BusinessPlus news | advice | learning | networking
Issue 119 – October 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
Saving energy?
More than just the money
BEPS explained In this issue: • • • •
Why IP should top your to do list Pt2 The whole story on maternity leave Thinking of rebranding? Spring member briefing schedule
Indonesia: Trade Mission report
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BusinessPlus is published by :
CONTENTS
The Employers and Manufacturers
Advocacy
Association (Northern) Inc
04 EMA plans post-election advocacy
159 Khyber Pass Rd, Grafton,
05 Polls unearth election surprises
Private Bag 92066, Victoria Street West, Auckland 1142
from business
14 Business NZ: A new Government and what business wants
Ph: 09 367 0909 or 0800 800 362 Email: ema@ema.co.nz
news
Website: www.ema.co.nz
06 Shorter, simpler .nz names are here
Chief Executive: Kim Campbell
06 Winner of UN Awards: BNZ New
with us
Zealand Empowering women at work
Manager, Advocacy & Govt Relations: Mark Champion Manager EMA Learning: David Foley Manager, Strategy & Enterprise:
07 Finalists in Best Workplaces survey announced
08 Start preparing for health and safety law changes
Mauro Barsi 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
9
19
22 Letter from Australia:
Thinking of rebranding? Think again.
23 F&B Exporters advised “Get in the real world”
mob 021 662 656
features Rotorua / Taupo / South Waikato / Whakatane Clive Thomson 07 348 0334 mob 0274 372 808
BusinessPlus Editor Gilbert Peterson Ph: 09 367 0916
16
tax tips: The BEPS report and what NZ should do about it
17
Provisional tax. Pay when it suits you
27 member noticeboard: Sorting the politicians
gilbert.peterson@ema.co.nz
27
Writer
24 Indonesia: Mission report
Mary MacKinven mary.mackinven@ema.co.nz
23
New nationwide port-logistics alliance
advice 09 Economics Update: Holding pattern
Designer Ripeka Mikaere Advertising Sales Colin Gestro (09) 475 9313 colin@affinityads.com ISSN No. 1176-4953
10
EMPLOYMENT CHAT: Protecting
staff from random violence. Too much time off for funerals? The whole story on maternity leave.
24 26
12 Saving energy – its more than just money
19 Business Intelligence: Sexy, but lazy? Let’s buy that company!
21 IP should be at the top of
BusinessPlus news | advice | learning | networking
Issue 119 – October 2014 $6.30
Publication of the Employers & Manufacturers Association Inc
Saving energy?
your to-do list
More than just the money
28 Spring Briefings Schedule 2014
On the cover... K & L Nurseries in the South Island won EECA’s Supreme Award for 2014 for their conversion from coal fired boilers to running solely on their own renewable green waste. The project has cut K&L Nurseries’ energy costs by $100,000 a year, and is avoiding around 3,500 tonnes of CO2 emissions a year. Michelle Kempthorne sets off the spring gerberas. Our energy story is on pages 12 and 13.
bePS explained In this issue: • • • •
Why IP should top your to do list Pt2 The whole story on maternity leave Thinking of rebranding? SPrIng member brIefIng Schedule
IndoneSIa: Trade mission report
ADVOCACY at work
EMA plans post-election advocacy Leading up to Christmas EMA intends making opportunities for members to meet and hear from senior members of our new Government. Will it be business as usual or will the new Government strike out in different directions? We expect quick progress on the law changes to employment, exploitation of migrant workers and occupational safety and health and resource management. We will also be engaging with senior ministry staff to discuss work programmes and where costs may be reduced for business. EMA’s prime focus will be on achieving outcomes for the six policy points in our 2014 Election Manifesto which is at www.ema.co.nz Scope of housing land inquiry falls short
Within a day of our comment on a new investigation into land supply EMA’s CEO Kim Campbell was interviewed on two radio networks. He said the lack of land for business development in the Auckland region needs investigating alongside the supply of land for housing. “We welcome the inquiry into how councils make land available for housing, including for infrastructure, which is to be conducted by the Productivity Commission,” he said. “But we are surprised the inquiry is not also specifically investigating the chronic shortage of land for building shops, doctors’ rooms, warehouses, manufacturing plants and other types of business. “Auckland’s Draft Unitary Plan (the 30-year plan for the region) allocates far too little land for future business development – in total and in the variety of plot sizes.
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Government procurement firmly on the agenda
“We are surprised the inquiry is not also specifically investigating the chronic shortage of land for building shops, doctors’ rooms, warehouses, manufacturing plants and other types of business”
“In the past 15 years an average of 96ha of land was available for business development, and we are running short; but in the next 30 years only 109ha per year is available – not enough for a growing, exporting city region. One large warehouse can take up 2ha. “Housing cannot be isolated from business development. The location of housing in relation to the location of workplaces is critical so people can get jobs and access facilities close to home for their own convenience. “Also to minimise traffic congestion we need top planning around the colocation of work and homes.” We will make a submission to the Productivity Commission in due course.
Central and local government procurement is worth lots of money – central government spends $30 billion annually on the likes of stationery, cars and cleaning – along with opportunities to subcontract the work out. The Policy Forum recently heard from John Ivil, general manager of government procurement at the Ministry of Business, Innovation and Employment (MBIE). He presented on a 10-year reform programme aimed at lifting the performance of public sector procurement across the board, and that everyone was looking for greater value from government’s $30bn spend. He said the objectives of the procurement reform are: • to create an environment for New Zealand businesses to succeed, • to increase performance, add value and maximise results, and • unlock cost savings (more value for money). He also noted that there were currently 14 all-of-Government contracts in place with further three being progressed. These had achieved estimated savings of $300 million. For more detail go to www.procurement.govt.nz. Two-way dialogue
In the past month EMA has also talked with Shane Jones, New Zealand’s Pacific Economic Ambassador since he resigned as a Labour Party MP. Mr Jones said a series at seminars on developing trade further with our Pacific neighbours is being planned for early 2015.
ADVOCACY By Kim Campbell
Polls unearth election surprises from business Several issues surfaced in recent pre-election polls which demonstrated a refreshing change in the thinking of our business leaders. For two issues the changes were surprising: the ranking of investment, innovation and sustainability ahead of skills and employment; and the business support for the concept of a living wage. The polls were ostensibly to help set what should become the priorities for the new government as they represent the most pressing business issues. The Deloitte-BusinessNZ Election Survey found solid support for the co-ordinated plan for the economy as articulated through the Business Growth Agenda. 63% felt New Zealand business has a plan in place, up from 35% in 2011. In another poll the Mood of the Boardroom found plaudits for Finance Minister Bill English, and big recognition for welfare enterprise guru Paula Bennett. Business lifted her in their estimation to Number 3 in the preferred cabinet minister stakes, a tribute to her hard work and careful programmes to front end the loading of welfare investment in upskilling and incentivising people into work. The polls also raked over a growing level of support for some modified form of capital gains tax. Talk of any new tax is of course anathema but in the absence of other ways to redirect capital, a CGT is credited with some merit, in spite of its compliance costs.
New Zealand has a very poor record of capital allocation, a shortfall which EMA has been at pains to highlight, since investing in productive assets is the surest route to faster productivity growth. Though the jury is still out on whether some form of CGT is the best way to achieve this, the discussion around it has brought the issue into sharp focus, and in the face of harsh criticism Labour’s David Parker has persisted. The placing of investment, innovation and sustainability ahead of skills development and employment issues is an outcome of the attention given these issues, and the success evident in recent years in the range of secondary and tertiary education programmes now available. However the more remarkable shift for business is with sustainability issues coming to the fore. Business people increasingly recognize the economic sense it makes, a recognition made up of the need to acknowledge customers concerns (64%); for reputation (60%); for competitiveness (43.3%); and to reduce costs (34.6%). But I confess to be baffled by the business support for the concept of the living wage. Of the 1100 plus business people surveyed in the Deloitte Business
NZ survey 42.6% expressed support for a living wage with 47.8% against. 45.7% were all for it in their own businesses. The response seems clear; there is no law preventing business from paying more and otherwise introducing more and better rewards for their staff. Business need to take a leadership role with this. If a business can afford to pay more and supports this cause, then by all means it should do so. Some industries are certainly able to pay better than others, in particular innovative industries with higher margins which typically employ highly skilled people. Nevertheless Working for Families should be re-assessed so people offered more pay do not feel obliged to refuse it on the grounds that by doing so they would in effect get less income. To return to the larger story, the steadying hand of Finance Minister Bill English has to be credited with the financial stability of the economy over the past few years, and business loves the sense of certainty. If ever there was a time to recognize a Finance Minister for managing our economy for stability in these otherwise highly volatile times this was it. New Zealanders voted accordingly. kim.campbell@ema.co.nz
BusinessPlus
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NEWS
Shorter, simpler .nz names here with us From 1pm, 30 September 2014, the second level domains like the ‘.co’ in ‘.co.nz’ and the ‘.org’ in ‘.org.nz’ became optional and from then on you could register your company with them, without them, or both. For example, if your business’s domain name is ‘anyname.co.nz’ you may also be able to get ‘anyname.nz’. (See also BusinessPlus August and September) This is a big change. These new types of name create an exciting new registration choice. Most importantly, if you or your business already has a website or email address that ends in .nz read on.
