Businessplus may 2016 lr by EMA

ISSUE 136 - MAY 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

Changing times - at EMA and in regional governance READ MORE: PAGE 5

MORE STORIES PAGE 8: Getting the best out of IT staff PAGE 12: Mayoral candidates’ views on business PAGE 15: Fined for firing whistle-blower PAGE 23: Proposed tax changes (yes!) explained …and much more!

10 WAYS WE HAVE HELPED YOUR BUSINESS Been deeply involved in making

01. practical changes to the Health & Safety at Work Act

via our regular Member Briefings

Introduced the concept of Employment

03. Readiness Certificates for school leavers

05.

Provided economic and employment

02. updates to more than 6000 people

Promoted the need for a more efficient planning and consent process

Fought to mitigate members having to

07. bear unnecessary costs of earthquake strengthening for buildings in low risk areas

Provided more than 750 training,

09. networking and conference events for

04.

Continued to raise the importance of better transport infrastructure and funding for this

Been instrumental in the passing of

06. legislation protecting migrant labour from exploitation

Answered more than 30,000 queries from

08. members via our AdviceLine service in the past year

Delivered a reduction

10. in ACC levies

our members, which were attended by more than 10,000 people

NZ 0800 300 362 | AU 1800 300 362 www.ema.co.nz

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

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BUSINESSPLUS

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

ISSUE 136 - MAY 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

On the cover... EMA’s chief executive Kim Campbell presents the new business hub and assistance to vote at the 2016 local body elections Full story, p5. Photo credit: Garry Brandon Photography

Changing times - at EMA and in regional governance READ MORE: PAGE 5

CONTENTS Commentary 5 EMA’s CEO Kim Campbell on: Time for a change – new EMA building, new

mayor for Auckland 6 Action needed to avert bleak congestion prospects 8 Getting the best out of your IT staff 9 BusinessNZ CEO Kirk Hope on: Change in employment relations 10 New CEO for WorksafeNZ | End of provisional tax 11 The power of many: business collaboration at Callaghan Innovation 12 2016 Mayoral candidates’ series: Auckland’s Mark Thomas and Vic Crone Employment 13 Seen @ Auckland OSH conference 14 Recruitment: Evaluating employment market contradictions 15 Case law: Mishandling of employee’s whistleblowing costs employer 16

Employment Chat – Q and A: The new “zero hour contract”, non performing OSH committee and poor management team 18 Looking after mobile and isolated workers 19 Employers needed for young students’ work experience 21 Registrations open for IBM Kenexa Best Workplaces Programme 2016 In business 22 Governance: Should my business have an advisory board? 23 Tax: Proposed tax changes a step in the right direction 24 Marketing: Planning makes for a successful eventful event 25 Selling up: Engage experts to market your business for sale

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.

International trade 26 Tips for F&B exporters planning market visits 27 Latin American: Steady regional growth despite unrest 28 Responsibility for corruption falls far from the tree 29 Why we need foreign investment Member profiles 30 Turkish Bread: The singing bakery

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

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

CEO COMMENTARY By Kim Campbell

Time for a change – new EMA building, new mayor for Auckland It has been an exciting few weeks in the life of the EMA. After much anticipation, we moved into our new Auckland premises in late March. The new business hub is a modern environment that we hope our members will enjoy coming to. In fact, given our learning centre and regular forums have barely missed a beat, I know many of you have already experienced (and hopefully enjoyed) our modern facilities. We have built a hub for business where members are welcome – whether that’s to attend training or attend an event we’re hosting, or to hire a meeting room for your own needs – we look forward to seeing you. Our new building is being officially opened on May 5, by the Prime Minister, Rt Hon John Key. While our bricks, mortar and steel may have changed, our quest to champion the needs of our members specifically, and business in general, remains the same. To this end, we are turning our eyes to the local body elections later in the year. Via BusinessPlus we have asked key mayoral candidates from the main centres in our region to contribute their thoughts on the issues business face in their respective areas. We began with comments from Auckland candidate Phil Goff in the April issue. We continue with the views of Auckland candidates Mark Thomas and Vic Crone in this issue (see page 12), and will focus on other cities during the next few months. While every region is important, the person we elect to lead New Zealand’s largest city has a major job on their hands. Managing

“While the natural tendency is for media and candidates to focus on how to get ratepayers’ votes on the campaign trail, what is often missed is the fact that the majority of ratepayers are equally concerned with the economic wellbeing of their cities too.”

the challenge of Auckland’s growth and everything that entails, is commensurate with a central government ministerial portfolio.

City (Auckland central business district association) to host two mayoral debates. Our agreed intention is to put the needs of business front and centre in the minds of the key candidates running for the Auckland mayoralty. While the natural tendency is for media and candidates to focus on how to get ratepayers’ votes on the campaign trail, what is often missed is the fact that the majority of ratepayers are equally concerned with the economic wellbeing of their cities too. As business leaders/owners/operators or employees, we all want to know that the city is in capable hands. We want to see leadership around key areas including: •

prudent financial management such as asset sales to release funds, which can then be invested in major projects that are lagging, eg, infrastructure development;

•

solutions that unlock Auckland’s potential, not gridlock us; and

•

Auckland’s mayor to be able to work effectively with central government.

Mayoral debate Which is why we are going one step further with the Auckland local body elections. We have partnered up with the Auckland Chamber of Commerce and Heart of the

“We want to build a hub for business where members are welcome – whether that’s to attend training or attend an event we’re hosting, or to hire a meeting room for your own needs – we look forward to seeing you.”

The purpose of the mayoral debates is to let the business community send a clear signal about the policy outcomes it wants to see. When the details of these debates are finalised we will let you know. This time around, let us make sure the voice of the business community is heard. • Kim Campbell is the CEO of EMA. Email kim.campbell@ema.co.nz

BusinessPlus May 2016

COMMENTARY By Alan McDonald

Action needed to avert bleak If you are living and working in Auckland in 2036, moving your freight or getting to work then is looking like a bleak prospect. In 20 years’ time, inter-peak traffic congestion – how busy our roads are between the morning and evening motorway peak periods – will be the same as the morning peak is now. Basically our motorways will look the same all day as they do now at around 7–7.30am. Congestion for freight traffic is expected to be 45 per cent worse than it is now, with car journeys taking up to 30 per cent longer than current times. The only improvements expected are in public transport times – provided you don’t live in the west and south of Auckland. Traffic congestion is expected to get worse in the next 10 years, stabilising at peak levels from 2026 until 2036 and then easing to some extent as longterm projects included in the Auckland Transport Alignment Project (ATAP) kick in. Last March, the EMA hosted KiwiRail’s CEO Peter Reidy and the regional manager of the central government New Zealand Transport Agency (NZTA), Ernst Zollner. Members were able to discuss freight and transport issues with them at our monthly Policy Forum. What we heard was a blunt assessment of the future for Auckland road users, and an equally blunt assessment of the task ahead for rail. Zollner was refreshingly straight, acknowledging the errors of the past and outlining what may be a painful task ahead before the traffic situation gets better. He told the Forum, “You probably face a longer public transport trip or a painful

BusinessPlus May 2016

experience in the car for your journey to work in the next 20 years before it gets better beyond 2036. “Coming to New Zealand from overseas, I couldn’t believe some of the mistakes that have been made in the past and now we are using up most of the low-hanging fruit to catch up with congestion.” That low-hanging fruit is being able to expand the current motorway corridors with projects including: • the third-lane addition underway from Takanini to the south, • the proposed east/west link (now including a possible link from the east), and • the completion of a western ring route via Waterview.

“Congestion for freight traffic is expected to be 45 per cent worse than it is now, with car journeys taking up to 30 per cent longer than current travel times.” However, once those projects are completed, along with the current north-western motorway projects, there isn’t much room left for expansion on the constrained Auckland corridors. With another 700,000 plus people arriving in Auckland in the next 30 years or so, and an estimated 270,000 new jobs to get to, that’s bad news for Aucklanders on their daily commutes. It’s also bad news for the myriad small businesses that ply their trades in and out of, and around Auckland, as

congestion will affect the number of jobs they can carry out in a day. It also affects staff morale, attitudes and productivity, and the overall productivity of the business. To counter that, NZTA is concentrating on making journeys more predictable with using traffic management, technology and real time information added to the mix. “It is the uncertainty of journey times that creates the biggest problem on the roads. Some days a trip can take 20 minutes, the next day, 45 or 50 minutes. If we can make that journey time more predictable that will help commuters and businesses manage their time on the roads,” said Zollner.

Rail taking the heat off KiwiRail CEO Peter Reidy outlined a programme that is clearly delivering results for the business, with its focus on a transformation project that is bringing consolidation to KiwiRail’s freight offering, as well as recovery to its balance sheet and building competitiveness with other freight transport options. In the Upper North Island that also means finding funding for a third main line to build resilience and additional capacity into the network in Auckland, improvements in the Kaimai tunnel and renewals around signalling, level crossings and train assets. The third rail alone needs upwards of $50 million in funding and would enable another six freight trains per day on the Auckland network. When combined with the rail changes outlined above, another 12 trains per day can be added to that “Golden Triangle” of economic linkages encompassing Tauranga, Hamilton and Auckland. KiwiRail is also working with NZTA to

prospects optimise the road/rail network across the country, and the numbers on the benefit side are compelling.

Auckland average daily traffic and freight volumes (2014)

Rail carries the freight equivalent of a million trucks per year, saves around two million litres of fuel and lowers CO2 emissions by about 470 million kilos per year. But according to Reidy, the big win would come from a “combined port, rail, road strategy to manage New Zealand’s future freight task.” Despites the issues, plans and constraints of the three major ports in the EMA region – Northport in Whangarei, Auckland and Tauranga ports - that’s something no Government of any stripe appears willing to contemplate at this stage.

