Businessplus August 2014 by EMA

BusinessPlus news | advice | learning | networking

Issue 117 – August 2014 $6.30

Publicatio n o f t h e E m p l o y e r s & M a n u f a c t u r e r s A s s o c i a t i o n Inc

Dry ice blasting...

Four dodgy tax schemes to avoid Big trade opportunities in Taiwan Exporters leave money on Macao tables In this issue: • • • •

Alert on domain name changeover EMA Starcard boosts fuel discounts 2014 IBM Best Work Places programme set to go The NZ dollar: Where to from here?

Tats @ work.. general scruffiness.. disagreements over KPI’s...

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BusinessPlus is published by : The Employers and Manufacturers Association (Northern) Inc

CONTENTS Advocacy 04 Product stewardship efforts never wasted

159 Khyber Pass Rd, Grafton, Private Bag 92066, Victoria Street West,

05 What’s stopping New Zealand from growing faster

Auckland 1142 Ph: 09 367 0909 or 0800 800 362

news

Email: ema@ema.co.nz

06 Starcard ups EMA discounts rate on

Website: www.ema.co.nz

fuel

Chief Executive: Kim Campbell Manager, Advocacy & Govt Relations:

06 Automated monitoring helps identify utilities trends

07 High alert on web site domain names

David Lowe Manager EMA Learning: David Foley

Manager, Strategy & Enterprise:

IN THE LOBBY: Northern business

and the election

19 How to lift world GDP two per cent

Mauro Barsi

- B20 Summit report

Waikato

20 COMMENT: The New Zealand

Denis Quigan 07 823 9311

mob 027 203 0694

Russell Drake 07 838 0018

mob 021 686 621

Bay of Plenty Terry Arnold 07 575 8401

mob 021 662 656

Rotorua / Taupo / South Waikato / Whakatane

dollar: Where to from here?

22 EXPORT: ANZTEC throws open trade door to Taiwan

24 Letter from Australia:

Setting up an Australian advisory board

Clive Thomson 07 348 0334 mob 0274 372 808

25 Exporters to Macao leave money on the table

BusinessPlus Editor

features

Gilbert Peterson Ph: 09 367 0916

tax tips: How to fall foul of the IRD: four dodgy tax avoidance schemes

RAISING CAPITAL: The new rules for raising capital - disclosure, licensing and the New Market (Part II of the raising capital workshop)

gilbert.peterson@ema.co.nz Writer Mary MacKinven mary.mackinven@ema.co.nz Designer Ripeka Mikaere Advertising Sales Colin Gestro (09) 475 9313 colin@affinityads.com ISSN No. 1176-4953

26 member noticeboard: Measuring a home’s worth

26 NZ entrepreneurs launch

cloud-based editing app

27 Cool way to clean learning 08 The IBM Kenexa Best Workplaces programme

09 FISH! employee engagement success story

BusinessPlus news | advice | learning | networking

Issue 117 – August 2014 $6.30

Publication of the Employers & Manufacturers Association Inc

Dry ice blasting...

advice 10

EMPLOYMENT CHAT: Tattoos, general scruffiness, too long at coffee, and disagreements over KPIs

On the cover... Industrial cleaning using dry ice blasting has its advantages as EMA member Mike Coleman is happy to explain. His story is on page 27

Four dodgy tax schemes to avoid Big trade opportunities in Taiwan Exporters leave money on Macao tables In this issue: • • • •

Alert on domain name changeover EMA Starcard boosts fuel discounts 2014 IBM Best Work Places programme set to go The NZ dollar: Where to from here?

Tats @ work.. general scruffiness.. disagreements over KPI’s...

ADVOCACY at work

Product stewardship efforts never wasted Analysts from the Ministry for the Environment brought members of EMA’s Manufacturers Forum up-to-date recently with Government-supported waste projects, in particular recycling through ‘product stewardship’ schemes. Product stewardship schemes involve processes that help consumers get rid of a product at the end of its life in a way whereby its components can be re-used or recycled. Commonly such schemes involve consumers paying a levy in the purchase price so retailers can be incentivised to take back the goods for recycling. The Ministry is close to announcing its

…from Resene which has an accredited scheme

summary of consultation on proposals to introduce mandatory product stewardship schemes in terms of the Waste Minimisation Act 2008 for four priority product types: • electrical and electronic equipment • tyres; • agricultural chemicals and farm plastics; and • refrigerants and other synthetic greenhouse gases. If any regulatory measures are proposed, standard regulatory development provisions would apply (including the requirement to consult with potentially affected parties). You can read more including about the 12 accredited industry and company schemes, at www.mfe.govt.nz Discussion at the Forum included the likelihood of such schemes being rolled out compulsorily to other manufactured goods. Being just a number is good for business

Measures that reduce complexity in dealing with government agencies are welcome by business, including the proposal to make available the New Zealand Business Number to all firms, not just to registered companies as at present, EMA said in a media statement.

BusinessPlus

All registered companies were allocated a unique, 13-digit New Zealand Business Number (NZBN) last year to use in their dealings with eight Government agencies, with more expected in future. This means businesses can soon enter their identifying details once only, then refer to themselves by this number on all issues relating to such as ACC, Inland Revenue, Customs and Statistics NZ. Now the Government proposes to extend the NZBN to all business entities, including sole traders, partnerships, trusts, non-incorporated partnerships and State sector and notfor profit entities. EMA’s Kim Campbell, says, “The NZBN system provides companies with a consistent way of dealing with government agencies, and reduces the time and cost of doing so. “All this red tape can be a nightmare for small businesses, so anything that speeds it up is great. “The NZBN gives access only to key, public information that companies themselves provide. “Over time businesses will also be able to use their NZBN with business customers and suppliers, which could take the pain out of some documentation requirements. “It might also be good for exporters if Government extends access to the NZBN identifying criteria to Australian searchers and vice versa, as indicated,” Mr Campbell says. Immigration as a solution for labour shortages

Immigration Minister Michael Woodhouse discussed policy and his thinking around immigration law, particularly as it affects the availability of workers at EMA’s latest Employer Forum last month. The Minister explained that balancing labour market needs with wider business needs and the economy was not straightforward. Government policy always put the needs of New Zealanders ahead of immigrants. He works closely with the Ministers

of Labour and Social Development to make sure all parties’ needs are aligned, for example in relation to labour issues in the Canterbury rebuild. He said policy can’t be too loose, or so tight that it would choke off social, cultural and economic growth. EMA backs savings campaign and urges further tax cuts

EMA has backed the public campaign for cutting taxes on KiwiSaver earnings, but said it should go further. In EMA’s election manifesto (June 24th) we said the tax rate on KiwiSaver and other long term savings should be cut to 15% (as in Australia) and the $541 KiwiSaver tax member credit axed. EMA’s chief executive Kim Campbell said, “We want to see savings encouraged, not penalised. “The campaign is good for business investment as well for as those making the savings. “Businesses need Kiwis to save more so we have a bigger domestic pool of funds with which to build stronger businesses. “Doing this also means less reliance on borrowing overseas, and helps keep interest rates down. Detailed comment on your behalf

EMA’s expert staff has lodged submissions with the government on: • The Ministry for the Environment’s consultation on Priority Waste Streams; • The Ministry of Business, Innovation and Employment discussion on introducing a ‘Bounded Public Interest Test’ into the New Zealand anti-dumping and countervailing duties regime; • The IRD’s income tax scenarios on tax avoidance; • Auckland Council’s vehicle parking proposals; and • The draft health and safety law regulations of MBIE. Our submissions show support where warranted. They also question costs to business either implicit or explicit, and suggest alternative processes or sources of revenue.

