniversary making lightweight, durable metal roofing tiles adorning buildings worldwide, Metrotile has this month renamed the company Ross Roof Group after its founding family. The Ross family have been involved in roofing over four generations since 1942, one of the most experienced roofing businesses in New Zealand. Fourth generation owners Cameron Ross, sister Michelle Baskett and cousin Steven Ross are actively involved in the business in key roles as the sales director, HR director and engineering director respectively. Siva Mudaly joined the company in 2012 as general manager, and as a director last year. Metrotile and Tilcor are the two major product brands of the Ross Roof Group marketed globally, says Mr Mudaly. The Tilcor brand launched a few years ago is rapidly growing in Africa, Middle East and Europe, and being launched in America this year. The Metrotile foundation brand continues to expand its market share in other countries. The company recently expanded its factory at Takanini, Auckland increasing its manufacturing, warehousing and container handling facility. Trade Minister Tim Groser attended the opening in February. The factory is ISO 9001-accredited (for quality management) to manufacture tiles suitable for all climates and environments around the world. Metrotile and Tilcor Roofing Systems are manufactured to be watertight, fire and earthquake-resistant, and designed to withstand hurricane
The 25th celebrations at the Auckland Museum Observatory
The company won awards in the Deloitte Fast 50 Awards last year, for Fastest Growing Mature Business in Auckland and the Upper North Island. Mudaly stresses exporters need to take care to structure Ross Roof Group company director Steven Ross, centre left, hosts Polish and Kenyan customers at the 25th celebrations their manufacturing business and cost base to withstand exchange rate fluctuations. force winds up to 190kph. “If it’s structured on a low fx rate Staff numbers have also almost you can come unstuck when it moves. doubled and during the initial days of We are set up to be sustainable.” The scaling up production some came from company has its own sales offices in temping agencies to meet demand, says Dubai, Europe (Poland), the US and Michelle. The plant operates 24 hours a Japan. day, five days a week. Michelle admits it can be Mudaly says the growth is due to challenging employing staff overseas multiple factors but chiefly the focus – the Ross Roof Group has 10. on manufacturing a quality product Employers in New Zealand must using mostly New Zealand sourced raw follow the employment laws of the materials, and promoting these themes. country where staff are based, and He says, “The business is almost a this means consulting overseas-based household name in the roofing industry lawyers because no advice is available both in local and overseas markets in in New Zealand. more than 100 countries.” BusinessPlus
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