BusinessPlus news | advice | learning | networking
Issue 120 – November 2014 $6.30
Publicatio n o f t h e E m p l o y e r s & M a n u f a c t u r e r s A s s o c i a t i o n Inc
EMA develops big business campus Why the Holidays Act must change, for tax reasons The Terranova challenge!
Inside
• • • •
Redundancy, hangovers, and too much golf? Economic update from Kiwibank Angel investment Taiwan free trade widens opportunities
The new ER law, at last
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Christmas andNew New Year Christmas and Year Public Holidays Public Holidays –Thursday 25 December 2014 entitled to be paid for a public holiday if the holiday »» Christmas ChristmasDay Day –Thursday 25 December 2014 would have: » Boxing Day – Friday 26 December 2014
» Boxing Day – Friday 26 December 2014 » New Year’s Day – Thursday 1 January 2015
» New Year’s Day – Thursday 1 January 2015 » 2 January holiday – Friday 2 January 2015
» 2 January holiday – Friday 2 January 2015 Entitlement to a paid public holiday All employees for whom the day is otherwise a working day will be entitled to a paid public holiday or an alternative holiday if they work on the day. Employers therefore need to consider whether the day on which the public holiday falls is otherwise a working day for each employee in order to determine public holiday entitlements. Otherwise working day In many cases it will be very clear that the day on which the public holiday falls is otherwise a working day for an employee. However if it is not clear employers should ask themselves - “if it wasn’t for the public holiday would the employee normally work on the particular day of the week/month.” Rosters and work patterns can help to determine whether an employee would normally work on a particular day. If it is not clear whether the day would otherwise be a working day an employer and employee should consider the following factors with a view to reaching an agreement on the issue: • The employee’s employment agreement • The employee’s work patterns • Any other relevant factors, including o whether the employee works for the employer only when work is available: o the employer’s rosters or other similar systems: o the reasonable expectations of the employer and the employee that the employee would work on the day concerned. • Whether, but for the day being a public holiday, the employee would have worked on the day concerned.
• otherwise been a working day for the employee; and • occurred during the employee’s annual holidays had they taken their remaining holiday entitlement immediately after the date on which their employment came to an end. An employer only has to project forward by the amount of entitlement to annual holidays an employee has and not by the amount of annual leave an employee has “accrued” through an incomplete year. Employees become entitled to 4 weeks holidays after the end of each completed 12 months of continuous employment. Where the normal pay day falls on a public holiday, does the payment have to be brought forward? Wage and salary payments need to be paid when they fall due which is usually determined by the employment agreement. Where the normal pay day falls on a public holiday employers may be unable to pay employees on time. If this situation arises it is best practice to process pay before the normal pay day in order to meet payment obligations. Some employment agreements cover the issue and provide for payment on the next working day which is fine as long as it has been agreed. Can a public holiday be transferred to another day? The Holidays Act allows an employer and employee to agree in writing to transfer a public holiday to any 24 hour period. This means with agreement a public holiday may be transferred: • By a few hours to match shift arrangements • To a completely different day In the absence of a written agreement, a public holiday is observed midnight to midnight on the traditional day. The EMA website www.ema.co.nz contains detailed guides on leave entitlements. This is a guide only. It should not be substituted for professional advice. Please contact our AdviceLine Team if you require assistance.
Christmas closedowns and public holidays If a public holiday falls during a closedown period the factors listed above in relation to what would otherwise be a working day must be considered as if the closedown were not in e ect. This means employees may be entitled to paid public holidays during Free call NZ on 0800 300 362 Free call AU on 1800 300 362 closedown periods.
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BusinessPlus is published by :
CONTENTS
The Employers and Manufacturers
Advocacy
Association (Northern) Inc
04 Your input required
159 Khyber Pass Rd, Grafton,
05 World tremors demand urgent responses
Private Bag 92066, Victoria Street West,
14 Business NZ: Business questions
Auckland 1142 Ph: 09 367 0909 or 0800 800 362 Email: ema@ema.co.nz
to councils
14 Mayor’s proposal to penalise
business with quick rates fix decried
Website: www.ema.co.nz
news
Chief Executive: Kim Campbell
16
06 EMA to develop major business campus
Manager, Advocacy & Govt Relations:
09 Employment Relations amendment
Mark Champion
keeps up with modern workplace practice
Manager EMA Learning: David Foley Manager, Strategy & Enterprise: Mauro Barsi
10 What’s wrong with the Holidays Act?
10 Take a picture, save money on tax
Waikato Denis Quigan 07 823 9311
mob 027 203 0694
Russell Drake 07 838 0018
mob 021 686 621
Bay of Plenty Terry Arnold 07 575 8401
10
24 Best workplaces celebrated
22
20 The Taiwan free trade opportunity expands
mob 021 662 656
20 ILO finds numbers of poor workers shrinking
Rotorua / Taupo / South Waikato / Whakatane Clive Thomson 07 348 0334 mob 0274 372 808
BusinessPlus Editor Gilbert Peterson Ph: 09 367 0916 gilbert.peterson@ema.co.nz Writer Mary MacKinven mary.mackinven@ema.co.nz
21
Fake goods threat rising
22 Simpler exporting regs to Australia envisaged
22 Renewal of US FDA registration required
24
23 Letter from Australia:
What Australian chief executives of New Zealand companies say…
25 Kiwi growth base for international Aussie manufacturer
features Designer Ripeka Mikaere Advertising Sales Colin Gestro (09) 475 9313 colin@affinityads.com ISSN No. 1176-4953
26 BOOK REVIEWS: Leading titles for results, and innovation
advice
25
08 Appeal court upholds decision on
28
equal pay: The Terranova challenge
12 EMPLOYMENT CHAT:
Redundancy, hangovers, and how can there be too much golf?
16 Dollars from heaven; Angel investment
19 Economics Update:
Hey big spenders? with Kiwibank
BusinessPlus news | advice | learning | networking
Issue 120 – November 2014 $6.30
Publication of the Employers & Manufacturers Association Inc
EMA develops big business campus Why the Holidays Act must change, for tax reasons The Terranova challenge!
On the cover... EMA is redeveloping its Khyber Pass site in Auckland with a new HO and a business campus. The full story is on page 7. InsIde
• Redundancy, hangovers, and too much golf? • Economic update from Kiwibank • Angel investment • Taiwan free trade widens opportunities
The new eR law, at last
ADVOCACY at work
Your input required EMA’s special interest member committees have been entrusted with helping the EMA Policy Forum develop policies and Mark Champion priorities to improve the business environment. EMA special-interest committees and forums, and their policy champions, are: • Trade & Foreign Policy Committee – Garth Wyllie • Local Government & Regional Infrastructure – Peter Atkinson • Energy & Environment – Peter Atkinson • Manufacturers Forum – Bruce Goldsworthy • Employers Forum – Michael Burgess • Policy Forum – Garth Wyllie EMA’s manager of advocacy and government relations, Mark Champion (pictured), says the special interest groups are now more sharply focused. Taking EMA’s six-point election manifesto as the starting point for the core policies that EMA wants to effect, the committees will develop a strategy for each manifesto policy area. All members are to be kept informed and encouraged to have input. To have your say on the six policy areas of the manifesto please contact the following EMA ‘policy champions’: 1. Education, Skills and Migrants – Michael.burgess@ema.co.nz 2. Innovation, Research & Development – Gilbert. peterson@ema.co.nz 3. Local Government Consenting Process - Peter.Atkinson@ ema.co.nz 4. Small Business Growth – Bruce.goldsworthy@ema.co.nz 5. Superannuation and Business Investment – Garth.wyllie@ ema.co.nz 6. Retention of Current Policies – Michael.burgess@ema.co.nz
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Nonsensical mining consenting
Gaining consent to mine the Taranaki’s offshore iron sand deposits for iron ore has ended up in court for New Zealand company Trans-Tasman Resources (TTR). Its CEO Tim Crossley told EMA’s Energy and Environment Committee about their trying to negotiate a balance between environmental and economic outcomes during the consenting process. Now it is appealing the consent
imposed on business by Watercare and will follow this up. Auckland CBD development plans discussed
Another EMA guest speaker was Rick Walden, General Manager of City Centre Integration at Auckland Council. Rick’s team was established last December to develop a new ‘downtown framework’ for the CBD including the waterfront, cycle ways and walkways, coordinating all Council planning departments. EMA seeks acceleration of unfinished business
refusal of the Environmental Protection Agency (EPA), in the High Court. Crossley says it has been difficult to get consistent or clear messages from the EPA. The project on hold is the mining of iron rich sand using a patented drill system off a ship, 22km offshore. The company’s objective is to mine across 65.76 km sq at 20-42m depth. The mined sediment would be processed on board the ship at sea, with the resulting iron ore concentrate exported. The business would require approximately 200 personnel. TTR was the first NZ company to seek a marine consent under the new exclusive economic zone legislation. The committee also discussed the legality of the water rate differential
EMA has extended hearty congratulations to the re-election of Prime Minister John Key and National. EMA chief executive Kim Campbell said, “We will now be looking for accelerated attention coming to bear on unfinished business. “With the international scene so highly volatile, New Zealanders understand the need for certainty is vital for our future standards of living.” Influential visitors
EMA regularly hosts visits from overseas and in the past month we met with the Ambassador from Switzerland His Excellency David Vogelsanger (pictured) and the Swiss Honorary Consul to New Zealand based in Auckland, Peter Deutschle.