Check the status of your name
You need to talk to your domain name provider or visit the Domain Name Commission’s anyname.nz website to check the status of your existing .nz name. There you’ll find the different options available. Check your options
You may find you’re eligible to register the shorter version of your .nz name before anyone else. Or reserve it for free for up to two years. Or you could find your .nz name is listed as ‘conflicted’. This means, for example, that you’ve got anyname. co.nz and others have got anyname. org.nz and anyname.net.nz. If so
you’ll be able to have your say on who you’d like to get the shorter version. Its important thing to note that there will be absolutely no change to people’s existing domain names. If, for example, you have a .co.nz name and you’re not interested in changing it your .co.nz name will continue to work as it always has. But if a person is eligible to register or reserve one of new shorter .nz names and they don’t do this by 30 March 2015, then the shorter version of their name will become available for general registration. Email to info@dnc.org.nz with any inquiries.
Winner of UN Awards: BNZ New Zealand Empowering women at work EMA congratulates the Bank of New Zealand on winning the Supreme Award in the United Nations White Camellia Awards 2014 celebrating businesses empowering women. In New Zealand the White Camellia Awards 2014 are run by the UN Women National Committee Aotearoa New Zealand - EMA is a signatory and represented by Zoe Timbrell, manager of conferences and events. UN Women is the UN entity for gender equality and women’s empowerment. The category winners in the New Zealand awards were: • Principle 1 - ASB Bank and Bank of New Zealand (first equal) • Principle 2 - Bell Gully • Principle 3 - Farmers Trading Company • Principle 4 - Deloittes • Principle 5 - ASB Bank • Principle 6 - Westpac The ‘Women’s Empowerment Principles’ designed by UN Women to unlock progress across the board for women universally.
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“A large financial services company offers a parental leave with a total of two years parental leave for the primary”
Putting principles into practice
Companies around the world have furnished concrete examples how they advance women’s empowerment. The examples following showcase actions and policies to learn from and emulate: Principle 1: Leadership Promotes Gender Equality • An international mining group headquartered in the UK, commissioned a resource guide on how to engage women and community groups as a major policy directive. • A company assessment by a global accounting and consulting firm determined
the company was losing out on business by failing to attract and retain highly skilled female professionals and, on the basis of the findings, worked to change company culture and policies through leadership and board involvement. Principle 2: Equal Opportunity, Inclusion and Non-discrimination • To retain and attract more qualified women, an Eastern European microfinance group initiated a broadbased data collection and analysis project, followed up with recommendations on the treatment of its female employees. • In an effort to close genderbased pay gaps, a global insurance group dedicated 1.25 million Euros over three years. • A large financial services company in Australia offers a parental leave policy with a total of two years parental leave for the primary care giver, which can be taken flexibly, rather than on a fulltime basis. Read more at www.unwomen.org.nz
NEWS
Finalists in Best Workplaces survey announced IBM Kenexa has announced the finalists of its annual Best Workplaces Survey and Awards from 32,000 employees in 228 New Zealand organisations. 42 companies were finalists across five categories. The IBM Kenexa Best Workplaces Survey and Awards is New Zealand’s largest and longest running study of workplaces 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, culture, recognition and engagement. Analysing the data received via the survey provides business leaders with key insights about their organisations from their most valuable assets - their people. The insights identify the characteristics that make their workplace great places to work, as well as areas to improve. Organisations also gain a more accurate view of what is needed to retain critical talent. The winners will be announced at the Awards Dinner on 23 October in Auckland. The IBM Kenexa Best Workplace Survey and Awards are delivered as part of IBM’s Smarter Workforce initiative, which helps organisations apply proven behavioural science, statistical analysis and psychological principles to improve employee engagement and
organisational performance. Read more at www.bestworkplaces.co.nz Follow the conversation at #BestWorkNZ
• • • •
Finalists in the Small Workplace (20-49 employees) category
Medium-Large Workplace (150-399 employees)
• • • •
• • • • • • • • • • •
• • • • • •
Hairy Lemon Web Solutions Hilti Hyundai Motors New Zealand Hyundai Wairarapa – Eastwood Motor Group Inspire Group Maven International McVerry Crawford Hyundai Milford Asset Management Office of the Electricity and Gas Complaints Commissioner Redvespa Consultants
Bay Audiology Colliers International NZ Cristal Air International t/a HRV FCB New Zealand Leading Edge Communications Mars New Zealand MOVE Logistics Rothbury Group Smith and Smith South Taranaki District Council TradeMe
Small-Medium Workplace (50-149 employees)
Large Workplace (400-749 employees)
• • • • • • • • • • •
• • •
ADInstruments Brother International NZ Buildtech Holdings ClearPoint Credit Union Baywide FUJIFILM NZ Giltrap Audi Giltrap Motors Miles Toyota and ILAM Toyota MRC Transmark New Zealand Rugby
0800 223 729 Ace Payroll for New Zealand employers.
Provoke Soltius New Zealand Sport Northland Yealands Wine Group
AA Insurance FMG Overland Footwear
Enterprise Workplace (750 or more employees)
• • •
Flight Centre (NZ) VTNZ Warehouse Stationery.
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BusinessPlus
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NEWS
Start preparing for health and safety law changes! Too many businesses are ill-prepared for the increased health and safety obligations due to become law next April and its putting them at risk, according to Brent Sutton, a health and safety expert with Workbase NZ. The new law will increase employers’ responsibilities to have safe work practices and be sure their employees know how to work safely. It will mean directors, owners and managers, who are duty holders with influence and control over the business, will need to know about all of their business’s operational risks and hazards and how they are managed. They will also be expected to verify that the organisation’s safety management is effective and meets the Health and Safety Reform law’s requirements. The onus will also be on duty holders to lead the organisation’s safety performance by making sure the changes are implemented and organisational practices are keeping employees, contractors and visitors safe. Furthermore a number of new health and safety terms, such as ‘Person in control of a business or undertaking’ (PCBU) will be introduced. Mr Sutton says addressing these issues starts with boards and business owners knowing what steps they need to take. “This can be easier said than done,
“Directors, owners and managers will be expected to verify that the organisation’s safety management is effective”
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especially for the vast majority of New Zealand businesses that do not have a dedicated health and safety role.” He suggests to start: 1. Identify all of the business’s hazards and risks. 2. Understand the business’s health and safety obligations, and its strengths and gaps. 3. Develop a plan for implementing the health and safety changes, and make it manageable by setting priorities. 4. Address the business’s greatest health and safety risks first. WorkSafe New Zealand provides guidance and standards for many industries. For these go to: www. business.govt.nz/worksafe/ information-guidance/guidanceby-industry Case study: Health and safety improved after literacy training
Bayer New Zealand’s Animal Health Division manufactures a wide range of veterinary products at its Manukau site, and employs around 130 people. Bayer managers saw opportunities for improvement so employees were offered the time to participate in a government-subsidised Workbase literacy, language and numeracy training programme run in their workplace. Bayer’s Operations Manager Terry Campbell says enhanced employee literacy, numeracy and communication skills resulted in significant health and safety improvements. Accident and near miss reporting improved significantly and employees are far more pro-active in bringing potential hazards to their manager’s attention. “The accident and near miss rates have dropped because people are
“It’s not just about individuals improving their skills. We realised that many of our written instructions and policies were difficult to follow.”
more confident to tell managers about a potential hazard and to complete hazard reports,” Campbell said. There also have been improvements in all aspects of the team’s work with fewer mistakes, less rework and far better attention to detail. He said, “It’s not just about individuals improving their skills. We realised that many of our written instructions and policies were difficult to follow.” Bayer is now rewriting standard operating procedures, and health and safety documentation to ensure that they contain the necessary information without being too complicated. “For example, there’s no point having long and complex fire evacuation procedures pinned on the wall if nobody reads them or knows what they mean.” Workbase is a not for profit trust with more than 20 years’ experience in developing adult literacy skills. Contact Brent Sutton 09 390 5442 bsutton@workbase.org.nz • EMA has run several series of seminars and training sessions on the new H&S Act, including tailored courses, and for company directors.
comment By Donna Purdue and Zoe Wallis
Holding pattern: Economic update Since early March, the Reserve Bank has raised the Official Cash Rate (OCR) by a full percent, taking it from 2.50% to 3.50%. This has seen variable mortgage rates rise from around 5.70% in early 2014 to around 6.70% currently. But after previously signaling that further interest rate hikes were likely before the end of the year, the RBNZ now looks to be in a holding pattern. Its latest set of forecasts in the September Monetary Policy Statement (MPS) suggests that the OCR could remain on hold until around the middle of next year, before gradually rising again. In the following article we ask why the change in tune and what it means for you as a borrower.
