Staples Rodway NUMBERS Spring 2017

THE POLITICAL ISSUE ENCOURAGING GROWTH & INNOVATION FOR SMEs The political parties share their policies

No 43 SPRING 2017

LYING, SCHEMING & BACKSTABBING The psychopathology of office politics

POLITICAL PRESSURES Does politics influence financial markets?

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DIRECTORS AUCKLAND

David Searle

HAMILTON

Rosanna Baird (07) 834 6800

(09) 373 1128

TAURANGA

Chris Downey (07) 578 2989

HAWKES BAY

Dave Sawers

(06) 878 7004

TARANAKI

Chris Lynch

(06) 757 3155

WELLINGTON

Robert Elms

(04) 472 7919

CHRISTCHURCH Dave McCone (03) 343 0599

DISCLAIMER No liability is assumed by Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this document. It is 2 • NUMBERS 2017 recommended thatSpring you consult your advisor before acting on this information.

No 43 SPRING 2017

2016 Network of the Year BAKER TILLY INTERNATIONAL

IN THIS ISSUE 2 Encouraging growth and innovation for SMEs The parties provide policy

8 Political pressure Can politics influence financial markets?

10 Office Politics The psychopathology behind it

12 Cyber Attacks More tips to avoid imminent cyber attacks within your business

14 Profit vs Cash Why do I have cashflow problems?

16 Let's talk about stress Are we working ourselves to death?

18 Investing in the technology sector Could today's Facebook become tomorrow's Yahoo?

20 Trustees and settlors beware Family trusts don't travel well

22 Ask an Expert 24 Women in Business Interview with Oksana Siminoff, Deep Green Bush-School Co-Founder

27 Staples Rodway Challenge 28 Staples Rodway snapshot 32 Movers & shakers

ENCOURAGING GROWTH & INNOVATION FOR SMEs 110 10000 REVE SERBANK RESER VE OF

RN ESERVE BA BANK O NK OF F E AND ZEAL NEW NEW W ZEZAELAALNADND

Politics is moving fast, so it is fair to note that these responses were received in the week ended 13 August.

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PARTIES PROVIDE POLICY

It's election time! For accountants, this is an exciting time, as new policies are proposed and implemented, giving us some mental arithmetic and new challenges.

As business advisors to small and medium businesses, we approached the major New Zealand parties and asked them to share their tax vision to encourage growth and innovation for small to medium enterprises (SMEs). What follows are their responses.

CURRENTLY 58 MPs

Hon. Judith Collins NATIONAL PARTY SPOKESPERSON FOR REVENUE

National remains very focused on supporting SMEs, funding a $187 million SME-friendly tax package in 2016. This package will reduce compliance costs and make tax simpler for small businesses as part of the Business Transformation programme being implemented by Inland Revenue.

We’re modernising and simplifying the tax system to make paying tax easier and more certain, reduce the burden of interest and penalties, and help small businesses tailor payments to their individual circumstances.

A modern Revenue system with new digital services and simplified processes has and will continue to reduce the cost of tax administration for SMEs. It will also make it easier for businesses to comply with their tax obligations.

SMEs can now manage their GST online. They can pay GST when they file, set up instalment plans, view their GST history and payments online and get refunds sooner.

In February, the government passed legislation to simplify tax processes including reducing or removing use-of-money interest for most business tax payers and contractors are now able to choose a withholding tax rate that suits their needs rather than one being set for them.

From April next year, the new pay-as-you-go option for businesses grossing less than $5 million will provide small businesses with a way to pay tax as they earn income - the accounting income method (AIM).

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SMEs will use accounting software to pay their provisional tax as their business makes a profit. It will make a huge difference to new businesses and those with fluctuating or seasonal income.

The new pay-as-you-go option for businesses grossing less than $5 million will provide small businesses with a way to pay tax as they earn income."

This will make tax part of running the business, rather than a separate process and it will provide more certainty, and reduce compliance costs for business.

It is a common sense measure that will benefit up to 110,000 small businesses and was introduced in direct response to small businesses concerns with provisional tax.

We’re also planning changes to PAYE, including filing directly from software and via MyIR to further integrate tax obligations into a business’s regular payroll processes.

We want to ensure that SMEs can spend more time growing their businesses by making the paying of tax simpler, more certain and less time consuming.