ADVOCACY By Kim Campbell
World tremors demand urgent responses We might have thought in today’s IT networked, globalized world with its plethora of trade preferences that the spikes and troughs of economic cycles would be smoothened out. Not so. The opposite seems truer. The peaks are more dramatic these days and the troughs harder to escape. Of course there have always been periods of uplift followed by periods of decline. Famine and plenty. Economic cycles have been with us since Egyptian pharaohs dreamed of skinny cows eating other skinny cows and not getting any fatter. The world has always been a perilous place, so are we now economically at the edge of a precipice, or on the verge of a gentle amble downward for a time, with recovery always in sight? Economic ups and downs are often also largely man made. For instance the tech bubble, and the GFC with their effects spreading as fast as the news. In addition, the modern era has witnessed abundant misinformation about the state of inventory in the cycle. And the high priests of our financial systems have an uncanny ability to convince otherwise intelligent people to accept for a time some of their practices which are later shown up to be dodgy. As Reserve Bank Governor Graeme Wheeler has noted, the GFC resulted in 60% of US mortgages being worth more on paper than the properties they were secured against. The US banking system was underwater, insolvent. The response was to print money, transferring trillions of dollars from future generations to people already very wealthy. On Wall Street the $1.5 trillion of newly printed money has created an illusion of buoyancy perpetuated through share buy backs, mergers and cheap money. Little prosperity is leftover for those affected the most. What we have in effect is a ‘contained depression,’ though the majority are no doubt grateful their spending power is apparently being maintained, thanks to modern supply chains and low cost production. This too is approaching its limits.
“The challenge of the unskilled and unemployed demands the most urgent priority. The New Zealand strategy to upskill as fast as possible is most definitely the right one. What’s missing here though is access to capital”
The European economy is going sideways with the spectre of deflation hovering over a policy vacuum, and the growth driving emerging markets during the GFC has softened. Now the G20 has recognised the printing of money is not working. Their latest recommendation is for the world to invest trillions of dollars in sorely needed infrastructure. In New Zealand Finance Minister Bill English seemed to sense the extent of the looming recession in 2009 when he said we can expect it to take 20 to 30 years for the Government’s finances to recover from the impact of this recession.
In any other era an event like the MH 370 disappearance, or the shooting down of MH 17 might have also have tipped the world into war or recession. But Malaysia is largely benign and not strategically located. Something similar befalling the US, China, or the UK would surely have seen a different outcome. Russia, Ukraine, Ebola, ISIS in the Middle East, and Japan’s failure to launch a ‘3rd arrow’ are contributing to a picture of global instability and risk. With bond yields rated at zero, capital flight is also attracted towards risk in the hope of higher returns. This in turn presents a challenge with investment more likely to end up in non-performing assets. The larger risk is the oversupply worldwide of unskilled labour depressing real wage growth, a phenomenon that can be good for short term profits at the cost of real economic growth. Robots replacing labour for most production has greatly helped create this massive social issue. While vast wealth is earned from making automated systems and in highly complex IT plant and its networks, they leave little work for unskilled people. The challenge of the unskilled and unemployed demands the most urgent priority. In the midst of this the New Zealand strategy to upskill as fast as possible is most definitely the right one. What’s missing here though is access to capital, and the willingness to invest in technological growth where meaningful points of difference can be found, and to bypass our lack of scale. We also need to plan for the day when double digit growth in agriculture is no longer possible, and where an increasing proportion of the sale price is attributed to the value of what we produce. Value in future will be found in highly differentiated, specialised goods and services. The imperative is to innovate, or stagnate. The world is in a weird place, but the bigger risk is to do nothing. kim.campbell@ema.co.nz BusinessPlus
5
NEWS
EMA to develop major business REINZ purchases new head office The Employers and Manufacturers Association is pleased to announce it is commencing the redevelopment of its present Khyber Pass Road site to transform it into a major business campus. The development is to include: • Construction of a new, four level head office and training facility for EMA, • A multi-storey car park, • The comprehensive refurbishment of the existing office block which has been purchased by the Real Estate Institute of New Zealand (REINZ) for a new REINZ head office, • Standalone office units on Khyber Pass Road and • Ultimately a boutique hotel The overall conceptualization and delivery of the project is being managed by the Location Group, and once completed the development is expected to represent an investment of $40 million. “We’re very pleased to announce this exciting development is underway,” said Kim Campbell, EMA’s Chief Executive.
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campus
“We’re delighted to have the Real Estate Institute partner with us - it makes lot of sense for them and us to share onsite conference, skills training, car parking and other facilities. “EMA will retain ownership of a large part of the site with REINZ acquiring the existing office block which it will fully refurbish. “The Khyber Pass area is undergoing a major upgrade. Several big projects are underway in the vicinity. Along with the new railway station and other commercial developments, Auckland University is developing the old Lion brewery site. “The area is being transformed into a thriving business community, and our site is at the heart of D it, and the redevelopment will future proof ISE V E R EMA’s accommodation requirements for EMA EMPLOYMENT CAMPUS RESOURCE CONSENT decades to come,” Mr Campbell said. Helen O’Sullivan, Chief Executive 17/09/2014 RC 46d STAGE 3 - R.E.I.N.Z - ENTRY of the REINZ said the present EMA building, once refurbished, will become the Institute’s new headquarters. As well as accommodation for REINZ it will include training facilities, meeting rooms, an auction facility and additional space to be leased to commercial tenants. “As an organization REINZ is investing in what it believes in – the long term value of property in an area attractive to business for its excellent transport links and close proximity to the CBD,” she said. Work is already underway on the new car park building with the new EMA office block due to start in 2015. REINZ should take possession of its building in early 2016.
Job No.
Scale (A3):
3800
NTS
Sheet No.
145 - 159 Khyber Pass Road & 1-11 Auburn Street, Grafton
The copyright of these drawings and all parts thereof remain the property of Avery Team Architects Ltd.
