BusinessPlus Issue 138 July 2016 by EMA

ISSUE 138 - JULY 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

Exporters celebrated for contribution to NZ economy READ MORE: PAGE 26

MORE STORIES PAGE 10: Navigating the Employment Relations Authority PAGE 13: New payment trend, ‘blockchain’ PAGE 19: Salary survey findings: pay up 1.7% PAGE 23: Facebook’s multiple benefits for business …and much more!

BUSINESS MISSION TO MALAYSIA AND THAILAND Thailand and Malaysia are two of ASEAN’s strongest economies and are our eighth and ninth trading partners respectively. As part of this programme you will have one-on-one meetings with key decision makers, customers and partners, to help you generate new business and deeply understand these markets. August 15-19 2016

Why Thailand?

Key Benefits

The New Zealand – Thailand Closer Economic Partnership (CEP) has opened up the Thai market. Within 10 years of being signed, tariffs on virtually all manufactured goods have disappeared, with the remaining ones finally going by 2025.

• Experience first-hand the scale & magnitude of business opportunities with visits to retail, supermarkets, e-commerce providers and industrial sites. • Network with like-minded professionals at local chambers of commerce and at dinners hosted by New Zealand government. Source: Global New Zealand (Dec 2015)

Why Malaysia? Malaysia maintains strong trade relationships with many countries. It has been a member of the World Trade Organization since 1995 and had free trade agreements (FTAs) with Japan, Pakistan, New Zealand, Chile, Australia, ASEAN and India. It has plans to further strengthen its vibrant ICT industry and is also a hub for Halal. (Euromonitor, 31 Mar 2015)

• Engage with high level government officials in Thailand and Malaysia and learn about investment benefits available to Kiwi businesses in these markets • Explore the incentives for international trading and headquartering in ASEAN • Tap into a strong framework of vastly growing consumers in a mature digital ecosystem

Key industry sectors Source: Global New Zealand (Dec 2015)

Almost 15 times that of NZ’s (4.95 M)

This Mission is organised by ASEAN NZ Business Council and Export New Zealand with support from New Zealand Trade & Enterprise. To place an expression of interest, please email Catherine Lye at Catherine@exportnewzealand.org.nz

BUSINESSPLUS is published by The Employers and Manufacturers Association (Northern) Inc (EMA) EMA is the major shareholder of national lobby group, BusinessNZ. EMA head office: 145 Khyber Pass Rd, Grafton, Auckland, New Zealand Private Bag 92066, Victoria Street West, Auckland 1142, NZ Ph: +64-9-367 0900 Email: ema@ema.co.nz In Hamilton: EMA/ExportNZ Waikato 103 Tristram Street, Hamilton. PO Box 490 Waikato Mail Centre, Hamilton 3240. Ph: +64-7-839 2713 In Tauranga: ExportNZ Bay of Plenty Smart Business Centre, 65 Chapel Street, Bay Central, Tauranga, 3110. PO Box 13202, Tauranga Central, Tauranga 3141. Ph: +64-7-571 0600 AdviceLine: 0800 300 362 (in NZ) or 1800 300 362 (from AUS) or advice@ema.co.nz Phone 8am-8pm weekdays for information about employment and more, plus referrals to EMA Legal lawyers and your local EMA consultant in employment relations and/or occupational health and safety. Visit www.ema.co.nz for owner and staff training programmes, conferences and other events, employer guides and templates, manufacturer services, media statements and submissions, export development and more EMA contacts Chief executive: Kim Campbell Membership manager: Roger Carson External Relations manager: Val Hayes Advocacy and Industry Relations manager: Mark Champion Learning manager: David Foley Enterprises and Strategy manager: Mauro Barsi Head of Legal: Charlotte Hatlauf Industrial Relations and Safety manager: Paul Jarvie Finance and Technology manager: Paul Yeo Corporate and Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye Editor: Mary MacKinven, +64-9-367 0939, mob +21 636 089, email mary.mackinven@ema.co.nz Writer: Gilbert Peterson Designer: Ripeka Mikaere | Printer: MHP | Distributor: Rocket Mail Advertising sales: Colin Gestro, Affinity Ads, mob + 27 256 8014, colin@affinityads.com ISSN No. 1176-4953

“To champion New Zealand business and help our members succeed”

ISSUE 138 - JULY 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

On the cover... Sir William Gallagher has been recognised as a successful exporter and staunch supporter of other exporters, in winning the Simmonds Stewart Exporters Champion Award 2016 for exemplary service to export. Full story, p26.

Exporters celebrated for contribution to NZ economy READ MORE: PAGE 26

CONTENTS Commentary 5

EMA’s CEO Kim Campbell on: How have we been working for you? 6 Electricity Pricing 7 Coping with Auckland’s rapid growth 8 Managing costs and consumption in a cloud services environment 9 BusinessNZ CEO Kirk Hope on: Health and safety not a mystery 10 Explained: the Employment Relations Authority. When the conflict steps up a level 11 Commercialising a problem - Slowing the setting time of wet concrete 13 The future of payments? Introduction to Blockchain

Employment 14 15 16 18 19 20 22

Recruitment: Optimising contract and temporary human resource When size doesn’t matter: key law changes for all employers Employment Chat Q and A: What’s the story with mature workers, employment standards and splurging managers? Seen @ EMA’s Post-Budget Lunch with MP Steven Joyce, in Auckland Pay trends for 2016: stability rules! Salary survey list Best Workplaces: Taking the pulse of employee engagement

In business 23

Marketing: To Facebook or not to Facebook 24 Tax: NZ is cruising but housing needs addressing 25 Selling up: Sold! Work to be done in handing over the business

International trade 26

Success of exporters recognised BOP exporters celebrate 27 Awards night glitz and glamour 28 Argentina’s bright prospects 29 An insider view to Indonesia’s food and beverage sector 27

EMA is yours

Enterprises of all types and sizes belong to EMA for a variety of benefits: • The latest information and advice on everything to do with employing staff or managing contractors, and legal representation if employers require - at member rates; • A choice of 100-plus courses and tailored training options, plus specialist seminars and events on topics such as Lean practice and developing markets offshore through EMA’s Export New Zealand division – all providing opportunities to network; • Ensuring your voice is heard by local and central government, since our aim is to improve the environment in which your business operates.

Member profile 30

Shareholders Association: The investor’s best friend

Book now for the EMA Winter Briefings – schedule starts in July

+ Inside: TrainingPlus insert detailing July training courses, and more BusinessPlus July 2016

CEO COMMENTARY By Kim Campbell

How have we been working for you? We have been working on a range of initiatives which help our members succeed. Our aim is to concentrate on those key initiatives which will have the most impact for the bulk of our membership. Our work with the Accident Compensation Corporation is an example, of how our efforts have benefitted everyone. We have made a concerted effort over the past few years to work with Accident Compensation Corporation to ensure the levy has been reduced. First of all there was the reduction in motor vehicle levies, then work and earners levies and late last year further levy reductions to the tune of $450 million was announced for the 2016/2017 year. What this shows is that as the overall fund has been called on fewer times, it can be released back to those who contributed to it. With all the work being done around health and safety, and reducing workplace injuries, I would expect employers to enjoy ongoing benefits from this.

Employers voice for pay equity A significant step forward was made recently with the joint recommendation on pay equity being given to Government. EMA was at the table in this process, adding the voice of employers to this issue, along with union and government representatives. While the next step now sits with Government, the agreed approach from the Joint Working Group was to pursue a

bargaining approach, using the framework of the Employment Relations Authority – rather than opting for a court-based solution on pay equity issues. As the voice of employers, we are pleased with this as it provides certainty and familiarity for our members should they need to address such issues. We wait to hear back from Government as to how this will be progressed. Other key employer-related matters we have been advocating on include shaping the Health and Safety at Work Act and subsequent regulations to deliver a practical approach to implementing, managing and complying with the new regime. We also were at the forefront of putting members’ needs and/or concerns into the mix for the omnibus Employment Standards Legislation Bill, which saw parts of several Acts updated or modified in April of this year. This included parental leave, obligation to keep proper records and management of casual contracts. There is an ongoing piece of work relating to the Holidays Act, which members constantly say they would like simplified.

Progress on RMA reform Another area we have been working on constantly is reforming the Resource Management Act (RMA) to help breakdown the barriers to growth and development. The RMA, and associated Acts, have been a constant source of frustration to our members over several years now. While some change is underway, our aim is to

ensure members are not burdened with more layers of bureaucracy. On behalf of members we have put these views to the Select Committee. However, we firmly believe the RMA and the major planning laws – the Local Government Act and the Land Transport Management Act – all need complete reform. This naturally leads to infrastructure development and investment. We recently commented that infrastructure should lead development decisions, not follow, in relation to how Auckland would cope with its growth. A planned approach to transport systems, water, sewerage, community facilities such as schools and easy access to medical care is required, before developing the land for commercial or residential needs. Often a handbrake to infrastructure is how to fund it, particularly when local and central government are juggling their respective priorities. One area which we are keen to see progressed is public private partnerships. Overseas, these are a well recognised way to manage the procurement process for big spend items that have a public benefit, yet can offer a commercial return at some level. The centralised system and efficiencies delivered, result in more projects being delivered on-time and on-budget and the subsequent savings free up capital to be invested in more projects. You can hear about this and more as this month we are on the road for our Winter Briefing run. I look forward to catching up with as many of you as a I can, and sharing our updates along with hearing from you as to what else we can work on to make it easier for your business to succeed. • Kim Campbell is the CEO of EMA. Email kim.campbell@ema.co.nz

BusinessPlus July 2016

COMMENTARY By Alan McDonald

Electricity Pricing Electricity pricing is always a sensitive subject for members and its back on the agenda with the Electricity Authority currently consulting on a new Transmission Pricing Methodology. Consultation on the near 500 page document closes on July 26 but the Authority is basically setting a method of geographical pricing that means the further a consumer is from the point where the electricity is generated the more they will pay. In the EMA’s region from Taupo north, Auckland, Northland and customers in the outlying reaches of the Bay of Plenty face significant increases. In Auckland consumers face a 44% increase in their current line charges while in Northland the average is 58%. Counties Power (Franklin District) and WEL (Waikato) also face significant increases although the worst hit are Westland and Mid Canterbury with increases of 200% or more. The shift to geographical pricing is a major concern when our major infrastructure such as electricity and fibre networks have traditionally been socialised nationally as critical infrastructure for the national good of the economy and social wellbeing. There are a number of other technical issues around the proposal from the Electricity Authority but the fact is Auckland residents and businesses will bear the brunt of the reallocation of pricing while it will become more expensive to do business in

Northland and the Bay of Plenty because of this shift in pricing structure. Auckland lines’ company Vector has provided the analysis below which shows the individual cost for both residential and business customers. (NB: ICP = Installation Control Point, your connection point to the network). The costs vary across the four business connection types but for some of our larger members the impact will be well into six figure dollar increases per year with Auckland footing the bill for an additional $80 million per annum. The EMA will oppose these proposals and we encourage members to submit to the Electricity Authority submissions@ ea.govt.nz against the changes. Category

Number of ICPs

Current Average average annual annual charge increase

Residential

474,694

$260

$97

General

57,633

$397

$148

Low Voltage

4,456

$4,230

$1,577

Transformer

1,362

$19,373

$7,221

High Voltage

145

$61,255

$22,833

• Alan McDonald is EMA’s policy director. Email alan.mcdonald@ema.co.nz

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BusinessPlus July 2016

COMMENTARY

Coping with Auckland’s rapid growth Every week 825 new residents call Auckland home. In that typical week we would need to find 472 new jobs, 52 additional spaces for new students and care for 137 more seniors over the age of 65. We would need to build around 250 new homes with supporting roads, pavements, underground infrastructure and community facilities. Then our new residents would need to get around – last year an additional 118 vehicles per day were registered in Auckland. This is growth at a truly rapid rate. Auckland is a popular city to live, visit and invest in, and this popularity shows no signs of slowing. Our population has grown by 130,300 since Auckland Council was created, which is the equivalent of building a new city the size of Tauranga or Hamilton. By 2043 our population is expected to reach 2.2 million. While growth brings many advantages, it also comes with significant challenges.