EMA member forums You may be aware of our three forums - Policy, Employers and Manufacturers that help the EMA shape its policy-push direction, as well as provide invaluable insights for us to communicate to all members on issues facing your businesses. Upcoming forums are looking at the issues surrounding Ports of Auckland Ltd and the progress of the Ports Future Study, implementation of innovation in business and recent changes to Employment Standards Legislation. The latter will feature in training courses held in the Waikato and Tauranga. Participation in these forums is free to members, and invitations are included in EMA marketing emails and in the fortnightly e-report. If you see us running a Forum on a topic that interests you, then please register and come along. You can register interest at any time with kylee.goodwin@ema.co.nz • Alan McDonald is EMA’s policy director. Email alan.mcdonald@ema.co.nz

Source: NZTA

BusinessPlus May 2016

COMMENTARY By David Spratt

Getting the best out of your IT staff So here’s your likely situation around using Information Technology (IT): • Your business is loaded with technical debt, ie, spending money on systems that add less and less value while costs continue to soar; meanwhile, nimble, more agile competitors are grabbing your market share. • Competitive advantage through IT seems a thing of the past. • The IT department is full of people focussed on boxes that go ping and red flashing lights. • Your finance team can’t see why the latest request for more investment in more fancy boxes makes any sense and you agree with them!

So what has to happen? As an example, I recently met New Zealand Cricket’s leadership at the completion of a strategic IT review that I had been asked to conduct. As we shared our obvious pleasure at the progress NZ Cricket has made in the past three or four years I naughtily asked, “Does New Zealand Cricket design, manufacture and sell cricket bats?” “Of course not,” came the reply. “It is not our core business. We are aiming to be a world class sporting organisation, not a bat manufacturer.” To which I replied: “So why then would you choose to own and operate your own IT?” My point: no matter what business you are in, you should be actively questioning why you should own or operate IT services.

Evaluating IT spend You could start with this simple question: “What will I spend on IT over the next three years?” No, I am not asking you for a budget. Dig deep, check the balance sheet for depreciating IT assets and add a new

BusinessPlus May 2016

capital spend if they are approaching zero value. Find the actual charges for time and materials from suppliers for the past two years. Check your licencing costs. Check maintenance and service charges from your top IT suppliers. Start by identifying two categories of IT: • Category A: those that are legacy and are “table stakes” to doing business. Think: email, calendars, Microsoft Office, HR systems and finance systems. • Category B: those that really add value to the business. Think: systems that drive productivity on the shop floor, improve sales effectiveness, are unique systems distinctive to your business and strike fear into the heart of your competitors.

Analysing category A: Legacy IT systems What are these systems costing you to own and maintain? Are they cost effective, efficiently run and securely delivered? How would you know if they were? It’s time to outsource all this dross to the “best cost” provider. That usually means Software as a Service because owning the equipment and software that supports legacy services is neither core business nor an efficient use of your limited resources. Great examples of world-class systems available at a much lower cost than doing it yourself are Office 365 and Xero. I don’t sell this stuff so this opinion is based on experience, not vested interest.

Analysing Category B: IT systems that add unique business value This is the gold and needs to be mined. Ask yourself: are these systems easily available to those who need them, eg, via a mobile phone or from home via an internet connection and a browser?...to your important clients?

Ask, are we maximising the value we could extract from them? Is the current system world-class or at least best of breed? It’s time to focus on investing where the business will benefit most. But there is a catch.

The catch Even Category B systems may not be creating enough value to set your business apart. In the world today, industry IT systems are increasingly being made available over the internet via Software as a Service (the new guard). These emerging services are genuinely world-class in terms of quality, security and availability. The issue is ANYONE can use them with only a few weeks’, sometime even a few days’, effort. These systems are also being used to do away with entire industries that once relied on them. This is called “continuous disruption”. For example, film and camera industries have been disrupted by smartphones. If you own and operate IT from both a legacy and strategic perspective, regularly re-evaluate just where the value is and where it might well lie in the future. With these two questions your journey begins: 1. What am I currently spending my money on in terms of IT? 2. Where is this creating value for my business? If, when looking at your IT systems today, you can’t find the value, then it simply does not exist. See BusinessPlus next month for a case study in IT transformation at one of New Zealand’s most prominent export companies. • David Spratt is director of ICT at Total Utilities. Email david@tumg.co.nz

“BusinessNZ recommends changing the Act so that the unit of calculation of holiday pay is based on hours rather than days or weeks, since employment patterns these days are so flexible that there is no consistent definition of a week or a work day.”

BusinessNZ COMMENTARY

Change in

employment relations The employment relations area is undergoing change and employers need to know how new regulations and laws will affect their workplace. Key areas of change have been in health and safety, hours of work and parental leave. Holiday pay calculations continue to irk and we want that law changed.

Health and safety The shake-up with the new Health and Safety at Work Act now in operation requires people to do everything they reasonably can to achieve safety in the workplace – identifying possible hazards or risks and taking all reasonably practicable steps to eliminate or minimize those hazards or risks. While the ‘person in charge of a business unit’ has overall responsibility to achieve a safe workplace, everyone else at work is now also expected to do everything reasonably practicable to do the same. Every workplace must make provision for staff to participate in improving health and safety on an ongoing basis, whether by way of safety reps on a health and safety committee, or by some other form of participation. Businesses operating in lower risk occupations that have fewer than 20 employees will not be required to have safety reps but may choose some other way of involving their staff in ongoing health and safety. Penalties for non-compliance with the new law are higher than before – up to $3 million and possibly imprisonment - for non-compliance that results in death or serious injury. Compliance with the new law comes down to doing everything reasonably practicable to ensure safety in your workplace. Noncompliance comes down to not doing everything reasonably practicable to

ensure the workplace is safe. If someone in the workplace is hurt, and the employer has failed to do everything reasonably practicable to make sure the workplace is safe, the employer could be held liable. But if the employer had done everything reasonably practicable to make the workplace safe, the employer would not be liable.

Parental leave Changes to the Parental Leave and Employment Protection Act provide for more paid parental leave (18 weeks) to greater numbers of employees, including casual and short-term workers. A welcome aspect of the new law is that parental leave payment can be made even if the employee resigns their position. This will reduce the problem of uncertainty – employers not knowing whether or not their employee will actually return to work after their period of parental leave. It will allow employees to be upfront about whether or not they intend to return to the workplace, giving employers more certainty for business planning. The new law also provides for “keeping in touch” days where employees can work limited hours during their paid leave if they choose. This will help employees keep their work skills current and make their full return to work easier. These new provisions will allow for better transitions in and out of parental leave and better communication in the workplace.

Hours of work Casual work is now more clearly defined in the Employment Relations Amendment Act 2016. Employment agreements must now specify the number of guaranteed hours of work and must provide for compensation

By Kirk Hope

payment if shifts are cancelled with insufficient warning. These provisions address complaints made about “zero hours” casual contracts in some industries. The new Act requires employers to keep records that are detailed enough to demonstrate that minimum employment entitlements are being complied with. The Act also sets out more clearly the circumstances in which an employee can be barred from secondary employment with another employer – for protecting commercially sensitive information, conflicts of interest, etc.

Holiday pay calculations Holiday pay continues to cause headaches in some workplaces. Some high profile organisations have admitted underpaying holiday pay as a result of inadequacies in their payroll operation. Payroll operators are facing difficulties in sorting out what to pay for annual holidays for employees who work irregular hours. The difficulty arises from the fact that the requirements set by the Holidays Act stem from the 1940s when working weeks were based on traditional Monday to Friday hours. This is no longer the case for a significant number of employers and workers. BusinessNZ recommends changing the Act so that the unit of calculation of holiday pay is based on hours rather than days or weeks, since employment patterns these days are so flexible that there is no consistent definition of a week or a work day. As employment regulations undergo amendment, it’s important for businesses to keep up-to-date with the changes. Your business partner, EMA, can provide the latest information and advice on new employment relations requirements. • Kirk Hope is Chief Executive BusinessNZ. Visit www.businessnz.org.nz

BusinessPlus May 2016

NEWS

New chief executive sought for WorkSafe New Zealand The chief executive of WorkSafe New Zealand, Gordon MacDonald, has resigned after two-and-a-half years in the role and will return to the UK later this year.

Provisional tax for small businesses – gone after 2018? The Government is proposing changes to tax that it says will reduce compliance costs and make tax simpler for small businesses. Key measures in the proposal are that:

WorkSafe’s Board chair Professor Gregor Coster says, “He has built capability and capacity and has set a platform for WorkSafe to confidently build from as it enters a new phase with the arrival of the Health and Safety at Work Act. “We have built a responsive, effective workplace health and safety regulator under Gordon’s watch and the Board is deeply appreciative of his contribution.” Mr MacDonald will return to the UK to the family he and his wife left behind. Professor Coster says, “We cannot give a finite date on which Gordon will leave, but he has agreed to remain in his role up to the end of November this year, if needed, while we seek his successor.” The WorkSafe Board will begin a recruitment process shortly to replace Mr MacDonald.

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

REACH 6000+ BUSINESS DECISION-MAKERS Advertise in EMA’s monthy, free members’ magazine. For rates, visit ema.co.nz Members receive 20% discount *

CONTACT COLIN GESTRO: 027 256 8014 I 09-475-9313 colin@AffinityAds.com *On all advertisements from May 5, 2016

BusinessPlus May 2016

• Provisional tax is being reformed, with a new pay-as-you-go option giving up to 110,000 small businesses a way to pay tax as they earn income from 1 April 2018. • Use-of-money interest will be eliminated or reduced for the vast majority of taxpayers. • Contractors will be able to choose a withholding tax rate that suits their needs, rather than one being set for them. • The ongoing 1 per cent monthly penalty will be scrapped from 1 April 2017 for new debt – although immediate penalties and interest charges for late payments will continue to apply. Revenue Minister Michael Woodhouse says the changes are part of a wider business transformation programme which will support the use of new technology to make it easier to deal with Inland Revenue. “Around 30 to 40 per cent of businesses currently use cloud-based accounting software. This is expected to grow to 85 to 90 per cent in the next 10 years. “This package allows small businesses to pay provisional tax through their accounting software, rather than having a separate process for their taxes.” The package is expected to cost Government $187 million over four years. To find out more, and to provide comment on the proposals, visit www. makingtaxsimpler.ird.govt.nz. Submissions close on May 30. Read more about the tax package proposals on page 23.