DATE
Avery Team Architects Ltd PO Box 37701, Parnell, Auckland 1151 New Zealand t 09 6384449 f 09 638 4044
www.averyarchitects.co.nz
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BusinessPlus
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ADVICE By Sarah Gedge BA, LLB (Hons), EMA AdviceLine Advisor
Appeal court upholds decision on pay equity In the latest instalment of the ongoing ‘equal pay’ case, the Court of Appeal has rejected a challenge brought by Terranova Homes & Care Limited against the earlier decision of the Employment Court. The Employment Court had ruled in favour of Ms Bartlett, a rest home caregiver employed by Terranova, and the Service and Food Workers Union, holding that the parties could use an ‘external male comparator’ – that is, to look beyond the pay provided to Terranova’s male employees and consider what is paid to males in other industries, as a basis for evaluating whether the pay rates offered to Terranova’s female employees is in breach of the Equal Pay Act 1972. In the challenge, the Court of Appeal was asked to determine whether the Employment Court was wrong in holding that: • Section 3(1)(b) of the Equal Pay Act requires that equal pay for women is to be determined by reference to “what men would be paid to do the same work, abstracting from skills, responsibility, conditions and degrees of effort, as well as from any systemic undervaluation of the work derived from current or historical gender discrimination” (“Question 1”); and • Section 3(1)(b) entitles the Court to have regard to what is paid to males in other industries, if those enquiries of other employees or employers in the same or similar enterprise or industry or sector would be an inappropriate comparator group (“Question 6”). The Court of Appeal has answered ‘no’ in response to both those questions, thereby upholding the Employment Court’s decision. Court reasoning
The Court found that an external (as opposed to internal) comparison is necessary. It reasoned that in an all-female workplace the comparison cannot be internal, and that it is “reasonable to assume that what applies to an exclusively female situation was also intended to apply to a predominantly female situation”. The Court also looked at the text of the Act, which states “…the rate of remuneration that would be paid to
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“The Court of Appeal has stated the best way forward is for the Employment Court to identify the principles required under Section 9 before then hearing Ms Bartlett’s claim” male employees”. The Court held that the use of the word “would” indicated it was likely that evidence of rates paid by other employers was contemplated when the Act was drafted. The purpose of the Act was also considered. The Court asked the question “if Parliament did not intend it to be a complete answer for an employer to point to its male employees [to show equal pay] … the question has to be asked “why not?””. The answer? Because of a concern that a male pay rate in a predominantly female workplace might contain gender bias due to the work in question being considered ‘women’s work’. For this reason, the Court concluded that Parliament had intended the employer’s inquiry should extend beyond the particular workplace – and therefore that male pay rates in other sectors are relevant. Terranova also claimed an interpretation of section 3(1)(b) meant individual employers would be obliged to shoulder the burden of rectifying society-wide structural discrimination, and be required to undertake assessments beyond their expertise and resources. The Court rejected this, noting evidence of a variety of data on comparative wage rates already in the public domain including an ‘equitable evaluation tool’ (www.dol.govt.nz/services/ PayAndEmploymentEquity/eje.asp) available on the Ministry of Business, Innovation and Employment website.
The Court held that Section 9 of the Act can be used by the Employment Court to identify general principles against which claims could be processed in an efficient and manageable way. This means the Employment Court now has the task of identifying appropriate comparators and use them to guide the parties on how to apply evidence of other comparator groups in their cases. Where to from here?
The Court of Appeal has referred the matter back to the Employment Court, stating the best way forward is for that Court to identify the principles required under Section 9 before then hearing Ms Bartlett’s claim. This statement of principles is intended to provide a workable framework for resolving her claim. The Court is requested to then state appropriate comparators and guide the parties on how to adduce evidence of other comparator groups or issues. Implications for your business
A final decision on whether Ms Bartlett’s hourly rate breaches the Equal Pay Act is still some way off. The Employment Court has to first develop the statement of principles then nominate suitable comparators, a difficult task which may take months. Following this, the Court can then hear Ms Bartlett’s claim. Though it will be interesting to see how the claim is resolved, this case involves a unique set of circumstances, in one particular industry. The outcome may or may not provide much guidance for other employers or industries facing possible questions of equal pay. What is certain is that now the courts will have the power to determine what would be paid to a hypothetical male employee in one workplace by considering what other male employees are paid, not just in another workplace but in a completely different industry.
NEWS
Employment Relations amendment keeps up with modern workplace practice EMA says the new Employment Relations Amendment Act will be good for both employees and employers. The new law will help workplaces provide more flexible work arrangements, and ensure the law is more aligned with what is already common practice in many workplaces. Rather than deny employees’ meal breaks as has been mischievously put about, it ensures staff can take their meal and tea breaks whenever it is agreed with their employer is the best and safest time. The new law extends the right to request flexible working hours to all workers from day one, not just to caregivers who have been employed for six months as at present. It repeals the Massey University v. Wrigley case hence retaining the right for an employee to have disclosed back to them their own information and provides related privacy protection when a workplace is being restructured. On the issues around collective bargaining the amendment will return the Act to its original position where the duty of good faith does not require the parties to conclude a collective agreement and continue bargaining endlessly if they have reached a
“The new law will help workplaces provide more flexible work arrangements, and ensure the law is more aligned with what is already common practice in many workplaces”
deadlock. If the parties have failed to agree they can apply to the Employment Relations Authority for bargaining to be declared at an end. They nevertheless have to have bargained extensively and used all the avenues appropriate to achieve a settlement
before they can invoke this provision. If bargaining is declared at an end a 60 day cooling off period has to be observed before bargaining can be re-initiated. Employers will also now be able to opt out of multi-employer collective bargaining. Business will find the removal of the 30 day rule whereby nonunion members have to apply union terms and conditions of employment for the first 30 days a small adjustment as they still have to advise employees when a collective agreement covers a workforce. They will also welcome the provision allowing for partial pay reductions when partial strike action occurs based either on an actual calculation or a flat 10%. Parties will be required to give notice of strike action or lock out in all cases. The law exempts employers with less than 20 staff from the provisions of Part 6A of the law. Part 6A relates to vulnerable workers mainly in catering and cleaning industries. Other adjustments are likewise small and technical by nature though they should help contribute to business confidence and the sort of flexibility important for today’s workplaces.
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TAX TIPS Jo Doolan
What’s wrong with the Holidays Act? In a world where the traditional 9-5 working day has long gone, grappling with the inadequacies and complexities of the Holidays Act has become a nightmare for business. Adding to their woes is the attitude and focus of Labour Department inspectors. Unlike Inland Revenue, where inspectors will work with taxpayers to find a practical solution in cases of genuine error, the Labour Department boosts employers’ stress levels by demanding compliance regardless of the cost benefit. One of the National government’s commitments to small business is to reduce the compliance burden and making it easier to do business. Making it simpler and faster for SMEs to comply with their tax obligations, simplifying debt enforcement and enacting the previous government’s proposed changes to the Employment Relations Act are well and good, but the current holidays’ legislation remains a major administrative hurdle and an area of considerable risk. For example, the legislation fails to deal with public holidays, holiday accrual and holiday payments in a way that is clear and easy to administer.
“Part-time employees, depending on which days they work, may receive more public holidays than other employees working the same amount” When public holidays fall on a weekend, a complex process of Mondayisation follows. This can result in different parts of a workforce taking their public holidays on
different days. Part-time employees, depending on which days they work, may receive more public holidays than other employees working the same amount. Employees returning from statutory parental leave face a year of reduced annual leave payments if they wish to take holiday within 12 months of their return. The legislation is simply not ‘fit for purpose’ when it comes to calculating holiday payments. Calculations for annual leave and public holidays are made on the basis of weeks and days though most financial and payroll software systems work in hours. Five different potential calculations for annual leave and public holiday entitlements, and the uncertainty around what constitutes a ‘discretionary’ bonus, increase the scope for payroll errors, particularly for small employers where specialist payroll resourcing is often scarce. The consequences of making
Take a picture, save money on tax Taxpayers can now find out whether tax pooling can save them money simply by taking a photo of their tax statement with their smartphone. This is one of three new features Tax Management NZ (TMNZ) believes will further improve the usability of its Pay My Tax app. The photo function lets taxpayers find out if tax pooling can help eliminate IRD late payment penalties and reduce use-ofmoney interest on their tax liabilities. “Because tax is a complex subject and something most people tend to shy away from, we wanted to make getting help as easy as possible,” says Chris Cunniffe, TMNZ’s CEO. “This functionality can take away the pain and that whole discomfort for someone looking at their
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statement and trying to figure it out.” Taxpayers simply take a photo of their statement and enter their contact details within Pay My Tax. Once they have sent the photo, someone from the TMNZ customer support team will review the document and get in touch with them. “They can take a picture of any taxrelated document and send it to us. If
we can help them, we will,” Mr Cunniffe said. Push notifications – which will alert taxpayers about upcoming key tax dates and important updates – and a video tutorial on how to use the app are other new features. The latest release for Pay My Tax is available for download from the Google Play Store and iPhone App Store. Pay My Tax allows taxpayers to defer provisional tax payments to a time that suits them – without incurring IRD interest or late payment penalties. It also lets them reduce the cost on underpaid provisional tax. Contact Chris Cunniffe on 09 520 8922 or email chris.cunniffe@tmnz.co.nz.
genuine errors in applying the legislation can be significant. Although the underpayments may equate to only a few dollars on each occasion, when this is extrapolated across a number of employees (and former employees) over a six-year period, the amounts quickly become material. This is further compounded by the administrative costs involved in recalculating leave entitlements and contacting all the relevant employees and former employees to arrange for repayment. Most employers simply wish to pay their employees fairly while they are on leave and most employees simply expect to receive their normal pay when they take holiday. There is no need to make the process so complicated. A modern, easy-to-administer, legislative basis for accruing and calculating holiday payments would go a long way to easing the administrative burden on small and medium businesses. So what would this require?