Significant pressure on infrastructure For Auckland Council it means dealing with the significant pressure put on our city’s transport, housing and infrastructure. It’s a big job, but it’s a job we’re tackling. Like all councils, we need to meet the current and future needs of our communities for infrastructure and public services. But unlike other councils, we have an added layer of complexity given Auckland’s significance to the rest of New Zealand. More than a third of New Zealand’s population live in Auckland, and the region’s GDP is $88 billion, or 37 per cent of the national GDP. What matters to Auckland matters to New Zealand.

To be a successful city we need a transport system that moves people faster and more easily. I can confidently say we are on our way to achieving this.

we will continue to increase supply, we believe it’s now up to the developers and construction industry to start delivering those new homes.

As the biggest investors in transport, the council and government are aligned and are working together to deliver a shared common view about Auckland’s transport priorities. This will confine past disagreements to the history books and lead to greater confidence for our business community.

We also have over 25 major projects and initiatives across council that are focused on everything from Special Housing Areas and social housing to stormwater plans and optimising council-owned land - all of which will help with the supply, choice, and affordability of housing.

As an example of our joint work, we have just witnessed a huge milestone with the start of work on the City Rail Link (CRL). The CRL will unlock the city’s rail capacity and provide a train every 10 minutes for most Auckland stations. It will allow 30,000 people to travel every hour during peak time (double current capacity) - the equivalent of clearing 12 motorway lanes.

Housing challenge Perhaps Auckland’s greatest challenge though is housing. While there is no single solution to Auckland’s housing issues, we believe we are doing our bit. To keep up with population growth, we need to build 13,000 new dwellings each year. We know that we have a development pipeline of more than 94,000 new greenfield and brownfield dwellings and sections, which puts us in a good space for several more years. In our future urban land supply areas we’ve identified 11,000 hectares for development – that’s one and a half times the size of Hamilton and it equates to 110,000 homes (about nine years’ worth of supply). While

Photo credit Auckland Council - David St George

By Stephen Town

While Auckland’s rapid growth is enviable, it also requires significant investment. We pay for services and infrastructure through a combination of borrowing, government grants, rates and user charges. In 2016/17 Auckland ratepayers will see an overall average rates increase of 2.4 per cent in order to see us keep up the pace of the investment we need for the future. For the average business, that’s an increase of $5.12 per week. We place great importance on keeping costs down. To keep the cost of borrowing to an absolute minimum we cherish our strong credit rating which is only second to Central Government and above New Zealand banks. We also relentlessly pursue cost savings, which are budgeted to increase from $183 million of savings in FY2015 to $309 million in FY2025. Our savings programme includes better procurement and tendering processes, improved use of information technology, reducing the number of office buildings and alternative sources of funding. Dealing with growth on this scale is no easy task but I can tell you we are tackling the issue head on. Most importantly our region is now represented by one council that can speak with one voice, so we can plan for this growth in a measured and co-ordinated way. • Stephen Town is the CEO of Auckland Council

BusinessPlus July 2016

COMMENTARY By David Spratt

n o ti p m u s n o c d n a ts s Managing co t n e m n o ir v n e s e ic rv e in a cloud s In an ICT/cloud infrastructure model there are three basic levers that need to be managed. These three issues and their solutions are discussed below.

1. Establishing proper authority to buy services Picture a junior technical person happily sitting at their desk with ideas running freely through their inexperienced but giant brain. “Eureka!” they cry, “I can solve my technical problem by using loads of storage on a huge server”. Reaching for the department’s username and password, our intrepid techo accesses a public cloud service provider, nails up the required infrastructure and sets to work. Our junior techo never actually switched off the environment they created; in fact it was so useful that it became the test bed for the whole department. Nor did they even have the delegated financial authority to spend the money. Two months later a finance person, waving an eye-wateringly large invoice, arrives in the IT manager’s office. The company was committed and the money spent before you could say “breach of process”.

2. Controlling storage and backup growth For the past 20 years organisations have grown their storage at around 70 per cent each year on average, as shown in the diagram below. Year

Annual Monthly Gigabyte Rate spend spend storage per GB

Year 1 $2,400

$200

333

$0.60

Year 2 $3,264

$272

566

$0.48

Year 3 $4,440

$370

962

$0.38

Year 4 $6,036

$503

1636

$0.31

Year 5 $8,208

$684

2781

$0.25

Year 6 $11,160 $930

4728

$0.20

BusinessPlus July 2016

The diagram shows you were able to negotiate a 20 per cent price reduction every year for six years while backing up 70 per cent more data annually. Monthly backup charges have grown from $200 per month to a whopping $930, despite aggressive price reductions.

3. Monitoring the proliferation of server infrastructure

Our intrepid junior techo has moved to an organisation with more “flexible” IT policies (that means no policies, in case you needed clarification). Techo’s new boss has just turned up waving an unexpectedly large invoice and demanding a reduction in the number of servers. “We can’t do that!” says our techo, “These servers are all essential to the running of the business”. Flummoxed, the IT manager storms off, wondering just how to handle the inevitable conversation with Ms Money, the chief financial officer. Ringing in his ears are the words: “Don’t give me problems - I want solutions”.

Solutions

· Authority to buy services A good thing about most cloud service providers is they offer some form of budget control solution, however, organisations need to understand the spending risk and put in place internal policies around just how and when cloud services are consumed. · Storage and backups I have yet to find a multinational backup software provider that seeks to reduce the amount of data their users back up - hardly surprising as they charge by the Gigabyte. To get on top of this problem, measure performance against agreed limits on storage and backups, and ensure technical

people apply tools like deduplication (ie, only backing up one cat video shared on email), ageing non-critical data, and long term archiving. Measuring performance requires active monitoring by those in senior positions. I use a tool that reports in real time and used properly incentivises the IT team to actively manage the challenge, and delivers the satisfaction of real financial results for their efforts. · Server infrastructure Just as with backup software suppliers, server support providers are hardly incentivised to shut down servers when they charge a fee for every server they manage. The answer for managing costs is the same as for storage and backups: agree overall targets, and drive to these. Remember, although some servers are actually mission critical, not all are. Switching off a system just to hit an arbitrary target could be catastrophic, so key stakeholder input is as important when switching them off, as it is when switching them on. Monitoring server utilisation can quickly identify significant savings opportunities, and places the onus on the technical folk to justify why a server can’t be switched off in the low season. Baseline what you have, analyse the projected and actual costs, and monitor the inevitable ebbs and flows of a dynamic IT cloud infrastructure. The rewards will be huge, the savings real and the risk negligible when you get this right. • David Spratt is director of ICT at Total Utilities. Email david@tumg.co.nz

The Act’s definition basically comes down to doing everything that’s reasonably able to be done, in identifying risks and the harm they might cause and eliminating or minimising the risks.

BusinessNZ COMMENTARY By Kirk Hope

Health and safety not a mystery In contrast, the new Act assigns overall responsibility to the person in charge of the business unit, but also requires responsibility by everyone else at work, including owners, directors, managers, workers, contractors, and so on.

Some smaller businesses are worried about the new health and safety law. The Health and Safety at Work Act came into force earlier this year, replacing an act that had been in place for nearly 25 years.

The new Act contains serious penalties for unsafe actions - not only for directors and those who are in charge of the business unit, but for workers also.

The new law is better than the one it replaced. It is clearer about responsibilities for health and safety, and it is based on a simple set of principles rather than being a list of rules and directives. The reason why it is concerning some small businesses is because a change to a principles-based law takes a bit of time to get your head around. Instead of working with a checklist of rules and directives, there is now the freedom to set up your own health and safety practices at work - as long as they are consistent with the new Act’s principles. There are a couple of key principles in the Act: • First, you have to do “everything that is reasonably practicable” to achieve safety in your workplace. • Second, “everyone must be involved” in achieving safety in the workplace. The fundamental thing is to work out how to build a health and safety system in your workplace that complies with those principles: first, doing “everything that is reasonably practicable” to achieve safety. This basically comes down to identifying and dealing with risks.

harm they might cause and eliminating or minimising the risks. The cost of doing this must be reasonably practicable too - not grossly disproportionate to the risk. And your actions must also be reasonably practicable in terms of how much influence or control you actually have over the area of risk. Working through this principle of “doing everything that is reasonably practicable” is a big change from simply following rules and directives as in the old Act. But once this principle is internalised – once everyone at work understands and commits to doing everything practicable for safety – we will be better placed to achieve safe workplaces.

If you can’t eliminate risks (as far as is reasonably practicable), then you must minimise them (so far as is reasonably practicable).

All involved

Definition of reasonably practicable

The previous health and safety act was not very clear about where all responsibilities for safety lay, while tending to impose responsibility on a narrow group of people – managers and safety reps.

The Act’s definition basically comes down to doing everything that’s reasonably able to be done, in identifying risks and the

The other big principle of the new Act – “everyone must be involved” – also requires an attitude shift.