Online info about NZ for businesses A new online data tool, Business Figures, aims to provide easily accessible and understandable New Zealand data to help people run their businesses. It has been developed as a public-private partnership between Figure.NZ, ASB Bank and Statistics NZ. The charity, Figure.NZ, is devoted to getting people to use data about New Zealand. Its website page https://figure.nz/ business has produced a free online service for businesses using data from a range of sources, including Statistics NZ. Statistics and Small Business Minister Craig Foss says, “Small businesses are vital to New Zealand’s economy. Business Figures will help small businesses continue to punch above their weight by providing valuable insights into their industries, communities and markets.” For example, a plumber in Masterton can now view a simple graph showing how many households — and therefore potential customers — are in their area, as well as the number of businesses involved in construction. On the site you can see that Statistics NZ’s recent Business Operations Survey shows business spending on research and development has grown by more than 15 per cent in one year, from $1.25 billion in 2014 to $1.44 bn in 2015.

“The Nuku members visit each other’s businesses every quarter to keep the energy and learning from one another rolling into more opportunities.”

The power of many: business collaboration at Callaghan Innovation The power of business collaboration is the central focus of Nuku ki te Puku, Callaghan Innovation’s programme seeding innovation in Maori food and beverage businesses. The programme is the brainchild of Hemi Rolleston, Callaghan Innovation GM, Maori Economy, who has been steering the direction of the programme for the last two-and-a-half years. It works with more than a dozen food and beverage businesses to expose them to innovative research and development and technology thinking. Rolleston says it’s vital this cross-pollination happens.

experimental approach to business and technology, they learnt a lot about one another and how working together could benefit their businesses mutually. One crucial development was the joining up of manufacturers with suppliers. Typically operating independently, two Nuku participants – Ngati Porou fisheries and New World Victoria Park supermarket - saw an opportunity to create a product together. Using their complementary knowledge they developed a new smoked fish product, Ahia, tailored to the supermarket’s central Auckland consumers, which has gone on to sell well in other markets. “A lot of the parties didn’t know each

other before this project began. Now we’re seeing the Nuku members regularly meeting, sharing ideas and collaborating – the programme’s joined the dots, and we’re seeing these businesses thriving in new ways,” says Rolleston. A new high-value berry product, focused on producing a nutrient-rich food that could create international reach, similar to the Gold Kiwifruit, is currently being negotiated by several Nuku partners as a result of Callaghan Innovation’s programme. The Nuku members visit each other’s businesses every quarter to keep the energy and learning from one another rolling into more opportunities. This is what Rolleston hoped for when he established the programme – for inspiration to rub off, regenerate and expand Maori business innovation. For more information visit www. callaghaninnovation.govt.nz

“Food and beverage businesses need to step-up their technology capacity today. “Historically, because food and drink industries are based around straightforward growing and manufacturing processes, they’re not always thinking about the ways technology can add value and benefit them”. In 2014 and 2015 Nuku participants attended Stanford University, meeting researchers and affiliated businesses with the university’s d school (school of design) to experience the university’s worldleading innovators’ hub. From the trip, the Nuku members not only were inspired by the fresh and

BusinessPlus May 2016

COMMENTARY

Mark Thomas

Vic Crone

2016 Mayoral candidates series: Mark Thomas and Vic Crone 2016 is local body election year - is this important for business? Yes, and there are two key reasons why, says BusinessNZ chief executive Kirk Hope. The elections are important to ensure any local government policy does not reduce the capacity of any region to do business, or affect its attractiveness as a place to do business. Also, voting is important to make sure the links between local and central government, particularly in infrastructure, are as strong as they should be. BusinessPlus is asking key contenders for mayor in the cities where our members are located, for their responses to our questions about critical “big picture” issues affecting business. This month, we report the views of Auckland candidates Victoria (Vic) Crone (43), who lives in Parnell suburb, and Mark Thomas (49) from central Auckland. Q1. What are your views on how the Resource Management Act (RMA) can balance business growth with environmental protections? Mark Thomas Auckland Council needs to make the consenting process easier, faster and more customer friendly. I’ve run customer businesses for more than 15 years and will lead big changes as Mayor here. I will also reduce more of the unnecessary council rules. Government controls important RMA levers. I support their plans to remove the need for minor resource consents and introduce templates to reduce the ridiculous variation that exists across different councils (on how to measure building height, for example!). I also support the idea of stopping councils

BusinessPlus May 2016

telling businesses to do stupid things. The Government’s changes are heading in the right direction but need to go further. Vic Crone Businesses are more willing than ever to take leadership on their environmental responsibilities so it’s less of a choice between business and environment. But businesses need an RMA that’s not a nightmare to navigate, is clear and provides certainty. We’ve seen some good RMA reform momentum under the government that needs to continue. But councils have the serious job of making it straight-forward to follow the rules. I’d like to lead a substantial push for timely, efficient and cost effective consent processing.  Q2. What are your views on Auckland transport congestion? Mark Thomas We’re not making quick enough progress! As Mayor I will restore the $113 million Len Brown cut from the transport budget by cutting spending on lower priorities in council’s $613 million per annum support, economic and cultural budget support. I will restructure Auckland Transport so more local transport priorities (parking, light phasing, roundabouts, etc) are dealt with quicker. Bigger regional transport projects need to be advanced faster, eg, Penlink and Lake Road in the north, the Northwestern busway out west, the Botany-PakurangaPanmure busway (AMETI), the Mill Road extension and future rail planning in the south. I will also lead a new ‘hybrid’ mass transport plan better linking bus and rail to help central Auckland’s congestion. Vic Crone The dollar effect on business in Auckland is astounding and frustrating to say the least. Projects like the East-West Link and AMETI will help reduce pressure on popular business travel routes, but not for long given our growth rates. The City Rail Link should provide twice the rail

passenger capacity but public transport needs better integration and reliability across the region, not just the inner city. The elephant in the room is how we pay for this accelerating need for transport infrastructure. We can do this without the heavy burden on residents and businesses. Our investments need to be future-focused and we need to be serious about internationally trending technologies and innovations. Q3. …on the future of Auckland’s port? Mark Thomas Our first priority needs to be resolving the growth and transport pressures the port and Auckland are facing in the next five years, and improving the way the port connects to central Auckland. The port’s future growth may mean its current location is not a long term option but it will cost billions to establish a new port, new locations all have problems and such a move is decades away. As Mayor, I will plan for the port’s long-term but also upgrade Grafton Gully as needed and further boosting container traffic by rail. As the port’s efficiency and productivity has improved, its need for footprint growth has already reduced. Vic Crone Auckland needs a world class port that will grow with our city. It’s clear this can’t happen in its current location. Moving the port seems inevitable and will reduce congestion around the CBD, also paving the way for exciting public options for that waterfront space. Q4. …on the business rate differential? Mark Thomas I support making this fairer recognising the economic benefit our businesses contribute to Auckland. Council has had a general policy of reducing this differential although Len Brown has slowed that down with his most recent budget. I will get us back on track and work to explain this to residential ratepayers. Continued on pg 31

Seen @ Auckland OSH conference

A D

C E

EMA’s annual Occupational Health and Safety Concert (conference) this year delivered fun entertainment alongside sessions for the serious business of managing OH&S under new legislation. Pictured are some of the attendees at the two-day event in Auckland last month.

F I

A: Dianne Donald (Diocese of Waikato and Taranaki) and Steve Tucker ( Gallagher Group)

I: Glynis McCarthy (Safety Associates) and Paul Allen (Gadens Lawyers)

B: Nigel Robinson (Ceres Enterprises) and Robert Kumar ( Independent Liquor NZ)

J: Lisa Reid (DIC New Zealand)

C: Natalie Hibbert (Davis Trading Company), Hazel Hape and Angela WarrenClark (Tauranga Women’s Refuge)

L: Beverley Pollard and Alicia Tutbury (Framework services)

D: Joe Suh (New Image International) and John Hyun (Sensient Technologies) E: Danae Adcock ( Monesyshop Group), Anne Kendall and Marion Hakaraia (Te Hononga) F: Paul Fawcett (Baygold) and Robin Brockie (Diocese of Waikato and Taranaki) G: Becky Gardiner and Richard Thurlow (Waipuna Hospice) and Joe Gnaniah (Blundstone NZ)

H: David Richards (Aggreko – APAC)

K: Meredith Darke (DIC New Zealand)

M: Jaine Curran was presented with the Patrick Seaman Memorial Award to recognise the effort and contribution by an EMA member to further their knowledge in the field of health and safety. This inaugural award recognises trainer and EMA consultant, the late Patrick Seaman, who passed away last June. Pictured: Craig Garner (EMA), Kath Seaman (Auckland Council), Jaine and Mike Curran (Cupright Acces) and Keith McConnell (EMA)

M BusinessPlus April 2016

EMPLOYMENT By Nicola Pohlen

Evaluating employment market contradictions Disruption to labour markets and business models on an international scale are creating ambiguity that impacts employers’ workforce strategies and correspondingly the nature of work for employees. Exploring the elements, below, from a business leader’s perspective provides background to these drivers of change.

Job creation vs job decline Growth in some job functions and industry sectors is a natural result of adjustments and the shift to meet changing consumer behaviour. The speed of development of technology and its impact and use is the obvious influencer, closely linked to demographic and socio-economic factors that vary by country. In New Zealand, examples of increased job demand include employees in robotics, data analytics, business services and sales leadership - consistent with global trends. As new job families emerge, others become redundant. While automation contributes to this change, another driver is employers evaluating business-critical roles, resulting in re-allocating resources to positions that clearly add value. Opportunities in administrative roles at all levels have been reducing for many years.