ADVOCACY By Kim Campbell

What’s stopping New Zealand from growing faster (First published in NBR)

Back at the start of this year the Reserve Bank governor Graeme Wheeler said: “We estimate that over the last two years potential output has grown by a little over 2% annually, compared with average GDP growth of 2.7%…. some increase in inflation pressure is inevitable as the economy is growing more rapidly than potential output.” A short time later we began climbing the interest rate ladder. Other commentators subsequently piled in with their fix on New Zealand’s ‘limits to growth’. Then, after Statistics NZ released the GDP figure for the March quarter of 3.7%, a leading business editor wrote “we’re at capacity now!” With blunderbuss inaccuracy a Treasury report released in late June said: “With our preferred estimate of the output gap now showing that the economy is operating near full capacity, inflationary pressures will continue to build over 2014 and beyond requiring further monetary tightening by the Reserve Bank. “This - combined with further moderation in the housing market and easing commodity prices - will temper domestic demand somewhat.” A washing-of-the hands of responsibility if ever there was one. The bland acceptance of such a slow rate of growth is alarming. 2.7 or 3.7% is paltry. Many other countries have been growing more rapidly for years. How can we keep our standard of living in good shape when other countries are consistently outperforming us? What’s preventing us growing faster? We’re told by our Reserve Bank Governor two per cent is all we can aspire to. Its not enough. We need a game breaker. But the Governor’s argument in January is undeniable. He said then: “Real private consumption has been growing at an annual rate of around 3.5% in 2013: the high terms of trade, the 40,000 person increase in employment, the 20,000 person increase in permanent and long-term immigration, the 9.5 percent increase in house prices, strong consumer confidence and low real interest rates.” So up go interest rates, no matter they are two edged sword which, crudely put, reduces the demand for money by

raising the cost of borrowing it and that, at the same time, reduces the appetite for investment thereby slowing growth. The point is also acknowledged by the Reserve Bank governor.

“For us to pay our way in the world, we need to earn much more from offshore. To earn 40% of GDP from exports by 2025 will cost $200 billion in new projects and plant and equipment” The larger challenge for New Zealand is that a rise in interest rates typically hoists the exchange rate which, while mitigating the costs of consumption, makes investment locally less attractive by reducing the return on exports and import competing products and services. In the circumstances its no comfort to hear the Governor say: “The exchange rate remains a considerable headwind for the economy, and the Bank does not believe its current level is sustainable in the long run.” A big challenge just now is with the large injection of cash required for the Christchurch rebuild, which along with a shortage of skilled workers, is pushing costs up, costs which become price rises filtering through the economy. The total Christchurch investment is expected to be $40 billion with the annual construction investment associated projected to peak in 2016 and 2017 at around $4 billion. In Auckland the recent lift in housing starts is very welcome, though nowhere near enough to meet the requirements of new Kiwis and returning expats. For us to pay our way in the world, and for the rebuild, and for all the other infrastructure needed – hospitals,

schools, transport, machinery and so on – we need to earn much more from offshore. The target set by the government is to earn 40% of GDP from exports by 2025. To achieve this, the Ministry of Business, Innovation and Employment estimates will cost $200 billion in new projects and plant and equipment. But New Zealand is economically anorexic for want of investment. What do we need to free it up internally and from offshore? With the economy and demand wide open to imports the policy response must target supply side limitations. These include: 1. Removing the constraints preventing capital from flowing into productive enterprise. The present constraints include our planning laws (which for instance, limit the availability of land thereby making it artificially expensive), efficient transport, competitively priced energy, water and waste management. 2. Ensuring the free flow of labour for building roads, hospitals and other infrastructure. 3. Ruthless reform of competition regulation, the company tax regime, and foreign direct investment programmes. We have to find a way as well to reduce the proportion of the economy represented by government (36%), and we need a cultural seismic shift to build the recognition that profits are the key driver of national prosperity. Only by lifting the rewards delivered by productive enterprise can we produce sufficient surpluses to reinvest in our economy which is the means by which we will break through the glass ceiling of our self-imposed two per cent growth. kim.campbell@ema.co.nz BusinessPlus

NEWS

Starcard ups EMA discounts rate on fuel Effective immediately Caltex has increased the discount rate on fuel purchased by EMA members on the EMA Caltex Starcard scheme. The new discount rates apply to both 91and 96 octane petrol and diesel purchased at retail stations. Previously EMA Starcard fuel attracted 5.2 cents per litre off the advertised pump price including GST. Now the discount is 6.04 cents a litre including GST (5.25 cents a litre GST excluded), a big 16% further saving. The new discounts are in addition to up to 50 days free credit and online billing and reporting options to help your business manage your cash flow. The present 10.35 cents per litre discount on diesel at Caltex truck stops is unchanged. To find out more and sign up for the EMA Caltex Starcard fuel discounts go to www.ema.co.nz/services/rewards/Pages/Home.aspx

Automated monitoring helps identify utilities trends An automated utilities monitoring service has been developed by Total Utilities to assist multi-site businesses and corporates spending more than $100,000/year on electricity, gas or computing and telecoms. The new monitoring service simplifies financial management of a company’s utilities use by generating and displaying usage reports to help identify trends. The objective is to allow CFOs to quickly pinpoint any issues and make investment and strategy decisionmaking more accurate. According to Mike Ette of Total Utilities, “many companies struggle with the financial management of their utilities, and it’s difficult to know if you are getting value from these services if they are not monitored and measured.

BusinessPlus

“Once a business can identify their usage trends, it becomes easy to ask key questions like - is the usage increase in line with increases in production or staff numbers? Or if nothing has changed why is our usage going up?” Until recently, utilities monitoring has predominantly been a manual

process. Total Utilities has now automated the process to deliver an accurate and superior service at a lower cost. “Getting the best purchase price for your utilities can only go so far – businesses can add real, long-term value by monitoring consumption of utilities as well as cost,” said Mike Ette. Total Utilities manages utility contracts on behalf of business customers to the value of $385 million per year. Over the last 15 years Total Utilities has worked closely with clients to develop a best-practice approach for utilities procurement, monitoring, and management. To find out more, speak to Mike Ette at Total Utilties on 09 600 5679.

NEWS

High alert on web site domain names From September a radical change to the suffixes of web domain names is expected to offer far great online address flexibility and innovation. But some organisations may find they are apparently competing with another for their choice of online name. Though we discussed these changes a year ago in BusinessPlus ( July 2013), some situations are arising now that were not necessarily foreseen and they may put organisations in potential conflict with each other. From September this year organisations will have new choices to register their web details for example as .kiwi, .nz. More options are in the offing. Organisations with a .co.nz suffix or .org.nz suffix may well wish to protect their rights to the name over the domain by registering the direct .nz version as well. But a change like this can have its dark side. Those wishing to register a .co.nz suffix directly to a .nz suffix may find themselves in conflict with another organisation. For example in wanting to do this, www.ema. co.nz could find itself in conflict www.ema.org.nz which may also want the same .nz suffix. In this case your organisation’s name may become conflicted. In addition, someone offshore may

“Change like this can have its dark side. Those wishing to register a .co. nz suffix directly to a .nz suffix may find themselves in conflict with another organisation” have sought to register the shortened version of your domain name. The Domain Name Commission (DNC) www.dnc.co.nz offers advice how to manage first step of such a conflict on their website as follows: What happens if I have a ‘Conflicted’ name?

If you have a Conflicted name, from 1pm, 30 September 2014 you’ll be able to use an online system at anyname. nz to select one of the following preferences: That you want to try and get your name registered directly at the second level.