Every workplace must now make provision for staff to participate in improving health and safety on an ongoing basis. There is a lot of freedom around how this can be done, whether by having safety reps and a health and safety committee, or some other way of involving staff. Businesses operating in lower risk occupations that have fewer than 20 employees are not required to have a health and safety committee but have to consult workers in matters of health and safety, and workers must be able to contribute to decision-making on health and safety. Again, once this principle is internalised – “everyone must be involved” – we will be better placed to achieve safe workplaces. Some smaller businesses have expressed fears about being able to understand and comply with the new Act, given the penalties for serious infringement of the Act are stronger than before. However, the new Act is not only tougher on safety; it also provides better assurance to business people that they will not be held unfairly liable for accidents in the workplace. If someone in the workplace is hurt, and the employer has done everything reasonably practicable to make the workplace safe, he or she will not be liable. • Kirk Hope is chief executive BusinessNZ. Visit www.businessnz.org.nz

BusinessPlus July 2016

COMMENTARY By Matt Dearing

“The ERA takes an inquisitorial approach to determining the problem, with the Member pre-reading the evidence and leading the questioning of the parties. This is intentionally less formal and speedier than a court process.”

Outside help to resolve employment relations conflict EXPLAINED: How the Employment Relations Authority works Last month (in BusinessPlus June 2016) we discussed what occurred at mediation for employment relationship problems. Here we outline what occurs when an employer finds themselves having to attend the Employment Relations Authority (ERA). Sometimes when the parties to an employment relationship problem are unable to resolve the issues themselves or at mediation, one of the parties (usually an employee, ex-employee or union) will seek to have the matter determined by the ERA. However, an employer can seek to have the ERA deal with a variety of matters such as an employee breaching post-employment restraints or confidentiality/trade secrets, or breach of contract. The ERA investigates employment relationship problems and has the power to make legally binding decisions. It is not a court, and holds “Investigation Meetings” rather than hearings. Decisions are made by Authority Members as opposed to Judges. The ERA takes an inquisitorial approach to determining the problem, with the Member pre-reading the evidence and leading the questioning of the parties. This is intentionally less formal and speedier than a court process. The Investigation Meetings are open to the public and the ERA’s determinations are made public.

Process for resolving a problem through the ERA A party wishing to have the ERA determine a matter is the “Applicant” and needs to fill out an application form, which includes a Statement of Problem.

BusinessPlus July 2016

The Applicant must explain what the problem is, including: 1. the facts that caused the problem, 1. the steps taken to try to solve the problem, such as mediation, 1. how they would like the problem resolved. Other relevant documents should also be attached and then the application lodged, with the necessary fee (currently $71.56). The ERA sends a copy of the Statement of Problem to the other party who is the “Respondent”. The Respondent must complete a Statement in Reply form within 14 days, explaining: 1. their view of the problem in plain language, 2. their account of the facts, 3. any steps taken to resolve the problem, such as mediation. The Authority Member will then hold a teleconference with the parties’ representatives. If the parties have not been to mediation, the Authority will, in most cases, direct them to attend before it deals with the matter. If the parties have been to mediation, the Member will organise what witnesses each party will be calling to give evidence, a timetable for the exchange and filing of evidence, and set down a date for an Investigation Meeting. The parties may attend an Investigation Meeting with or without an advisor or representative. During an Investigation Meeting the Member may make a recommendation to the parties about solving the problem. If the recommendation is not rejected by one or both parties it becomes final and binding.

The Authority makes a decision Where the Member completes the investigation and reaches a decision about

the problem, the ERA must, wherever practicable: • give an oral decision (known as a “determination”) to both parties, or • give an oral indication of its preliminary findings to both parties. The ERA can only reserve its determination if there are good reasons for not giving an oral determination or oral indication. In this case the ERA gives a “reserved determination”. The ERA can also determine matters without holding an investigation meeting. However, in all cases the ERA must give a written determination (or a written record of an oral determination) to the parties.

The ERA may order remedies If the ERA finds that a personal grievance has been established, it can order remedies including financial remedies. Remedies might include an order that a dismissed employee be paid lost wages, or that the employer pay compensation for humiliation, loss of dignity and injury to feelings. In some circumstances, the ERA can also order that the employee be given his or her job back (ie, reinstatement). When considering financial remedies, the ERA must consider both the conduct of the employer and of the employee. For example, if a grievance is established but the employee’s conduct was poor, the ERA may reduce the amount the employer would otherwise have to pay. The amount of compensation ordered by the ERA varies depending on the facts of the particular case. With respect to costs, the ERA operates a tariff system where the successful party receives $3,500 per full day of Investigation Meeting. If one party is dissatisfied with the ERA’s determination, they can have the entire matter re-heard in the Employment Court. • Matt Dearing is a Senior Solicitor at EMA Legal and a member of the Auckland District Law Society’s Employment Law Committee. Email matthew.dearing@ema.co.nz

“After months of experimentation and trialling, the team of scientists and engineers undertook further research in the lab and concluded their tests with a successful outcome – a process to inhibit concrete drying.”

Commercialising a problem Slowing the setting time of wet concrete Interbloc is a successful Auckland-based company that produces interlocking concrete blocks for a range of building services. After meeting a Callaghan Innovation representative initially in 2013 the company approached Callaghan last year with an idea for business expansion, but as the idea was essentially a problem, it needed extensive research and technology to provide a solution. The problem was the vast amounts of wet concrete being wasted on sites throughout the world each year, because the short hardening time for concrete renders it useless after about six or seven hours. Interbloc sought to solve this problem, and its first question to Callaghan Innovation was: is it possible to slow the setting time of wet concrete? Callaghan Innovation’s scientists and engineers undertook extensive research and are now in the early stages of a solution that could see hundreds of thousands of tonnes of wet concrete being recycled into useable blocks, through an extended setting time. Research scientist Matt Sharp was involved in planning the research and development programme, and then

implementing it to get the technology to a useful stage for Interbloc. He says the team’s expertise made for a smooth process. “As we had a really good understanding of the concrete system and carried out some preliminary research, we had a good idea of what to expect before beginning the work,” says Matt. The team at Callaghan’s Gracefield Innovation Centre identified existing technologies that could potentially provide a solution, however, these technologies weren’t designed for the intended type of application. After months of experimentation and trialling, the team of scientists and engineers undertook further research in the lab and concluded their tests with a successful outcome – a process to inhibit concrete drying. “The concrete had to meet extreme performance targets to be considered useful, such as keeping the wet concrete mixture fluid for multiple days, and then making it harden on demand. “It was fantastic when we began to see test results meeting these targets, as we knew our proposed solution was viable,” says Matt. The end-to-end support Callaghan

Innovation provides starts with its specialists working alongside businesses from the very outset to determine not only the best solution for the client, but also to offer excellent analysis and guidance through the process of product development. Matt sees more capacity for work in the manufacturing industry, especially to minimise waste. “The expertise in Callaghan Innovation is very diverse and almost all areas of the manufacturing industry can benefit from more efficient processing or the minimisation of waste,” he says. “This often leads to new markets as well. “For example in the area of cement, materials from other sectors that were once considered waste, such as waste glass, fly ash from coal burning and slag waste from metal smelting, are now highly sought-after and sold as supplementary cement materials, as they provide several performance benefits when added with cement.” The next steps of the cement project will see additional large pilot trials taking place on site in Auckland. For more information visit www.callaghaninnovation.govt.nz

BusinessPlus July 2016

Find the middle ground. Keep your precious staff.

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“A Blockchain is a system for validating, clearing, settling, tracking and recording the ownership of assets as they are traded.”

COMMENTARY By Barry Squires

The future of payments? Introduction to Blockchain Have you heard of Blockchain? Distributed Ledgers? Crypto Currencies? Virtual Currencies?

only the owner of the account and the bank can view the transactions and the balance held in that account.

If not, you soon will.

When you use your bank account to pay someone else, two things occur.

Blockchain is described as the fifth paradigm shift in computing after the introduction of mainframes, personal computers, the Internet and social networks. The World Economic Forum identified the Blockchain, in a report released in 2015, as one of six global mega trends that will shape the future of society. Blockchain technology was originally developed to support the first Virtual Currency, Bitcoin - the first peer-to-peer, nongovernmental currency.

Payments now Real money, or Fiat Currency, is issued by a country’s central bank and has the balance sheet and revenue gathering (tax collection) authority of the Governments backing it. Virtual Currencies are not backed by governmental agencies. Blockchain technology uses a system of Distributed Ledgers to record and maintain a record of every transaction that ever occurred within that ecosystem. This is very different to the way “real money” is transacted. The payment and settlement of Fiat Currency transactions relies on centralised, point-topoint ledgers, as well as on trust relationships between the actors in the payment ecosystem and the provision of liquidity through the use of the balance sheets of a central bank and the registered banks in that country. A bank account is really a ledger maintained by your bank, in your name, that records all the transactions conducted over that account. The ledger is point-to-point, in that

Firstly, your bank records the debit to your ledger and deducts that amount from your account. Then the payer’s bank notifies the payee’s bank to update the ledger of the payee’s account by the same amount. This is referred to as Interchange and relies on the payee’s bank trusting the payer’s bank that the transaction is authentic and that the payer’s bank is good for the amount transferred. The second process is “settlement” of the transaction. This is when the real money changes hands. The settlement process between the banks uses the central bank’s clearing system to pass the real money from the payer’s bank to the payee’s bank. This process can be described as a “manyto-one” ecosystem, in that all the banks in the system point to the central bank to settle transactions; ledgers are only updated by the account-holding bank and can only be viewed by the owner of the account; and the banks in the ecosystem must establish trust relationships with each other.

the newly updated ledger is available. Once agreed and updated, the resultant new ledger is called a “block”. Each new block is added to the “chain” of previous “blocks”, hence the term “Blockchain”. The nodes in the Blockchain network are provided by a network of high-powered servers, each separate to the rest. This results in a ledger that is very difficult to alter once a new block is created. Therefore the Blockchain can be described as a distributed database that is so robust that it can be made public. All the transactions across the ledger are verified and immutable.

Wide potential uses The applications for such a ledger are only just beginning to be identified. In the world of global trade, that is still heavily reliant on paper documents, banks, regulators and logistics bodies are discussing whether a Blockchain network could be used. It could work like this: an exporter could update his/her ledger when an order was received and then shipped; the port updates the ledger when the goods are received; the shipping company when the goods are loaded on the carrying vessel; regulatory authorities such as Customs and Health Certifications could update with their approvals; and all of this becomes visible to the importer and relevant authorities at the destination.

The idea behind Distributed Ledgers is very different. A Blockchain is a system for validating, clearing, settling, tracking and recording the ownership of assets as they are traded.

Other applications could involve post-trade settlements of securities trades, cross-border payments and land title registries. The possibilities are endless. The technologies are still very much in the early stages, but major corporations and banks as well as regulatory institutions globally are taking notice and investing.

It involves a ledger of transactions that is “distributed” over a network of nodes. This means all the ledgers must agree, or reconcile with each other for every transaction, before

• Barry Squires is Head of International Business - Corporate and Institutional Banking, at Westpac NZ. Email barry_squires@westpac.co.nz

The future of payments?