Talent shortages vs unemployment Across industries, organisational tiers and functions, companies experience a lack of available expertise at the right price. There is tension in the current employment market about “talent shortages” for skills and also increased reference to the lack of availability of desired, 21st Century attributes. Opposing this shortage problem, the choice of potential employees for some roles is greater, as a global labour market offers access to wider talent

BusinessPlus May 2016

communities comprising local candidates, New Zealanders returning home and new Kiwis. This increased competition is exacerbated by transferability of skills across industries in which previously there was no comparability, but now there is acknowledged value. A typical example is the movement between manufacturing and services.

Specialist vs generalist employee Requirements of the employment market with regard to deep knowledge within certain functional areas make people with narrow, profound expertise appealing, particularly in areas such as information technology, engineering and science disciplines. Alternatively, the preferred style and key to success for many innovative companies is hiring generalists who have developed abilities from a core function to take a broader perspective across the organisation, making connections between ideas, engaging teams and articulating goals.

Workaholic vs work-life balance The high connectivity levels of individuals has created integration of business and personal communication channels, therefore developing blurred lines with regard to appropriate response times and delivery of results. For some this is a welcome enhancement to achieving their goals faster and assists a “never switch off” culture. A converse reaction is evident with the return of the 1980s concept of work-life balance. Consistent with the experience of our partners in Europe, the US and Australia, we see that providing a workplace that caters for both is necessary as employees aim to combine a challenging career with independence and flexibility to pursue their own interests.

Tech evaluation vs human assessment Internationally, considerable energy is invested in discussing the role of technology solutions in a recruitment process. Technology may include automated responses, CV word matching and oneway video interviews, with the purposes of filtering applications, reducing timeframes and costs. Taking this approach may overlook key elements of interest in a person’s background, but it is potentially appropriate for positions with a high volume of responses to a job advertisement. It follows that using human judgement in interpreting written content in a CV and in evaluating an interactive interview enhances the understanding of the information the candidate presents. In addition, human dialogue is more effective to represent the attractiveness of your organisation in relation to a competitor employer, and is therefore a proactive strategy in the “war for talent”.

Company up-skilling vs contract expertise Businesses are investing in up-skilling and re-skilling their people to meet requirements of their future workforce. Where they have hired on attitudinal qualities with strong alignment of individual and company behaviours, this is a successful and rewarding strategy for both. Offering development opportunities through mobility, job rotation, mentoring and flexible work practices retains company knowledge with a positive impact on staff retention and attraction. Alternatively, “buying in” capability for projects with a defined timeframe that is often short or medium-term delivers key skills quickly, and is favoured by some companies. Along similar lines are possibilities of collaborating with a complementary business or engaging with an outsource partner. • Nicola Pohlen is a principal at Pohlen Partners human resource and recruitment specialists. www.pohlenpartners.co.nz

EMPLOYMENT By Matthew Dearing

Mishandling of employee’s whistleblowing costs employer A recent case at the Employment Relations Authority (ERA) involving whistleblowing about drug use in the workplace demonstrates to employers the importance of responding to staff with a proper process. The events began with Mr Crichton arriving at work at TD Drilling Limited & Anor (TDL) on February 21 last year and noticing seven colleagues, including the foreman, appearing to be heavily intoxicated. He said the supervisor also noted their condition, cancelled work for the day and sent all 10 staff home. Mr Crichton expressed concern no further action was taken and he was not paid for the day. On 27 February, he claimed a colleague, “M”, drew his attention to a number of others who were in a van apparently taking drugs. On 1 March, Mr Crichton telephoned Mr Tweeddale (the managing director) and told him about that, and said Mr Tweeddale agreed to treat the call as confidential. However, the next day, the foreman called a staff meeting at which he is said to have advised that Mr Crichton had reported alleged drug use and this was going to mean drug testing. Mr Crichton was extremely concerned because a number of his colleagues had a history of violence, drug use and imprisonment and he then felt at risk of potential retaliation. He said following the meeting he and M were told to go to the depot, where they and the foreman were drug tested. Mr Crichton took issue with this, as he claimed no other employees were then tested. He also expressed concern M failed the test but was allowed to return to work. M accepted that was the case — as he put it, his result “was swept under the carpet”. M added the

“However, the next day, the foreman called a staff meeting at which he is said to have advised that Mr Crichton had reported alleged drug use [in his colleagues] and this was going to mean drug testing.” others were tested after Mr Crichton left TDL’s employ, but no action was taken in respect to five failures.

Complaint to MD Mr Crichton left the workplace after being tested, and spoke to his wife. She called Mr Tweeddale who allegedly told her he found the drug allegations hard to believe and he trusted his staff. It is also alleged Mr Tweeddale said he could not afford to test all at once, but it would be done over the following weeks and that M had failed to corroborate Mr Crichton’s allegations. Mrs Crichton said Mr Tweeddale accepted her husband had been identified as the complainant and he agreed that should not have happened, but added he considered the issue a storm in a teacup; that no support would be available for her husband. Mr Crichton returned to work but was removed from the digger. He says that while it was normal he perform other work, he had never before been required to do so for an extended period. TDL said the performance of other tasks was standard procedure and aired allegations about Mr Crichton’s inadequate care of truck and tools when it responded to this issue. Mr Crichton called in sick the next day, afraid he would again be singled out for negative attention.

He said that when he arrived at work on 4 March he was cornered by Mr Tweeddale who loudly advised, before at least five other employees, that while his allegations were serious they were unsubstantiated given the foreman’s clear test, and the fact M had not seen anything. Mr Chrichton said Mr Tweeddale then accused him of causing “a big f … ing rift here”. Mr Crichton therefore decided to leave, and raised a claim of constructive dismissal including unjustifiable disadvantages.

Constructive dismissal claim upheld The ERA found that Mr Crichton was unfairly targeted by Mr Tweeddale, and was put at risk from co-workers who had a propensity for violence. It also stated that TDL had a duty to provide Mr Crichton a safe workplace, and not doing so amounted to a constructive dismissal. Revealing Mr Crichton as the source of the drug revelations put him in a dangerous position, and almost nothing was done to address his concerns. TDL was ordered to pay Mr Crichton $11,115 in lost wages and $12,000 compensation for humiliation, loss of dignity, and injury to feelings. This case provides a good example of what not to do as an employer, and that burying your head in the sand when serious allegations are raised (particularly regarding health and safety) will incur major costs. • Matthew Dearing is a Senior Solicitor at EMA Legal, EMA and a member of the Auckland District Law Society’s Employment Law Committee. Visit www.ema.co.nz

BusinessPlus May 2016

Employment CHAT

The new “zero hour contract”, non performing Q. Zero hour contracts – are they in, or are they out? – Scott

Dear Scott Yes and no. That is, under new legislation from April 1 this year you have to make some sort of commitment to permanent employees about the workload you are offering them. You can no longer employ on the basis that employees have to be available to work for you at a moment’s notice; and with no concrete promise of any particular hours of work. You have a year to update any employment agreements with staff you employ this way. What you have to include in the agreement is: a) hours of work agreed between you and the prospective employee; or b) an indication of the arrangements relating to the times the person is to work. In the case of (a), the hours include: • The number of guaranteed hours, and/ or • The days of the week when the work is to be performed, and/or • The start and finish times of work, and/ or • Any flexibility in days of the week and/ or start and finish times.

ADVICE AND SUPPORT WHEN YOU NEED IT. Free call NZ 0800 300 362 AU 1800 300 362 Visit www.ema.co.nz

BusinessPlus May 2016

“You can no longer employ on the basis that employees have to be available to work .” Also in the case of (a), now the agreement must also specify the “availability” of the employee to the employer for work, and vice versa. A clause must specify the employee is required to be available to accept any work the employer makes available – but only if at least some hours of work are guaranteed and agreed; and relates to other hours outside the guaranteed hours. But importantly, you can only include these availability provisions if you have genuine reasons based on reasonable grounds to insist the person be available, and for the times specified. Furthermore, if you renege on making work available while the employee is making themselves available to you, you have to compensate them for this (unworked) time. Such reasonable compensation pay must be included in the employment agreement. If an employer is satisfied that an employee is a casual, the “zero hour contract” does not apply to genuine casuals. For more detail, give us a call. Also, EMA runs a course called “Employment Relations Act 2000 and

its Amendments” (next on May 18 in Auckland, June 8 in Hamilton and August 24 in Whangarei). In addition the EMA Employers Forum meets regularly to discuss the practical application of such law – and what might need changing. Q. Several members of our OSH committee keep finding fault with every little thing around the building and in our processes, and the meetings are most unproductive. How can I make them work? – Sandy

Dear Sandy You are not the only employer to tell us this sort of thing. And as difficult as it might be to sort out, you have to, or face potentially terrible consequences. You can send all the committee members to training courses at EMA. Possible courses are “Health and Safety Representative Training” (stages 1, 2, 3 and advanced). Or sign up yourself or send the appropriate manager(s) to the course called “Health and Safety from a Management Perspective”. In fact we have a suite of courses on health and safety to help members be totally comfortable and compliant with stringent new law. They are outlined in our Health and Safety Training Directory, which you can order at learn@ema.co.nz You can also find the course list at www.ema.co.nz/services/ education/Pages/Short-Courses-Health-

We’ve got a team of advisors, lawyers and consultants who’ll do more than take the case - they’ll help you build a workplace for the future. AdviceLine

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A library of knowledge, tested in the courts and all in one place.

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Our member only resources allow you to download templates for all the difficult jobs that face employers - like Employment Agreements and OH&S.

Employment CHAT

OSH committee and poor management team and-Safety.aspx Some courses are done online or as webinars; others at EMA’s training centres in Auckland and Hamilton or as tailored training at members’ premises. Aside from helping people talk constructively about the issues, make sure your plant and operations are safe to work in. Consider getting help from EMA’s OSH consultants available at special member rates– you can find them on ema.co.nz They offer full support with compliance issues such as induction training and hazard identification and management. Additionally they can help with preparation for ACC ‘Workplace Safety Management Practices’. Q. I find I can’t stand the managers I have inherited in this job. They are unproductive and negative – morale is very low. Can I leave early and still claim the benefits of my golden parachute clauses? It would be worse for the business – and my severance terms – if I stayed. – Ned

Dear Ned Check your employment agreement for restraint of trade clauses – are they going to inhibit your options if you leave now?