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That you don’t want your name registered directly at the second level and don’t mind who has it. That you don’t want it and don’t think anyone else should have it. That you think it should become a second level domain like .co.nz, .org.nz or .school.nz. On this online tool, Registrants with conflicted names will also be shown how to find the contact details of those they are in conflict with. This will allow them to directly discuss with one another who should have it. Should a clear outcome not result from either the online system or through individual discussions, DNC may offer a facilitation service. Note: If someone who is conflicted lets their domain name lapse, they will no longer be in the conflict process. Its important to remember that to retain rights to the use of a domain name in New Zealand your organisation has to be using it. Nonetheless some situations may arise not covered by the advice on the DNC website. If you find yourself in dispute with another organisation please let EMA know about it. We are interested in monitoring these changes and could be prepared to mediate if required. Email gilbert.peterson@ema.co.nz

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LEARNING By Gwynn Jennings, Senior Consultant - Smarter Workforce

The IBM Kenexa Best Workplaces programme Creating a best workplace through an inspiring and shared vision can put a man on the moon We have all heard the story when President John Kennedy visited the NASA Space Centre in 1962. Spying a janitor carrying a broom, he interrupted the tour, walked over to the man and said, “Hi, I’m Jack Kennedy. What are you doing?” The janitor responded, “I’m helping put a man on the moon, Mr. President.” Whether or not the story is true is largely irrelevant. What it illustrates is the importance of having all employees completely engaged and aligned to what NASA was trying to achieve. An engaged workforce is crucial to business success. An engaged workforce is not only satisfied and committed, they are motivated to go above and beyond to achieve the vision of the organisation. IBM research linking employee engagement and organisational outcomes shows that organisations with high levels of employee engagement report increased productivity, a lift in business performance, higher customer satisfaction, lower employee turnover and less unplanned absences. Having a clear and compelling organisational mission or vision drives employee engagement. Studies by IBM show over the past five years the top driver of engagement has been the clarity of the organisation’s future vision with its people. Senior leaders and managers have a significant impact on employee engagement by communicating a strong and inspiring vision. Front line managers also play a role by making the vision come alive for employees, and by aligning the vision to each employee’s job. Leading Edge Communications is a great example of a New Zealand company reaping the rewards of a having a compelling vision shared across its 230 employees. In 2010, Leading Edge saw the need to review its mission and vision to transition from a dependent

BusinessPlus

dealership to a national sales channel management company which now partners with some of New Zealand’s top brands to deliver outstanding sales results. In response, the leaders and a group of employees from across the organisation came together to re-define their vision, mission and develop a set of organisational values. One year on, in 2011, they worked with IBM to conduct an employee engagement survey to track how engaged their employees were in achieving this new vision. According to Sandy Hall, HRM of Leading Edge, “the survey confirmed our people were responding to our new vision, and we were on the right track. The next step was to embed it in every part of the organisation”. To achieve this the organisational values became the vehicle for building employee alignment over the next two years – creating a common language around ‘what’s important to us as an organisation’, providing a guide for expected behaviours, and enabling managers to have meaningful conversations that relate back to ‘what we are here to achieve’. Leading Edge has participated in

the IBM Kenexa Best Workplaces programme for the last three years. In 2013 Leading Edge was nominated as a finalist for the Best Workplace in New Zealand and won the overall ‘Most Improved Workplace’ Award and placed second in New Zealand for the ‘Best Medium – Large Workplace’. The impact of introducing and embedding the new vision and organisational values is clear - the percentage of people who believe there is a common purpose lifted from 65% in 2011 to 85% in 2013, and Leading Edge now have 52% of their staff Gwynn Jennings engaged. And according to Sandy Hall, this awardwinning lift in employee engagement has seen a corresponding lift in productivity, sales results, new sales channel opportunities and revenue. Having a clear vision on what an organisation wants to accomplish continues to be a key driver of employee engagement. And like Leading Edge (and NASA), when that vision is clear to employees, and they can see how what they do aligns to that vision, higher levels of employee engagement and profitability are possible.

LEARNING By Deborah Carruthers

FISH! employee engagement success story EMA ran its first FISH! Philosophy programme for improving engagement in the workplace over the past year for the Order of St. John, with exciting outcomes. The programme began with a full day workshop where 19 participants were introduced to the FISH! philosophy principles and practices.Participants created plans outlining how each of the four areas of the philosophy could work back in their workplace. The workshop was extremely well received; enthusiasm ran high at the end of the day. Over the next six months the FISH! programme facilitator kept in touch mostly by email, summarising the participants’ implementation FISH! and providing additional information and resources. He checked in by phone too, to offer support in committing to their plans. Over the months, two more short workshops were run so the group members could share their experiences of implementing FISH! in the workplace and to pick up more ideas to implement. Outcomes - short term

Final interviews were conducted last month to gauge outcomes and measure results. We are pleased to report improvements have been measured right across St John. For example, the current level of engagement and sense of team culture has improved in the following selected areas: 1. Human Resources - 75% (up from 65% before the programme began) 2. Customers & Services - 80% (up from 65%) 3. Finance - 80% (up from 70%) 4. Northern Region - 70% (up from 65%) Furthermore, interviews with participants uncovered these pleasing outcomes: • 100% of people interviewed said the culture has improved in their area at work as a result of FISH!; • 100% of people interviewed

FISH! lifts St John’s performance

“All reported the FISH! activities have helped to “bring people together”, improving the work environment”

• • • •

•

said that FISH! has made a positive difference in the workplace; Team members have developed greater awareness of each other and they 'feel closer' as a result; Teams cooperate more and are more supportive of one another; Team mates exhibit higher levels of appreciation and recognition among each other; All reported the FISH! activities have helped to "bring people together", improving the work environment; and Communication has improved, with a greater incidence of people talking to one another.

The FISH! programme is used for three main reasons: culture change; customer experience change or leadership change. The measureable goals or outcomes are more specific, eg, the cultural change may be required to reduce staff turnover or improve productivity. It’s based on four philosophies that transfer across industries, organisations and departmental teams within them: • Play • Be there • Make their Day • Choose your attitude It’s not a management programme beyond senior people inviting their organisation’s natural leaders to be involved and, in turn, invite their team members to create actions to improve the experience of being at work. Deborah Carruthers is EMA Learning’s Manager of Tailored Solutions Deborah.carruthers@ema.co.nz 021 636 799

BusinessPlus

EMPLOYMENT CHAT

Tattoos, general scruffiness, too long at coffee, My best job applicant was dressed a bit scruffily and had visible tattoos. How can I deal with this safely before I employ him? – Josie Dear Josie Tattoos are pretty commonplace these days, even fashionable in certain circles and the sacred Maori moko (on the face) is a cultural right. So depending on the content of the tat, perhaps it may be not offensive to your clientele and other stakeholders? To cover issues like this you need to make sure the aspects that matter to your organisations (with reasons you can back up) are in your organisation’s Dress Code Policy. In general terms, the Human Rights Commission advises caution in refusing employment on the grounds of wearing any kind of bodily marking per se, and suggests that general references to reasonable standards of dress and appearance are less likely to be in breach of antidiscrimination provisions. You can mention your policy – along with any others – and attach them to your job description or job offer or employment agreement, for his/her consideration. Say, ‘If you

“The Human Rights Commission advises caution in refusing employment on the grounds of wearing any kind of bodily marking per se”

were offered a job, this is what you would be expected to wear; can you comply with this code?’ If s/he can’t agree to your requirements, then s/ he fails to obtain the job. Requiring certain styles of appearance are akin to requiring staff to wear a uniform, so it’s not unreasonable. Just don’t make the code too restrictive or specific or you will turn people off. Individuality is generally to be encouraged! Not to mention it’s a human right … Also make sure the rules are fair and applicable to all staff, and are not discriminatory on the basis of gender, age, ethnicity or other factor.

Specialist Employment Lawyers Our legal team spend 100% of their time working solely with employers, to help build and shape New Zealand businesses. Come in, sit down and talk to us about what’s next for your business – if you’re ready to take the next step, we’re ready to make it happen.

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www.ema.co.nz

I have too many staff spending too long over coffee and lunch breaks, and leaving on the dot of 5 or even five to! I’m very distressed about this and have made little comments that make no difference. What do I need to do? – Bill Dear Bill Raise it with them fair and square. Direct, clear communication might turn up some surprises. Maybe they don’t really know how much it matters; do they have enough work to do?; maybe they are working during those breaks by talking and sorting out projects. So ‘delays’ can be beneficial if the staff are working over coffee. And never underestimate the bonding and morale-boosting functions of those breaks, as well as their providing rest and a change of focus. If staff have achieved everything each day, is leaving a few minutes early not a reasonable reward? Let them know if that is OK and if not, why not. Maybe they need to be available every last minute for client calls. If you are a stickler about time for the sake of it, is that fair? And do you lead by example?