Inflation…where are you? The short answer to the RBNZ’s apparent change in tune is inflation, or rather the lack of it. The RBNZ, along with most other economic forecasters, has been surprised by how well behaved consumer price inflation has been against a backdrop of strong economic activity and rising house and commodity prices. The latest figures for the June 2014 quarter put inflation at a lower than expected 1.6%. Against this backdrop, the RBNZ has significantly revised its outlook for inflation (see first chart). Inflation is now forecast to fall back towards the bottom of the 1% -3% target band over the next couple of quarters and is not expected to reach the midpoint of the 1% -3% target band until
September 2016 – a full year later than forecast in the June MPS. This new inflation profile removes the urgency for the RBNZ to continue to frontload interest rate hikes. But it also means the RBNZ is at little risk of breaching the top of the target band even if an upside shock to inflation were to eventuate (for example due to a sharp decline in the NZD). It is not surprising then that the RBNZ has gone into ‘wait and see’ mode. That said, we are not yet convinced that medium-term inflation will be as soft as the RBNZ’s current forecasts indicate. Wage pressures, a changing exchange rate dynamic (toward a lower NZD), and record high net migration are likely to put upward pressure on inflation. To us, that suggests that when the RBNZ resumes tightening, the OCR may rise at a slightly faster pace than the RBNZ’s latest forecasts imply.
What does this mean for borrowers? The upshot for borrowers is that the floating mortgage rate is likely to remain steady at around 6.7% until the second quarter of next year. That suggests there is no hurry to fix your interest rate, particularly if you need some flexibility in your fortnightly or monthly repayments. However, if you don’t need the flexibility, then current fixed term mortgage rates do appear to provide businesses and households with an opportunity to protect themselves from further OCR increases. As the chart shows, fixed rates in the 6-month
to 2-year terms are well below the floating rate. That means as a borrower you are getting a discount for certainty – something that is very unusual, especially at this point in the interest rate tightening cycle. In fact, the 2-year fixed rate is currently 0.4% lower than it was in back March when the RBNZ started lifting the OCR. We also caution that these “cheaper” rates won’t be around forever. Fixed mortgage rates are determined not just by domestic factors, but global factors as well (particularly for longer-term rates). Over 2015, we expect major central banks such as the US Federal Reserve and the Bank of England to begin the tricky task of moving interest rates away from the extremely accommodative level they have been in over the past five years. It is difficult to pick the timing when this will happen, but when it does fixed mortgage rates will inevitably push off their current lows. If we were looking to fix our mortgages, then the two to three year part of the mortgage curve looks to offer good value. A quick note for savers, while the RBNZ is taking a breather for now, we do expect the OCR to move higher next year. All else equal, that should also start to increase the savings rates on offer. Important Disclaimer: All content is for information only and is not advice. The views expressed are those of the authors and are based on information believed but not warranted to be correct. Any views or information, while given in good faith, are not necessarily the views of Kiwibank Limited and are given with an express disclaimer of responsibility. No right of action shall arise or can be taken against any of the authors, Kiwibank Limited or its employees either directly or indirectly as a result of any views expressed or this information.
BusinessPlus
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EMPLOYMENT CHAT
Protecting staff from random violence. We are a government agency that sometimes gets angry customers. In light of the Ashburton shootings how can we protect staff from violence? – Selwyn Dear Selwyn This is a good question because in fact employers are responsible for making sure employees are safe at work. The Health and Safety in Employment Act (1992) requires tenants/employers to develop procedures (multi-risk preparedness not just for fire) for preventing harm, identifying workplace hazards and managing them. The Act is of course about to be replaced next April with the Health and Safety Reform Act (EMA is running several series of seminars to explain it.) The best way to reduce the impact of emergencies is to develop systems and devise a plan that your business can rely on in the event of unforeseen events such as violence. It pays to have policies in place so if your staff have any concerns for their safety, they will know how to bring that to your attention. Businesses that plan for emergencies are also able to resume business more quickly. The current Act means you are legally required to: • systematically identify and manage hazards; • manage hazards by eliminating them, isolating them or minimising them (in that order of preference); • provide suitable protective clothing and equipment to staff; • provide safety information to staff; • provide training or supervision so that work is done safely; • monitor the health of employees to ensure their work is not having a detrimental effect on their health; and • provide opportunities for your staff to contribute to all those things. Preparing for every kind of emergency is difficult, but depending on your industry you should have a good idea of the types of risk you face
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at work. A comprehensive emergency plan should contain. • A detailed floor plan, • Evacuation procedures, • Emergency response, • Fire management checklist, • Emergency supplies and first aid checklist, • Utilities checklist – gas, electrical, • Business recovery plan. Perhaps take advice from an EMA Employment Relations consultant or Occupational Health and Safety consultant.
“Always act in good faith at this emotional time. If you suspect the request is not genuine, without evidence you ought to allow it”
My older staff seem to have lots of funerals to go to. How do I decline without seeming unsympathetic? – Morrie Dear Morrie The Holidays Act 2003 covers all types of leave and makes clear what employees are eligible for in term of bereavement leave First off, check your compulsory Holiday and Leave Record for each person to determine whether or not your employee is entitled to paid bereavement leave. An employee is entitled to three paid days off in respect of the death of the following family members: • Child • Spouse • Parent • Brother or sister • Grandparent • Grandchild • Spouse’s parent Not everyone has a family and many people need to attend the funerals of friends too. In that case, it is open to your discretion to allow someone time off in respect of anyone else who is
important to them if you accept they have suffered a loss – for one day each for a bereavement they suffer on the death of anyone other than close family. The Holidays Act says that you must allow an employee to take a whole day off when an employee suffers a bereavement on their ‘relevant daily pay’ rate, ie, the amount they would have earned that day had they been at work and not on bereavement leave. Always act in good faith at this emotional time. If you suspect the request is not genuine, without evidence you ought to allow it. The entitlement is unlimited – not for a certain number of deaths a year, for example! Additionally, if an employee suffers multiple bereavements at one time, the bereavement leave that the employee is entitled to is accumulative with respect to each person that has passed away. But if they stay away from work without giving notice or without agreement, this can become a performance management issue (if their job is not getting done) or a disciplinary issue (for lying). But first, have a conversation about what is going on.