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CURRENTLY 31 MPs

Michael Wood LABOUR PARTY SPOKESPERSON FOR REVENUE

We are happy that many of the proposals that we put up in ‘Flexible tax for Business’ have been progressed. We’ve long argued for a more streamlined tax system for small business, and it is positive that the government (a little belatedly) has picked up on some of our proposals.

However, there is still a lot of further work to be done to ensure that tax for small business works as well as it can.

Labour believes that tax should be fair, simple, and collected - and there is work to be done on each of these. At a structural level, Labour has proposed a major review of the tax system through a tax working group. This will examine the overall balance of the tax system – how are we collecting tax, who is paying, are we taxing different assets and areas of economic activity appropriately? It is possible that having looked at these areas, that changes will be proposed for small business.

During the working group process we will specifically consult with the small business sector. We know that SMEs play a major role in our economy and that the impact of tax (in terms of time and complexity) can be disproportionate. We also want to make sure that small businesses are playing on a level playing field by ensuring that multinational companies are paying their fair share of tax.

There will also be some more policy specifics coming out in the near future that will likely be of interest to small businesses. We have discussed setting up a new seed enterprise investment fund (tax incentives for investment in SMEs) that was discussed in the Future of Work commission, and we have signalled our support for the Chartered Accountants Australia New Zealand position that small businesses should not need to spend more than one hour per month on their tax filing requirements.

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Labour believes that there is more potential for the IRD Business Transformation project to assist with this, but we do not think that the government is focussed enough on pressing the department to really meet the needs of small businesses. For example, the government is currently proposing in tax legislation to remove the small payroll subsidy for small businesses using an intermediary for electronic filing. This subsidy is very important for small businesses who will otherwise struggle to justify setting up their own electronic filing systems. We are fighting to keep the payroll subsidy in place.

Restoring the Research & Development tax credit will instantly mean that small businesses investing in R&D will be better off, and incentivised to do so.

Finally, while not specific to small business, our policy of restoring the research and development (R&D) tax credit is relevant. National removed the tax credit and replaced it with a grants scheme which is very bureaucratic and has real barriers for small enterprises. Restoring the R&D tax credit will instantly mean that small businesses investing in R&D will be better off, and incentivised to do so. All large businesses started off as small businesses, and innovated their way to success. Labour wants to back the next generation of SME entrepreneurs with R&D tax credits, so that they can build the next generation of New Zealand firms.

CURRENTLY 14 MPs

James Shaw GREEN PARTY LEADER

I’m James Shaw, Green Party Leader and spokesperson for economic development. I’ve worked for big businesses, and I’ve started my own, so I have experienced some of the challenges you face as owners of SMEs, before I entered Parliament.

TAX SHIFT I want to lead a shift in taxation away from taxes on things we think are good - such as work and enterprise - and onto things that are bad - such as pollution and non-renewable resource use. For example, we will make it progressively more expensive to pollute carbon and use the revenues to fund a tax cut for SMEs and households.

I want to lead a shift in taxation away from taxes on things we think are good - such as work and enterprise - and onto things that are bad - such as pollution and nonrenewable resource use.

UNTAXED CAPITAL GAINS In government, we also intend to close the largest remaining tax loophole by introducing a comprehensive capital gains tax (excluding the family home). A proper capital gains tax will incentivise capital to shift from housing speculation into the productive sector, lowering our highly leveraged overseas borrowing rates and taking pressure off our inflated exchange rate. This will be good news for exporters.

R&D TAX CREDITS We will further encourage innovation and value add throughout the economy by boosting R&D funding significantly and giving SMEs access to R&D tax credits alongside the current grant system.

We also have a number of non-tax related reforms which will benefit SMEs: A MINISTER FOR MANUFACTURING If you manufacture, National has largely ignored you. We’ve witnessed the on-going simplification of our exports, and the

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loss of tens of thousands of good paying jobs in the manufacturing sector. We are going to help fix that.

The manufacturing sector needs a champion at the highest levels of government, securing a fairer share of its considerable resources to ensure the sector thrives, diversifies, is able to compete fairly with imports, and adds more value to our exports. The Green Party in government would establish a Minister for Manufacturing, in Cabinet, to better represent the interests of manufacturers.

OTHER MEASURES TO HELP SMES We will also pull on all the levers of government procurement policy to prioritise Kiwi-made suppliers.