EMPLOYMENT CHAT

and disagreements over KPIs Look at the big picture. Happy employees are generally good for business.

A staff member is disputing my view that she didn’t meet her KPIs (key performance indicators). Is this a disciplinary issue? – Gerry Dear Gerry I assume that if she is disputing that, she is either uninformed and misunderstands the KPI process, or she is right. I suppose there’s a third possibility: she is insolent. In any case, she has a right to question you if she disagrees. You have to justify your conclusions. The KPI process requires an early discussion to ensure the indicators are clearly understood and manageable, and measurable. If you set unreachable targets the employee can ultimately feel forced to leave and possibly claim constructive dismissal. But if this employee is in the wrong and can’t come to an understanding with you, you might be quite justified in deciding her lack of meeting the KPIs requires more training and support to help her do her job, and possibly as part of a formal

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

“The KPI process requires an early discussion to ensure the indicators are clearly understood and manageable, and measurable”

performance management process that can ultimately lead to termination if performance expectations are not met. Give her the benefit of the doubt, act in good faith and try to sort this out. It’s possible the KPI process was never properly explained to her – and if so, how many other employees are in the same boat? • 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.

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Untitled-3 1

10/06/13 12:42 PM

BusinessPlus

TAX TIPS Jo Doolan

How to fall foul of the IRD: four Tax avoidance is alive and well, with several tax-saving schemes doing the rounds in the market place. 1) The first involves selling private homes to a company, financing the company with external borrowings, then renting the home back to the original owners at a low rate. This is tax avoidance, no matter what your advisor says, and will land you into very hot water with Inland Revenue. You will bear the financial cost of the tax, use-ofmoney interest and penalties. The unfair reality is that you are responsible for your taxes and while you might recover some costs by suing your advisor, the legal costs – and time - associated with this will mean you are out of the money. There are also reputational issues to consider. 2) Dodgy scheme number two is paying school fees as a voluntary donation, then claiming a donation rebate. This is another no-go zone. Even if the organisation you are paying says it is okay, it is not. Unless it has a binding ruling from Inland Revenue, then do not engage in this type of scheme. 3) Next we have employees electing to substitute part of their salary or wages

for vouchers. These vouchers can then be used to pay for petrol or supermarket goods, or for other private expenses. This scheme is being promoted as not only allowing you to pay less tax and but also with the flow-on “benefit” of enabling you to pay less child support, lower student loan repayments and KiwiSaver contributions, and to receive more

“Dodgy scheme number two is paying school fees as a voluntary donation, then claiming a donation rebate” as a Working for Families tax credit. Employers also benefit. Their contributions to your KiwiSaver scheme are reduced and they are often not paying fringe benefit tax on the vouchers. They may also be claiming back GST. Some charities are caught up in this scheme, claiming the vouchers are exempt from fringe benefit tax. There are even third

party providers, running and administering these types of schemes for a fee. The odds-on bet is if you engage, you are likely to fall foul of the tax avoidance rules. The IRD has issued an alert, warning people against this type of packaging and using the example outlined below. “An employer offers their employees the opportunity to replace some of their salary with supermarket vouchers. The employee receives vouchers from their employer to the face value of the amount of salary they have elected to substitute and they subsequently redeem the vouchers at the local supermarket. For example, an employee elects to receive $800 of vouchers per month, loaded on to a stored value card, in return for electing to substitute $800 per month of their gross salary. The $800 per month on the stored value card is not treated as income and no PAYE is deducted. Also, the employer does not pay any FBT. The employer claims GST input tax credits on the purchase of the vouchers but does not return any output tax on the provision of the

Waste levy review seeks fairness The three yearly review of the $10 per tonne waste disposal levy introduced in 2009 under the Waste Minimisation Act (WMA) has been released. Minister Amy Adams says its working well but measuring long term trends in waste disposal is proving difficult due to a lack of data. The report recommends this shortfall is addressed. Hence the Government is inviting tenders for a waste survey to quantify the volume and composition of waste disposed to landfills not covered

BusinessPlus

by the levy, including commercial fills and farm dumps. In addition to the waste survey, Ms Adams has approved a $97,500 grant from the Waste Minimisation Fund for the development of a national waste data framework to identify the most important data that should be captured and develop standard definitions to ensure waste is measured consistently. The Waste Management Institute is to lead the project. Other funding for data projects

involving specific waste products include a $100,000 grant from the Waste Minimisation Fund (WMF) for a detailed costbenefit analysis of options for tyre disposal and recycling, and a further $170,000 to improve information on the electrical and electronic equipment sector, and the associated recycling industry. The waste levy review is available at: www.mfe.govt.nz/ issues/waste/waste-disposallevy

TAX TIPS

dodgy tax avoidance schemes “Next we have employees electing to substitute part of their salary or wages for vouchers which are then used to pay for petrol or supermarket goods, or for other private expenses” vouchers to the employees. It is considered that the provision of the vouchers is income from which PAYE should be deducted. It is also considered that the provision of the vouchers to the employee by the employer is a supply that is subject to GST. Inland Revenue considers that the arrangement is a tax avoidance arrangement. “ 4) Lastly, New Zealand tax residents, who have stashed money in offshore bank accounts and access this with an offshore credit or debit card, should be returning any income on these accounts in New Zealand.

Again, this is seen as a way to pay less tax in New Zealand or less child support, or to reduce student loan repayments, or to claim higher amounts via the Working for Families tax credits. The answer is simple: if you are a New Zealand resident for tax purposes, you must disclose your world-wide income in your New Zealand tax return and pay tax in New Zealand. Even if tax is paid offshore, you still must disclose the income and claim a tax credit for what is paid offshore. Being a non-resident for tax purpose is not just about being

outside New Zealand for a specific number of days. If you have a home available to you in New Zealand, or have strong connections to New Zealand – such as retaining club memberships and having bank accounts or dependent family here you may be viewed as a resident for New Zealand tax purposes. If you have been caught up in anything that, on reflection, looks dodgy, you should urgently take advice and consider making a voluntary disclosure to Inland Revenue. You will, at least, save money and stress. If your friends or family are involved in these types of schemes, urge them to take action. A head-in the-sand approach will not work. Joanna Doolan is a partner with EY joanna.doolan@nz.ey.com

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IN THE LOBBY

Northern business and the election Northern businesses are clear about policies they are interested in this election year. EMA members giving their views on political policies say they want action on skills, development, and the economy. Skills shortages are holding many northern businesses back. The greatest areas of shortage are technical skills including engineering, IT and trades. Businesses would like to see this fixed with more emphasis on technical and trade skills and school and in tertiary institutions. Not only technical skills but simple ‘work ready’ skills can also be hard to find. Businesses are concerned at the low level of attainment of many young people leaving school. Some suggest that completion of schooling should be based on achieving education standards. Not having enough of the right skills can impede business at all levels.