• Treating public holidays as part of the annual leave entitlement would avoid the need to “Mondayise” and has worked well in the UK. Employers could still have the power (as they currently do) to close down during the Christmas break or to require employees to take leave during these periods; • Incorporating public holidays into annual leave would make it easier to pro-rate the public holiday entitlement for part-time employees in a proportionate manner; • Employees returning from parental leave should be paid on a “regular pay” basis, based on their usual rate of pay and hours of work; • Holiday pay should be capable of accruing and being calculated in hours to reflect employers’ financial and payroll software; • There should be one formula for calculating holiday pay based on what is included in an employee’s
regular pay, rather than including unrostered overtime or annual bonus payments. If the government is genuine in its commitment to ease the administrative burden on small and medium enterprises, an urgent review of the Holiday Act is needed, rather than the current ‘too-hard-basket.’ Yes, this means working with the unions to ensure they agree with any changes but the experience of someone like Labour MP Andrew Little should mean it can be achieved to the satisfaction of all interested parties. Solving this issue will mean businesses can focus on improving both their profitability and their employees’ income, along with increasing employment opportunities. Joanna Doolan is a partner with EY and Christie Hall is the Employment Law Leader at EY Law. joanna. doolan@nz.ey.com chrstie.hall@nz.ey.com
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EMA/HP/T/TF
BusinessPlus
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EMPLOYMENT CHAT
Redundancy, hangovers, and... how can you How soon after making a person redundant can I re-hire someone into that role (or a similar role)? –
a person leaves a role due to redundancy they can challenge the decision by raising a personal grievance especially if they have reason to believe they were treated unfairly. That’s if there were problems, and of course usually there won’t have been – although redundancy is very hurtful and it is easy for employees to perceive unfairness and want resolution for any previous injustice, in such situations. Plenty of communication, in good faith, is always recommended.
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“Redundancy is very hurtful and it is easy for employees to perceive unfairness”
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again, or a substantially similar role doing basically the same things, of course you can hire someone for it. There is no strict period needing to have passed between the redundancy and creating the role again, but there are a few things to consider: appointing someone to the role could make the earlier redundancy seem less genuine; and the closer the reappointment is to the redundancy, generally the riskier it is. Risky in the sense that: when
A couple of our guys come to work with hangovers every Friday and are damn near useless all day. It’s nice that they get on together outside work and I can’t afford to lose two people at once, though I feel like firing them. What are my options? – Barney Dear Barney Your problem is not uncommon. Poor performance can be treated as such, regardless of the cause, ie, whether or not there’s alcohol and hangovers involved. Gather
Advice and Support when you need it! We’ve got a team of advisors, lawyers and consultants who’ll do more than take the case - they’ll help you build a workplace for the future.
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Free call AdviceLine, NZ 0800 300 362, AU 1800 300 362 or visit our website, www.ema.co.nz
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EMPLOYMENT CHAT
have too much golf? evidence of their not getting their work done and call them in separately for informal talks about your concerns. If they are apologetic and contrite, you could ask them to pull up their socks and say from right now you are keeping tabs on them, as the company needs their input. It might also be necessary to point out the negative effect on others’ morale due to their larking around and not pulling their weight. Or you could tell them a formal performance review is getting underway, beginning with a letter you send them in the next week that advises them of meeting times to discuss a plan for performance improvement and review. On the matter of introducing drug testing: you would need to write a policy for your workplace and consult with your staff before putting the policy in place. The outcomes provided for in a policy might include suspension, dismissal or rehabilitation. If you do not have a policy, your ability to require a member of staff to submit to drug testing becomes problematic, and unless you obtain informed consent to testing from the employee, you can’t force him to be tested or punish him if he refuses to be tested. Drug and alcohol testing raises many complex issues so if you are
“Ask them to pull up their socks and say from right now you are keeping tabs on them, as the company needs their input”
considering your options I would recommend you take formal advice before putting in place a policy.
One of my sales people seems to play a lot of golf…how can I be sure he is actually working, without raising his suspicion that I’m suspicious? – Fred Dear Fred There’s no substitute for good faith, open and honest communication, so
ask him! Give him the benefit of the doubt and ask about the games and who he is playing with, how he does on the course and afterwards with closing deals. Generally if his sales performance is good and he’s getting enough customers, tread softly! If you discover he is in fact lying and/or isn’t selling, it would be appropriate to say you need to formally review his behaviour and/ or performance. Follow the correct procedure, always guided by acting in good faith.
• By the EMA communications team in consultation with EMA Advice, and based on real calls to EMA’s AdviceLine. All names are fictional. The information in this article is a guide only and not to be used as business advice without further consultation. EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within New Zealand), and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email advice@ema.co.nz or read or print information such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, at www.ema.co.nz
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IN THE LOBBY Phil O’Reilly
Business questions of council Businesses throughout New Zealand should be questioning why their local councils often charge them more in rates than they do residential ratepayers. For example in Auckland businesses should be questioning the Auckland Mayor’s proposal for 2015-25 rates changes. There is still time to be heard on the rates to apply from next year onwards with a public consultation period during February next year. The Council will then decide on the rates changes to apply by next June. The Auckland proposal at present may seem mild enough - an average rates increase of 2.5% for the next two years, and 3.5% after that for the following eight years. But a reading of the fine print shows average rates will be held down at the expense of business. The ‘business differential’ set by the Auckland Council is currently 2.63 meaning businesses pay almost three times more in rates based on the value of their property as households do for the equivalent level of capital value. Business differentials are charged by councils in many areas at varying levels. But the higher rates paid by business do not translate into higher levels of service for businesses. Some councils, recognising the unfairness of charging businesses more than other ratepayers, are in the process of reducing their business differentials. Auckland Council had committed to reduce the rates differential on business
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“Higher rates paid by business do not translate into higher levels of service for businesses”
properties over a ten year period, but the Mayor has now said he will seek to delay that reduction next year. No reason has been given for this, other than the obvious fact that lower business rates would mean residential ratepayers would have to pay a little more. So the decision to pause the reduction in business rates appears quite arbitrary. In fact the decision to charge a business differential in the first place is arbitrary.
Differential rating would only be justified if a higher level of service was provided to the group of ratepayers concerned. It shouldn’t just be another way of raising revenue. Differential rating allows councils to keep residential rates relatively low at the expense of business. Businesses are a small minority compared with households, so their complaints can be more easily ignored. Businesses in greater Auckland should consider making their thoughts known on the business differential at the time of the Auckland Council consultation period in February. One way to ease the relative unfairness of rating businesses more than for other properties rating would be by increasing the uniform annual general charge (UAGC) portion of rates. The UAGC is a fixed amount levied on all properties regardless of their value or location. Auckland Council’s UAGC is one of the lowest in the country. A low AUGC adds to the unfairness of the business differential. If the UAGC was increased to make up around a third of the total rates bill, which it is legally able to do, this would ensure a fairer way of paying for Auckland Council’s costs. Rates would not rise as a result of increasing the UAGC; they would just be more
Mayor’s proposal penalises business Business is disappointed the Auckland Mayor has proposed the Auckland Council should keep an unfair rates burden on business, EMA’s Kim Campbell said in a media statement recently. “We need friendlier business practices from Council,” he said. “Keeping business rates higher than
residential rates is unfair. “We call on the Auckland Council to vote the proposal down. “The Auckland Plan makes very clear the city’s future depends on large increases in business activity and keeping the business differential high is no way to help with this. “The real answer to the Mayor’s
dilemma of high rate increases for some residences would be to increase the Uniform Annual General Charge to the maximum permitted by law. “This would decrease the severity of rates increases on those residential properties most affected by the recent high valuation increases.”
fairly apportioned and would have the result of flattening out the rating structure. Any householders adversely affected by a more flattened rates structure would be able to get their rates reduced by way of the rates rebate scheme. The proposal for the 2015-25 rates changes comes at a time when Auckland property values are rising faster than ever before. There is a common belief that rates are determined by property values, and rising property values necessitate higher rates. In fact, the council works out needed
rates revenue according to its costs, and then decides how to apportion them across all residential and business ratepayers. While the council chooses to charge higher rates on higher valued properties, the increased valuations are not the actual cause of the increase in rates. What causes the increase in rates is the spending decisions made by the council. This is the other thing businesses might like to bring to the attention of the Auckland Council during its consultation period in February next year - council spending.