We’ll fix congestion in our major cities - not in a temporary way by building more motorways - but by making it more attractive for commuters and students to get to where they’re going by taking alternatives, like rapid transit, walking, and cycling.

We will increase funding for universities in the engineering, mathematics, computer science, and the natural, physical and material sciences. The restoration of student allowances for post graduate students will make it more attractive for students to build on their undergraduate education and graduate with higher skill levels.

A CARBON NEUTRAL ECONOMY BY 2050 These measures are all sensible, but they are not the big idea that is going to irrevocably shape our economy for the next 50 years and the place of SMEs in it.

The shift to a low carbon economy is inevitable; it’s our choice, as business and political leaders, if we want to step up and respond in good faith to it and profit from the new opportunities it presents. The current path we’re going down, which is to simply try to ignore climate change for a little bit longer, will pass the huge costs of doing nothing on to our children and grandchildren.

If you are a business wanting to do the right thing, I want to make it easier for you to lead on sustainability and, at least, level the playing field, if not actively tilt it in your direction. With your help, we can create the first truly sustainable economy in the world - one that our children will one day be proud of.

NUMBERS Spring 2017 • 5

CURRENTLY 12 MPs

CURRENTLY 2 MPs

Fletcher Tabuteau

Te Ururoa Flavell

NEW ZEALAND FIRST SPOKESPERSON FOR REVENUE & TRADE

MĀORI PARTY CO-LEADER & MINISTER FOR MĀORI DEVELOPMENT

New Zealand First has a vision for SMEs in New Zealand.

Perhaps the most important part of that vision is actually acknowledging their existence. Whilst this government does all they can to increase big business activity, little effort is made to support and grow our kiwi businesses and grow the capacity of their owners. In fact, quite the opposite seems to be happening, with the likes of big infrastructure contracts being given out to overseas operators who are being made subcontractors and suffering through poor management.(sic) The focus would change under New Zealand First from a big multinational facilitator to a kiwi-owned business focus.

Initially this must start with growing our regions coupled with a specific focus on lowering the cost of doing business. I often wonder why there is not a greater outcry from our small business owners in this area, National has become more nanny state than at any time in our country’s history.

Our kiwi-owned business focus must start with growing our regions coupled with a specific focus on lowering the cost of doing business.

Our economic development package is out soon and will include tax incentives, including likely cuts for small kiwiowned business, accelerated capital depreciation terms and export incentives, and packages that include new-staff programmes which will offer monetary incentives to the business owner directly with more on offer if the business is willing to take on the training of staff. It is important to us and important you know what are up to.

The Māori economy is tipped to grow at a faster rate than the country’s economy as a whole – more than double," 6 • NUMBERS Spring 2017

Small businesses are the beating heart of the New Zealand economy. Over 97 per cent of firms in this country employ 20 or fewer workers. It is the backbone of the economy and Māori have a big part to play. We need to provide the right conditions to allow our small businesses to prosper so they can continue to grow our economy and support our people.

We welcomed last year’s tax changes in the Budget to make things easier for small businesses. Tax is an obligation, but it should never be burden. The tax changes that came into effect in April will help, and IRD’s overhaul of its computer system will also make things less onerous for business owners.

But in the end, the tax system is not what makes or breaks a business, it comes down to the business owners. Their ideas, their drive, their passion, their belief in making a go of it. Innovation plays a big role, especially in the Māori economy, which is thriving. A recent report estimated the value of the Māori economy at $50 billion. It is tipped to grow at a faster rate than the country’s economy as a whole – more than double, in fact. By 2030 the value of Māori assets is projected to be $100 billion.

While our people and enterprises hold significant assets in our primary industries - mainly in farming, forestry and fisheries – it would be foolish to just focus on our large enterprises. We need to pay special attention to our small businesses. That is where the Māori entrepreneurial spirit is at its strongest. There are around 8,500 Māori-owned small and medium-sized enterprises and most have an annual turnover of under $1 million.

One of the goals of the recently refreshed He kai kei aku ringa, the Crown-Māori Economic Growth Partnership and national Māori economic development strategy, is to lift the number of Māori SMEs by 30 per cent over the next five years.

To do that we need to ensure Māori entrepreneurs and innovators get the support they need to carve out their niche in business. A part of that is a tax system that encourages people into business, but more importantly we need to provide them with the tools to succeed and help them navigate the myriad of services available to them so they can thrive and grow. Small business owners are employers of their whānau and others in their community and by providing those tools to business owners it can benefit the country as a whole.