BusinessPlus July 2016

EMPLOYMENT By Odette Shearer and Becky Mudford

Optimising contract and temporary human resource With a shift globally in the nature of work, there is a push-pull effect between employers and the workforce to engage in flexible employment contract relationships. The number of individuals who choose careers as non-permanent staff is increasing while companies are thinking laterally about fresh ways of clustering tasks, and this interim workforce provides agility as new functions emerge. Hiring non-permanent staff provides the following benefits: • It allows employers to scope a newly created position to determine if it is required, its content and the volume of work. • It facilitates business change where the nature of a role may differ from the original position responsibilities after introducing a new system, refreshing a brand, integrating operations or introducing a new function. • It provides cover for an employee on leave. • It is useful for project management, eg, for a specific event, brand launch, new product development, system upgrade or implementation, change in legislation or company transformation project. • It helps in managing uneven workflows, eg, for seasonal requirements or fluctuating factory capacity. • It helps where there is a change in business ownership by providing capability to guide the company through new reporting requirements, organisational design and governance parameters. • It covers a skills shortage for businessas-usual critical roles while a strategy is developed to recruit permanently. • It can provide more cost-effective access to high-level professional expertise such as public relations, legal, human resources than having the role in-house.

BusinessPlus July 2016

Employment contract structures Methodologies applicable for nonpermanent employment relationships vary, reflecting the nature and level of the assignment, the company policy and required expertise. Following are payment options: • Hourly rate • PAYE or GST registered • Fixed term contract • Outsourced payroll plus transaction fee • Daily or monthly agreed rate Applicable engagement terms are: • Hourly rate fees for short-term and open-ended projects; • Fixed term agreements for longer and defined periods; or • Self-employed, GST-registered career contractors for senior or specialist skill engagement. Advantages of each method must be evaluated in line with all elements of the project and employment market legislation.

Scoping and sourcing Prior to a hiring decision, define the project and corresponding skills match, consider the employment relationship options, think laterally about hours considering full or part-time alternatives and the location of the worker (eg, office or home). For recurring hiring campaigns it may be appropriate to create a pipeline of resource. But for a unique situation, a secondment to develop organisational breadth may be preferable. The internal hiring process should reflect the duration and level of expertise required.

Attribute and skill success factors Ensuring your interim employee has the relevant capabilities and attitudes will assist fast incorporation into your business and results. This transient employment relationship does not appeal to every personality type, with the most pertinent interpersonal qualities of a non-permanent being: • Adaptability to new environments and work schedules; • Effective communication; • Ability to build rapport and relationships; • Affinity with change and learning quickly; • Self-awareness and self-confidence; and • Motivation to deliver on agreed objectives. It is accepted business practice to hire a slightly more skilled person into an interim role than for the equivalent permanent position.

Integration Appropriate induction encourages a smooth assimilation. Outline expectations and timeframes, make key introductions, ensure technology is accessible, and describe organisational functions, locations and purpose. Cover housekeeping items, identify timesheet and payment processes and if supplied through a talent partner, keep the latter informed. For duration of the project, communicate regularly and openly, provide feedback, gain value from the worker’s expertise and include them in social events. Shaping particular positions and projects to engage a temporary resource may be the most effective commercial model, while also accommodating the contemporary labour market. • Odette Shearer and Becky Mudford are consultants at Pohlen Partners human resource and recruitment specialists. Visit www.pohlenpartners.co.nz

EMPLOYMENT By Bernadette Emerson

When size doesn’t matter: key law changes for all employers Updates across a range of employment legislation have placed new requirements and responsibilities on employers in New Zealand, whether you employ fewer than 10 people or more than 500. The new rules reflect our modern, dynamic business environment and encourage fair and productive work practices. They include widening of paid parental leave eligibility to cover more workers and extending the Government’s payments to 18 weeks. From the outset, the Workplace Relations and Safety Minister stated the legislation was intended to “strengthen the enforcement of minimum employment standards”. Many employers are already meeting these standards and for some, the amendments provide legislative guidance to update their policies to attain compliance. The amendments add to the raft of already complex legislation: the Employment Relations Act 2000 (ERA), the Parental Leave and Employment Protection Act 1987, the Minimum Wage Act 1983, the Holidays Act 2003, and the Wages Protection Act 1983.

Key areas that will impact many businesses are outlined below.

specifies the period of notice required for cancellation.

• Hours of work The ERA addresses so-called “zero hours contracts”. It offers protection to employees in industries where an employer requires them to be available to work when required. The Act now includes provisions covering agreed hours of work, guaranteed hours and availability. The addition of Section 67C ‘Agreed hours of work’ covers both collective and individual employment agreements.

Additionally, if a shift is cancelled, it outlines that reasonable compensation must be paid if such notice is not provided. To avoid doubt, nothing in the provision enables an employer to cancel an employee’s shift if that cancellation would breach the employee’s employment agreement.

We recommend employers review their employment agreements particularly in relation to hours of work. • Secondary employment provisions A provision in an employment agreement prohibits or restricts the employee from performing work for another person, or prohibits or restricts it without the employer’s consent. Employers should note that offering a secondary employment option may increase the risk of fatigue. • Cancellation of shifts The ERA contains a new provision for shift workers covering the cancellation of shifts. An employer must not cancel a shift unless the employment agreement

For more assistance, our Adviceline team can be reached on 0800 300 362 and are equipped to guide you through the key changes to employment standards legislation.

Best practice conference For further analysis and explanation, come to our annual Employment Relations Conference in Auckland on July 21. You will hear directly from the chief of the Employment Relations Authority, James Crichton, about how to minimise your risk of costs and compensatory payments, plus lots more. Register to attend at www.ema.co.nz • Bernadette Emerson is Portfolio Manager – Human Resources and Employment Relations at EMA. Email Bernadette.emerson@ema.co.nz

BusinessPlus July 2016

Employment CHAT

What’s the story with mature workers, employ Q. There are supposed to be lots of mature workers around who will work flexibly. Does this mean I can hire them as casuals and on 90-day trials and at the minimum wage because they will just be glad to have something to do and probably be off sick and taking trips away all the time anyway? – Mike

Dear Mike Um, no, you can’t pay someone the minimum wage just because they are old and “only want pocket money” as you suggest. All staff must be treated on equal terms and employed to do a job they are capable of, as they will demonstrate during your recruiting them. People get paid the appropriate hourly/ annual rate for their levels of skill and experience. All employees can work on flexible terms in agreement with their employer, and it’s an opportunity used for all sorts of reasons and by all age groups. You can employ anyone on a casual basis or engage with them as a contractor on agreed hours and conditions, to suit your

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BusinessPlus July 2016

“People get paid the appropriate hourly/ annual rate for their levels of skill and experience.”

business needs. In all cases the employee or contractor will sign an Employment Agreement or a Contractors Agreement before the work begins. Likewise, regardless of a person’s age or other attributes, if you are not sure the chosen candidate will be right for the role, you can employ them on a 90-day trial as agreed with them in their Employment Agreement. In general, older workers are choosing to stay in the workforce either for financial reasons or because the gain a sense of fulfilment by being in work. So it is not reasonable to assume they will be unreliable, skiving off on holiday and treating the job with disrespect – any more than anyone else might!

Q. I keep hearing about this thing called “employment standards”. What are they? We have set up a new business with two employees and want to make sure we get it right. - Don

Dear Don A number of laws govern employment to protect the parties involved and help manage inevitable conflicts, such as the Employment Relations Act. The Acts describe the minimum requirements or standards that employers must observe in employing people. You can go above and beyond the basic standards but offer no less, in order to protect people from harm and human rights abuses. A number of these laws were amended under the name of the Employment Standards Legislation on 1 April 2016. The government’s aims were to respond to the modern, dynamic business environment and encourage fair and productive workplaces; and to strengthen the enforcement of minimum employment standards.

Employment CHAT

ment standards and splurging managers? Tougher enforcement sanctions include: • The Employment Court will hear the most serious breaches of minimum standards, such as exploitation, and will be able to award increased penalties ($50,000 for an individual; the greater of $100,000 or three times the financial gain for a company); • Public naming of employers who are found to have breached minimum standards; • Possible banning of individuals from being a manager for serious breaches or exploitation of migrant workers; • Extension of liability to persons such as director, senior manager, legal advisors and other corporate entities if they are knowingly and intentionally involved in any breach. These people could be pursued even if the employer ceases to exist. Other areas of change relate to: • Clearer record keeping requirements, • Increased tools for labour inspectors, • Changes to Employment Relations Authority’s approach, • Prohibition of certain practices such as “zero hour contracts”, and • Parental leave.

“It is important to set clear parameters on what the employee can spend. Remind people of the need to watch costs and of policies for such things as use of company cars, credit cards and entertainment expenditure.” Call us for more explanation if that is not enough, or visit www.ema.co.nz Q. I have senior staff always off at meetings and functions, putting in big expense claims despite my request to tone it down. I wonder how much of this is necessary. On what basis can I confront this excess spending? – Jacqueline

Dear Jacqueline It is important to set clear parameters on what an employee can spend. Remind people of the need to watch costs and of policies for such things as use of company cars, credit cards and entertainment expenditure.

If the employee is consistently spending above the budget then it would be important to address the issue through performance management. EMA has employment relations consultants who can help with that, at member rates. • 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), 8am8pm weekdays NZ time; or email advice@ema.co.nz You can also find information at www. ema.co.nz such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, or the detailed Employer Guides on 12 popular topics.

0800 223 729 www.acepay.co.nz 0800 223 729 www.acepay.co.nz

0800 www.acepay.co.nz 0800 223223 729729 www.acepay.co.nz

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BusinessPlus July 2016

h c n u L t e g d u -B st o P â&#x20AC;&#x2122;s A M E @ n See with MP Steven Joyce, in Auckland

Wal Britton [Accounts Enforcement] and Andy Goodwin [Stemtech NZ]

Richard Pearson [EMA board] and Gary Ivory [KPMG]

Michael Martin (Prestige Real Estate International), Martin Philipsen [director] and Lance Pearson (Access NZ 2005)

Kim Campbell [EMA] and Marsh Hudson [Hudson Strategic]

Patrick Holmes [Coastguard NZ] and Matthew Bellingham [Bellingham Wallace]

Alan Le Noel [Hauraki Panel and Paint] and Angela Cameron [Consult Recruitment]

Richard Sandford [Spark], Val Hayes [EMA] and Willa Barker-Pocock [Spark]

Peter and Rose Follas [Monarch Sheetmetals]

BusinessPlus July 2016

Steven Joyce [MP], Mark Champion and Rachael Armstrong [EMA]

Dennis Peat [Goldline Construction]

EMPLOYMENT

wage&salary

By David Shannon

Pay trends for 2016: stability rules! I am an immigrant to New Zealand, although after 32 years here I consider myself fairly well “naturalised.” And I’ll wager a good many readers are also immigrants to Godzone. The New Zealand “way” is now our way of life, and among the many advantages of life here is STABILITY. Sure, there are ups and downs and detours, but overall, there is a great deal of stability and it features in nearly all aspects of our lives: government, society, business, entertainment, services, general lifestyle and, dare I say weather?