Operating expenditure by the Auckland Council for 2014/5 is estimated to be around $3.2 billion. This level of expenditure raises the question of whether council spending is well-targeted or efficient, and whether a number of services provided by council could be more efficiently provided by local businesses. Business should be getting a better deal from their local councils.
Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz
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ADVICE By Mary MacKinven
Dollars from heaven: Angel Angel investors are the people who put their personal savings on the line to help grow businesses that take their fancy. But first, the business has to make itself known to the investor and in fact sell the abilities of its top people as well as its products, to attract funds and strategic advice. Invariably the funding is in the range of hundreds of thousands or several million dollars – not mega millions. Angel investors are people who have made money from business or corporate roles and now want to share, maybe 10%, of their savings to invest in other entrepreneurs. So said the five-person panel of US and Australian angel investors at the recent Business Intelligence Workshop series run by Lowndes lawyers in partnership with EMA, in Auckland last month. The five tended to share the view that making money from their recipient companies was not the single, or even the main driver; but that altruistic reasons also played a significant part. John Huston from the US is an investor with one of the world’s
“People invest in what they know and by getting together with other people with complementary backgrounds”
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largest angel groups, Ohio TechAngel invests in five or six education Fund launched in 2004 with 50 companies with the rationale: “If you investors now with four funds and have time and the money, education is 340 members. The group became a our future for a peaceful world and to founding member of the Angel Capital have an optimal life.…It will lead to Association. He started his angel less war and more sharing.” activities after retiring from 30 years in Connor is a board director of the bank lending and credit. Sand Hill Angels and CEO of First Why do it? John says, “Our companies have 453 on the payroll earning on average $87,000 a year in a state where $47,000 is the average household income. Compare [the satisfaction of this] to spending on fly fishing which is all catch John Huston and Catherine Mott and release, and they never eat a fish! Focus Learning Systems. “You might make two cents an hour Australian venture capitalist and when the company cashes out!” angel investor Jordan Green said, Angel investor Catherine Mott “Angel investing is not a way for an from the US said, “I don’t do it for investor to get rich quick. It takes three a market based return. You maybe to five years to make money. There’s allocate 10% of your [wealth]; and no way you can tell who’s going to do giving expertise to young people and well …but people invest in what they innovative companies is great. know and by getting together with “It’s a bit of a lifestyle issue really. other people with complementary There’s financial and psychological backgrounds [to become angel reward. investors]. “But it gets worse before it gets “How much an investor puts in is better. [You have to consider] do you how much they are prepared to lose. have the stomach for this? I have made money over six years. “Be prepared to invest three times You make a contribution to the future as much for three times as long [as you of your community; I’m kind of an think].” idealist so I think it’s worth doing, but She founded and is CEO of BlueTree not to make money.” Capital Group and BlueTree Allied So what advice do they give Angels in Pensylvannia which has to entrepreneurs looking for invested $30 million in 46 companies. assistance? Prior to forming her own businesses, Green said entrepreneurs should look Mott worked 17 years in corporate for investors they trust and like. “You banking. are committing to a lot of time on this US angel investor Jim Connor
investment
Workshop panellists (l-r): Jordan Green, Catherine Mott, Jim Connor, Dr Tom McKaskill, MC Mark Lowndes and John Huston
Advice? Or an introduction to suppliers and vendors? Then go to the right one. We come in different sizes and flavours, so learn about us before you approach us. “If the business has already got some advice, that’s a good sign. “We encourage the founder to be the chair of the board. Success is about management, management, management and the board. I have never seen a case of the technology not working – it’s the people.” Dr Tom McKaskill is always waiting for the exit plan when listening to a pitch. “If you haven’t figured out an exit, there’s no way we can make a decent return. Start with the exit and how much money you need to get there. Prove to me it’s a viable proposition and if there’s a big enough opportunity for the buyer(s). “Are the entrepreneurs open to advice? If they take no notes during the meeting [with us] we will never meet them again. If you are going to work with the entrepreneur for three to eight years and they are not open to advice Jim Connor and Jordan Green
venture for years so…if the investor is not at least as knowledgeable as you, about the business you want to build… It’s not about [us giving you] the money, and then being left alone; that’s not who we are.” Huston says, “We don’t like it when entrepreneurs haven’t figured things out ….Do they work hard enough and deserve to be wealthy? If they say I have never missed a kids’ soccer game, that’s a turn-off. You have to be totally immersed in the business. I’m all for life balance after the exit!” He usually takes a board seat. “We demand to affect the outcome…to build strategic value for the companies. We expect our directors to be deeply involved.” Mott recommends: “Think about what you want from your investors:
“Success is about management, management, management and the board. I have never seen a case of the technology not working – it’s the people.”
it won’t work; you are better to walk away.” Connor asks himself: would I work for this person? He asks them if they have hired anyone smarter than themselves, and how they do what they do. “That tells a lot about their motivation and style. There are lots of control freaks in the entrepreneurial crowd….”. BusinessPlus
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Keep your nger on the pulse Your people are one of your biggest assets. To make sure your business is performing at its best you need to get their pay and benefits ‘just right’. That’s where we can help. Using our market intelligence you can keep your finger on the pulse of market trends and act with confidence. The National Employers Wage and Salary Survey covers 216 positions. Our comprehensive reports include splits by industry, location and revenue bands: Salary reports: Reflect Salary ranges by position, location, revenue bandings and industry. Beneets and Conditions reports: Position specific analysis of benefits and conditions. You’ll find sample reports as well as a full list of positions and descriptions on our website.
www.nzsalarysurvey.co.nz The
National Employers Wage and Salary Survey is a joint venture between
comment By Donna Purdue and Zoe Wallis
The RBNZ is now widely expected to leave interest rates on hold until the middle of next year, giving consumers a little more breathing room. Population Prior to the global financial crisis household items. growth remains Real retail spending per capita (GFC), New Zealanders were spending But the resurgent strong, with a net 5,500 up large, with the pace of spending housing market 43,700 people 5,000 growth well in excess of income (notably through having entered 4,500 growth. House prices were rising 2013) and the high the country in the quickly and record low unemployment NZ dollar have past year. That 4,000 meant the population as a whole was also provided a volume of people 3,500 feeling more inclined to shop. Then the boost. The latter alone will provide GFC hit and we were quick to respond in particular has a solid base to 3,000 by keeping our money in our wallets as enabled some consumer demand the economy took a turn for the worse. seriously attractive in the near term. Given we are now almost six years deals on TV, The labour on from the GFC, we take a look at computers, and other electronic goods market is also continuing to strengthen, how consumer spending is shaping up, in recent years, which has clearly with the unemployment rate widely specifically where Kiwis are spending enticed consumers to open their wallets. expected to fall toward 5% over the their money and the trends we expect Spending on non-durable goods and next year or so (from 5.6% currently). to see going forward. services has been far less spectacular but That should pave the way for stronger solid nonetheless, rising 10% and 16% wage growth as skill shortages intensify. Highs and lows respectively since 2009. Add to that the Canterbury rebuild, Between 2001 and 2008, real consumer Despite this apparent recovery, the increasing construction work in spending (i.e., adjusted for inflation) current pace of spending is still less than Auckland and Wellington, and an increased by more than 35%. The half that experienced pre-GFC (at 3% anticipated rebound in house prices later increase was funded in large part by versus close to 8% at the height of the this year, and housing-related spending debt, with household borrowing rising mid-2000s spending boom). (durables and services) should continue sharply over the same period. However, There are a couple of explanations for to perform well. that all changed when the GFC hit, this. The first is that debt levels remain with spending declining by 5% over Watch this space elevated. While we did see some eighteen months. Overall, we expect real consumer households move to pay down their Since mid-2009, consumers have spending to average around 3% over the debts over 2009 to 2011, the level of gradually clawed their way back. Total coming year, before easing back toward household debt never fell below 150% spending is up around 18% since early 2% through 2016 in response to further of household incomes (the latest official 2009, but figures put the ratio interest rate increases by the RBNZ. Spending by type importantly real at 154%). We caution though that there are 25 25 retail spending The second some headwinds forming. The recent 20 20 per capita has explanation is wage fall in the NZ dollar means that the 15 15 also risen by growth. Despite era of bargain deals could come to an 10 10 around 13%, an improving jobs abrupt end as retailers face increasing 5 5 and has now market, wage growth import costs and look to raise their 0 0 surpassed the prices in an effort to retain margins. has remained very -5 -5 Non-durables previous 2007 Meanwhile, the ongoing sharp subdued, increasing -10 -10 Services Durables peak. In other decline in dairy prices risks further by just 1.7% over the -15 -15 words, spending downward revisions to Fonterra’s past year which is is increasing already reduced dairy payout forecast barely above the rate not just because of $5.30/kg milk solids. Both of these of inflation. we have a bigger population, but each factors have the potential to spoil the person is also spending more. Outlook consumer story. So what are we spending on? The There are a number of reasons to be biggest gains have been in durable optimistic that the pace of consumer Important Disclaimer: spending growth will hold up over goods (items such as fridges, TVs and All content is for information only and is not advice. The views expressed are those of the authors and are based the coming year. Consumers overall washing machines) where spending has on information believed but not warranted to be correct. remain optimistic with confidence risen by around 40% since the start of Any views or information, while given in good faith, are not necessarily the views of Kiwibank Limited and are measures currently sitting above their 2009. given with an express disclaimer of responsibility. No long term averages, driven by a strong The Canterbury earthquakes have right of action shall arise or can be taken against any of the authors, Kiwibank Limited or its employees either perception that now is a good time to clearly provided support for this type of directly or indirectly as a result of any views expressed or buy major household items. spending as people replaced damaged this information.