“Sometimes it is the systems and processes – ICT or other that are the problem, not just individuals.” Also check the severance terms such as your access to use of a car, any shares and medical or other benefits – can you survive OK by leaving before a possible trial period is over? Then discuss your reservations about leading the team to success, with your board and/or mentor. Sometimes it is the systems and processes – ICT or other - that are the problem, not just individuals. It might even be necessary to implement a different team culture to bring about a change in morale. But a restructure of roles might be required if the team system is dysfunctional. However, you cannot use a restructure to get rid of people you don’t like. Performance reviews are the process required to challenge and retrain where possible.

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 NZ), and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email advice@ ema.co.nz or read or print information such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, at www. ema.co.nz

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BusinessPlus May 2016

EMPLOYMENT By Petra Håkansson

Looking after mobile and isolated workers A cellphone is not much help to an isolated or remote worker if they are hit over the head and lose consciousness. In the 2013 case of the security guard who bled to death when beaten over the head by hoodlums, he had been struck about six hours before he was found. Other systems such as the employee making hourly call-ins to the workplace might avert such drastic outcomes; or more suitable technology such as duress devices.

associated with remote or isolated work, a PCBU must provide a system of work that includes effective communication with the worker. Even in pairs, workers in remote places can face unforeseen danger. Inspectors on forests and farms might inadvertently come across drug use and face aggression. They might be attacked by animals, work around water or at height.

“There are endless boxes of unused “GPS gadgets” sitting under desks around corporate New Zealand. Often the hardware gets the blame as being useless and that’s why the staff gave up on using them. “More often than not, it’s actually a case of cellular devices being purchased for use in areas of patchy cell cover, where a radio or satellite solution would have been more appropriate.

Under new health and safety law, the company that hired the security firm employing him would also be liable for that death, says Petra Hakansson, presenter of EMA’s course, “Lone Worker – Safety for Mobile and Isolated Workers”.

Regional sales reps out on the road risk more than traffic accidents. Night workers walking to their cars at the end of a shift have been attacked. Workers in pack houses wearing earplugs to escape the constant noise might not hear the cries of a colleague run over by a driverless forklift, out of sight.

She points out that the Health and Safety at Work Act (HSWA) specifically mentions remote and isolated work with this wording:

Petra says the risks aren’t necessarily that they are more likely to be injured than someone in the workplace, but they are less able to get help immediately.

If you have lone workers you need to protect, or this is a topic of interest to you, come along to the half-day course in Auckland on a choice of dates. Book at ema.co.nz

[indent] Section 22 Duty of PCBU relating to remote or isolated work - (2) to minimise risks to the health and safety of a worker

It’s not only systems but also the right technology, and correctly used, that are needed.

• Petra Håkansson is Managing Director of Guardian Angel Security. Visit www. guardianangelsecurity.co.nz

“Or it’s a lack of staff training. Or it’s a lack of process around the use of the devices (such as ensuring they are always on and charged). Or the device is simply cheap crap which was never going to last or work. Or a mixture of all of the above and more.”

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BusinessPlus May 2016

EMPLOYMENT

Employers needed for young

students’ work experience EMA is a partner in a growing scheme that is designed to develop employment skills in young people aged 18-24 years. And more employers are sought to provide the work experience segment of this Licence To Work scheme. EMA is a member of the steering group for the Youth Employability Programme that is managed by COMET Auckland, an education trust and council-controlled organisation. And the programme’s “Licence to Work” passport is quadrupling in size for 2016. After running as a successful pilot programme in 2015, the innovative scheme to build ‘soft’ skills in young people to help them secure jobs after high school, will be delivered to more

License to Work: key facts •

•

than 300 students across 13 sites this academic year. Those sites include nine Auckland schools, three Taranaki schools and one youth services group in Kaikohe.

The programme includes 80 hours with an employer, and 20 hours doing community service. Facilitators teach students employability skills such as attitude, communication, teamwork, willingness to learn, commitment, motivation and initiative, thinking skills, self-management and resiliency. Students also learn work-readiness skills such as search skills, IT skills and health and safety. On completion, students gain a formal Licence to Work, which they can present to future employers.

The wider spread of sites this year will also help COMET Auckland to collect robust outcome data, which will finetune the programme so it can be used across even more diverse settings in the future – aiming for national roll-out next year.

•

COMET Auckland’s full-time project manager for employability, Aroha Te Kanawa, says Licence to Work has received support and interest from local employers, with 100 per cent of the employers from last year’s pilot being on board again this year.

The expansion of this programme will require more employers to come forward to provide work experience. If your workplace is keen to get involved, please contact Aroha at phone +64-9-307 2101 or EMA senior policy analyst Mike Burgess at Michael.burgess@ema.co.nz

•

BusinessPlus May 2016

Find the middle ground. Keep your precious staff.

North or South, East or West. Health Professionals to Construction Workers. We’ve got the true picture from Kiwi employers just like you to help you make informed decisions that deal with questions such as, ‘In order to retain my precious staff, what should I pay and what benefits should I include’?

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EMPLOYMENT

Registrations open for IBM Kenexa Best Workplaces Programme 2016 New survey options enable ongoing dialogue with employees throughout the year. IBM Kenexa (NYSE:IBM) that is a global provider of business technology and consulting solutions for human resources, delivers enhancements to the IBM Kenexa Best Workplaces Programme this year, increasing accessibility for organisations wanting to improve engagement with their employees. The new Best Workplaces ‘Pulse’ Survey means organisations can easily check on their progress between full annual surveys. Employees answer 20 core questions from the full survey, incorporating the key themes and characteristics that consistently distinguish the best workplaces in New Zealand, including engagement, leadership, involvement and enablement. Employers can now run surveys year-round, choosing times that best fit with their business priorities, and also have the option to use their own branding. Organisations wanting to compete in the 2016 Awards will need to run their survey by August 31; those surveying from September onwards will be considered for the 2017 Awards. “We’re launching the 2016 programme with some innovative changes that will make it easier than ever for New Zealand organisations to participate in their own way, and in their own time, and still be eligible for Best Workplaces recognition,” says Sandy Hall, director of IBM Kenexa Best Workplaces. “Just as successful organisations constantly listen to their customers, the best workplaces are creating a continuous dialogue with employees. Building on an annual survey snapshot with shorter interim assessments like the new Best Workplaces Pulse Survey can enable clients to better track their progress toward

Programme launch speakers Wesley Allen, IBM Social and Smarter Workforce leader, Australia & NZ (left) and Struan Abernethy, CEO of Leading Edge.

“Building on an annual survey snapshot with shorter interim assessments like the new Best Workplaces Pulse Survey can enable clients to better track their progress toward strategic goals and provide opportunities to ‘course-correct’.” strategic goals and provide opportunities to ‘course-correct’.” The IBM Kenexa Best Workplaces Programme, now in its 17th year, is proudly supported by Kiwibank, the Employers and Manufacturers Association (EMA) and the AUT Business School. It regularly attracts more than 200 organisations, providing the most comprehensive set of industry benchmarks

available in New Zealand. Award winners and the most improved organisations will be announced on November 3 in five employee-size categories: Small, Small-Medium, Medium-Large, Large and Enterprise. For more information, go to www. bestworkplaces.co.nz, and also follow the conversation at #BestWorkNZ

About the IBM Kenexa Best Workplaces Survey and Awards The IBM Kenexa Best Workplaces Survey is New Zealand’s largest annual workplace climate and employee engagement survey, and the definitive measure for ‘best employer’ and ‘employer of choice’ claims in the country. For 17 years Best Workplaces has been valued by organisations and chief executives throughout New Zealand, providing the information to assist them in building great workplaces, reducing employee churn and increasing customer satisfaction.

BusinessPlus May 2016

IN BUSINESS By Dave Jaques

Should my business have

an advisory board? Operating a company with a formal Board of Directors usually incurs a certain amount of cost and time. The Directors hold legal accountability for the company’s outcomes so it is critical they fully consider all matters and follow a robust process. In comparison, an Advisory Board is a lightweight version: it is still a group of people meeting to discuss the higher level aspects of the business, but they are able to do this in a more informal way as the outcomes are only ‘advice’ to the owners/managers and are non-binding. As a rule, the advisers on the Advisory Board are not personally liable. Shareholders, as owners, set the broad expectations in a business structured as a limited liability company. They set the risk profile, the expected return and the industry area that the company should focus on. They do not run the company. The directors (of the board) – who may or may not be owners as well - hold the legal liability for the decisions that set the direction for the enterprise. The chief executive officer (CEO) follows the direction of the board and implements it on a daily basis. If an issue arises that is too risky for the CEO to comfortably control, the matter is referred back to the board for direction. However, the owners of a smaller enterprise may wear all three hats - Shareholder, Director and CEO/MD. And when they wear each hat they make decisions with those differing considerations.

Many hands make light work I am a firm believer in the quote from Charles Mackay (1841): “Collective Wisdom: The many are smarter than the one.” An Advisory Board brings what is good from the Board process, without the

BusinessPlus May 2016

burden of some less helpful aspects. The Advisory Board avoids some of the cost and bureaucracy of a Board, and can attract wise people who might otherwise be put off by full director liability. The benefits include independent input, actually taking time to consider the decisions (as opposed to making them on the fly), and getting wide input.