Yes indeed, both are true. So let’s dig a bit deeper.

Individual variation The EMA’s salary survey breaks job positions into 18 categories/ families and provides movement data on each. You can see examples of individual positions and their movement over time, in the list below. To take the most extreme figure, salaries in the “Local Authorities” employment category have fallen by 16.6 per cent in the past year!

This stability extends to the employment scene. Sure, there is the odd disruption now and then. What would labour relations be without some confrontation? But, overall, this is a pretty stable working environment at all levels.

Other apparent anomalies include “Residential/Community Care” wages/salaries falling 1.1 per cent, and “Health” falling 3.8 per cent. Such falls would seemingly hardly support my view of New Zealand as “stability” itself.

A year ago in BusinessPlus I described the labour market as “steady as she goes”, with more of the same predicted. And indeed just as then, the EMA’s National Wage & Salary Survey through the past year, 2015 to 2016, has continued to show modest overall wage movement at 1.7 per cent - which is even less than the “modest” rate of 2.1 per cent that I wrote about last year.

I then compared these extremes with the data from the previous year, and found that Residential/Community Care increased 7.3 per cent; Health rose 12.7 per cent and Local Authority rose 17 per cent. Quite a contrast!

But there are market variations across different jobs and skills. Some of you will say, “But I know whole groups of employees who got over 10 per cent increases,” or, “…who got no increase at all!”

Job family Clerical/Administration Contracting/Construction Electrical/Electronics Engineering Finance/Accounting Food Retail General Health Hospitality Information Systems Local Authority Management Manufacturing/Production Residential/Community Care Retail Sales/Marketing Supply/Distribution Transport Overall

Average wage/salary movement, 2015-16 % 2.6 5 3.2 2.6 0.6 4.8 -0.6 -3.8 9 3.6 -16.6 2.4 2.9 -1.1 11.1 4.2 -0.4 0.6 1.7

This demonstrates vividly the need for caution in interpreting specific figures when it comes to salary and wage movement. One factor that should be considered is the timing of the salary survey. It is conducted on a “rolling” basis throughout the year, and the figures can vary significantly depending on whether the employer completes the survey just prior to, or just after, conclusion of wage negotiations. Also, the more participants entering remuneration data in each job family, the more accurate the data will be: so please, do take part as often as you like and as soon as your wages/salaries in any job position change. So, what have we learned this year? My conclusion is: “Stability rules!” The pluses and minuses indicated in the salary survey data tend to balance each other, with last year’s “big gains” being countered by modest movements this year, and those who made less progress last year being compensated this year. And that is the nature of life here in New Zealand. We may see exceptional events in any aspect of life, but overall, things remain stable, predictable and comfortable.

Non-pay benefits In addition to paying wages and salaries, employers continue to put effort into providing broader work-life balance. This can be as simple as agreeing to or offering more flexible work hours to better cope with Auckland’s traffic. This becomes yet another way of building that stability we enjoy in New Zealand. There has been little overall change in the provision of benefits

BusinessPlus July 2016

wage&salary in the 2015-16 survey year. Employee leave entitlements such as the number of holiday days offered, and the range of health/ medical provisions such as insurance subsidies offered also remain essentially the same.

About the National Employers Wage & Salary Survey The survey is run throughout the year with 12-month rolling data used to create weekly reports. This means that when you receive your report it is current to that week – not made up of a year of data that could already be months old.

(up to 25 positions surveyed and $25 per position after that), members receive two reports: the Wage & Salary Survey overview; and the Salary Report which details salary ranges by position, with national averages by sector along with lower quartile, median and upper quartile results. These detailed reports include splits by industry, location and revenue bands. Being a national survey, it is also conducted among members and non-members of our regional sister organisations that together own BusinessNZ: EMA, Business Central, Canterbury Employers Chamber of Commerce and the Otago-Southland Employers Association.

As the survey covers 216 positions across 18 job families, it is a comprehensive benchmark.

Read more and take part at www.nzsalarysurvey.co.nz

The pricing structure for participants is “per position”, with significant discounts for EMA members. For $35 + GST per position

• David Shannon is EMA’s remuneration specialist. Email david.shannon@ema.co.nz

27 BENCHMARK JOB POSITIONS CEO/Managing Director - 50199 Employees (MA02) # of employees Average base salary % movement 3 year rolling General Manager - 50-199 Employees (MA05) # of employees Average base salary % movement 3 year rolling General Manager - Under 50 Employees (MA06) # of employees Average base salary % movement 3 year rolling

May-14

May-15

May-16

51 $206,020 -5.0%

28 $218,676 6.1% 0.8%

105 $187,957 -14.0% -4.5%

May-14

May-15

May-16

67 $154,998 -9.8%

43 27 $166,311 $160,646 7.3% -3.4% -2.3% -2.3%

May-14

May-15

May-16

187 $122,494 -8.6%

79 92 $130,668 $124,999 6.8% -4.5% 1.5% -2.3%

Marketing Manager (SA01)

May-14

May-15

# of employees Average base salary % movement 3 year rolling

55 $106,986 -9.4%

39 32 $111,714 $114,739 4.4% 2.7% -2.4% -1.0%

May-14

May-15

94 $102,953 -0.7%

25 22 $104,805 $104,279 1.8% -0.5% -0.4% 0.2%

May-14

May-15

Human Resources Manager (MA09) # of employees Average base salary % movement 3 year rolling Human Resources Advisor - Up To 5 Years (MA11) # of employees Average base salary % movement 3 year rolling Analyst/Programmer (IS03)

Finance Manager/Financial Controller (FA01)

May-14

May-15

# of employees Average base salary % movement 3 year rolling

112 $126,283 -0.9%

77 59 $128,528 $135,096 1.8% 5.1% 0.8% 2.0%

Chief Information Officer (IS01)

May-14

May-15

# of employees Average base salary % movement 3 year rolling

31 $118,864 9.4%

15 12 $114,179 $135,595 -3.9% 18.8% 0.9% 7.9%

BusinessPlus July 2016

May-16

# of employees Average base salary % movement 3 year rolling Sales Representative/ Commercial Traveller (SA07) # of employees Average base salary % movement 3 year rolling

37 $60,745 -2.2%

May-14 78 $74,032 0.8%

May-14 145 $60,826 1.5%

10 $62,810 3.4% 0.7% May-15 31 $76,880 3.8% 2.7% May-15 151 $62,397 2.6% 1.5%

May-16

May-16 19 $66,376 5.7% 2.3% May-16 15 $81,523 6.0% 3.6% May-16 111 $60,485 -3.1% 0.3%

Executive Assistant/Personal Assistant to CEO (CA04) # of employees Average base salary % movement 3 year rolling Receptionist/Data Entry (CA08) # of employees Average base salary % movement 3 year rolling Registered Electrician (EL05) # of employees Average base salary % movement 3 year rolling Electronics Technician (EL06) # of employees Average base salary % movement 3 year rolling Machinist/Toolmaker (EN08) # of employees Average base salary % movement 3 year rolling Automotive Engineer - Heavy (Motor Mechanic Diesel) (EN10) # of employees Average base salary % movement 3 year rolling Accounts Clerk (FA11) # of employees Average base salary % movement 3 year rolling Payroll Clerk (FA14) # of employees Average base salary % movement 3 year rolling Engineers Mate/Trades Assistant (Fitters Mate) (EN06) # of employees Average base salary % movement 3 year rolling

May-14 62 $58,822 -6.0%

May-14 138 $40,943 0.8%

May-14 96 $62,494 -0.3%

May-14 37 $53,151 5.4%

May-14 23 $56,939 -3.7%

May-14 41 $56,500 2.0%

May-14 73 $44,612 3.3%

May-14 54 $50,097 -1.4%

May-14 38 $40,365 -6.2%

May-15 29 $61,893 5.2% 0.4% May-15 93 $43,728 6.8% 2.6% May-15 51 $68,651 9.9% 3.2% May-15 69 $52,240 -1.7% 1.9% May-15 14 $58,017 1.9% -0.1%

May-15 11 $57,561 1.9% 1.6% May-15 42 $48,058 7.7% 3.4% May-15 33 $53,287 6.4% 2.1% May-15 23 $45,172 11.9% 0.5%

May-16

Caretaker/Custodian/ Handyperson (GE03)

39 $65,400 5.7% 1.5%

# of employees Average base salary % movement 3 year rolling

May-16

Salesperson - skilled (RE05)

93 $44,348 1.4% 3.0%

# of employees Average base salary % movement 3 year rolling

May-16 116 $73,045 6.4% 5.4% May-16 24 $59,604 14.1% 5.9% May-16 63 $60,967 5.1% 1.1%

May-16 19 $60,825 5.7% 3.2% May-16 23 $46,275 -3.7% 2.3% May-16 23 $53,649 0.7% 1.8% May-16 2 $39,520 -12.5% -2.7%

Warehouse/Storeperson Semi-Skilled (SD04) # of employees Average base salary % movement 3 year rolling Warehouse/Storeperson Unskilled (SD05) # of employees Average base salary % movement 3 year rolling Maintenance Fitter (MP14) # of employees Average base salary % movement 3 year rolling Production Worker - Unskilled (MP12) # of employees Average base salary % movement 3 year rolling Production Worker - SemiSkilled (MP11) # of employees Average base salary % movement 3 year rolling Driver - General Road Transport (TP05) # of employees Average base salary % movement 3 year rolling

May-14 9 $41,904 -3.3%

May-14 83 $43,588 16.9%

May-14 348 $39,325 3.1%

May-14 239 $34,582 0.5%

May-14 38 $58,224 -4.2%

May-14 763 $33,276 -1.6%

May-14 1,180 $37,131 -0.4%

May-14 83 $43,804 3.9%

May-15 27 $43,982 5.0% 0.0% May-15 21 $46,004 5.5% 6.5%

May-15 122 $40,289 2.5% 1.7%

May-15 27 $36,517 5.6% 2.1% May-15 79 $60,634 4.1% -0.3% May-15 480 $35,824 7.7% 2.0%

May-15 474 $38,443 3.5% 0.8%

May-15 135 $42,683 -2.6% 0.9%

May-16 31 $45,659 3.8% 1.8% May-16 128 $45,277 -1.6% 6.3%

May-16 163 $39,023 -3.1% 0.8%

May-16 38 $34,717 -4.9% 0.3% May-16 43 $70,110 15.6% 5.2% May-16 526 $36,035 0.6% 2.2%

May-16 527 $38,679 0.6% 1.3%

May-16 160 $46,742 9.5% 3.6%

BusinessPlus July 2016

EMPLOYMENT By Jessica Xu

Taking the pulse of employee engagement Why listen to employees? • • •

83% of surveyed employees said they would participate in an employee listening programme. Only 62% of Baby Boomers surveyed believe management will act on their input, compared to 78% of Millennials. HR practitioners who use multiple listening methods rated their organisational performance and reputation 24% higher than those who do not.