When a woman goes off on paid maternity leave, does the 52 weeks leave begin at the same date? – Doug Dear Doug An employee who has worked for you for more than a year when they are due to give birth is entitled to a maximum of 52 weeks off. This 52 weeks usually consists of 14 weeks of maternity leave and 38 weeks of extended leave. The 52-week clock starts ticking when the employee commences their leave. However there are circumstances when the 52 weeks may be extended. Another eight weeks can be added if she has medical complications and a doctor authorises it, or if you the employer direct the employee to commence her maternity leave early if the employee is incapable of performing her duties and
EMPLOYMENT CHAT
The whole story on maternity leave there is no alternative work available. Just to confuse matters, the Government’s Paid Parental Leave (PPL) scheme is for a 14-week period. You must inform her about this scheme and say that more information, and payment application forms, are available from the Ministry of Business, Innovation and Employment. She then sends the form to Inland Revenue herself – you do not handle this income in any way, except to provide the eligibility information to Inland Revenue such as her ‘ordinary weekly pay’, if she or Inland Revenue needs you to. You do not need to make KiwiSaver transfers to her while she is receiving PPL and you are not paying her. So back to your question: if your employee who is pregnant goes on maternity leave on November 3 and then has the baby on December 15, she can take leave until November 3 the following year. However, the employee can return to work as soon as she likes, by pre-arrangement, within 52 weeks from taking leave on November 3. The employee has to give you at least 21 days notice in writing before the previously-agreed period of leave ends, on whether or not she will be returning to work at the end of her leave. The same 21-day notice applies if the employee wishes to return to work earlier than the previously-agreed leave end date. During the 52 weeks of parental
“The employee has to give least 21 days notice in writing before the previously-agreed period of leave ends on whether or not she will be returning to work at the end of her leave” leave, you are required to keep the employee’s job open for them to return to. You can hire temporary staff to cover the role while your employee is on maternity leave but the employee on maternity leave is entitled to return to the role that she left. There may be circumstances where the role cannot be kept open, due to it being a key position or due to the operational requirement to make the role redundant. These situations can be quite tricky and we advise that you seek advice before making any decisions. There might also be shared care leave arrangements between the woman and her partner…keep communication open and in good faith. Give us a call if you need more advice. • 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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Free call AdviceLine, NZ 0800 300 362, AU 1800 300 362 or visit our website, www.ema.co.nz
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ADVICE
Saving energy – its more than Businesses in New Zealand spend $8.4 billion a year on energy – especially in the wood and food processing industries and commercial buildings. EECA programme manager Pramesh Maharaj said reducing these costs adds many other benefits: cutting the carbon footprint and reducing air pollution, increased competitiveness, improved staff wellbeing and morale and safety, and building better relationships with customers. He was addressing EMA’s Energy Management Summit last month held in association with Genesis Energy. Presenters spoke of the trends and technologies in the supply and cost of energy. EECA (Energy Efficiency and Conservation Authority) traditionally provided grants but is now focused more on assisting businesses with energy efficiency, said Maharaj. EECA also recommends energy audits which for a medium sized company costs, as a rule of thumb, 3% of a company’s energy spend, about $10-30,000. EECA’s new focus is on forming partnerships with leaders of businesses, local government and energy retailers for long term sustainable projects, rather than supporting individual energy-saving projects with grants. EECA’s also licensed to provide
“The first three companies saved a combined $2.5 million on energy in 2012-13 with the next five saving a total of $2.8m in 2013-14”
the ISO 150001 framework for energy management and is piloting the standard with ANZCO, Fletchers, Silver Fern Farms, AFFCO, Auckland Airport, Downer, Fulton Hogan, Goodman Fielder and soon with Talley’s food processing units. The first three companies saved a combined $2.5 million on energy in 2012-13 with the next five saving a total of $2.8m in 2013-14. EECA is seeking more companies to partner with. It also retails the NABERNZ scheme that measures, rates and
improves the energy performance of office buildings in New Zealand. By undertaking the certified rating, an accredited assessor can help companies identify ways to improve their energy use and reduce operating costs. The scheme is administered for EECA by the New Zealand Green Building Council. Award winner
The supreme winner this year of EECA’s annual awards programme was K and L Nurseries (pictured), for their replacement of a coalburning boiler with a sustainable wood chip boiler for heating its glasshouses - with help from EECA and $500,000. “We have solutions for businesses at all stages of the energy management journey,” Maharaj said. For information visit www. eecabusiness.govt.nz Case study: Selling NZ
Auckland International Airport’s manager of sustainability and environment, Martin Fryer, talked about the use of targets to improve energy efficiency at the airport. He said carbon emissions will again become an issue because
Corporate sustainability and energy effiency • Business spends $8.4 billion per annum on energy • Wood and food processing and commercial buildings are large use’s
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ADVICE
just the money Energy audit a starting point
K&L Nurseries produces more than two million stems of cut flowers a year, supplying 70% of the South Island’s gerberas. A constant source of heat in its glasshouses is crucial to the year-round growing operation. From left are the owners Paul and Lyn Loader and family Ian and Michelle Kempthorne.
despite using more fuel efficient planes, composites and biofuels, emission reduction efforts will be outweighed by projected growth in air travel. The airport created the role of sustainability manager then a fiveyear sustainability policy in 2008 to reduce carbon emissions as well as fuel, water and waste per passenger. In some areas it has saved 84% of electricity and 53% of gas. The airport’s energy management team is working with EECA for the next three years with the aim of reducing electricity use by 2GW/ hr each year – on a campus that consumes about 100GW/hr a year. Its EnergyPro software allows the airport to know what its tenants are doing then knock on their doors and say ‘you might be interested in these energy saving products’. It acts as an electricity line company to its tenants who choose their retailers. Fryer says, “We don’t yet understand where all energy is used and [operations] can be made more efficient, but this software will show us. “We have an opportunity to try
“Reducing emissions is important as a supply chain partner and is important to our customers. We’re a logistics provider to many exporting to the EU and US where it’s very important”
new approaches and learn from past mistakes.” On marketing its credentials Fryer said the Auckland airport was the first New Zealand-owned company listed in the Dow Jones Sustainability Index, “so it gets recognition but probably doesn’t market itself that well!”
An energy audit taken on by NZ Post was to be a starting point and benchmark for the group’s massive, nationwide asset and vehicle portfolio to cut fuel and energy consumption. Corporate sustainability specialist Tom Croskery said NZ Post comprises 590 properties, 700 franchisees, 2000 cars and trucks, five aircraft, 2000 posties and 700 couriers. “We have found little projects won’t make a difference; energy efficiency is for costs savings and environmental management. “Reducing emissions is important as a supply chain partner and is important to our customers. We’re a logistics provider to many exporting to the EU and US where it’s very important. “Energy audits are a starting point. “But don’t do it unless you will action the results. Choose a representative site to audit, for a first cut at savings and to benchmarks all your sites against. “An energy audit is for gathering basic information or for when things aren’t working and you don’t know why.” An audit can cover: • data and trends, eg, how has the site or system used energy historically? • physical equipment, eg, appropriate use and functionality, and • billing – are we actually using what we are paying for? Croskery says the audit report should give a prioritised list showing easy wins with potential savings quantified. “But you also have to think of environmental and brand benefits: what are these worth to us? They’re not just financial returns.” Croskery says auditing is an essential part of energy management, but you must commit to investing prior to auditing, and a two-year payback horizon is the sweet spot. BusinessPlus
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IN THE LOBBY
A new Government and what The election of a new Government brings an opportunity for business to advocate for the kind of environment that is needed for economic growth. The business community supported many of the policy initiatives made under the Business Growth Agenda during the last electoral term and would like to see further advances for business and economic growth. Members of EMA and BusinessNZ would like to see policies that can bring improved international competitiveness for New Zealand firms, including: • Trade policies that result in more connection with and fewer tariffs in overseas markets • Tax rates that make New Zealand enterprises more competitive and New Zealand more competitive as an investment destination • Competitive levels of investment in road, rail, irrigation, broadband and other infrastructure • Research and innovation settings that promote the rapid growth of enterprises and industries based on new technologies • Sustainability policies that foster successful communities, environmental protection and economic growth • Human capital policies for highlytrained, productive, innovative citizens • Policies to orient New Zealand away from state reliance and towards a more enterprise culture Business understands that getting a
sustained higher growth rate requires government to doing many things well, not just a few. Among the many policies that the new Government will be considering, business would like to see some specific ones progressed early in this electoral term, including: Trade
• Work towards completing the Trans Pacific Partnership and Korea free trade agreement Tax
• Reduce the corporate tax rate. There is evidence that actual corporate rates (after taking account of exemptions) of all other OECD countries are lower than New Zealand’s. Innovation
• Promote the goal of increasing private sector investment in R&D to 1% of GDP Natural resources
• Enable greater development of mineral and petroleum resources by developing a staged process where the Crown decides which resources should be explored and then uses an independent arms-length authority to oversee
issuance of permits under a rulesbased framework • Reach a clear position on water allocation, tradability, storage and irrigation to encourage investment in water infrastructure and allow water to flow to its highest value use • Review the Resource Management Act to get a more strategic focus by local authorities, more recourse to private arrangements, compensation paid for the taking of private property rights, and better separation of the currently confused issues of planning guidance and environmental protection Local government
• Tighten the role of local government to core activities only • Review the future funding of local government and its current asset base • Review the size and structure of territorial authorities to ensure their ability to service their geographic and population base • Review policies that drive up housing prices, taking into account the Productivity Commission’s inquiry into land supply • Replace the Building (Earthquakeprone Buildings) Amendment Bill with a first principles review of earthquake risk management
Workplace bullying guidelines to be evaluated The guidelines developed by Worksafe New Zealand to address workplace bullying and its negative impacts are now being evaluated and your thoughts about them are wanted. The Preventing and Responding to Workplace Bullying Guidelines are being formally reviewed by the NZ Work Research Institute (http://www.workresearch.aut.