“The benefits include independent input, actually taking time to consider the decisions (as opposed to making them on the fly), and getting wide input.” An Advisory Board should still meet regularly, ie, two monthly, and adhere to some structure such as following an agenda and keeping minutes, but not become political and ineffective. I am constantly amazed at the contrast between the skills required to start a business, and those required to run it well. By nature, a business owner must be tenacious, determined, prepared to take a risk, and generally singleminded. On the other hand, to do the job properly they should be openminded, constantly compare their opinion against the facts, and open to the opinion of others. As I said in my article, “Building Your Team” (Business Plus, October 2015), each of us is born with a strength and usually a concomitant weakness. For example, an extrovert has a real talent for taking risk and creating attraction, but might be weaker at providing a

contingency should things not go to plan. But where an enterprise is not large enough to require a formal Board it is usually very difficult for an owneroperator to decide to stop doing everything themselves and take input from a group.

Advisory Board guidelines There is no substitute for an effective Advisory Board for a business in trouble or wanting to grow – as long as the right Board is established. I have found the following guidelines helpful for getting the most out of Advisory Boards: • Ensure someone on the Board knows more about general business than you. You should be constantly hearing material you did not know, and be inspired by their ideas. • Consciously measure the relative propensities of your decision-makers, eg, their introversion/extroversion and nous for figures versus branding, and ensure your Board has a balance. • Give your Advisory Board a chance – it will take three to four meetings to see the value. If you are not looking forward to the meeting, then something is wrong with the people or the way you are going about it. Consider appointing or electing a strong chairperson to help move things forward. Suitable people to approach to assist you create an Advisory Board include your accountant, lawyer, successful business people you know, professional advisors and mentors. To get the full value out of the advisory process, make sure Board members offer inspiration and wisdom. Remember, the wisdom of the many is always stronger than the knowledge of the one. Hop off the rat race and give your business the benefits of greater planning, checking and measuring. • Dave Jaques LLB NZIM is managing director of Good Governance. Visit www.goodgovernance.co.nz

IN BUSINESS By Joanna Doolan and Claire Dilks

Tax changes a step in the right direction “Businesses tell us that provisional tax is hard to get right and expensive to get wrong,” said Prime Minister John Key at the recent launch of Government’s issues paper, Making Tax Simpler: Better Business Tax. The paper contains proposals covering the old bug bears such as provisional tax, withholding tax for contractors and late payment penalties. But this is one small step on the long journey to making tax simpler.

Provisional tax proposals Provisional tax in particular is painful for businesses because all experience fluctuating income. The IRD’s current backdating use-of-money interest to the first provisional tax payment for the year is crazy, especially when the interest rate for underpaying tax is 9.21 per cent (this drops to 8.27 per cent from May 8) and for overpaying, you receive 2.63 per cent interest penalty (dropping to 1.62 per cent from May 8). Underpaying provisional tax can be crippling for any business, such that all provisional taxpayers should consider using a tax pooling company like Tax Management New Zealand to reduce interest costs to a rate closer to the entity’s borrowing rate. Under the new proposals, the safe-harbour where you do not pay use-of-money interest will increase from $50,000 of residual income tax to $60,000. Currently, even the $50,000 limit is limited to individual taxpayers; the proposal extends this to non-individual entities such as trusts and companies. There are also lots of options currently for working out your provisional tax, however, 92 per cent of businesses use the standard uplift method - broadly, requiring the taxpayer to pay provisional tax based on 105 per cent of the residual income tax returned for the previous year, or 110 per cent of the tax position in the year before that if this

was the last return filed (only in respect of the first two instalment dates). For those using the latter (110 per cent) method, the paper proposes the use-ofmoney rules will be removed on the first two instalments of provisional tax and will only apply for the last one, which is actually after your balance date (generally the 28th of the month following your balance date but May 7 for March year-ends). Also proposed is a new provisional tax method, allowing companies with turnovers of $5 million or less to calculate and pay their provisional tax through their accounting software, using real time information. This is a huge improvement, however, this needs to be accompanied by measures allowing for IRD to make timely refunds if businesses seriously overpay provisional tax payments.

Withholding tax The obligation to deduct withholding tax from contractors is also proposed to be extended to labour-hire contractors. This obligation will be updated to provide more flexibility, allowing contractors to elect the tax rate they apply, similar to taxpayers being able to elect the resident withholding tax rate taken from their interest. Currently, the rate elected cannot be less than 10 per cent for residents or 15 per cent for non-residents. While this latter flexibility may be good, you can do this already by applying for a special rate. And we will need to review the fine print to be convinced this is anything other than a measure to get more tax earlier overall. Around 130,000 businesses are already registered to pay withholding tax, so watch this space.

Late payment penalties It’s also proposed to remove the 1 per cent incremental, monthly, late payment penalty. However, this one is messy and dependent on the IRD’s new computer system. The current system means use-of-money

interest and late payment penalties can reach 27 per cent per annum, which can be a ruinous strain on businesses in default.

Sharing your tax information Tax secrecy may also become a thing of the past, as proposals allow the IRD to share your information with credit reporting agencies and the Companies Office. Despite the excitement around the recent Panama tax evasion leaks, the move to sharing information has to be carefully managed, especially where the tax has arisen via a difference of opinion between the IRD and the taxpayer. This paper has been presented using all the right words, with the PM stressing these tax changes will be positive, particularly for smaller businesses. The aim is to reduce compliance costs and make tax simpler, with up to 110,000 small businesses being able to use the new proposed pay-as-you-go option. The counter question is this: is this one giant step for taxpayers that will provide major pain relief? The answer is a resounding no. In fact it could be viewed as a step backwards, as some of the provisional tax proposals are reminiscent of the regime introduced in 1988. It is important advisors and agencies such as EMA make submissions that represent the views of engaged members rather than a vocal minority. Submissions close on May 30 and draft legislation is expected in August. A number of measures will apply from April 1, 2017. A lesson we can all learn from the Panama papers scandal is people on the street are demanding changes to outdated rules. Change is equally needed to make life easier for law-abiding taxpayers who are the engine of our economy. • Joanna Doolan is a tax partner and Claire Dilks is an associate director of tax with EY. Email Joanna.doolan@ nz.ey.com and Claire.dilks@nz.ey.com

BusinessPlus May 2016

IN BUSINESS By Rosina Webb

Planning a successful event Planning is the key to holding a successful business event, whether big or small. This applies to those of you who are contemplating taking a booth space at an upcoming conference or inviting potential customers to a gathering to showcase their business, for example.

Pre-Event Decide what you are trying to achieve. Set goals. What are you hoping to achieve? What do you want people to know about your business? These goals could be financial, eg, increased sales, or social goals such as raising awareness of your brand amongst key players. Set goals that determine a “successful event” so that afterwards, you can measure how well you did. Your goals need to be SMART – Specific, Measurable, Achievable, Relevant and Time-based.

“Who are you trying to speak to? Define your target audience and the number attending.” Plan and define your target market. Who are you trying to speak to? Define your target audience and the number attending. Plan a budget. Agree on an appropriate spend and document quoted versus actuals to track event costs and stay on budget. Plan the event execution. Confirm the date, the time, the venue. Check there are no conflicting events on at the same time. Plan parking. Put together timelines for activities to tick off prior to the event, on event day, and post event. Plan for help. Helpers may be trusted staff who are savvy

BusinessPlus May 2016

about what you do and how you do it. If they are going to be facing customers, ensure they are confident, able to relate well to others and able to answer any questions that may come up. As the personal face of your business, they need to emulate your brand. Plan your marketing material. Invest in support material such as brochures, signage, banners, promotional flags, giveaways or samples. Plan to stand out – particularly if it is an industry-wide event - with material that is clear, eyecatching and not too ‘busy’. Provide a strong call to action through a phone number, a website or an offer that encourages contact. Plan your venue. Investigate your intended venue to plan the best use of the space you have, so you can draw people in to see what you are promoting. Plan your communication. How you will let people know about the event? If it is an internally organised event, will you use your own databases? If it is an industry-wide event, eg, a conference, check the opportunity to advertise in the programme as an exhibitor or visitor.

Event Day Plan your technology requirements. Consider if you need WiFi, a laptop or projector. Perhaps you need iPads for people to browse your website. Check the lighting. If you need to prepare a formal presentation be sure to have a full practice beforehand to check that your technical support works well. Plan your photography. If you require photographs to be taken at the event to be used for promotional purposes or industry magazines, organise someone you trust to take photos before and during the event, to capture the activity. Likewise video – are there

presentations you need and are permitted to capture that could be useful on your website? Plan to collect prospects. Prepare to capture the details of new prospects. Maybe run a competition which allows you to obtain entrants’ email addresses for future marketing opportunities. If it’s an industry event, maybe you swap business cards.

“Utilise any opportunities for interaction and do it within a few days after the event, while you are fresh in their minds.” Post-Event Follow up with contacts. Follow up with any new contacts you have identified. Send them an email thanking them for attending and perhaps draw their attention to a special deal you have going. Maybe offer them the chance to have a coffee and a chat. Show an interest in their business, and find ways for your organisation to help them solve their problems. Utilise any opportunities for interaction and do it within a few days of the event, while you are fresh in their minds. Evaluating your success. Measure the success of your event against the goals you set yourself. Did you achieve your sales targets? Did you gain more connections or prospective customer details? Be sure to evaluate ways to improve for future events. • Rosina Webb is founder and managing director of Energise & Associates. Visit www.energise.net.nz

“So in most cases, it is to your advantage to advertise to create as much interest as possible in the early stages of selling the business.”

IN BUSINESS By Mike Fokkens

Engage experts to market your business for sale Just like selling a house, engaging a professional who understands the market can be invaluable when selling your business. Consider using a business broker who knows your industry, and how to reach potential buyers. The broker should be able to offer an extensive, current and prequalified database of prospective buyers. He/she will be able to develop a comprehensive marketing plan to suit your budget and which should include an Information Memorandum, and a variety of advertising media. As with any professional, check out their history and reputation.