The need to innovate can be held back because innovation is usually created by those most skilled within a company. In the absence of sufficient homegrown skills, northern businesses would like to be able to hire skilled workers from overseas. Unfortunately, the visa system does not make this easy. An employer has to prove there is no New Zealander qualified and available for the job in order to hire a migrant, and when it’s time to renew their visa they have to repeat the process again. Local businesses say the burden of proof should lie with Immigration NZ, not employers, and skilled workers who have the support of their employers should be able to have their visas extended automatically. Being able to get proposed development through the consenting

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process is another big issue for business. Northern businesses say there’s a need for better planning and consenting processes given local government’s tendency to create multiple requirements for information and consultation, multiple layers of fees, and a general lack of timeliness in consenting. BusinessNZ agrees with EMA Chief Executive Kim Campbell’s call for better consenting practice, including the need for local authorities that issue building and resource consents to publish a standard for the total elapsed time between a consent application being submitted and being granted, and to publicise their performance in meeting those standards. Like businesses in other parts of the country, many northern businesses would like to see a review of the Resource Management Act and the Local Government Act, and of

Phil O’Reilly

“Although our nominal business tax rate is fairly average, the real or actual rate of tax paid by New Zealand firms is the highest in the OECD...business would like to see the nominal rate of corporate tax in New Zealand set much lower.”

local government’s performance in administering them. And a key concern for northern business is economic performance. Knowing that the health of the economy is affected by government policies on taxing and spending, business is concerned about unnecessary government spending that leads to higher taxes. Northern business would like to see lower business tax. New Zealand firms pay a higher real rate of corporate tax than those in other developed countries. Although our

nominal business tax rate is fairly average, the real or actual rate of tax paid by New Zealand firms is the highest in the OECD, because our tax system is broad-based and comprehensive, with few exemptions. To offset this difference between tax systems, business would like to see the nominal rate of corporate tax in New Zealand set much lower than the current 28 percent. Many businesses pay the top level of income tax instead of corporate tax – they too would like to see their tax burden reduced through greater

government spending restraint. Northern business would like to see more incentives to invest in R&D and innovation, including soft loans; an increase to 67 years for entitlement to superannuation to ensure it remains affordable; tax on KiwiSaver reduced to 15 percent and the KiwiSaver tax credit removed. The overall desire by northern businesses is to have policies that don’t drain but help grow the economy. They would like to the social safety net kept in place, while keeping government spending under control. Overall, northern businesses would like to see parties elected to government that can deliver better fiscal performance, more in-demand skills from schools and tertiary institutions, and a higher-performing local government sector. Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz

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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.

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Raising capital

NEWS

By Allan McRae

The new rules for raising capital disclosure, licensing and the New Market

(Part II of the raising capital workshop held last month) New rules for disclosure and licensing

Phase 2 of the new regulatory regime is scheduled to come into effect on 1 December 2014. At that time the new wholesale investor regime, and the self-certification rules associated with it, will come into force. Two of the key planks to Phase 2 are the new disclosure regime, and the new regime for licensing financial product markets. As regards the new disclosure regime, companies looking to raise money through an IPO will be able to do so through the issue of a Product Disclosure Statement. The intention here is that the document will be both shorter and more relevant than existing prospectuses and investment statements. Much of the financial detail will be required to be placed on an online register which can be accessed by potential investors. The start date for compliance with the new disclosure regime will depend on the nature of the issuer: 1. New managed investment schemes will need to comply immediately; 2. New one-off issues will be able to be made under what will then be the former Securities Act if the prospectus is registered before December 2015, and the allotment is completed before December 2016. 3. Continuous issuers will have a two-year transition period in which they can continue to offer under the existing regime. A second key plank of Phase 2 will be the requirement for financial product markets to be licensed. Currently, New Zealand operates an all or nothing regime: exchanges are either registered and fully regulated, such as those operated by NZX, or they are not registered and fall outside the regime, such as Unlisted, which is not subject to the insider trading and continuous

disclosure rules contained in the Securities Markets Act. However, as from 1 December, trading facilities will not be able to operate unless they have been licensed by the FMA, or are exempted. In a departure from the existing all or nothing regime, provision has been made in the new Act for the FMA to issue licences for what it calls “stepping stone markets”: that is, markets where the requirements are modified to cater for the requirements of the particular market. Possible candidates for these modified markets are markets where only certain types of products are traded, such as derivatives. The New Market

NZX is promoting the New Market, or Growth Market as it is sometimes called, as a listing option that will provide cheaper and easier compliance. NZX is targeting to have this market up and running in the near future. The New Market is an attempt to create a viable market that sits between the main board and the smaller private markets, such as The Angel Network and Venture Capital. The existing alternative market operated by NZX (NZAX) is supposed to serve that purpose but has failed to do so. NZX attributes the failure to the NZAX market not having differentiated itself from the main board. It considers the New Market will differentiate itself and stresses the following features: (a) Lower costs and simplicity. (b) Allowing companies to use key operating metrics to outline the business performance, instead of the more onerous prospective financial information requirements. (c) Allowing companies to disclose information to investors periodically rather than continuously.

(d) The appointment of market makers to ensure there is sufficient liquidity on the New Market. However, the New Market will also impose requirements that do not exist under the NZAX Rules: (a) Issuers must have a market capital of more than $10m, and a minimal capital raising of $5m prior to listing (if capital is being raised). (b) Issuers will also have to have a 25% free float; and (c) A majority of the board must be independent unless the board has more than three directors, in which case at least half the board must be independent. Given the failure of the NZAX, and the failure of the New Capital Market which preceded that, McRae said: “I think it is fair to say that the jury is out on whether the New Market will be any more successful than its two predecessors. “Overseas experience suggests there definitely is a place for a mid market, such as the AIM market in London. “But in New Zealand the risk is that the New Market, like its predecessors, will not be able to differentiate itself, not only from the main board but from other new alternatives, such as small personal offers and crowd funding, and any other markets that might be licensed or exempted under the new regime. “My own view is that to succeed the New Market will need to become a genuine capital raising vehicle, and not just a trading platform. I think this means entities will need to come to this market with an IPO of at least $5 million, or funding lines that provide equivalent liquidity. If there is no liquidity in these companies, it is difficult to see how there will be any liquidity in their stocks.” Allan McRae is a partner with Lowndes Associates mcrae@lowndeslaw.com BusinessPlus

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NEWS

How to lift world GDP two per cent - B20 Summit report Heads of business, government and non-government organisations from the G20 countries – the world’s largest 20 - met in Australia last month to discuss policy that would drive growth and jobs worldwide – specifically, to increase average world gross domestic product to 2% above the trajectory otherwise. EMA’s chief executive Kim Campbell was privileged to be a delegate at the B20 Australia Summit 2014, which is the business group set up to advise and inform the G20. Business NZ’s Phil O’Reilly was also in the New Zealand delegation led by Fletcher Building CEO Mark Adamson. The Summit was chaired by the Australian CEO of Wesfarmers Ltd, Richard Goyder. Delegates and observers from the 21 countries (the 20 from New Zealand attended as guests of Summit host Australia) were divided into taskforces to formulate policy recommendations in five topic areas: 1. Trade 2. Infrastructure and investment 3. Anti-corruption 4. Human capital 5. Financing growth 20 recommendations made the final cut focused on structural reforms need to enhance structural flexibility, free movement across borders, consistent and effective regulation, and integrity and credibility in commerce. Kim explained the recommendations influence international debate and thinking and government policy: “This is the stuff that ends up in international treaties and ultimately becomes law here.” He noted the huge over capacity increasing in developing countries which threatens deflation, and the difference in view on the value of assets as reflected in the US use of GAP versus the rest of the world’s use of the accounting standard IPRS. In addition there is tax base erosion, and the high tax and low interest rate regimes which encourage businesses to go further into debt. And the problem with the concentration of wealth with fewer people is that factories don’t get built because the bulk of the people

don’t have enough income to spend on the factory output. Despite the 500 bilateral trade agreements around the world, since the GFC world trade has gone backwards by 5%. Unless we can unlock regulatory environments internationally, and investment funding for productive enterprise, and unblock global trade, the world economy faces an economic standoff. Economic drivers include the world need for infrastructure which is said to total $53 trillion representing some 53 million jobs, and the world energy outlook though solid is polluting and it will go greener. Speakers and panellists at the B20 included MDs, CEOs and chairs of the largest and often global companies, including presentations from: • Telstra Corporation • KPMG • Credit Suisse Group • Royal Dutch Shell • Russian Union of Industrialists and Entrepreneurs • OECD • Rio Tinto • WTO • Australian government ministers, • J P Morgan Chase, and so on. The New Zealand delegation included Fletcher Building, Fonterra, NZ High Commission, Ryman Healthcare, Xero, NZ’s Deputy Prime Minister and Minister of Finance, Minister of Trade, Ministry of Foreign Affairs and Trade, NZ Food Innovation Auckland, BNZ, Committee for Sydney, Deloitte, Auckland International Airport, Christchurch City, Orion Health and Telecom NZ. Kim Campbell said Australia graciously included New Zealand in the branding of the Summit, such as with a haka along with the didgeridoo, and serving New Zealand food.