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ac.nz/) in collaboration with Massey University’s Healthy Work Group. The aim of the review is to determine how the guidelines have helped employers’ awareness and their preventative actions. The Institute wants managers and other professionals responsible for Health and Safety and/or Human Resources to interview as part of the evaluation.
Interviews will take about 40 minutes at a time and location convenient to you. You need to be familiar with the WorkSafe workplace bullying guidelines and have thought about their content. Please contact Danae Anderson, NZ Work Research Institute senior researcher, to participate in the study: danderson@aut.ac.nz.
Phil O’Reilly
business wants Sustainability
• Partner with business to get progress on key sustainability issues including moving to a low carbon economy, retaining New Zealand’s reputation for a quality environment while increasing export growth, and enabling more businesses to employ vulnerable young people Workplace
• Amend the Employment Relations Act according to the current amendment Bill, along with additional changes of shifting the purpose of the Act from “productive relationships” to “productive workplaces”, ensuring collective bargaining is voluntary, allowing management to restructure during bargaining. • Review the Holidays Act and Minimum Wage Act to address
unforeseen consequences of recent court decisions
Canterbury
• Continue commitment to the Christchurch rebuild
Skills
• Review the contribution investment in tertiary education makes to economic growth • Provide opportunities for vulnerable workers to lift their skills • Lift the performance and capability of school leaders and teachers • Press ahead with ICT graduate schools and increasing the number of engineers • Improve information provision on careers advice and outcomes of tertiary education, including the ‘Rate my Qualification’ pilot • Set expectations for better engagement between education and business • Enable easier entry for immigrants with needed skills
Regional
• Implement tailored policies for regional growth Regulation
• Introduce a Regulatory Responsibility Bill to improve the quality of legislation These are some of the key areas that EMA and BusinessNZ will be advocating for during the new teRm of government.
Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz
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ALSO AvAILABLE ThROUGh ONLINE LEARNING Courses meet the Department of Labour’s First Aid for Workplaces – A Good Practice
Book now: www.redcross.org.nz/training
Guide (September 2009), and all the NZQA Training Requirements.
BusinessPlus
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TAX TIPS Jo Doolan
The BEPS report and what NZ While we have been engrossed, appalled and distracted by political conspiracies likened to a South Pacific House of Cards, the OCED has been busy picking up the pace around its recommended approach to BEPS (Base Erosion and Profit Shifting). There are seven papers with around 700 pages of issues. Before we dig into this, it’s worth noting New Zealand has received a silver medal for coming second out of 34 countries on a tax competitiveness index prepared by the Tax Foundation. Despite the rhetoric during the election campaign, our system is admired internationally. As the Tax Foundation says in its report: “In a world where businesses, people, and money can move with relative ease, having a competitive tax code has become even more important to economic success. The example set by New Zealand and other reformist countries shows the many ways countries can improve their uncompetitive tax codes.” Moving from the accolades to the challenges around BEPS, New Zealand businesses cannot afford to ignore these recommendations. While many are betting that global acceptance is unlikely, there is scope for individual countries to adopt the measures as recommended. As a small economy, New Zealand can quickly
enact law changes and shift audit resources towards priority areas. The latest papers focus on: • the digital economy; • the use of hybrid instruments that are treated as debt in one country and equity in another; • harmful tax practices where one country provides tax preferences at the expense of another; • treaty shopping where businesses have a business base in a particular country for the main purpose of obtaining a benefit from a double tax treaty that the other country has; • the pricing on intangibles, transfer pricing and the terms of multilateral agreements between countries. Digital economy
Taxing the digital economy is complicated. The current international tax rules generally rely on a company having a physical presence in a country before any tax
liability can arise. In the digital age, a company can trade with customers in a market without ever setting foot there. Many New Zealand businesses operate in other countries by having an online presence there, and they are not taxed, and may even get goods into the other country without having to pay indirect taxes. The OECD notes it is not possible to isolate the digital economy for the purposes of creating special tax rules. Instead, the current tax rules should be expanded to cater for the digital economy. GST
Changes will be needed around GST/ VAT activities that are currently exempt, reviewing permanent establishment exemptions to include the digital economy, ensuring controlled foreign company rules target the income from the sale of digital goods and services, and ensuring the transfer pricing rules allocate market values to these goods
Provisional tax. Pay when it suits you Here is a method that lets you choose when you pay your provisional tax
Provisional tax has been the subject of much debate, and any business owner can understand why. The idea does not sit well that your payments are based on what your income might be before you have earned any of it. Often, too, inflexible provisional tax dates do not align with cash flow or business cycles. This is especially the case just after Christmas. More than half of the respondents to an EMA poll on tax payment practices and tax pooling
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(see May BusinessPlus) reported the January to March period was the toughest in terms of cash flow. Stonegrill New Zealand is one of many Kiwi businesses that find a Tax Management NZ (TMNZ) product provides a smart way to manage both their cash flow and provisional tax obligations. Tax FINANCE allows you to pay provisional tax at a date that suits you – without worrying about late payment penalties or use of money interest (UOMI) by Inland Revenue (IRD). This is particularly ideal if you have cash flow constraints or would
rather use the money you would pay to the IRD to reinvest in your business. TMNZ’s rates start below 6% which means Tax FINANCE is cheaper compared to many traditional forms of finance such as an overdraft or unsecured loan. It does not affect existing credit lines or banking covenants, and no credit checks or security are required. Tax FINANCE is flexible - the finance arrangement can be easily extended. Should you not require all the tax you have financed, you don’t have to pay for it.
TAX TIPS
should do about it or services. New Zealand is reviewing the threshold for applying GST to imported goods and services, and both the administration of this and the associated compliance costs are challenging. New Zealand companies selling into overseas markets through online platforms must keep an eye out for changes that may give rise to a tax liability for sales in offshore markets. These changes may also be beneficial to some NZ-based businesses where their domestic sales are being eroded by offshore competitors selling into NZ without paying GST. R&D
Harmful tax practices that might come under the microscope include the proposed tax preferences for R&D expenditure. One hopes this is not the case. We have waited years for these and if we are to encourage businesses to invest in R&D some sort of taxpayer funded incentive is critical. Payable tax agreement
The proposals impacting on double tax agreements are concerning if they delay any current treaty negotiations.
Stonegrill New Zealand managing director Tony Scott has used it to defer provisional tax payments when wanting to order stock from overseas. “Being able to better manage the timing of our tax payments and cash availability has allowed us [as importers] to purchase internationally when exchange rates are most favourable and to obtain discounts by paying at the time of order,” he says. “We have cemented the relationship with our valuable clients by being able to pass these considerable savings on to them.” Tony says Tax FINANCE “pays for itself in more ways than one. The option has made our company and personal tax management a breeze
Robust tax
“There is unlikely to be any wholesale changes to our tax legislation. Taxpayers can expect the main impact to be an increase in information requests, not just from the New Zealand tax authorities but also from the authorities of countries that they are trading in”
At present we are negotiating treaties with China, Luxembourg, Norway, Portugal, Samoa and the United Kingdom, along with new protocols with several other countries.
and has taken the stress off our cash flow.” To defer provisional tax payments using Tax FINANCE, you pay TMNZ a oneoff, tax-deductible interest amount. The interest amount is based on the amount of tax financed and how long you defer the payment. For example it costs $290 to defer a $10,000 provisional tax payment for six months. TMNZ arranges the $10,000 provisional tax payment on your behalf. This payment is held at the IRD in the account of an independent trustee, the Guardian Trust. You then pay the $10,000 principal in six months’ time, and Guardian
New Zealand’s existing tax laws are already recognised as robust so there is unlikely to be any wholesale changes to our tax legislation. Taxpayers can expect the main impact to be an increase in information requests, not just from the New Zealand tax authorities but also from the authorities of countries that they are trading in. There will be much more of a focus on the economic substance of a transaction rather than the strict legal form. If you are operating in other countries, as a minimum you need to have robust transfer pricing documentation to establish how you are pricing your goods and services, and to prove from relevant benchmarks that it is arms-length. The need for change and the engagement by the OCED in trying to resolve these issues is unquestionable. Its ability to secure agreement from all member countries around implementation is a huge challenge. But without this agreement we could see a further tilting of what is already an uneven playing field. Joanna Doolan is a Tax Partner with EY joanna.doolan@nz.ey.com
Trust instructs the IRD to transfer the tax into your IRD account. IRD treats the $10,000 provisional tax as paid on time once the transfer has gone through. TMNZ is New Zealand’s largest and oldest tax pooling company, and has helped more than 25,000 SMEs save more than $70 million in IRD compliance costs since 2003. As an EMA partner, TMNZ offers special rates. Call 0800 829 888 or email support@tmnz.co.nz to find out how TMNZ can assist you.