The Information Memorandum It is difficult to effectively sell a business without some sort of documentation that sets out all the relevant information about your business for a prospective buyer to appraise the opportunity. This is where a professionally prepared business profile is invaluable. Most commonly called the Information Memorandum, this information pack is a strong marketing tool to assist with the sale of your business. The Information Memorandum must be prepared with great care to ensure it is comprehensive, accurate and honestly represents the business. Consumer protection legislation and regulations require that a business owner must disclose any information that may be detrimental to the ongoing profitability of the business, or that is relevant in the purchaser’s decision to proceed. This information is usually gathered from the business owner and their professional advisors. A variety of topics may be covered in the Information Memorandum,

including: · Executive summary · Background information · Management organisation and control · Staff levels, skills and talents · Historical financial information and commentary · Current financial performance and future outlook · Opportunities and potential · Details of tangible and intangible assets · Premises, facilities and lease details · Product/Service positioning · Other information such as S.W.O.T. analysis, business plans and marketing materials.

Marketing your business Most business owners want the sale of their business handled confidentially. For commercial reasons, some don’t want their competitors and suppliers to know they are selling. Marketing is a critical element in achieving a successful sale. An appropriate and comprehensive marketing plan incorporates notes on how to present the business, a detailed Information Memorandum, an advertising schedule and considerations for website and database marketing. Experience has shown that the most serious buyers often show interest in the early phases of a seller’s marketing campaign and they want all the answers readily available at the start. So in most cases, it is to your advantage to advertise to create as much interest as possible in the early stages of selling the business. This approach can create competition between interested parties, which can result in a better sales price – through a contested process. It is also the only way to ensure you have reached the maximum number of potential buyers.

Types of buyers Identifying the motivations of different types of buyers is an important part of a marketing programme. Generally, buyers fall into one of the following categories: Strategic – Larger companies or corporate entities wishing to make an acquisition for strategic reasons. Family – Sometimes a business is transferred or sold to another family member. Job Buyers – People looking for a smaller company which they intend to run as owner-managers. Private Equity Funds – Investment groups wishing to maximise returns in industries that demonstrate strong growth prospects. Existing Management – Sometimes management act in conjunction with private equity investors to acquire a company they know intimately (commonly known as a Management Buy Out). Trade Buyers – Competitors within the same industry who believe they can achieve cost reductions and improved operating efficiencies by acquiring a larger customer base. Private Investors – People who are considering investing in a private enterprise with a less than fulltime involvement. In the next issue of BusinessPlus (June 2016) we cover The Sale Process and Due Diligence. • Mike Fokkens is a business broker at Link Business Broking Ltd (Licenced REAA08), email michaelf@linkbusiness.co.nz

BusinessPlus May 2016

International trade By Nada Young

“A sensible schedule should allow for enough time in each market to conduct business, visit key accounts and survey the competition. It should also include rest time.”

Tips for F&B exporters planning market visits As the dust settles from one of Asia’s most important annual food and beverage (F&B) expos, “Food and Hotel Asia” in Singapore last month, many New Zealand exporters will be busy laying plans for market visits to follow up on opportunities generated from the Expo. Anyone who has been to an expo of this size will know it is virtually impossible to have a productive meeting at such a show, where most meetings are held in the midst of busy expo booths and are plagued by constant interruptions and the incessant clamour of the crowd. To get the best results from a followup market visit, good planning is key, especially for a visit that incudes markets in multiple countries. A sensible schedule should allow for enough time in each market to conduct business, visit key accounts and survey the competition. It should also include rest time – nobody wants to talk business with someone who can barely keep their eyes open after a gruelling market tour taking in five countries in as many days.

Guidelines for trade show follow-up visits • Choosing meeting locations Choosing suitable meeting locations is often a trade-off between convenience, such as in your hotel restaurant, and suitability such as at an office but after an hour in dense traffic across an unfamiliar city. Most will agree that it’s worth the effort to meet in the relative calm of an office. Not only is it a better environment for a business meeting, it has the added advantage of providing a first-hand appraisal of the nature of the company and its operating environment. • Setting agendas Having clear goals and objectives for each

BusinessPlus May 2016

meeting is extremely useful. Taking the time to send meeting agendas in advance shows professionalism and ensures that meetings are productive. Without some form of structure, precious time is wasted as the conversation wonders from point to point, briefly touching on important issues before moving on to the next topic. An agenda also allows for clear deliverables and timelines to be established. • Making time for trade visits Scheduling time to visit important customers or retail stores is vital. Distributors will readily extol the depth of their market penetration. Verifying their comments with first-hand observations is a good way to separate the truth from a boast. For food service and on-premise sectors, taking the time to accompany your distribution partners to a key account meeting is a good way to ensure your products are favourably remembered. • Surveying the competition For retail brands, assessing the competitive environment is an important element of any market tour. Retail planograms change on a regular basis. New entrants come and go. Price positions reshuffle. Keeping abreast of these developments will provide helpful insights for use in your export strategy. When selecting suitable stores to visit, seek advice from an experienced exporter or adviser. Most retail groups in Asia segment their store formats according to consumer demographics and geographic location, so not all stores will have a full complement of relevant brands and variants to survey.

Getting the most out of a market visits is a lot more involved than booking flights and finding decent accommodation. It takes good planning, a sensible schedule, the right setting for each meeting and a clear set of deliverables. It’s certainly worth the effort. At the rapid clip that emerging markets are developing, all eyes are on Asia right now. Being there is everything. • Nada Young is Asia Market Director at Incite, an export development agency for F&B companies trading with Asia. Visit www.exportincite.com

International trade By Thomas Manning

Steady regional growth despite unrest Political and economic news from Latin American has recently been dominated by drastic reforms in Argentina, chaos in Brazil and Venezuela and the “Panama Papers” tax scandal. More welcome news from the IMF that the economies of the other 30 economies in the region are growing between 1 and 5 per cent (except Ecuador at -1.7 per cent) has been swamped in a tsunami of breathless, sensational reporting on the tumultuous parts of Latin American. To better frame and understand the tumult, I prefer the apposite insights of 18th Century Jamaican Government Secretary and playwright, William Congreve, which provide a far more pertinent focus on events than those of contemporary hacks.

Argentina His quote, “Music has charms to soothe a savage breast, To soften Rocks, or bend a knotted Oak”, applies in Argentina’s case as the prestissimo tempo of new brooms sweeping clean is soothing music to the IMF, World Bank and bond markets, all of which are softening and bending sympathetically to the neoliberal President Macri’s government’s austere new tune. The removal of foreign exchange controls, export tariffs and subsidies will improve medium-term growth prospects, but meantime stagflation will endure with 7.8 per cent unemployment, inflation spiking around 40 per cent and GDP contracting 1 per cent this year.

Brazil The lines, “Grief walks upon the heels

of pleasure; married in haste, we repent at leisure”, evoke how the world’s onceenamoured financial markets have downgraded Brazil and increased its financing costs as the economy reels from its worst performance in 25 years - with a 3.8 per cent contraction in 2015 (projected to further contract 3.5 per cent this year), political dysfunction and a pervasive corruption scandal riddling the corporate and political classes. Congreve’s words, “Heaven has no rage like love to hatred turned, Nor hell a fury like a woman scorned”, accurately describe how viscerally Brazil’s people turned on their once much-loved President Dilma Rousseff when economic conditions worsened, and succinctly characterise Rousseff’s furious rhetoric accusing opposition forces of a “coup” and corruption-tainted Vice-President Michel Temer of a traitorous conspiracy to usurp her mandate as he personally impels growing momentum to impeach her. The quote, “Defer not till tomorrow to be wise, Tomorrow’s sun to thee may never rise”, epitomises the urgent need for the resolution of political and policy uncertainty in Brazil or, despite a weakened currency helping improve export competitiveness, the IMF says the recession risks becoming the worst in a century.

Venezuela It will take more than soothing music to soften the rocks upon which the Venezuelan economy has been dashed by an unsustainable socialist economic model. Venezuela depends on oil for 90 per cent of its income and the crash in oil prices has led to a lack of hard currency, widespread shortages of electricity, food, medicines, GDP at -8 per cent, inflation at 720 per cent and imminent sovereign debt default.

President Nicolas Maduro, a former bus driver and intractable demagogue, clings to power by jailing opponents and at every turn checkmating the opposition parties who control Congress with the support of the supreme court and electoral commission both stacked with his handpicked cronies. Widespread and virulent social unrest is building toward a crescendo, the longawaited apogee of which will be Maduro’s ouster and an imperative return to conventional economics.

Panama Panama’s booming financial services sector has grown to account for three-quarters of GDP courtesy principally in contravention of the FATF convention on money laundering, as now exposed by Mossack Fonseca’s hacked “Panama Papers”. Congreve’s words, “I know that’s a secret, for it is whispered everywhere” exemplify Panama’s egregious role in money laundering as while the Panamanian Government pays lip-service to FATF it covertly encourages tax evasion in other jurisdictions. The nefarious, publicity-abhorring denizens of Panama’s financial underworld including the seven heads of government from Latin America who are involved, believing Congreve’s final words here as gospel, “O fie, miss, you must not kiss and tell”, will decamp to more secretive havens and markedly shrink Panama’s economy in the process. • Thomas Manning is a New Zealand 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

BusinessPlus May 2016

transparency International By Brendon Wilson and Daniel King

Responsibility for corruption

falls far from the tree A number of investigations into cases of potential foreign bribery are taking place in New Zealand, but there have been no prosecutions to date. However, New Zealand’s foreign bribery laws are very much in line with international legislation and there are a number of examples of UK companies “overstepping the line” when operating overseas. Recent newsworthy cases of UK businesses that slipped below the “integrity threshold”, and from which New Zealand might learn, are outlined below.

Case A: £2.3m fines and smack for wilful ignorance In February a surveying and development company with wide international representation was penalised with more than £2.3 million fines, confiscations and costs as a result of a conviction for failing to prevent bribery. An employee operating in a Middle Eastern subsidiary had made corrupt payments to secure a building contract. The judge noted that the defendant company had wilfully ignored two KPMG reports in 2011 and 2014 flagging weaknesses in the company’s internal systems and controls. This case shows the law will pursue issues across boundaries and jurisdictions, as well as penalise companies that, through deliberate decision, complacency or poor internal controls, do not take adequate measures to address risks of foreign bribery and corruption. As New Zealand’s Serious Fraud Office director, Julie Read, states: “Many New Zealand companies rely on foreign based employees and agents to manage their international business, often in countries

BusinessPlus May 2016

which are high risk in terms of the likelihood of corruption. “If those employees or agents become involved in corruption on behalf of the company, even if no one in New Zealandbased management is aware of this activity, the company itself can be found criminally liable and subject to significant fines.”