EMA members participating in the IBM Kenexa Best Workplaces have long recognised the value of listening to their employees as part of a strategy to develop a highly engaged workforce and to drive business success. Globally, organisations are recognising the need to stay in touch with employees on an ongoing basis, going beyond annual “snapshot” style surveys. So if your practices haven’t changed in years, you could be treading water when it comes to driving engagement and harnessing the power of “employee voice”. The shift toward continuous listening is natural in an always-on, smartphoneenabled workforce. The rise of social media has also led to a climate where feedback is continually being offered – whether it has been asked for or not. All-encompassing census surveys are no longer enough by themselves. A new suite of tools is available including mini-polls, informal pulse surveys and, of course, social analytics, to assess people’s beliefs, opinions, situational observations and even mood at any given time. To balance an annual census workplace survey with a tool that allows leaders to stay in touch with their people more frequently, IBM recently launched the Best Workplaces “Pulse” Survey. Employees answer 20 core questions from the full survey, incorporating the key

BusinessPlus July 2016

“Together these tools help organisations listen more regularly to what their people think about the state of the business, provide more timely feedback, spot any warning signs early on, and paint on ongoing picture of how a workplace is performing.” characteristics that consistently distinguish the best workplaces in New Zealand, including: • engagement, • leadership, • involvement, and • enablement. This allows shorter, faster and more frequent “temperature checks” on critical measures.

Always-on people strategy Together these tools help organisations listen more regularly to what their people think about the state of the business, provide more timely feedback, spot any warning signs early on, and paint on ongoing picture of how a workplace is performing. In other words, they help ensure that an organisation’s leaders and workforce are on the same page – all the time.

“Our annual Best Workplaces survey data has clearly shown that asking people for their feedback but failing to take visible action can actually be disengaging.”

However, developing strategies and taking action from survey results is every bit as important as listening in the first place. Engagement surveys are the start of a conversation, and just like every conversation, you need to respond. Our annual Best Workplaces survey data has clearly shown that asking people for their feedback but failing to take visible action can actually be disengaging. Continuous listening comes with higher expectations that people’s feedback will be acted upon, and requires a mindset shift when it comes to measuring and improving employee engagement. An “always on” people strategy is required; one that involves commitment and accountability from all levels of the organisation to give and receive feedback, to jointly formulate solutions, take visible actions, and monitor progress for improvements. The annual IBM Kenexa Best Workplaces Survey is open now; companies surveying by August 31 will be eligible for the 2016 Awards. • Jessica Xu is Managing Consultant, IBM Smarter Workforce. Visit www.bestworkplaces.co.nz

“Facebook builds brand loyalty. By providing valuable and entertaining content your followers will tend to stay loyal even when you make a mistake.”

IN BUSINESS By Rosina Webb

To Facebook or not to Facebook Facebook is worth considering as part of your business marketing plan. The number one reason is that your customers are there! Secondly, your competitors may already be there! Facebook is the number one social media platform, with more than one billion users and many of these “checking in” multiple times a day. However, if your customers are NOT on Facebook (and make sure this is a reality, not a perception) then Facebook may not be the right medium for you. You can check this easily yourself, looking online at what your competitors are doing.

Benefits of using Facebook In your deciding to give Facebook a go, consider the following list of benefits others achieve. • Facebook provides an opportunity to show a more human side to your business. • It’s a great way to interact and be engaged on more of a one-on-one basis with your customers - to keep them informed and build brand identity. • It broadens your reach beyond more traditional channels – an additional touch point with your customers. • It’s timely – you are able to reach large groups frequently, and to tailor those interactions to the needs of your audience. • It helps increase your website traffic by posting “link/like Facebook posts” that drive traffic to your site. This interaction between Facebook and your website will further boost your website search engine optimisation and help you to obtain better search engine results, as your site is well optimised.

• Facebook builds brand loyalty. By providing valuable and entertaining content your followers will tend to stay loyal even when you make a mistake. When people look online for businesses to buy from, they will often search via social media, particularly if they are already active Facebook users. Being active and responsive in this environment, they are more likely to do business with you than a company with no Facebook presence or a poorly-run Facebook page. • It’s an effective lead generation tool via competitions, giveaways, newsletters, etc. These allow you to legitimately collect users’ email addresses to connect with them outside Facebook. • It’s an inexpensive marketing tool. A Facebook business page costs nothing other than time to set up (until you start paying for ads, etc). Use professional graphics and photos where possible, to ensure a professional and reputablelooking site. In short, Facebook is an easy and inexpensive way to target specific prospects, as well as existing customers.

Ensure you request a profile address that is clear, logical and will allow your business to be easily found. There are many helpful set-up tips online, particularly on Facebook. com itself.

Analyse how you are going Facebook itself has many tools that you can utilise, that are important indicators of how well your Facebook page is doing. After your page has received 30 “likes” you are able to access data on audience demographics, referral traffic, likes, sharing, “un-likes” as well as how people are discovering and responding to your posts. These metrics are invaluable in assisting you with determining what is working and what is not. Bring your company to life – give it a personal face by creating an easy, inexpensive Facebook presence. It will help in understanding your customers better, and help build a stronger and more trusted relationship with them. What are you waiting for?

But where do I start?

Next month (BusinessPlus, August 2016) I’ll describe how to develop content for your Facebook page.

Start by setting up your business page. Facebook is very user-friendly, but if you are not comfortable with technology yourself, enlist the help of someone who is.

• Rosina Webb is founder and managing director of Energise & Associates. Email rosina@energise.net.nz

BusinessPlus July 2016

IN BUSINESS By Joanne Doolan

NZ is cruising but housing needs addressing This year’s Budget teaser of future personal tax cuts, as well as the finance minister’s hint of a boring, no frills, no fuss and solid-as-she-goes approach to the elephant in the room - housing – has passed. Now the key is to reflect on what this means for all of us. Even the most pessimistic person has to appreciate that New Zealand’s economic results make us the envy of other countries that are struggling with a challenging global environment. Our economic growth is averaging nearly three per cent per year, we have growing surpluses and falling debt, we have 200,000 more new jobs over the past three years and another 170,000 jobs expected by 2020. The average wage of $63,000 is $16,000 more than when National first came into Government. Add to those figures low inflation, low interest rates and improving economic forecasts. And the icing on the cake is that, despite dairy farmers having a shocker of a year, our exports grew by two billion dollars in the past year, which means we are diversifying beyond our dairy focus. The underlying fundamentals are changing and what New Zealand is seeing is a plan in place to create permanent differences. The increased spending in innovation, infrastructure, social needs and health are targeted as longer term initiatives rather than being dictated by the election cycle. There is rightfully a robust debate around whether the signaling of tax cuts represents an election bribe or whether this is good fiscal management to address issues such as tax bracket creep. At present the projected Budget

BusinessPlus July 2016

“And the icing on the cake is that, despite dairy farmers having a shocker of a year, our exports grew by $2 billion in the past year, which means we are diversifying beyond our dairy focus.” surpluses would not indicate these are warranted. However, given that our top personal tax rate of 33 per cent applies for income over $70,000, with the average wage at $63,000 there is a need to keep this on the agenda and ensure our personal tax rates are competitive, as increased wages alone are expected to bring in more than one billion dollars in taxes over the next four years.

Elephant in the room Housing affordability was largely ignored in the Budget and everyone

has an opinion on the best solution. However, it is a complex jigsaw puzzle that requires lots of different pieces to fit together. People needing to sleep in cars during winter is not okay, regardless of the reasons. We have more than 67,000 social houses available and some of these seem to be the wrong size and in the wrong locations. Nearly 800 of these are either being sold or redeveloped; more than 400 are meth contaminated and close to 800 are under repair or earthquake-damaged. Yes, increasing the supply of housing by enforcing rules for local councils to do so is going to make a difference, however, the issue seems to be a longer term fix. What about all those empty church buildings or halls, etc, owned by entities that have a tax-free status: can these be put to better use? When can we move beyond our fixation with home ownership to seriously explore better ways to provide quality, long-term rental solutions with fixed rents so people are not at the whim of some landlord? The loss of tax concessions for rental houses may not have been the smartest move on the block. After my initial cynicism around MP Peter Dunne’s request for a housing conference or think tank as ill-founded, I now think that is needed to progress this urgent issue, which is a blot on an otherwise great Budget. This is my least column in BusinessPlus so to all readers, thank you for your time, and best wishes. • Joanna Doolan was a tax partner with EY at time of writing.

“If any plant or equipment is damaged or faulty, it is the responsibility of the seller to have it repaired or replaced, otherwise its value may be deducted from the total plant value.”

IN BUSINESS By Mike Fokkens

Sold! Work to be done in handing over the business In the June issue of BusinessPlus, I covered the process of selling a business, and now I look at handing over to the new owner. It’s official: your business is sold! The sale is official because you have written confirmation that the sale agreement is unconditional. Both parties must now complete the transaction, and there’s lots to do. The solicitors for both parties will proceed to finalise the details required for settlement to take place on the specified date. The buyer’s deposit being held in their/your solicitor’s Trust Account can be paid to you, the vendor, after the funds have been in the Trust Account for a minimum of 10 days. In the time between the agreement being declared unconditional and the settlement date, both parties will need to finalise the following issues: • Stocktake The Sale and Purchase Agreement will nominate a stock value, along with a percentage stock variance figure. This figure reflects the movement in stock values depending on seasonal adjustments, shipping or manufacturing cycles. Stock values are arrived at by calculating the historical cost of purchased stock and in the case of a manufacturing company, the value of the work in progress. A physical stocktake will be completed with both parties present just prior to settlement, to enable a final stock figure to be arrived at for settlement. • Plant and equipment The purchaser will want to inspect your plant and equipment as detailed in the agreement, to ensure it is in good working

condition. If any plant or equipment is damaged or faulty, it is the responsibility of the seller to have it repaired or replaced, otherwise its value may be deducted from the total plant value.

• Allow time to sell On average, businesses take three to four months to sell. If you have to sell in a hurry you are in a weaker negotiating position and likely to be disadvantaged.

• Period of assistance The Sale and Purchase Agreement will stipulate the period of time you have agreed to spend assisting the new owner immediately after settlement.

• Write down your systems Show the prospective buyer how easy it will be to take over. List your suppliers and major customers, the jobs to be done, the hours of operation, service providers and what records must be kept.

Depending on the complexity of the business, this is normally up to four weeks and may be full-time for the first two weeks and part-time thereafter. If any additional assistance is required beyond that period, it is normally negotiated at a pre-agreed hourly rate.