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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
ADVICE By Mary MacKinven
Sexy, but lazy? Let’s buy that company! Buying another company or merging with it should be just part of a business strategy, and the merger or acquisition could be the beginning of new problems. So cautioned the presenters at the recent 2014 Business Intelligence breakfast workshop in Auckland. The content-rich workshops are for busy corporate executives, owners, directors, managers, advisers and corporate counsel run by Lowndes lawyers in partnership with EMA. MC Paul Hartland, partner at Lowndes, said improved business confidence and successful capital raisings have contributed to an increase in merger and acquisition (M&A) activity. But they are no guarantee of business success but a means of delivering the business towards a strategic objective, and can be defensive or attacking in nature. For every acquisition there’s usually a corresponding rationale for divestment, often of non-core assets, for example if the target business is larger than the acquirer or the acquirer needs to de-risk debt finance. “So, understand the true, ultimate nature of the transaction,” he said. The three presenters spoke about the place of M&As in corporate strategy. M&A is not a silver bullet to accelerate or de-risk a business, said David Hay director of Antipodes Consult. “Unless your business is in good shape you should not think about buying another - it won’t solve problems and might end badly,” he said. “Strategy is [about] looking at the business: what markets and what products do we want to be in, and what capability do we want to build in our company? “M&A is part of how you get there. It’s often a lazy way to execute your strategy; you have problems if it’s your only strategy; you have to have paths to growth. “Can you reshape the new company? Or perhaps take a fresh approach to what you already have? “Be very honest about your internal capability to execute the M&A and run this large (new) business.” Key factors for M&A success are: • Preparation • The right team resources – internal and external
from left to right: David Hay, Richie Smith, Andrew Bashford, Paul Hartland
•
Synergies between the acquirer’s and the target company • In-depth assessment of risk • People - It will take six to nine months and possibly take key people out of the acquirer’s business during the process • Test your thinking against your original goals and don’t underestimate the owners of the business you are acquiring. You want the best people for your business. You need a great culture that’s clearly understood by everyone. Hay said, “The done deal is just the start of the hard work!” Communication is key
Over-communication is essential, said Richie Smith, principal of Richie Smith Ltd. “Communicate with shareholders, customers, suppliers, staff and business partners. “Simple, clear messaging will combat the Chinese whispers. Use professional help if necessary and remember everyone is thinking, ‘what’s in it for me?’ Everyone gets hypersensitive.” Smith said the reason a target purchase is a successful business is not always immediately obvious – it might be people-related, such as understanding of markets. What makes the whole thing tick?
“And what value do you really get to deliver to your shareholders? The notion of savings through synergies, eg, purchasing together, is a classic trap. “Because, after the M&A, nothing stays the same.” “The worst thing to do is to tell staff everything will stay the same because it won’t.” M&As are challenging, exciting and pretty sexy at times, said Andrew Bashford, Head of Corporate Finance and Corporate Relationships at Westpac Institutional Bank. “But for longevity it’s an art and a science.” Financing considerations for banks are the credit risk rate based on the economic value, EBITDA, business risk and debt. Borrowers and bankers need to be aligned about the business and credit strategies. The funding structure must support the transaction structure and investment strategy. Consider options for hedging such as buying insurance while waiting for a deal to be completed. “Engage early with banks – this can add value to your bid submission.” • The next workshop is: “Is Angel Investing a Sensible Thing to Do? The Profits and Pitfalls” Tuesday, October 14 at the Northern Club, Auckland 5.30 – 7.30pm. Register at business-intelligence.co.nz BusinessPlus
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ADVICE By Paul Adams
IP should be at the top of your to-do list Last month Paul discussed why IP is so important, and advised when your organisation develops a great idea, invests in new R&D, files a patent or acquires a company you need to objectively assess the “intellectual property position” of that idea, R&D, potential patent or company in terms of three key insights: 1) The strength and scope of your IP 2) Whether you are infringing someone else’s IP, and 3) How your assessment can reveal highly valuable market intelligence about the market and competitors.
“You can infringe someone else even if you have a patent on your technology. Ignorance cannot be a strategy. A “see no evil, hear no evil” approach to FTO is a major mistake”
Intellectual Property strength and scope
Whether you are likely to receive broad and strong IP protection directly impacts both the commercial potential of the idea and the commercialisation options available. A strong IP position justifies increased investment or more aggressive expansion plans because you can expect higher margins from a product you can protect more effectively and therefore command more market share with. Conversely, a weak IP position may lead to an R&D pivot, a different business strategy or even abandoning the project. Infringement
Are you likely to infringe someone else’s IP by producing or selling this idea? In short, do you have freedom to operate (FTO) your technology, product or service? If you do not have FTO it means you are infringing someone else’s IP. Unfortunately having your own patent does not always mean you have FTO – you can infringe someone else even if you have a patent on your technology. Ignorance cannot be a strategy. A “see no evil, hear no evil” approach to FTO is a major mistake. New Zealand may not be as litigious as the US, but as New Zealand businesses grow and succeed their visibility increases on the world stage
where this is a far greater risk. If they enter foreign markets infringement risk becomes very real. It should be noted that managers and directors can be directly liable for failing to take infringement risk seriously. Market intelligence
Assessment of your IP position provides valuable market intelligence. It reveals the state of technology development in your market or industry: Who is doing what, when they were doing it, and where are they now? It generates a list of people working on what you are working on; your potential competitors, collaborators, strategic partners, co-developers, licensees and licensors. Example
Consider a company developing a new product and facing two divergent technology paths (A) and (B). Both paths will take 10 engineers and two years to complete. Without looking at IP, management might decide which path to take solely on functionality, perceived market acceptance and other factors. Putting on the IP field glasses however, suddenly reveals very different terrain. Path A is heavily patented out. The chance of gaining strategic high
ground (building its own strong IP position) is limited, and there is a high probability of infringement. With path B on the other hand the terrain is open. The company can develop its own strong IP, has no fear of ambush or mines and can instead turn the tables and lay traps of its own, further fortifying its position. Consider the implications of taking Path A: 20 man years of engineering time lost (perhaps $1.5million), its investments in its own patents and IP may be lost (perhaps $150K), the cost of launching a product that is quickly copied or must be removed from the market. Worst of all the opportunity cost of going back to the beginning and missing the market. The difference between the two paths could be millions of dollars for a relatively small project! Early insights into whether a project will be a commercial success can be gleaned from the combination of the three factors above. An important point: IP is seldom a burning issue for managers and all too easily put off. It only gets to the top of the agenda for most management teams when something goes wrong. They discover a contractor, not them, owns a core piece of IP, or their latest ‘breakthrough technology’ actually broke through 10 years ago and they are now infringing on someone else’s IP. Understanding if you have a strong or a weak IP position is critical. To make this assessment, independent and commercially pragmatic advice will be essential. It is important to put IP on the top of your to- do list and keep it there until it is done. Paul Adams is CEO of EverEdgeIP, a leading intellectual property strategy, management and technology commercialisation firm. Paul has been named one of the world’s top IP strategists and was the recipient of the Outstanding IP Leader Award 2012. www.EverEdgeIP.com. BusinessPlus
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ADVOCACY
Letter from Australia from Marketing Specialist Bella Katz
Thinking of rebranding? Think again. When it comes to rebranding I have one word for you. Monday. It was in fact a Monday in 2002 that the (then) PricewaterhouseCoopers spun off its consultancy arm under a new brand, the aforementioned ‘Monday’. The jokes wrote themselves then as they do now. With restrained humour, the BBC news website announced in its obituary on 31 July 2002, “Monday passed away quietly on Tuesday after a short but controversial life.” It was a terrible name and a silly concept for a reputable accountancy firm with such a strong history. What were they thinking? I was reminded of the Monday fiasco while on a work trip to Auckland last week. Spark phone boxes, billboards, press ads and buses all over the city. Companies like Telecom and Australia’s Telstra, while not loved, are respected. After all, they are
“For us marketers, the temptation to rebrand is like a disease. In fact it is a rite of passage for a shiny new marketing manager to suggest a rebrand in the first week of the first job they take”
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synonymous with the development of national infrastructure and communications. That level of recognition, market dominance and reputation, took decades to build. So why do companies keep going down the major rebrand route? For us marketers, the temptation to rebrand is like a disease. In fact it is a rite of passage for a shiny new marketing manager to suggest a rebrand in the first week of the first job they take. Several years go by. The marketing manager faces the boardroom firing squad multiple times, is made redundant a couple of times and takes on a more weathered resilience. Then, in the best cases, like a butterfly they re-emerge with commercial acumen and genuine ability. From that point on, a true marketer realises that changing a name, logo and font is not going to turn the business around. The point is, even for a manufacturing business whose clients are other businesses, think twice before you undertake a rebrand, consider the value of what you’ve already created and the reputation you built in your market. Can you afford to throw all that away because someone suggested you could do with a better name and logo? Very often when I speak with companies the conversation leads to rebranding. It’s usually coming from another place and actually they don’t mean rebranding at all. What they’re looking for – or just what they could do with – is a brand revitalisation. Breathing a new lease of life into the business without changing everything that made it unique in the first place. For your company to have reached this point of growth, you must have done something right. So why get rid of all that? I love great design and I love
“A true marketer realises that changing a name, logo and font is not going to turn the business around.”