You can read more about the Summit at @b20 and www.b20australia.info The World Bank Doing Business Rank 2014 NZ

Australia

Ease of Doing Business

Starting a Business

Dealing with Construction Permits

Getting Electricity

Registering Property

Getting Credit

Protecting Investors

Paying Taxes

Trading Across Borders

Enforcing Contracts

Resolving Insolvency

Key Indicators NZ

Australia

Exchange rate at 30 June 2014

USD 0.8758

USD 0.9433

GDP per capital (2013)

USD 40,842

USD 67,468

Govt, dept to GDP % of GDP (2012)

Net 25.9% Gross 37.8%

Net 11.9% Gross 27.9%

Inflation rate (2013)

1.1%

2.4%

Company tax rate

28%

30%

Capital gains tax

Yes

Average annual hours per worker

1,739 hours

1,728 hours

Source: IMF, OECD, World Bank, IAO, Australian Tax Office

Comparative Labour Costs – median earnings by sector* Currency USD NZ

Australia

Total all Industry

38,255

46,599

Agriculture, Forestry and Fishing

34,931

43,656

Mining

65,490

101,587

Manufacturing

40,988

49,052

Electricity, Gas, Water and Waste Services

54,651

73,578

Construction

44,267

56,410

Wholesale Trade

41,033

49,052

Retail Trade and Accommodation

25,321

25,752

Transport, Postal and Warehousing

42,810

53,957

Information, Media and Telecommunications

44,631

53,957

Financial and Insurance Services

52,419

58,127

Rental, Hiring and Real Estate Services

39,303

44,147

Professional and Administrative Services

43,675

50,278

Public Administration and Safety

50,643

60,285

Education and Training

43,265

49,052

Health

34,931

41,302

Art, Recreation and Other Services

32,790

39,045

Source: Latest available data from Statistics New Zealand (June Quarter 2013) and the Australian Bureau of Statistic (August 2013)

BusinessPlus

COMMENT

The New Zealand dollar: Where to from here? Kiwibank economists Donna Purdue and Zoe Wallis will contribute regular articles to provide topical and unique insights into the New Zealand economy. Let them know what you’d like to hear about at Kiwieconomics@kiwibank.co.nz. The high New Zealand dollar (NZD) over the past few years has been a source of frustration for many, particularly those in the export sector. At the worst of the global financial crisis (GFC), back in early 2009, the NZD/USD sat at $0.49. Today it sits around $0.87. A lot of this is due to the New Zealand economy outpacing other developed economies such as the US and Europe in that period. In this article we’re going to look at some of the key drivers of our exchange rate and discuss the implications for the NZD/ USD in the short to medium term. The dominant driver of exchange rates in New Zealand tends to be relative interest rates – the difference between the interest rates in New Zealand and those of our major trading partners. At the moment the Reserve Bank of New Zealand (RBNZ) is one of the

a role in the New Zealand dollar, particularly since the GFC, is risk appetite. The New Zealand dollar is typically seen as a ‘risky’ currency. To measure the degree of risk appetite in financial markets we look at global equity markets which in recent times have been hitting new all time highs indicating that investors are accepting a high level of risk taking. This risk appetite has helped bolster demand for the NZD. A cautionary note though: Donna Purdue, Zoe Wallis market confidence is a fickle thing and it can take very little for the market alleviating some of the upwards pressure to reverse its sentiment which could on the NZD. We anticipate this to start cause a sharp drop in the NZD. happening from the end of 2014. So where does that leave us? Given Export commodity prices are another the importance of relative returns we determinant of the New Zealand expect the NZD to remain around dollar. Higher prices for commodity current levels until the end of 2014. exports – dairy prices being a significant However, as we enter 2015, we expect contributor here – increase demand for other central banks (particularly the US the NZD as sellers convert their profits

only developed country central banks to be raising interest rates, with the official cash rate (OCR) expected to reach 4.50% by the end of 2015. Now compare that with the US Federal Reserve which has the official interest rate set at 0.5% and is unlikely to change for some time yet. Right now, the large difference between the two interest rates is making New Zealand a very attractive place to invest, hence increasing demand for the New Zealand dollar. Eventually as interest rate hikes in the US become more imminent, the relative interest rate differential will start to shrink,

back into local currency. Commodity prices also have an impact on the prospects for New Zealand growth, so there has been some surprise that the fall in dairy prices over recent months has not lead to a fall in the New Zealand dollar. What appears to be happening is that investors are much more focussed on the relative return than on any perceived downside risks to growth through lower commodity prices. In a world of low interest rates, the search for yield is king and the New Zealand dollar remains an attractive currency on this measure. One additional factor that has played

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and UK) to start lifting interest rates, triggering a downward move in the NZD. That said, New Zealand remains well positioned in the global context so demand for the NZD is likely to remain strong relative to historical averages. Before the GFC, the NZD/USD traded at an average of $0.56 (post float) but post GFC it has traded at a much higher average of around $0.75. We think that the NZD/USD will remain well supported above this recent average over the coming year. NB: This article was finalised on June 21, prior to the RBNZ’s OCR Review on June 24.

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By Gilbert Peterson

ANZTEC throws open trade door to Taiwan Made in New Zealand means something of value in Taiwan, unlike in Australia, one delegate commented during last month’s trade mission there. Delegates on it were, in the words of business leader Sir Ken Stevens, “surprised and humbled by the warmth of the welcome enjoyed during our time in Taipei.” It was the first trade group to visit since the signing of the ANZTEC free trade agreement with the separate customs territory last December. “Though Taiwan is the 8th largest market for our products by value, our smaller companies have tended to overlook the possibilities for building relationships here and deepening our business connections,” Sir Ken said. New Zealand’s 30 strong delegation included representatives from Fonterra, Zespri, Kono, Cerebos Greggs, Glidepath, along with several smaller food and beverage companies, film and television, hi-tech and education. The aim of the trade delegation visit was to draw attention to the greatly heightened trade prospects with Taiwan following the agreement, and demonstrable goodwill towards New Zealand in Taiwan offers a valuable competitive platform to our traders. The Taiwan economy is about the same size and affluence as Australia, and the signing of ANZTEC made the front page in Taiwan with lead items on TV news. Hard on the heels of the agreement total New Zealand exports to Taiwan have risen 30 per cent in the first half of the year and are expected to top $1 billion on an annualized basis this month.

Visiting a food processing plant in Hong Kong

BusinessPlus

In short order Taiwan has become the top destination for New Zealand apples and cherries (the Taiwanese take their daily fruit intake seriously as a health preservation practice). Dairy, wine, kiwifruit, beef and wood exports are also highly important. Dairy and wine became duty free from day one, with meat and most other goods clear of duty within a year or two. Taiwan exports to New Zealand have already increased 20 per cent. In May this year Taiwanese bicycles to New Zealand for example increased 87 per cent over the same month the previous year. While the speed of the tariff cuts is remarkable, ANZTEC builds in all the usual bilateral preferences expected from a high quality agreement – generous rules of origin definitions, sanitary and phyto sanitary provisions, liberalizing the cross border trade of services, protecting IP, going so far even to agree on a list of environmentally friendly goods. Added to that, it bestows an ‘open skies’ agreement on the signatories, and in a unique measure, encourages co-operation between the indigenous peoples of Taiwan and New Zealand. It remains Taiwan’s first and only free trade agreement with an OECD economy. On the quality front it stands out, as its former lead negotiator for New Zealand, Charles Finny has noted, in stark contrast to some of