Key factors in successful business sales • Price it right If you price your business too high, serious buyers won’t even consider it. Price it too low and you are throwing away hardearned money. A broker can guide you on what the market is paying for businesses similar to yours and what else is on the market in the same broad category. • Present it right You will get a better price if your business looks professional and organised and is clean and tidy in all respects including signage, interior, fittings, office and storage areas. Your plant and equipment should be in good operational order. • Prepare for the sale Buyers (and their accountants) will want to see up-to-date figures including financial accounts, daybooks, banking and GST returns. Lease agreements should be available for inspection and ideally have a reasonable term to run. Being ready with this information keeps the sale moving along smoothly.

• Be totally honest Do not try to hide or disguise anything. Any irregularities or problems with a business will almost certainly be discovered by a buyer and their advisors during the due diligence process. It’s vitally important to establish trust up front and throughout the process. • Use a business broker Brokers have specialist expertise derived from many years of experience in business sales. They can provide advice and guidance every step of the way, protecting your confidentiality, qualifying the genuine buyers and taking care of all the details. This leaves you free to do what you do best – running the business. Business owners who choose to list exclusively with a sales office and invest in a marketing plan, hugely increase their chance of selling. To get the ball rolling, we provide a free and comprehensive guide to “Managing the Sale of Your Business”. • Mike Fokkens is a business broker at LINK Business Broking (Licenced REAA08). Email michaelf@linkbusiness.co.nz

BusinessPlus July 2016

Success of exporters recognised Well established Waikato Milking Systems has taken out the supreme award for the 2016 Air New Zealand Cargo ExportNZ Awards for Auckland and Waikato regions. A New Zealand success story, Waikato Milking Systems was established in 1967 and is an outstanding example of the growth of agritech exporters. Today it is one of the leading designers and manufacturers of dairy systems in the world. In tonight’s awards, it also won the QBE Insurance Exporter of the Year (export revenue $10 million - $25 million) category. This is the first year the awards have been opened up to Waikato businesses and judges were extremely impressed with the quality of entrants from this region along with the high standard of entrants overall, says Barry Squires, Convenor of Judges. “Once again, the standard of entrants, finalists and winners is outstanding. The entrants covered a diverse, broad spectrum of industries, from education providers, high tech manufacturers, tourism operators to internet based service companies,” he says. “Judging is always a difficult, but rewarding process, and this year was no exception given the standard of exporting in our region.

Air New Zealand Cargo ExportNZ Awards 2016 2016 winners for the Air New Zealand Cargo ExportNZ Awards Award category 1: Westpac Exporter of the Year (export revenue over $25 million) was the Gallagher Group Ltd which are renowned for innovation and marketing of animal management, security, fuel systems and contract managing solutions. [Waikato] Other finalists were: - Hobbiton Movie Set Tours [Waikato] - Leigh Fisheries [Northland] - Vista Group Ltd [Auckland] Award category 2: QBE Insurance Exporter of the Year (export revenue $10 million - $25 million) was Waikato Milking Systems. A New Zealand success story founded in the Waikato in 1967, the company is today one of the leading designers and manufacturers of dairy systems in the world. [Waikato] Other finalists were: - Auckland Institute of Studies [Auckland] - BBC Technologies [Waikato] - Bobux International [Auckland] - James Dunlop Textiles [Auckland] Award category 3: 1. BDO Exporter of the Year (export revenue $1million $10million) was Rayglass Boats which was established in 1989 and is a leading manufacturer of high quality power boats, with the Rayglass Legend and the Rayglass Protector being its two key prototypes. [Auckland] Other finalists were: - API Consumer Brands [Auckland] - Dulux Powder & Industrial Coatings NZ [Auckland] Award category 4: Endace Services Exporter of the Year (export revenue $1million - $10million) was ICL Education which is a group

“I congratulate all the entrants, especially the winners, and wholeheartedly encourage those who were not successful or didn’t enter, to make an effort to be involved next year. We need to celebrate the success of our exporters, and the awards programme is a great way to do this, given exporting accounts for 29% of our GDP,” says Mr Squires. Seven category winners were announced from 25 finalists the awards evening held in Auckland in late June. Alongside the Supreme Winner (Waikato Milking Systems) and Sir William Gallagher was named the Simmonds Stewart Exporters Champion (for his exemplary services to export).

BusinessPlus July 2016

Simmond Stewart Exporters Champion - Sir William Gallagher

of education providers offering a range of tertiary business, computing, teaching English as a second language and early childhood education programmes. [Auckland] Other finalists were: - Eagle Aviation Consulting Ltd [Auckland] - Keedup Ltd [Auckland] Award category 5: TNT Emerging Exporter of the Year was Virsae which provides cloud services to allow its clients to manage their technology and communication systems to peak performance levels, so channels remain open and customers can always get an answer. [Auckland] Other finalists were: - Triumph & Disaster [Auckland] - Zealong Tea Estate Ltd [Waikato] Award category 6: Baldwins Intellectual Property Best Use of Commercialisation of Innovation for Export was Methven Ltd which create amazing water experiences every day with their range of beautifully designed showers, tapware and valves. [Auckland] Other finalists were: - Adept Medical [Auckland] - BBC Technologies [Waikato] - Quantec Ltd [Waikato] Award category 7: Quantium Solutions E-Commerce Exporter of the Year was Triumph & Disaster which is a modern day apothecary and skincare foundry using bespoke aromas and natural blends to deliver a product that’s reminiscent of simpler times. [Auckland] Other finalists were: - Metal Heart Ltd [Auckland] - Natural Ringa Company [Auckland]

Sir William has been recognised for his exemplary service to exporters and exporting. This award recognises a person who has gone beyond the call of duty. His reputation as a dynamic leader and an astute businessman in his own company and across the export industry are key reasons he has been bestowed this prestigious award. Judges felt Sir William’s ability to share his experience, networks, leadership skills and wide talents to help others develop their business offshore were crucial to the enhancement of the export sector. Now CEO/Chairman of Gallagher’s, he has taken his father’s electric fence business to international glory. It has grown into three distinct divisions as Security, Animal Management and Fuel Systems servicing customers in 130 countries. He truly is an exporter’s champion.

Beca Export Achievement Award - Phil Caskey

BOP exporters celebrate In a separate event, the Bay of Plenty ExportNZ awards also celebrated the success of exporters in the region in late June. Head judge, Kelvin Task, said the range of entrants from recent start-ups through to established exporters demonstrated that exporting was in good heart for the region. YOU Travel Emerging Exporter of the Year Award was Streamlined Honey Plant which sources bulk honeys from all over New Zealand. They then test and grade those honeys to create their own blends and pack to order. Other finalists were: • C-Corp NZ (Solomon’s Gold Chocolate) • You Know We Ain’t Ltd • Volcanic Hills Winery

Page Macrae Engineering Innovation in Export Award was New Zealand Manuka Group which harvests some of New Zealand’s best known natural treasures, such as seaweed, Manuka honey and Manuka leaves, and transforms them into distinctly differentiated consumer and medical grade products highly sought after around the world. Other finalists were: • Skyline Rotorua • Ubco Beca Export Achievement Award was awarded to Phil Caskey, New Zealand Manuka Group for his entrepreneurial spirit and dedication to growing his business in a collaborative way throughout the region. Other finalists were: • Chris Chaplin – Trimax Mowing Systems • Peter Edmondson & Peter McCormick – Shot! Darts (Puma Darts)

New Zealand Trade & Enterprise Service to Export Award was awarded to Graeme Marshall for his contribution to exporting success in the region, particularly in the shipping sector. He is heavily involved in leading exporting initiatives with his current involvement with Bay of Connections Governance Group. Sharp Tudhope Lawyers Exporter of the Year Award was awarded to Skyline Rotorua for the way it has transformed its venue into a multi-attraction, multi-activity international tourism experience, to deliver sustainable export growth. Other finalists were: • Automation & Electronics NZ • Ntec Tertiary Group

Awards night glitz and glamour Seen here at the Auckland and Waikato awards evening are just some of the glamourous guests and winners.

Hon. Steven Joyce, Dean Bell [Waikato Milking Systems] and Blair Gourdie [Air New Zealand Cargo]

Dion Nash [Triumph & Disaster]

Andrew Bathgate and Julianne Sanders [BDO]

Helen and Lance Sheppard [ExportNZ Auckland]

Rod and Heather Claycomb and Colin Ogle [Quantec]

Sir Kenneth Stevens and Hon. Steven Joyce

Brendan Downey-Parish [Methven Limited]

Patsy Carson, Andrew Sharp and Emma Hawking [Bobux International]

Ewen Mackenzie-Bowie [ICL Education] and Andrew Harsant [Endace Services]

BusinessPlus July 2016

International trade By Thomas Manning

Argentina’s macroeconomic reforms are generating lucrative opportunities for New Zealand exporters and investors.

Argentina’s bright prospects While business media coverage of Latin America continues to be dominated by bad news, there is definitely another side to the story. We often hear about the vagaries of the economies of Brazil, Ecuador and Venezuela, but less frequently are the economic reforms of Argentina, the success of Chile’s GDP growth or the modest growth of most economies of this region in the media spotlight. Brazilian President Dilma Rousseff has been suspended by Congress for alleged financial mismanagement and will face an impeachment trial in the Senate, while an interim government led by former Vice President Michel Temer has been installed until Rousseff’s fate is decided. While Brazilian politicians have been fighting amongst themselves, the economy has spiralled deeper into recession for a fifth straight quarter with unemployment rising to 11.2 per cent, inflation to 10 per cent and the OECD says GDP will contract 4.3 per cent in 2016.

“Of all the Latin American economies, Argentina has the best short-term prospects, as it is not oil-dependent and because of the significant macroeconomic reforms afoot…” Interim President Temer says he will sell state assets, lift restrictions on exploiting Amazon Basin resources and cut social welfare to reduce the 2016 fiscal deficit he has estimated at US$47 billion, as well as implement business-friendly policies to reverse Brazil’s longest recession since the 1930s. FocusEconomics are picking Ecuador’s GDP

BusinessPlus July 2016

will contract 2.8 per cent in 2016 due to a series of devastating earthquakes, which has compounded the government’s fiscal problems in its oil-dependent, dollarized economy, with a tepid 0.2 per cent recovery picked for 2017. The travails of oil-dependent Venezuela grow worse by the day. Here, the world’s highest inflation, severe shortages of energy and food and a rising incidence of rioting and lynching are fuelling expectations President Nicholas Maduro and his socialist economic policies will not last much longer, providing hope a new regime can reverse Venezuela’s precipitous decline.