working with great designers, but great companies are not built on visual creative alone and certainly not as a priority to real business and marketing issues. By all means, strive to improve the look and feel of your company. Don’t look like a startup whose teenage nephew built your website. Especially when you’re trying to tell the market you’re a cut above the rest. But before making cosmetic changes, ensure they come from a place that is bang on target with who you are as a company.
Bella Katz is an Australia-based brand and marketing consultant who regularly advises New Zealand companies on how best to position there. She specialises in marketing for the manufacturing and industrial sectors. +61 (0) 410 400 657 bella@bellakatz.com.au Bella on LinkedIn www.bellakatz.com.au
By Nada Young, Asia Market Director, Incite
F&B exporters advised “Get in the real world” Simply making your product available is not enough to survive and thrive in Asia. As an exporter it’s natural to back yourself, and think international success in Asia is inevitable, once you find the right buyers. After all, you’re looking at nations with populations in the tens and hundreds of millions, with GDP growth rates not seen in developed markets for years. But it takes more than a good product to survive and thrive in Asia. With this in mind, Incite asked Food and Beverage (F&B) importers from the major Asian markets we work in for their thoughts on New Zealand’s F&B exporters and trading with New Zealand. We canvassed 650 prominent F&B importers from across Southeast Asia, Hong Kong and Taiwan in an anonymous survey. Some results were predictable; 85% of respondents said the major advantage of New Zealand products was our product quality. Others exposed flaws in the way some exporters approach market development. One respondent went so far as to say, “New Zealand exporters need to get in the real world”.
100% Pure initiative, as well as our multiple Free Trade Agreements, consumer perceptions of New Zealand products in key Asian markets is enviable, and the tariff savings we enjoy from our exports give us a major competitive advantage. See figure 2.
Respondents also raised our lack of cooperation in providing the documentation required to register F&B products with Asian government agencies. Product registration in markets like Indonesia, Thailand and the Philippines is an arduous and frustrating exercise. In a sophisticated and transparent food regulatory environment such as New Zealand’s, it’s hard to fathom the scores of documents requested, many of which must be notarised by embassies or public notaries, along with Figure 2. Importers agree that the major advantages of New Zealand products are our quality, food safety reputation, FTA import tariff benefits demands for the and positive image. Respondents could select multiple attributes. disclosure of sensitive IP like the detailed ingredients lists and work flow charts Unfortunately, New Zealand’s required to be granted approval to sell esteemed product quality comes with a premium price tag and our high labour into these markets. costs, limited economies of scale and These processes are also geographical distance from trade exacerbated by the ever-changing partners compound the issue. policies commonly enacted by local Importers surveyed also felt that Government agencies. we are doing too little to support the To take advantage of the many premium pricing we demand. The lack opportunities in these countries, it’s of private and public sector investment imperative to examine your approach in brand building, marketing and from both sides of the negotiating after sales support were all subjects of table when defining your export criticism. strategy for the success you are counting on.
Figure 1. Respondents were F&B Importers from the major markets of Southeast Asia, Hong Kong and Taiwan.
Importers largely agreed on the things New Zealand F&B exporters do well. Our reputation for quality and food safety is obviously an advantage in Asia where frequent food safety scares have installed a deep mistrust of many locally produced goods. The New Zealand Government has clearly given us a head start, too. Thanks to campaigns such as the
Figure 3. The major barriers to success in Asia according to respondents are our high prices (caused by high FOB pricing, expensive freight and unfavourable FX, and limited public and private marketing support).
Contact Nada Young ph +64 9 889 0041 nadayoung@ exportincite.com Incite is a New Zealand owned International Trade Services firm with offices in Singapore and Auckland. Representing the interests of international F&B exporters in the high growth markets of Southeast Asia, Hong Kong, South Korea and Taiwan. www.exportincite.com BusinessPlus
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By Gilbert Peterson
Slowing economy hastens The Indonesian administration led by the new President Jokowi faces uncharted territory with a slowing economy, a budget deficit nearing its legal limit and unpopular cuts urgently needed to fuel subsidies. Though still expected to make 5.4% GDP growth this year the world’s 10th largest economy is projected to drop back further over the next few quarters. Part of the prescription to reverse the decline was presented at the 3rd Indonesia New Zealand Summit in Jakarta on September 8th. Widespread changes are mooted. Amongst them is a move to put senior administrative positions up for auction amidst changes for the bureaucracy, to lift the minimum wage and index it to inflation, the wholesale conversion of the transport fleet from gasoline to gas, and increasing compulsory education from nine years to twelve. “We know how to handle the economic slowdown,” said Mr Eep Syaifuloh, on behalf of Dr Iman
Sugema who heads up EC-Think, an Indonesian think tank. We know the reasons for it are due to the composition of the economy, he said, and we have policy measures ready to respond. To counter the worsening trade balance the government will do what it can to run a weaker exchange rate to stimulate export and tighten up on imports. On the domestic front the big issue is the $US21 billion paid out of the government’s $173 billion budget in fuel subsidies. The country has been importing oil for a decade and in 2013 the concern was exacerbated with a sharp drop in investment in the mining sector including oil and gas exploration. The fuel subsidies intended for lower income groups turned to be a
Indonesia mission report ExportNZ and the ASEAN NZ Business Council’s trade mission in September to four cities in Indonesia was an unqualified success. The work of the NZTE team led by Trade Commissioner Tim Anderson was highly valuable and much appreciated by the 25 delegates. This was the second visit in two years and included the 3rd Indonesia New Zealand Summit on Jakarta on September 8th. (See other report on this page). The mission was again led by Sir Ken Stevens and accompanied by NZ Ambassador David Taylor and Indonesia’s Ambassador to New Zealand, Jose Tavares. The delegation was warmly welcomed in each of Makassar, the first time an NZ delegation had visited, Surabaya, Bandung and Jakarta. In Makassar, the capital of South Sulawesi, the delegation was hosted by the Mayor and called
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on the Governor. Growth there is approaching 9% well ahead of the Indonesia average. In East Java, Mr Harry Sunogo, New Zealand’s new Honorary Consul generously hosted the group. Mr Sunogo is opening a NZ Trade Centre this month which offers a point of entry for all New Zealand traders in Surabaya. All delegates rated the mission highly. One has already returned for 10 days to follow up a contact made and to visit the site where his services are being sought. Other outcomes of the mission include a delegation visiting here from the University of Surabaya to discuss specific areas of Professional Development training. Another delegate is also returning to Surabaya and Jakarta, and an initiative to explore an NZ Inc approach to contracting for a major project is underway.
hand out to middle and upper income earners. Weaning people off them with fuel price increases is proving extremely difficult. 7.4 million motorcycles were sold in Indonesia in the first six months of 2014 when hire purchase limits came off. Many people found with $100 down and two years to pay, they could afford one. The subsidies bill has to be cut if the administration is to have funds for spending on education and health reforms. Alongside that challenge is a plan to convert gasoline and diesel fuel usage to CNG/LPG with the infrastructure for it to be completed by 2017. To speed the switch over, motor cycles and bi-fuelled cars, will be the target of tax incentives.