Case B: family firm’s executives imprisoned A small UK family printing firm was convicted and penalised with £2.2m in fines, confiscations and costs for making corrupt payments to public officials in African countries where it was attempting to secure contracts to print government secure documents. In addition to such severe penalties for a family company, sentencing sent the father and son executives to prison for 18 months (suspended) and three years, as well as imposed other penalties including on their future ability to act as directors. The relative severity of the penalties partially resulted from the direct knowledge and involvement, in such a small company, in which key executives could not show “distance from awareness”. It was pointed out that a defence would have been possible if they had previously adopted and properly deployed “preventive procedures” along the lines of policies and systems we have suggested in earlier issues of BusinessPlus.

Case C: bribery by a third party A Scottish cable networking company legally offered a sales reward (travel tickets) to its installers, and was found penalised when one of the independent installers (agents) offered part of his reward to a target customer, as inducement for gaining business.

The company was still found to be responsible for the actions of its independent installer in offering this inducement, as the terms of the reward scheme were clearly not intended to be passed to downstream customers to secure business. The company was required to make a civil settlement of £212,800, and is considered to have escaped very lightly. The core company was responsible, despite not knowing of the installer’s offer. When the company became aware of the problem, it immediately alerted authorities, took responsibility for its “failure to prevent bribery by a third party associated with the company”, voluntarily set up independent rigorous legal and accounting investigations, and as a result avoided criminal prosecution.

New Zealanders trust small business Lastly, here’s a positive for New Zealand businesses which hasn’t had a lot of exposure: the New Zealand public rates small business as increasingly trustworthy and more so than any other part of society. A recent survey conducted by Colmar Brunton for the Institute for Governance and Policy Studies at Victoria University analysed New Zealanders’ levels of trust in various parts of our country’s institutions. Small business scored a16 per cent net gain in the past three years, easily the greatest gain by any sector or structure. Corporate and large business did not fare so well, with a 37 per cent drop in New Zealanders’ trust. A variety of other sectors and parts of our society also fared poorly, most rating lower in the public’s trust estimation over the past three years. • Brendon Wilson and Daniel King are board members of Transparency International New Zealand. www.tinz. org.nz

International trade By Catherine Beard

Why we need foreign investment We need to remind ourselves and our elected representatives why New Zealand needs to remain open to foreign direct investment (FDI). When the focus goes on the narrow issues that arouse the most emotion, such as Chinese investment in farms, or the current hot topic of water, we can tend to overlook the facts about where our FDI comes from and the benefits it brings. To get a better handle on the facts, ExportNZ commissioned a report by economic consultancy NZIER to look at the pros and cons of FDI. The report concludes that while there are many strong views on FDI in New Zealand, those who care about jobs, exports and regional economic growth, should be worried about too little FDI, not too much. First let’s look at the facts about where our overseas investment comes from, keeping in mind the definition of FDI by Statistics NZ as “non-resident commercial investment”. Most of that investment comes from our long-term trading partners: • 52 per cent comes from Australia, • 8 per cent from the US, • 5 per cent from the UK, and • Approximately 0.7 per cent from China. In terms of where the investment goes, the largest percentage is in finance and insurance, followed by manufacturing, with agriculture, forestry and fishing at about the same level as investment in retail trade.

Global integration Foreign direct investment is a great example of increasing global integration. Global FDI inflows have increased by an average of 8.2 per cent a year over the

past 20 years compared to global GDP growth of 5.2 per cent. Foreign investment can enable the growth of businesses and jobs that wouldn’t occur if reliant on domestic investment alone.

“…while there are many strong views on FDI in New Zealand, those who care about jobs, exports and regional economic growth, should be worried about too little FDI, not too much.” Today our exporters earn revenue from businesses that in many cases have been developed with the assistance of foreign investment. Businesses need to build scale and capability to be able to export, and this is often not achievable with domestic investment alone. In addition, a foreign investor can be the partner/ channel into their domestic market that they understand better than the New Zealand firm. New Zealand has a relatively shallow capital base, so our businesses benefit greatly from being able to access foreign investment.

Economic benefits In economic terms, FDI encourages efficiency by allowing resources to be directed to their most valuable use. In practical terms, it allows businesses to introduce the new technology and management techniques that keep them competitive. And it produces lots of jobs – currently one in five New Zealanders works in a firm that has grown with the help of some foreign investment and those jobs tend to be higher paid than in firms with no FDI.

It’s worth considering these benefits, given there seems to be some reluctance in the public’s mind about the place of FDI in New Zealand. It can be easy for politicians to point to FDI and raise concerns about sovereignty, but often without mentioning the protective framework in New Zealand law that screens sensitive investment. Also not addressed is the power of foreign investment to keep interest rates down. By being connected and integrated with other economies, we escape the “risk premium” associated with more restrictive, slowergrowing economies. The ability of FDI to grow and revitalise cities or industries is also positive. In my home town of Wellington, we are watching the redevelopment of the landmark department store Kirkcaldie & Stains with a $20 million refit by the Australian-based, South African-owned retailer David Jones. This is the kind of investment that can have huge benefits for local economies. What if we decided to restrict foreign investment? The effects would be stifling. If we restricted FDI, our ability to grow and develop new businesses would be severely constrained. Our ability to forge free trade agreements and achieve significant export gains would be compromised. And we would lose our reputation as an evenhanded, open economy engaged with the rest of the world. All investments carry some risk, but foreign investment has been positive for New Zealand throughout our history, and can continue contributing to a strong economic future. • Catherine Beard is executive director of ExportNZ. Visit www.exportnz.org.nz

BusinessPlus May 2016

MEMBER PROFILE

In his younger days when travelling overseas, Ken Vaughan became fascinated with the Middle Eastern way of making bread. He vowed on his homecoming to make bread in the same, timehonoured way - by hand and without preservatives or other chemicals. He set out to make pizza bases and other breads commercially, the way they have been made since before the days of the Ottoman Empire. For the past 11 years his bakery, Turkish Bread, in Henderson, Auckland has baked true to the calling. Some 36 staff are engaged in the process. They shape every piece of dough by hand and throw it onto the hot stone, says Ken, managing director. “Our workplace is a very happy place,” he says. “It’s almost biblical. It’s all go, go, go. There’s lots of singing going on - that’s why the bread tastes so good. We are one of the noisiest businesses in Henderson. There’s no false idols here.”

Preservative-free The company’s pizza bases and other Turkish breads are cooled before being sealed in a controlled atmosphere, ready for rapid distribution to the chilled shelf space of the nation’s supermarkets. Over some years of trial and error Ken developed a way to ensure the bread would have a reasonable shelf life without resorting to preservatives. Turkish Bread staff Solomon Patea (left) and Alofa Mikaele with the latest batch of dough ready to roll.

“I could make a lot more money if I just stuffed preservatives in,” he says. “It means too, that you can achieve restaurant standard pizzas at home using our products, and at a realistic price point. It’s quite unique.”

The singing bakery “People are looking for real food; food that hasn’t been chemically altered.”

BusinessPlus May 2016

The business has doubled in size over the past five years, and it’s clear it won’t be deviating from the company philosophy. Because Ken says, people are looking for real food; food that hasn’t been chemically altered. And he adds, “outside of Turkey you won’t beat our quality.” One of their keys to success is making sure they stay closely in tune with the market, and with market demand, on a daily basis. When it’s hot and the cricket is on television, people want pizza, and Turkish Bread responds to that, Ken says. In the future Turkish Bread prefers to grow in the local market, and it has other products under development which adhere to the same entirely natural, timeless philosophy, he says.

Continued from p12

Vic Crone The business rate makes up roughly a third of the total rates revenue. It is projected to fall to 25 per cent and I support this direction. Q5. What are key issues you would like to progress or change that will enhance business and job creation? Mark Thomas Council needs to be easier to work with and reduce its cost to business. I will speed up the consents process and introduce a new ‘customer focussed’ approach so businesses don’t feel like they’re having to battle when they come to council with great plans for new business or growth. To effectively support our 50 Business Investment Districts (targeted rate business associations), I will reorganise the Auckland Tourism, Events and Economic Development (ATEED) to increase support for small and medium businesses. Vic Crone Council should look to partner with businesses more effectively across a range of areas, especially investigating other

ways to get more cars off the road to reduce congestion and unlock significant productivity gains for business. I see real benefits in exploring remote or flexible working practices, and we need to be more inclusive about planning for growth, partnering for major events, and supporting local initiatives. Q6. What is your background in employment/business? What do you bring to the role of mayor? Mark Thomas I bring 20 years of leadership in small, medium and large businesses across a range of industries. I have held senior management roles in banking and energy, responsible for a retail branch network with around 800 staff. I have run an Auckland-based consulting and services group for more than 10 years providing strategy advice to New Zealand and international companies. I’m a director/ trustee of a range of business and community organisations. I was elected to Auckland Council in 2010 and am Deputy Chair of the Orakei Local Board. I can hit the ground running as Mayor in

November. Vic Crone With 20 years private sector experience in senior management and board roles I can provide the strong, fiscally responsible leadership that our Council needs. Delivering real results in high-growth industries with billion dollar revenue streams, managing large teams and fast growing portfolios has been part of my everyday job. I’m confident I can bring leadership, competency and vision to the Mayoralty. Q7. What do you like to do in your spare time? Mark Thomas We have two boys, so their sports take up a lot of time (rugby, soccer, tennis and touch). My council role means spare time in supporting community groups. I go to the gym and we run as a family. Vic Crone I like going on adventures with my two daughters, walking the dog, swimming or kayaking, dinner with friends and a movie.

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BusinessPlus May 2016

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