Multiple sector opportunities Argentina’s Mauricio Macri government is continuing to implement economic reforms, which are expected to attract substantial foreign investment and grow GDP strongly in 2017 compared to 2016 when inflation will hit 40 per cent and GDP will contract 1 per cent. Of all the Latin American economies, Argentina has the best short-term prospects, as it is not oil-dependent and because of the significant macroeconomic reforms afoot, which are incidentally generating lucrative opportunities for New Zealand exporters and investors and are worthy of consideration. Argentina is Latin America’s third largest economy (its 2015 GDP reaching US$537 bn according to the World Bank) Income distribution is more equal than in most Latin American countries, and it has a broad and deep middle class with strong consumer buying power, as well as an extremely wealthy upper class cohort of around four million, which offers opportunities for niche goods and services.

Mauricio Macri, Business-friendly President of Argentina

New Zealanders are well thought-of and trusted in Argentine business circles. In the wider community we are known for the icons that typify our antipodean isles: dairy, lamb, rugby and tourism. Our exporters can build on that knowledge and awareness base. There is a growing interest in New Zealand about Argentina and vice versa, occasioned by comprehensive media coverage (both news and advertising) around the Argentine Jaguars rugby team joining the SANZAR Super Rugby Competition, and the new Air New Zealand service to Buenos Aires, which provides the quickest gateway to Asia from Argentina. This air route is fostering a growing interest in collaboration to service third-party markets in Asia, especially in agritech, dairy and viticulture. This article draws in part on the downloadable Manning Group’s Report “Business and Investment Opportunities for New Zealand in Argentina 2016”, which identifies opportunities in 18 sectors, namely: Agritech, Clean Energy, Consulting, Dairy, Education, Equine/Bloodstock, Experience, Film, G2G, Healthcare, ICT, Infrastructure, Legal Security, Marine, Mining, Oil & Gas, Tourism (including rugby) and Urban Security. • Thomas Manning is a NZ business consultant based in Buenos Aires, Argentina; former Vice President of the Latin America New Zealand Business Council and publisher of Transpacific Business Digest. Visit www.manninggrouplimited.com

“In Jakarta, the array of international goods at supermarkets like Hero (the largest retailer in the country), is noticeably more than just five years before.”

International trade By Nada Young

An insider view to Indonesia’s food and beverage sector It’s easy to get giddy when you think about the potential of Indonesia as an export market. It has some 250 million people, a rising middle class and a GDP of 5.1 per cent, which is among the highest in the region. Having lived and worked in Indonesia for the past five years, I’ve learned to temper this excitement with a healthy dose of pragmatism. Indonesia is a complex market and it’s not suitable for every food and beverage (F&B) exporter. There is certainly demand for imported goods. The F&B sector has transformed over the past five years, especially in Bali. That island has enjoyed an ever-increasing influx of visitors – more than four million last year, which was double the number for 2008, according to the Bali Government Tourist Office.

A great number of weekenders also jet in from Jakarta every weekend, as evidenced by the hourly flights between the capital and Bali. The transformation can be seen in the multitude of busy cafes and restaurants that are mushrooming along the Western coast of Bali. It’s also apparent in the growing number of international supermarkets like Pepito branching out across the island. In Jakarta, the array of international goods at supermarkets like Hero (the largest retailer in the country), is noticeably more than just five years before. While you might struggle to find a huge array of speciality items, the expanding array of imported ambient goods like canned pulses, pasta sauces and breakfast cereals demonstrate the trend towards foreign goods.

However, there are some major hurdles curtailing this transformation. All imported F&B goods must first be registered with the Government department “BPOM” (Badan Pengawas Obat dan Makanan) - a complicated and time-consuming process that must be conducted in Bahasa Indonesian and can take anywhere from three months to more than 12. Indonesia also has a long way to go in terms of infrastructure. Customs clearance can chew up precious shelf life and there are regular power outages. Therefore, the most common model for market entry in the F&B game is via a distribution partner who has the necessary skills and networks.

Continued on pg30

BusinessPlus July 2016

MEMBER PROFILE John Hawkins

The investor’s best friend The financial world was a different place, a wild west, when the New Zealand Shareholders Association (NZSA) started out in 2001, says chairman John Hawkins. “Led by founder Bruce Sheppard, we set out to tighten things up. “Some of the people involved then had no moral compass and there was a conspicuous lack of appropriate regulation,” he says. “Later, we lobbied for the early establishment of the Financial Markets Authority (FMA).” The Association even obtained a special meeting of the Parliamentary Select Committee to deliver its views. “We have turned the tide in a number of areas,” John says. “But most of the really egregious stuff has been knocked on the head.” Now the Association perseveres in ensuring legislation is investor-friendly and investorfocused, and to offer member services, networking and education. One important service is providing a proxy for members so the Association can cast a vote at meetings they’re unable to attend, he says. “We attend 80 company AGMs, and for controversial matters often send an email

to members advising how we intend to vote on an issue, and why, if we have their undirected proxy.” Investor education is becoming increasingly important, with courses including a broad introduction to investing. But advocacy and lobbying remain front of mind. “There are plenty of people with an interest in the sell side,” John says, “but before 2001 there was no one representing the interests of the buy side. We’re here to give balance in discussions on capital markets. “Some people, like brokers, deal with both buyers and sellers but we’re the only entirely independent entity representing the interests of retail shareholders.” Retail shareholders are typically individuals, not the investment fund companies.

Strength in numbers The key weapon NZSA has is strength in numbers: “Many investors, one voice.” The Association is now recognised for its integrity across the spectrum, John says, with its views known and sought after by the New Zealand Stock Exchange (NZX), FMA, the Ministry of Business, Innovation and Employment and other top level government agencies. John says the NZSA does not actively seek controversy, but is not deterred by it. “We have been consistent and the principles

and guidelines we follow are on our website.” Notices from listed companies to the NZX used to be sent to brokers 20 minutes in advance of their being made known to the public. “It took us four years to get rid of that unfairness,” John says with evident satisfaction when giving an example of NZSA’s work. This year NZSA has submitted on the NZX review of corporate governance and the review of the Financial Advisors Act. In a recent case where the Association made its views known, a public company which had been seeking to raise capital by making a share placement had to make a renounceable rights issue to existing shareholders. John says this was fairer to existing shareholders and NZSA’s strong preference. And the NZSA has waded in deep in other public debates such as around the Argosy Property Trust, and Abano (Lumino the Dentist). So how did John get involved in the NZSA? “I was fortunate that I had a very successful business and after selling it I joined the Association as an investor, and then was charged with organising a conference, and from there asked to join the board.” And why join EMA? John says the NZSA will become more reliant on employing staff and contractors, which means it needs to have ready access to the best advice.

Continued from pg29 Due to the nature of the market, distributors in Indonesia favour long shelf life, dry goods that are able to withstand the pressure of multi-transit loading and unloading in high temperatures and humidity. Of course, there are some short shelf life, temperature-sensitive imported brands carving out a respectable business. Australian dairy brands Bega (cheddar

BusinessPlus July 2016

cheese) and Bulla (yogurt) are doing well and New Zealand’s Whittaker’s chocolate is steadily gaining market share. The international brands that perform well have an unwavering commitment to supporting sales. This often takes the form of heavy discounts (Indonesia is still very price-sensitive) and regular marketing activations driven by the brand owner.

New Zealand F&B exporters with the right product portfolio will find huge potential in Indonesia. But patience and tenacity are required in this high-growth mega-market.

• Nada Young is Asia Market Director at Incite export development agency for F&B companies trading with Asia. Visit www.exportincite.com

FREE for all EMA members | To register call AdviceLine on 0800 300 362 or email advice@ema.co.nz Visit www.ema.co.nz

Winter Member Briefings Schedule 2016

Waikato / BOP Day/Date

Time

Venue

Mon. 4 July

9.30am - 11.00am

The Junction Hotel, 700 Pollen Street, THAMES

Mon. 4 July

3.00pm - 4.30pm

ASB Baypark, 81 Truman Lane, MT MAUNGANUI

Tues. 5 July

9.30am - 11.00am

East Bay REAP, Reap House, 21 Pyne Street, WHAKATANE

Tues. 5 July

3.00pm - 4.30pm

Suncourt Hotel & Conference Centre, 14 Northcroft Street, TAUPO

Weds. 6 July

9.30am -11.00am

Holiday Inn, 10 Tryon Street, Whakarewarewa, ROTORUA

Weds. 6 July

2.00pm - 3.30pm

Central North Island Kindergarten Association, 6 Glenshea Street, PUTARURU

Thurs. 7 July

9.30am - 11.00am

Claudelands Conference Centre, Cnr Brooklyn Road & Heaphy Terrace, HAMILTON

Day/Date

Time

Venue

Thurs. 7 July

2.30pm - 4.00pm

Bruce Pulman Park, Teamsports Centre, Walters Road, PAPAKURA

Fri. 8 July

9.30am - 11.00am

Quality Hotel Lincoln Green, 159 Lincoln Rd, HENDERSON

Mon. 11 July

9.30am - 11.00am

Titirangi Golf Club, Links Road, NEW LYNN

Mon. 11 July

3.00pm - 4.30pm

Waipuna Conference Centre, 58 Waipuna Road, MT WELLINGTON

Tues. 12 July

9.30am - 11.00am

QBE Stadium, Stadium Drive, ALBANY

Tues. 12 July

3.00pm - 4.30pm

Bruce Mason Centre, 1 The Promenade, TAKAPUNA

Weds. 13 July

9.30am - 11.00am

Rainbows End Conference Centre, Clist Crescent, MANUKAU

Weds. 13 July

3.00pm - 4.30pm

Ellerslie Event Centre, Ellerslie Racecourse, 80 Ascot Avenue, REMUERA

Thurs. 14 July

9.30am - 11.00am

Counties Inn, 17 Paerata Road, PUKEKOHE

Fri. 15 July

7.30am - 9.00am

EMA, Room 2C, 145 Khyber Pass Road, GRAFTON

Fri. 15 July

3.00pm - 4.30pm

EMA, Room 2C, 145 Khyber Pass Road, GRAFTON

Mon. 18 July

11.00am - 12.30pm

Butterfly Creek, Tom Pearce Drive, MANGERE

Tues. 19 July

9.30am - 11.00am

Aotea Centre, Limelight Room, Level 3, Mayoral Drive, AUCKLAND CITY

Tues. 19 July

2:00pm - 3:00pm

Webinar: www.ema.webex.com

Auckland

Northland Day/Date

Time

Venue

Weds. 20 July

3:00pm - 4:30pm

Switzer Residential Care, 71 South Road, KAITAIA

Thurs. 21 July

9:00am - 10:30am

Scenic Hotel Bay of Islands, 58 Seaview Road, PAIHIA

Thurs. 21 July

1:30pm - 3:00pm

Distinction Whangarei (ex Kingsgate Whangarei), 9 Riverside Drive, WHANGAREI

BusinessPlus July 2016

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