Taking a street lunch break in Taipei

the agreements reached by other economies in the APEC region. Mr Finny was a co-leader of the trade mission. But given New Zealand’s lack of tariffs to reciprocate immediate cuts in consumer prices, what direct benefits does Taiwan stand to gain? The answer seems the more interesting as it takes on geo political dimensions. Taiwan aspires to join the Trans Pacific Partnership, and by meeting the very high standards set by ANZTEC they clearly showed they were up for it, going so far to liberalise even the most sensitive of sectors. As Mr Finny noted, “The agreement is attracting huge international interest and having a positive impact on other negotiations underway in this region and under the umbrella of the WTO. “For example, at the most recent

Mission co-leader Charles Finny

Taipei, a city of 8 million

APEC Trade Ministers’ meeting (May, 2014 in Qingdao, China) the host country was very proactively pushing for work to begin on the Free Trade Agreement for Asia Pacific, FTAAP, which is to involve all APEC economies including Taiwan. In another arena, by signing such an agreement with a leading exporter of primary products, and giving trade advantages to New Zealand over producers of like goods in the US, Japan and Europe, New Zealand was thereby allowed to increase market share in Taiwan, which applied pressure to other countries to come to the negotiating table. They upped the trade ante. As for further immediate trade prospects, Business New Zealand’s Phil O’Reilly noted Taiwan is a trusted partner and a trusted brand in New Zealand. Mr O’Reilly was also with the trade delegation. He said Taiwan enjoys a unique relationship with China and other members in the region, and this is particularly helpful from a New

Trade delegation assembles for the customary photo at the DCH plant visit in Hong Kong

Zealand perspective as many of our products and services are aimed at affluent middle class consumers. Sir Ken Stevens said: “I am very confident we will see many more New Zealanders visiting Taiwan and doing much more business there, and this will include Taiwan and New Zealand businesses forming partnerships and

alliances to jointly explore other markets elsewhere. “We came to Taiwan to demonstrate we take the relationship very seriously and to show we are determined to develop it even further,” he said. Gilbert Peterson travelled with the delegation. Gilbert.peterson@ema.co.nz BusinessPlus

ADVOCACY

Letter from Australia from Marketing Specialist Bella Katz

Setting up an Australian advisory board This month, I’ve been working with a noticeably different sort of New Zealand company. The main reason they’re different is because the Chief Executive of this SME is gunning for Australia with a confidence and approach that I’ve rarely witnessed before, especially from a company of this size. Take for example the first project I’ve been engaged on: to help identify an Australian advisory board for this SME’s local subsidiary. The idea makes perfect sense to me and is genius in its simplicity. If you can afford it, I’d highly advise you do the same in your own dealings with Australia. In fact, I’d go as far as to suggest you shift your budget around and prioritise this advisory strategy. The benefits are manifold; here are the first three that spring to mind: 1. Instant credibility

In many circumstances, when you bring your business across to Australia, no one knows who you are. To them, you’re just another company landing on the shores with the same story as many of your competitors. However, by adding several key Australian advisors to your Australian team, you benefit by association. Advisors will add substantial gravitas to your business when they independently have great reputations in networks that your business needs to reach. Think of it as your very own celebrity sponsorship, only far more affordable and mutually beneficial. On a side note, ‘mutually beneficial’ means different things to different people. In Australia a senior advisor may join your Board for $3,000 to $5,000 per day or partial equity in your business. It may seem like a fortune, but the right individual will inevitably deliver value far greater

BusinessPlus

“Advisors will add substantial gravitas to your business when they independently have great reputations in networks that your business needs to reach. Think of it as your very own celebrity sponsorship... the advantage of employing locals is they hit the ground running”

than the $60,000 you invest over the year. (A $60k salary doesn’t buy much these days, whereas a $60k per year advisor is highly motivated to build your business.)

running with an immediate understanding of the Australian market. They may not know the New Zealand product as intimately as a New Zealander or an existing employee, but having spent one week in Auckland undergoing training, they’re ready to tap into their networks. The advisor adds another dimension to this, mentoring the local staff and enabling them to access high-level contacts they may not otherwise reach. As you know, a personal introduction and endorsement goes a long way. 3. Good advice

Finally, and certainly not least importantly – the advisor may, well, actually offer good advice. A complementary cross section of experts from different fields can help you see things differently. Whether their skillsets are building businesses, opening new markets, motivating staff – if your business can afford it, good advice is something you want to add to your Australian development budget.

2. Networks and access to people even your best sales team can’t access

The client I mentioned previously has another significant bow to her string. She has hired two business development people to her Australian team, both locals to Melbourne, where she has chosen to initially focus. Again, the advantage of employing locals is they hit the ground

Bella Katz is an Australia-based brand and marketing consultant, and regularly advises New Zealand companies on how best to position in Australia. She specialises in marketing for the business to business sector. bella@bellakatz.com.au, LinkedIn.

By Gilbert Peterson

Exporters to Macao leave money on the table Macao law requires the casinos, all 35 of them currently to source their supplies through one of the local supplier companies, but the distribution company’s say their requests for New Zealand to supply direct through them can fall on deaf ears. Macao’s Union of Suppliers Association (MUSA) representing some 270 companies each specialize in such as meat, eggs, seafood and so on. The association was established four years ago in part ostensibly to develop local employment. Consequently, and along with the casino business and break neck construction, unemployment is zero. Labour costs and rents are under pressure. In Macao everything is imported, but New Zealand exporters there are invited to approach the MUSA company relevant to their sector and present what they have to offer. They don’t have to rely on their Hong Kong distributor. Each supplier company has to manage its own warehousing and logistics team, said Matt Lee, general manager of his fourth generation family business which employs 140 people. Macao is totally unlike Hong Kong, he said. But since the airport and port are not fully developed yet to international standard many products are transshipped, or more accurately, transitioned via Hong Kong and elsewhere. The casinos are obliged to account monthly for their procurement. First time exporters to Macao and those with flexible distribution arrangements may indeed go direct by identifying and approaching the relevant MUSA agent. In evidence a delegate in a recent trade delegation pointed out a number of products imported from New Zealand. Lee said he prefers to do business with New Zealand and Australia much more than the US and Canada. Its easier due to our willingness to consolidate cargos. Lee said he tried to import meat from New Zealand but of six

casino complexes, the Sands Cotai, are reported the most profitable in the world, out pacing Dubai’s malls. The Sands people are at pains to point out Macao is rapidly becoming much more than place to gamble. Besides the casinos, the 3000 room hotels, and the glamorous stores, Macao has ambitions to become a convention centre and an events destination. Giving some truth to that was a recent Rolling Stones concert packing out a 15,000 seat venue, and with golf and motor racing firmly on the international events circuit. Perhaps unsurprisingly Macao is very much under construction, with the skyline in some places a jigsaw of cranes. The 10,000 employees MGM Resort staffing one hotel complex are matched by another 10,000 companies approached he got a over the road,in the Venetian. Soon response from just one company. In they will be joined by many more. the event he obtained the products he A light rail link and an express way needed anyway, from the company’s from Zhuhai will help see to that, Hong Kong distributor. along with the bridge expressway Though New Zealand companies direct from Hong Kong’s Chek Lap may indeed have sound reasons for Kok airport already more than half maintaining their supply arrangements way across the 32 kilometres of the to Macao via their Hong Kong Zhujiang river estuary. distributor, the Macao market has As Lee said “that’s a lot of to be sufficiently large for separate consumption, a lot of demand.” arrangements to be considered. Whereas 49 million people visit Hong Kong every year, (77,000 hotel beds at 89 per cent occupancy), Macao attracts 30 million visitors. While 80 per cent of them are day visitors, the 600 stores in just one of the hotel/ BusinessPlus

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Measuring a home’s worth Changes in residential building insurance have resulted in Auckland-based company Construction Cost Consultants growing staff numbers, IT systems, vehicles and office space. General manager Gary Caulfield says, “Changes to the insurance provisions from ‘total replacement value’ to ‘sum insured’ have expanded our offering to the general public to provide a professional quantity surveying service to fulfill this requirement.” The company operates throughout New Zealand from offices in Auckland, Wellington and Christchurch. It provides quantity surveying, commercial management and insurance rebuild valuations, as well as dispute resolution services. Andy Thomson, CEO

“His main advice to someone who is in their first year of business is: “Plan, plan, plan, plan some more, then execute.” Gary Caulfield, general manager

The $4 million turnover company with 32 staff doubled in size over the past 12 months. CCC began operating in 2010, with a desire to provide quality quantity surveying services using professionally qualified quantity surveyors and to raise the standard in general throughout the industry.