Hey big spenders?
2013
2012
2011
2009
2008
2007
2006
2005
2004
2002
2001
2000
1999
1998
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1995
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1993
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NZ$
Source: Statistics NZ
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Source: Statistics NZ
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The Taiwan free trade opportunity expands A glance at the map and some knowledge of history might suggest Hong Kong and Taiwan have some things in common. Thinking that would be a mistake. They are very different. Some of the differences were spelled out in the context of the ANZTEC free trade agreement New Zealand has with Taiwan at an Auckland workshop last month. First, the name. WTO recognises the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu which is abbreviated to Chinese Taipei and this is the region New Zealand has signed the ANZTEC agreement with. ANZTEC is Taiwan’s first agreement with an OECD country and is very special to Taiwan.
When the deal was signed it made front page news there and as a lead item on TV news. They love their food and New Zealand’s has healthy fresh fruit and produce in abundance. The agreement has already seen two tariff cuts – EIF and Year One. Year Two cuts come into force on January 1, 2015 at which time most goods from New Zealand will be entirely duty free, giving special preferences and a competitive advantage for our exporters. After just the first year under ANZTEC trade is booming. New Zealand’s total exports have grown 32%, and Taiwan’s to New Zealand 21%. Our dairy exports have increased 34%, meat and meat products by 14% and horticulture 135%.
The Taiwanese spend disproportionately more per capita on food compared with the rest of the world, Charles Finney said. Presentation values are extremely important, he said. Packaging should be absolutely perfect. From the 1880s until 1945 Taiwan was run as a province of Japan and some of the Japanese influence remains. Some older pople still speak the language. Now a million Taiwanese live in mainland China and four million people from mainland China visit Taiwan every year, fascinated by the differences in spite of the things so culturally similar. A buyers mission from Taiwan is scheduled to visit New Zealand early next year. We’ll keep you posted.
ILO finds numbers of poor workers shrinking Some startlingly good news from the International Labor Organization’s World of Work 2014 was released in May: “In 1994, 39% of the developing world’s workers were living with their families in extreme poverty (on less than US$1.25 in consumption per household member per day). By 2004, this figure had fallen to around 25% and, by 2014, it is estimated to have fallen to 13%. As a result, there are 417 million fewer workers living in extreme poverty now than there were two decades ago.” Workers earning $1.25 or less per day* 2013: 375 million 2007: 491 million 2000: 693 million 1991: 811 million * ILO 2014 estimates The ILO says very low-income work can be described as follows: An eighth of the world’s workers earn extremely low incomes.
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Of 3.33 billion men, women, and children at work about 375 million - one in every eight - will earn $1.25 or less a day. Their take-home pay will be lower still. Of these working poor about 155 million are in South Asia, 130 million in sub-Saharan Africa, 43 million in China and Southeast Asia, and the rest scattered around the Middle East, Haiti, the Andes, New Guinea, and other places. Few extremely low-income workers earn regular wages. About 22% of extremely lowwage poor workers are not paid at all. These are family members in subsistence farming, small shops, or similar work. Another 62% work on their “own-account” day-laborers and other temporary employees. Only about 15% of very poor workers get regular wages or paychecks, and few work where safety, pay, and other benefits are inspected by local governments or international businesses and agencies.
Most extremely low-income workers are rural. Nearly two-thirds of extremely low-income workers - 240 million men, women, and children - are farmers or hired farmworkers. By comparison, ‘industrial’ work in factories, mines, quarries, fishing boats, and construction sites employs about 65 million very low-income people. Farms and fields are also where most child laborers work - the ILO’s 2012 estimate was that 98 million of the world’s 168 million child laborers are in agriculture. Each day since 2007, the number of extremely low-income jobs has been dropping by about 53,000. The ILO estimates the number of very poor workers is down from 811 million in the early 1990s, to 491 million in 2007, to 375 million in 2013. The child labor estimates are also down: 245 million in 2000 to 215 million in 2008, and 168 million for 2012.
Fake goods threat rising. What’s being done? Fake goods used to be about knock offs of things like hand bags and watches – now it increasingly involves branded food and beverages, especially tobacco, white spirits, soft drinks and other fast moving consumer goods. Trade in counterfeit goods is worth $512 billion annually, 7% of the total world trade, Michael Eads informed a meeting of Export New Zelaand’s National Advisory Board last month. Mr Eads, based in South Africa was in New Zealand to meet government officials and advise on the problem and some counter measures possible. If this illegal economy were a country Mr Eads said, it would have a GDP greater than Sweden. Its about things like horse meat, and the fact that one in every six kebabs sold in the UK involves fraudulent representation. Importantly the issue includes dangers to human health. The Wall street journal reported certain New Zealand lamb rolls in the US contained rat, fox and mink meat. Then there is the infant formula issue, and 80 per cent of the trade in Manuka honey is counterfeit. A recent estimate based on data from the United Kingdom Food Standards, Agency suggested that fraud could affect as much as 10% of all the food bought in that country. One such example is that of “wild” salmon, which, it is estimated, is in fact farmed fish in one out of every seven cases. Overseas reputable vodka brands are caught up in the trade. The World Health Organisation estimates that around 30% of all alcohol consumed globally is illegally produced, or
“unrecorded.” Counterfeit spirits and alcohol frequently contain dangerous levels of methanol and other chemicals that can cause toxic hepatitis, blindness and can be fatal. Illicit pharmaceuticals account for 10% of the total trade, and up to 40% in developing countries. The global trade in illicit pharmaceuticals rose to $75 billion in 2010, up more than 92% from 2005. Counterfeiting and smuggling has expanded 10,000 per cent in the last 10 years. In 2011 the US Customs and
Border Protection made nearly 25,000 seizures involving counterfeited and pirated products, a 24% increase over the previous year. Driving the trade are notions of quick profits, and a regulatory gap – the penalties for doing it very low compared to the financial rewards possible. Add to these today’s technology allowing sophisticated printing of packaging, supply chain logistics where anything can be ordered from anywhere at any time. With brand values high profits can be high. The government response has been to stress the importance of full traceability and authentication programmes. The World Customs Organisation has its
SAFE Framework to develop trusted safe trader mutual recognition. Securing your supply china always makes good business sense, Mr Eads said. He covered several useful initiatives including: • www.thisfish.info • www.gulfseafoodtrue.org • www.harvestmark.com Companies and industries are protecting their supply chains by adopting underlying principles to secure their supply chains. These include: • Deal with entities, not transactions. • Share data and collaborate between countries • Use serialisation ‘fingerprints’ and unique identifiers • Trace past and present • Authenticate But track and tracing for instance, is not secure – it can be faked. Identifiers can be material based
or digital. and include holograms, QR codes. They maybe covert, semi-covert or overt. Tamper evident packaging can help. Digital fingerprinting is an emerging solution, for buyers to know where a product comes from and who it is coming from. For building the unique New Zealand story the issue assumes even more importance since trust is critical in the relationship between consumers and producers. BusinessPlus
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Simpler exporting regs to Australia envisaged, with new standards compliance The compliance cost of exporting to Australia could come down if the government there adopts proposals to accept more international product standards. An Accepting Trusted International Standards policy principle has just been announced as part of Australia’s Industry Innovation and Competitiveness Agenda. Prime Minister Tony Abbott and Deregulation Parliamentary Secretary Josh Frydenberg say the government: “…will adopt a new principle that if a system, service or product has been approved under a trusted international standard or risk assessment, then our regulators should not impose any additional requirements for approval in Australia, unless it can be demonstrated that there is a good reason to do so.” Businesses often have to meet regulatory approvals to use or sell products in Australia which duplicates what they do for other developed countries. The extra processes add cost and provide little or no more protection. The new proposed policy would remove regulatory duplication, reduce costs and delays, and increase the availability of products in Australia. As a first step, the Government plans to allow Australian manufacturers of medical devices the option of using European Union certification in place of Australia’s Therapeutic Goods Administration
Australian PM Tony Abbott
(TGA) certification. This will place Australian manufacturers on the same footing as overseas competitors. The Government will also require the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) to increase its acceptance of the risk assessments of industrial chemicals made by reputable international regulatory authorities such as the European Union regulator. EMA executive Garth Wyllie says the Australian Government is expected to seek to broaden the application of the principle. “Ideally, cosmetics, and especially low-risk product categories like skincare products, should be an easy priority for the application of this approach,” he said. “But, much of the implementation
will still be left to the regulatory agencies and officials themselves, and they may only partially embrace the policy.” As part of the regulatory review process Australian ministers are to write to regulators in their portfolio and work with stakeholder groups to develop criteria for the acceptance or adoption of trusted standards and assessments. Examples of unnecessary divergence from international standards can be submitted at the website www.cuttingredtape.gov.au The reforms planned build on the Australian Government’s $700 million cut to red and green tape since coming to office including the removal of around 10,000 pieces of unnecessary legislation and regulations.