challenges for Indonesia To lift the nation’s competitiveness a programme of infrastructure development is underway to reduce energy and logistics costs. For example a runway is going down for a new major airport mid way between Jakarta and Bandung. Jakarta’s airport is three times over capacity, and Bandung’s frail. Rail is programmed for double tracking throughout East and West Java with connections from ports to industrial parks. 500km of rail is scheduled for Kailmantan, for cargo, not people. However proposals like this, and there are many more, are just that until the need for change can be translated into law through the Indonesian Parliament. For the new government the challenge is how to replace the old order; a political test, not a technical one. President Jokowi could well face an obstructive parliament since many of its members supported his opponent. Top rt: Trade mission delegates visited a new $US800m Holcim cement plant near Surabaya. They are Jim Jackson (Jackson Electrical), Maurice Davies (Windsor Engineering), Sir Ken Stevens (Glidepath), Simon Longuet-Higgins (Beca), Tim Anderson (NZ Trade Commissioner), Mike Atkins (ASB) and Gilbert Peterson (EMA)
Below: The Deputy Governor of Bandung exchanges the traditional gifts with Sir Ken Stevens
Every year 10 million more Indonesians join the affluent middle classes now numbering some 70 million. And... • 18% of the population are aged 10-19 • Around 80,000 Indonesian students are studying overseas, 25% of them in Australia. NZ’s target is to attract 4000 students by 2017. • 40 agreements are in place between Indonesian and NZ universities New Zealand can help meet the dire need for skills training particularly in: • Agricultural Services • Infrastructure • Aviation Services • Energy • Education BusinessPlus
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Out & About
Trainees in Auckland at EMA courses Ultimate Team Leader, Top 10 Tips for Outlook and Diploma in Health and Safety (Level 6)
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1 – Mike Monigatti [Hiway Stabilisers] and Kevin Clark [Onelink] 2 – Alex Koppenaal [Placemakers] and Chris Watt [Hally Labels] 3 – Christine Craig [Family Start Manukau] 4 – Mary Fatamoka and Dolly Proffitt [Family Start Manukau] 5 – Tulson Caird [Astech Electrical] and Paul Nelson [Mastip Technologies] 6 – Robert Pennington [Orora], Richard Moka [ABB] and Graham Hockenhull [Orora] 7– Jimmy Patel [ABB] and Bernadette Rowe [Skin Institute] 8 – Claire Howse and Barbara Hogg [Baxter Healthcare]
EMA course Management- An introduction in Auckland
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1 – Chris Mann [Watercare] and Walid Bayouk [The Spencer on Byron] 2 – Helen Andrews [Instant Finance] and Pablo Dickson [Inghams Enterprises] 3 – Kelsie Wiki [Westbury Stud] and Angela Iona [Delmaine Fine Foods] 4 – Ann Hanson [Birthcare Auckland], Alex van der Leij [TNT Express]`and Abi Latham [Tuhoe Trust]
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MEMBERS NOTICEBOARD
Sorting the politicians Compac Sorting Equipment scored a coup by having the PM John Key and the Minister of Economic Development, Steven Joyce, announce a new Government policy at their premises in Auckland five days out there the election. Compac develops, manufactures and supplies produce handling solutions and equipment to packing operations around the world. The ExportNZ Auckland division of EMA enjoyed Compac’s chief operating office Ian Fulton as its guest speaker on October 9 – at the ConnectUP@Khybar networking after-five.
New nationwide port-logistics alliance Ports of Auckland and Netlogix have created Nexus Logistics Limited, a joint venture to provide independent container logistics and distribution services across New Zealand. The venture will operate as an open platform, available to all stakeholders in the supply chain, says Ports of Auckland chief executive Tony Gibson. “There is an incredible amount of potential in the New Zealand supply chain not realised because of the widely acknowledged inefficiency of empty truck and container movements out of import dominant Auckland to meet export container requirements. The inefficiency is borne, directly or indirectly, by all stakeholders in the
import/export supply chain. “This opens up new ground. With [the new] Nexus Logistics, we’re connecting the dots – our partnership with Napier Port and Icepak at Longburn, the new cold store with Polarcold at Wiri - and we’re also well advanced working
with parties to create a crossdock facility at Wiri. All of these combine to create an optimised and open supply chain. Alliance partner Netlogix’s chief executive Chinthaka Abeywickrama says, “By developing the Wiri Intermodal Freight Hub further Tony Gibson and utilising an optimal mix of road, rail and coastal transport capacities and services, Nexus Logistics will facilitate an efficient flow of cargo across New Zealand.” Ports of Auckland’s subsidiary CONLINXX will become a fully-owned subsidiary of, and service provider to, Nexus Logistics. BusinessPlus
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SCHEDULE FREE for all EMA members | To register call AdviceLine on 0800 300 362 or email AdviceLine@ema.co.nz
Spring Briefings Schedule 2014 Auckland Style
Venue Capacity
Classroom
60
Day/Date
Time
Venue
Thurs. 23rd Oct.
2.30pm - 4pm
Bruce Pulman Park, Teamsports Centre, Walters Rd
Fri. 24th Oct.
2pm - 3pm
Webinar
Mon. 3rd Nov.
9.30am - 11am
North Harbour Stadium, Davenports Lounge, Appian Way
ALBANY
Classroom
80/200
Mon. 3rd Nov.
3pm - 4.30pm
Bruce Mason Centre, 1 The Promenade
TAKAPUNA
Classroom
100/250
Tues. 4th Nov.
9.30am - 11am
Crowne Plaza, 128 Albert Street
AUCKLAND CITY
Theatre
120/230
Weds. 5th Nov.
9.30am - 11am
Counties Inn, Rata Lounge, 17 Paerata Road
PUKEKOHE
Classroom
50
Thurs. 6th Nov.
9.30am - 11am
Titirangi Golf Club, Links Road
NEW LYNN
Theatre
100
Thurs. 6th Nov.
2pm - 3.30pm
EMA AGM, Alexandra Park
GREENLANE WEST
Classroom
100/250
Fri. 7th Nov.
9.30am - 11am
Lincoln Green
HENDERSON
Classroom
60/120
Fri. 7th Nov.
3pm - 4.30pm
EMA Room 2C, 159 Khyber Pass Road
GRAFTON
Theatre
90
Mon. 10th Nov.
7.30am - 9am
EMA Board Room, 159 Khyber Pass Road
GRAFTON
Theatre
50
Mon. 10th Nov.
11am - 12.30pm
Butterfly Creek, Tom Pearce Drive
MANGERE
Classroom
80/120
Tues. 11th Nov.
2pm - 3.30pm
Waipuna Conference Centre, 58 Waipuna Rd
MT WELLINGTON
Classroom
80/170
Tues. 11th Nov.
4pm - 5.30pm
Waipuna Conference Centre, 58 Waipuna Rd
MT WELLINGTON
Classroom
80/170
Style
Venue Capacity
PAPAKURA
500
Northland Day/Date
Time
Venue
Weds. 12th Nov.
3pm - 4.30pm
The Northerner, Corner North Road & Kohuhu Street
KAITAIA
Classroom
15/25
Thurs. 13th Nov.
9.30am - 10.30am
Scenic Circle Bay of Islands, Seaview Rd
PAIHIA
Classroom
30/60
Thurs. 13th Nov.
1:30pm - 3pm
Kingsgate Hotel Whangarei, 9 Riverside Drive
WHANGAREI
Classroom
48/80
Style
Venue Capacity
Waikato / BOP Day/Date
Time
Venue
Mon. 17th Nov.
9.30am -11.00am
Kingsgate Hotel
HAMILTON
Theatre
400
Mon. 17th Nov.
3.00pm - 4.30pm
Thames War Memorial Civic Centre, 200 Mary Street
THAMES
Classroom
60
Tues. 18 Nov.
9.30am - 11.00am
Armitage Hotel, 9 Willow Street
Tauranga
Classroom
160
Weds. 19th Nov.
9.30am - 11.00am
East Bay REAP (Upstairs), Reap House, 21 Pyne Street
WHAKATANE
Classroom
60
Weds. 19th Nov.
3.00pm - 4.30pm
Suncourt Hotel
Taupo
Classroom
36
Thurs. 20th Nov.
9.30am -11.00am
The Holiday Inn, Corner Froude & Tyron Streets
ROTORUA
Classroom
90
Thurs. 20th Nov.
1.30pm - 3.00pm
Central North Island Kindergarten Association, 6 Glenshea Street,
PUTARURU
Classroom
50
Thurs. 20th Nov.
5.00pm - 6.30pm
The Waitomo Club, corner of Taupiri Street and King St East
Te Kuiti
Theatre
50
Fri. 21st Nov.
2:00pm - 3:00pm
Webinar
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BusinessPlus
500
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