Mr Caulfield says the great thing about doing business in New Zealand is people are friendly – though they can be parochial in places! His main advice to someone who is in their first year of business is: “Plan, plan, plan, plan some more, then execute.”

NZ entrepreneurs launch cloud-based editing app Auckland-based entrepreneurs, Alliv Samson (25), Heng jie Wang (23) and Jordan Thoms (21) have debuted their cloud-based editing app, Notable PDF, a viewer and annotation tool for formatting pdf text for writers, schools and small businesses. “Notable PDF transforms traditional PDFs into interactive documents to make any writer’s life less complicated”, says cofounder, Alliv Samson. The easy-to-use app directly shares annotations and key feedback on the PDF document along with text highlighting, addition and copy/paste functions. Edited documents can be shared via Notable PDF’s links to Google Drive, Dropbox or Box. And while the app works perfectly with any computer, its PDF viewer is enabled with deep

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Chrome OS integration. Over 20,000 users bought it within 2 months of its June 2104 launch date with 80% of users based in the US. The app is backed by NZ investment companies, Flying Kiwis and Hopscale. •Heng jie Wang and Jordan Thoms thought of the original concept of “Notable” in 2012

while interning in San Francisco as an internet application allowing students to share and compare lecture notes in real time from anywhere. • Alliv Samson is the founder of online beauty, health and fashion website, XYNZ (formerly The Style Collective) and owner of NZ designer boutique, Livs.

“Over 20,000 users bought it within 2 months of its June 2104 launch date with 80% of users based in the US”

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Cool way to clean Commercial and industrial cleaning has long been associated with mess, expense and often, dangerous chemicals. But now Cold Jet New Zealand is introducing dry ice blasting. With this technology, natural, non-additive, solid CO² (dry ice) is accelerated at high speed to create a thermal impact that removes contaminants. The dry ice then sublimates, leaving no secondary waste to dispose of. Chief executive Mike Coleman says dry ice has been used globally for more than 25 years as a cleaning solution, and received little attention in New Zealand until now. He launched Cold Jet New Zealand two-and-a-half years ago after discovering dry ice blasting as a cleaning option for a project he was working on. “I was restoring a classic car, and looking online for a way to remove the underseal and generally clean the underside of the car,” he says. “I came across a method of using a dry ice blasting machine and thought it would not only be the perfect solution to my problem, but also an excellent business opportunity.” After researching a number of dry ice blasting manufacturers, Coleman decided to go with Cold Jet. He visited the company’s global headquarters in the US with a proposal to set up a New Zealand subsidiary.

Cold Jet CEO Mike Coleman

“By using technologies like ours, they can demonstrate that they’re taking steps to minimise the impact of their operations on the planet. We can only see our business growing as a result.” Cold Jet NZ now runs a six-day-aweek dry ice production and delivery service. It makes dry ice at its Wiri factory using liquid carbon dioxide, a by-product of the oil refinery process. Some clients regularly purchase bulk quantities for transporting perishable goods around the country and the world. “We can supply the dry ice in

several different formats according to customers’ needs, from 3mm pellets and 16mm nuggets to 5kg blocks.” Its contract cleaning division is taking off, and volumes of dry ice are increasing to meet demand. Cold Jet New Zealand now provides the full range of dry ice blasting and dry ice production machines, and sells, supports and services its dry ice cleaning systems, nozzles and accessories so customers can carry out their own blasting as frequently as they need to. Dry ice blasting technology is being used in industries as diverse as food & beverage, medical, plastics, printing and construction. “Not only is it a greener option, but dry ice blasting is also an extremely versatile cleaning method, and I’m discovering new ones all the time.” Recently he used dry ice to help restore headstones at the Symonds St Cemetery after they were sprayed with graffiti. Abrasive media such as sand, bead and soda blasting grind the surfaces being cleaning and frequently this damages them, Coleman says. “On the one hand, it can be used to remove layers of bitumen from plant and machinery or builtup ink from printing machines, or to decontaminate food processing equipment from salmonella, e-coli and listeria, and yet it’s gentle and precise enough to restore smokedamaged books or even remove the lettering on a business card.” “By using technologies like ours, they can demonstrate that they’re taking steps to minimise the impact of their operations on the planet. We can only see our business growing as a result.” BusinessPlus

Out & About HSNO Enforcement Officer Training Programme, Auckland

001 – Kapila Kumar and Jessie Zhang 002 – Sharon Tang and Joanne Orchard 003 – Jason Foster and Darryl Thompson 004 – Herath Kodi, Arif Khan and Russell Hoban 005 – Sharmila Narayan, Joape Nainoca and Ashneet Bhagat ..all of Auckland Counci

ConnectUp@Khybar at ExportNZ Auckland

001 – Ilya Ruppeldt [Golem Productions] and Rob Grimsey [Telstrom] 002 – John Lisowski [LHF], Neil Smit [SEW-Eurodrive NZ] and Paul Johnston [LHF] 003 – John Gore [EuroFair] and Lance Sheppard [Lance Sheppard Associates] 004 – Jenny Wheeler [Intenza] and Darrell Taberner [Bernard International] 005 - Leanne Murphy [Cerebos Gregg’s] and Richelle Ashman [ ExportNZ Auckland] 006 – Paul Noble and Barry Pyle [Images in Space] 007 – Catherine Lye [ExportNZ Auckland] and Cath Sinclair [Mastip Technologies] 008 – Dinesh Sood [Export Import NZ] and Evan Sim [Cerebos Gregg’s] 009 – Craig Watkin [Douglas Pharmaceuticals], Geoff Popham [ Burnard International] and Heather Baigent [Interact Consulting]

3rd Annual Administration Professionals Conference

3rd Annual

Learn from some of the best leaders in administration! Join like-minded individuals for a motivating and knowledge-filled day where you can learn from some of the best leaders in the market and make sure your professional administration skills are the best they can be!

AUCKLAND | 11 September

emaevents.co.nz/admin

COMING IN ROTORUA Payroll Conference

NOVOTEL, ROTORUA | 17th September

Managing Leave

NOVOTEL, ROTORUA | 18th September With an ever-changing environment, payroll professionals continually face new challenges. This Annual Payroll Conference will help you deal with the more challenging parts of your role, while offering you innovative methods and training to meet existing compliance and operational demands. We cover changes in tax and employment, how to make with the complexity in your payroll, effective payroll management and the use of supporting tools. Accompanying this is a half-day Managing Leave toolkit. Get to grips with annual, parental and sickness leave.

2nd Annual Asset Management Conference Asset management to support company objectives

This conference takes a holistic view of asset management to help you get the best performance from your assets. Get up to date with the latest thinking, processes and technology around asset management. Ensure compliance with any new legislative changes that might affect your physical assets and the people that care for them.

AUCKLAND | 9-10 September

emaevents.co.nz/asset

Energy Management Summit

COMPLIMENTARY half-day conference - Afternoon of 10 September

Join us for this half day event that looks at the latest trends, developments and technologies in the supply and cost energy and their implications for business efficiency. Find out about where to get the best deals on energy, the energy audit process, plans for a smarter electricity network with Smart Grid, and more.

conferences@ema.co.nz | (09) 367 0959

How do you see your staff?

If your “human resources” are hardworking people who give their time and effort to make your company what it is, offering Southern Cross health insurance is the perfect way to reward them. But they’re not the only ones that benefit. Offering health insurance helps retain and maintain a productive workforce. Find out how some of New Zealand’s leading businesses see their staff at www.healthybusiness.co.nz