Renewal of US FDA registration required The FDA (Food & Drug Administration) require all current exporters of food and beverages into the USA to re-register with them by 30th December, 2014. The FDA together with the FSMA (Food Safety Modernisation Act) has advised the biennial renewal period
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began on 1st October, and all current valid registrations will expire on December 31, 2014 unless renewed. After that date if you have not renewed your current registration will become null and void. This applies to all exporters of food and beverages into the US and no samples or
shipments will be allowed entry without FDA registration. It also applies to food and beverage companies who export to the USA and which are in the loop from the farm gate to the port of export including those that manufacture, process, pack or store or own or export.
Letter from Australia from Marketing Specialist Bella Katz
What Australian chief executives of New Zealand companies say… Early last year, I conducted a series of interviews with New Zealand chief executives and business owners to find out how they exported their business to Australia. As expected, there were no shortcuts to succeeding here. Just hard slog, a solid amount of capital, mistakes made and strategies urgently revised. Later this month, I’ll be releasing the follow up piece. This time, from the viewpoint of the Australian or Australia-based chief executives of New Zealand companies. I’ve spoken at length with 11 leaders, all at different stages of business development in Australia. All with different relationships back to New Zealand. They have much to say and several have chosen to go off record, because they don’t think their New Zealand contemporaries will like what they hear. It has been a fascinating series of conversations that brings home why some New Zealand companies thrive here, while others crash and burn. As I look back at my interview notes, one interview was particularly poignant to me and summed up all the “don’ts” that New Zealand companies should heed when
“Don’t hire an Australian chief executive unless you’re ready to take that person’s advice”
embarking on an Australian expansion. This chief executive told me he feels like a colonialist working for a New Zealand manufacturing business and that it’s one of the more challenging positions he has held. This from a man who has had his fair share of Australian senior roles. So, if I could give the number one ‘don’t’ from these interviews, it would be this: Don’t hire an Australian chief executive unless you’re ready to take that person’s advice. And here’s the catch. Make sure you hire the right person so that their advice is worth taking. The companies I spoke with on an upward trajectory in Australia have hired well-connected and experienced individuals. They share the overall business culture, but have been given full autonomy to develop local strategy, local focus and local organisational culture too. The companies butting heads and facing constant roadblocks seem to be those where New Zealand head office tries to fit their own solution to an Australian problem. As one chief executive said: “The New Zealand office simply does not understand the success criteria in Australia. Rarely do they come over. They don’t immerse themselves for a month. They just come for a day or two and we end up having the same conversations to get them to the point of support. Almost every board meeting it’s the same question, ‘Why can’t we do that?’” Well we can’t, because the legal framework and the nature of our business is different here than in New Zealand. These things are a distraction. Lets have the discussion once and move on.” If there’s one thing I’ve learned from all these interviews over the years, as tempting as it is to run your
“The companies butting heads and facing constant roadblocks seem to be those where New Zealand head office tries to fit their own solution to an Australian problem.” business in Australia according to New Zealand rules of engagement, don’t go there. Once you reach a certain size – I’d say around the $10m mark in Australia – hire the best local leader and let them work their magic. If you’d like a copy of the Australian Leadership paper when it’s published, drop me an email bella@bellakatz.com.au
Bella Katz is an Australia-based brand and marketing consultant, and regularly advises New Zealand companies on how best to position in Australia. She specialises in marketing for the business to business sector. bella@bellakatz.com.au, LinkedIn BusinessPlus
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NEWS
Best workplaces celebrated EMA congratulates Vehicle Testing New Zealand (VTNZ) for winning the award of Overall Best Workplace at the IBM Kenexa Best Workplaces Awards. EMA is an awards sponsor. VTNZ beat 228 New Zealand organisations to receive this year’s top award. It also received the award for the Best Enterprise Workplace (750 or more employees). The awards were achieved based on employees’ ratings in a confidential online survey. VTNZ’s 750-plus employees graded their workplace and employer across 12 key categories including leadership, culture,
recognition and engagement. This year over 32,000 employees from 228 New Zealand organisations representing private and public sectors participated in the survey. Best Workplaces winners in each size category were: • Hyundai Wairarapa – Eastwood Motor Group (Best Small Workplace, 20-49 employees), • Giltrap Audi (Best Small-Medium Workplace, 50-149 employees), • Mars New Zealand (Best Medium-Large Workplace, 150399 employees), • Overland Footwear (Best Large
Workplace, 400-749 employees), and • VTNZ (Best Enterprise Workplace, 750-plus employees). Overland Footwear, 2013’s overall winner, joined Flight Centre (NZ) in the Ten-Year League as the two organisations which have ranked consistently as a finalist in the survey year-on-year for ten or more years. Eleven companies were recognised in the Five-Year League. The IBM Kenexa Best Workplaces Survey and Awards is New Zealand’s largest and longest running study of workplace climate and employee engagement. The annual programme identifies the best places to work in New Zealand as rated by their employees. Employees grade their workplace and employers across key categories including leadership, development, recognition and employee engagement. For more information go to: www.bestworkplaces.co.nz The IBM Kenexa Best Workplaces Survey is New Zealand’s largest annual workplace employee engagement survey and the definitive measure for ‘best employer’ and ‘employer of choice.’ EMA at the Best Workplaces Awards: From left, EMALegal Solicitor Ashleigh Nelson, Communications executive Mary MacKinven, CEO Kim Campbell and Events Manager Zoe Timbrell.
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BusinessPlus
PROFILE By Mary MacKinven
Kiwi growth base for international Aussie manufacturer An Australian plastics company that set up its main manufacturing plant in New Zealand 14 months ago is struggling to meet international market demand. Originally started on the Gold Coast 20 years ago, FSP Australia Pty Ltd now imports (buys) most of its plastic creations (some patented) from its manufacturing plant FSP Pacific in the Bay of Plenty town of Mt Maunganui. National sales manager in New Zealand Ashley Keys says international sales have increased from $18 million a year to $23m. The company is about to open FSP Canada in the coming months as a distribution hub for the massive UK, Canada and US markets. Another highlight has been hosting Tauranga region MP Simon Bridges and a dozen members of the ExportNZ Bay of Plenty division of EMA on a tour of the FSP Pacific plant earlier this month. FSP makes lockers for schools, sporting clubs and the mining industry, plus fire safety products including hose reel cabinets, safety cabinets, hose reels, extinguisher cabinets, mobile hose reel and fire depot boxes. Then there the tool boxes, safety equipment such as wheel chocks and work platforms, and mining equipment such as drill hole savers, underground mobile hose reels and machinery guards. Among the company’s customers, 70% are education institutions, 2030% are mining firms and the rest includes forestry and the general public. Most (60-70%) of production is exported to Australia and the rest to Canada, Belgium, Chile, elsewhere in South America, Southeast Asia and Papua New Guinea. They are serviced by dispatch companies FSP Belgium, FSP Chile and FSP Papua New Guinea and about six outlets in Australia. FSP Pacific also sells to the south east Pacific and New Zealand-wide, and is open to the public, but not with a showroom as such (yet).
Left to right: [Scott Lees (FSP factory manager) facing away from camera], Ashley Keys (FSP NZ national sales manager), Government minister Min Simon Bridges, Alastair Collie (Datacom Systems) and Jason Stockdale (NZTE/Callaghan Innovation regional business advisor).
The FSP Pacific team...
... and robot
The Hewletts Rd site in Mt Maunganui is operated by about 10 people and one robot that saves a lot of labour in its rotational
moulding process using food grade polyethylene that is UV stable, strong and durable with 15-year warranties. It also does injection moulding for some components and FSP China manufactures stainless steel components for the locker systems. Keys says willing labour, proximity to ports and low infrastructure costs in New Zealand were major draw cards for setting up business in Mt Maunganui 14 months ago. “Compared with where we started in the Gold Coast there are many distractions; workers are willing here!” When asked the down sides of doing business in New Zealand, Keys pondered and could not think of a thing. BusinessPlus
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BOOK REVIEWS
Leading titles for Results, and Business Execution for Results – a practical guide for leaders of small to mid-sized firms Author: Stephen Lynch Publisher: Self-published under Stebian press Title:
RRP:
$14.99
Reviewer:
Former Mr New Zealand body building champion and current chief operating officer at Results.com, Stephen Lynch, oozes motivation and discipline in his book. The company’s founder and CEO is New Zealander Ben Ridler, but it’s Stephen who pens the regular email tips on management I always love reading because they are clear, meaningful and positive. He is a great writer! So it was an easy decision to check out his book that encapsulates the Results management approach using cloud-based software. The company is clearly doing alright to have offices in Auckland and San Francisco - and the book blends Kiwi and American references. It doesn’t matter if you find the frequent mentions of body building and Walmart outside your comfort zone, because Stephen is developing clear and important messages. As you read on you feel like you are listening to a workshop presentation– it’s chatty and practical. Stephen asks you not to turn the page until you have done what he just suggested. And I don’t turn the page….How does he do that? This softcover, 237-page book is self-published but, far from being an infotainment ego trip, is a mightily practical guide written for RESULTS. com clients, and for leaders of any small to medium sized organization. The book teaches a step-by-step
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BusinessPlus
Mary MacKinven, EMA communications executive
process that helps leaders and their teams to create a one-page strategic plan for their organization, as well as how to execute that plan effectively. Far from being rah-rah, the book emphasizes there is no substitute for rigour and application such as the need to ignore life’s distractions that deter from the goal. A ‘big hairy audacious goal’ is necessary to start with – which you are helped to articulate and then to figure out how to achieve. Not forgetting passion, and the homework. Business Execution for Results has won the “Management” category of
the USA’s 2014 Small Business Book Awards, chosen by an expert panel of 24 judges from the USA’s small business community. The awards are run by the online publication Small Business Trends that publishes hundreds of expert contributors, for small business owners, entrepreneurs and the people who interact with them. It has cred, it has simple lingo and is full of interesting stories.
Title: No.8
Re-wired: 202 New Zealand inventions that changed the world Author: Jon Bridges and David Downs Publisher: Penguin RRP: $45 Reviewer: Mary MacKinven, EMA communications executive Any book written by two comedians is pretty much guaranteed to be worth reading, in my book. Penguin Books obviously agrees with me and so has published No.8 Re-wired, recently launched at EMA. The book’s authors are ex university friends Jon Bridges, one-time stand-up comedian and
currently producer of TV3 show 7 Days, and David Downs, former stand-up and currently general manager at New Zealand Trade and Enterprise. Their stories of clever people inventing things from, the girls’ team sport of marching to superconductors, are told amusingly, in plain English
BOOK REVIEWS
innovation and with any scientific terms explained simply. Plus there are lots of pictures, making this a possible bedtime read for your 10-year-old [grand] child. You could start with the quirkiest invention and read one a night for a year except school holidays (they are only one or two pages long each, filling about 250 pages). The authors cite example after example – some more simple such as the deployment of roosting chickens to depress a switch that turned on street lights at night, then turned them off again when the birds alighted from their coop at the crack of dawn. More complex inventions include the Fisher and Paykel Healthcare products that have generated a billion dollar business.
“Our inventiveness may well have been borne of the necessity of distance... but in fact New Zealand isn’t as inventive as other countries”
Sagging
The book is a celebration of the No.8 wire spirit and inventiveness that made New Zealand what it is. And our inventiveness might well have been borne of the necessity of distance, from spare parts suppliers, for example, that made us think
differently; and borne of our rebel spirit and tendency to challenge authority. But in fact New Zealand isn’t as inventive as other countries, the
authors say. In many cases the great ideas failed to provide benefit long term or internationally, due to our naivety about intellectual property protection such as patents and a lack of commercialisation savvy. The same issues and some of the same examples were included in the 2011 book New Zealand by Design: A History of New Zealand Product Design by product designer Michael Smythe. So the content of Re-wired isn’t wholly new but it is the sole focus of the book, and a timely reminder of the authors’ conclusions that number 8 wire thinking has served us really well but it’s not sufficient to take New Zealand forward. They suggest the mindset of business leaders needs to change and do more research and development, focus on stronger commercialisation into real world solutions and collaborate with partners around the world and New Zealand to bring products to market - as evidenced by companies such as PowerbyProxi that makes wireless power chargers.
Great opportunity to secure talent from Australia: Perth and Sydney jobs fairs this month If you’re having trouble recruiting the skilled workers you need, the government’s co-funded New Zealand Jobs Expos are on in Perth (Nov 22-23rd) and Sydney (Nov 29-30th). At these you can meet ex-pat New Zealanders, and Australians who may have the skills and experience you are looking for. This is the first time the government has backed job fairs of this scale in Australia – and with the cost to employers significantly
reduced and the jobs Australian market currently off the boil. There’s never been a better time! These events are being run by New Zealand firm Working In and will be strongly promoted in Perth and Sydney targeting job seekers. Marketing activity will be tailored to the specific skills sought by the employers who participate. The sooner you commit, the sooner marketing for your roles can get underway. Stands are available starting at
NZ $2,475 (no GST applies). This is an extremely cost-effective way to meet candidates face to face and to connect with talent in a market where work visas are not generally required. But you will have to move fast! Opportunities to participate close soon. For more information call Jo Bradshaw at Working In on 09 378-0945 or 021 673-422, email jo.bradshaw@workingin.com or visit www.workingin-events.com.
BusinessPlus
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Out & About Taiwan Roadshow, CEO Breakfast - No.8 Re-wired launch, FISH! Philosophy programme
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001 – Sayar Verma, Mehak Sood and Swati Nanda [Newton College of Business and Technology] 002 – Jatinder Singh [Newton College of Business and Technology] and Dwayne Jones [ASB] 003 Gary Adam [Bell Tea and Coffee Company] and Anthony Tsoi [Burnard International] 004 – Jon Bridges [co-author No.8 Re-wired] and Bruce Goldsworthy [EMA] 005 – Paul Johnston and Cliff Olsen [Life Health Foods NZ] 006 – Graham Mountfort [EMA board], Luke McCarthy [Spidertracks] and Richard Pearson [EMA board] 007 – Gavin Bell [Bell Technology] and Stephen Bordon [Rheem NZ] 008 – Brian Johnson [Poyry Management Consultancy] and Andy Shenk [Auckland Uniservices] 009 – Diane Yin [Callaghan Innovation] and Katrina Frost [Kiwibank] 010 – Jean Barr [Top Achievers Sales Training] and John Cooper [IRI – Aztec] 011 - John Preston [Industrial Sheet Metals] and Robyn Finucane [Midlands Health Network] 012 Joanne Spence [Midlands Health Network], Sarah Jackson [Top Energy] and Kate Bull [EMA] 013 – Kate Howe [Ceres] and Vanessa Green [EMA] 014 – Ashley Lasar and Monique Lee [Ceres]
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