STAPLES RODWAY COMMENT CURRENTLY 1 MP

David Seymour ACT PARTY LEADER

Commentary by Mike Rudd STAPLES RODWAY AUCKLAND mike.rudd@staplesrodway.com

ACT’s fundamental belief is that the government should spend less of your money. You should keep more of it. That goes for both personal income tax that you pay on your salary, and the tax that business owners pay in company tax.

The Government’s accounts are in surplus - the tax taken from New Zealanders exceeds the amount Government is spending. At the same time, taxpayers bear the cost of a large amount of wasteful spending. There are numerous grants and subsidies out there to support businesses and projects that New Zealanders would never voluntarily invest in – golf contests, yacht races, research into the Southland accent and subsidies to some of our biggest companies. ACT would make savings by cutting corporate welfare, and would use this money to deliver a company tax cut. We would return government surpluses to New Zealanders by delivering a tax cut in every income tax bracket, and ensuring no-one pays more than a 25% tax rate.

ACT would cut the company tax rate from 28% to 25%, with a long-term plan to cut it even further. Businesses around the country tell us that, rather than the National Party’s plans and strategies, grants and subsidises, the simplest thing that the Government could do to support business growth is a reduction in business taxes. We know that reducing the tax burden on all companies will enable them to grow, take on new staff and pay higher wages. Our cut to the company tax rate is estimated to reduce government revenue initially by $1.1 billion per year.

We will balance this by reducing spending on corporate welfare – grants and subsidies to businesses. We believe that business growth overall will be better served by reducing the tax burden on all companies, rather than picking winners with taxpayer money. Greater after-tax returns will incentivise greater investment in new businesses and growth of existing businesses.

ACT would also tie personal tax bracket thresholds to inflation, ending the ‘bracket creep’ that sees New Zealanders taxed at higher and higher rates even when they are no wealthier.

The simplest thing that the Government could do to support business growth is a reduction in business taxes." www.staplesrodway.co.nz

It has been great to see the political parties currently in the House providing some comments on their taxation policies for small to medium enterprises (SMEs).

The consensus appears to be against massive changes to our taxation system, but instead continuous improvement. We would hope that this is because it is functioning properly, but some might argue that there are big issues with our system that politicians are too afraid to address. We certainly believe our system is working well, although there are challenges in the taxation of multinationals that New Zealand shares with other members of the OECD. Only a couple of parties had policies that specifically addressed SMEs, although the general consensus was that an efficient tax system should benefit SMEs, as they will spend less time on compliance and more time on their business. In the same vein, we argue that the current broad based, low rate system results in most people and entities being taxed on an equitable basis and doesn’t result in absurdities.

We thankfully remain semi-immune from overseas nuances such as a court having to decide what constitutes a biscuit (as in the United Kingdom), or business spending hours trawling through an 87 page document to determine if their smashed avocado on toast is subject to GST (as in Australia).

Inland Revenue’s Business Transformation programme appears to be supported by all sides of the spectrum, and while there are efficiencies to be gained, the word on the grapevine is that Inland Revenue have been experiencing troubles with implementation. As Inland Revenue develops systems that will enable it to track more and more information, we have a sneaking suspicion that it is only a matter of time before any efficiency gains that taxpayers will obtain under the new system will be swallowed up by the cntd. over

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time taken to gather and provide IRD with further information, and respond to questions about any discrepancies between information sources. From a fairness point of view, new systems may make it easier for Inland Revenue to take long-promised action against the cash economy.

The Treasury’s Pre-election Economic and Fiscal Update (PREFU), which came out after the MPs made their submissions, but before publication of this magazine, has resulted in statements being made that appear to reduce the differences between the government and the opposition in the area of tax.

The opposition, for instance, looks like they have ruled out increases in income tax or changes to GST, while awaiting a tax working group report before implementing other tax changes. There are therefore few tax changes that could remain, apart from a capital gains tax, which is still the big unknown and is seen as a cure for rampant house price increases. A capital gains tax has not been a cure for high house prices in places such as Australia and the United Kingdom. More likely, house prices have increased because of an undersupply of houses in the right place and an oversupply of (relatively) cheap money.

Unfortunately, a capital gains tax will not help SMEs, as their owners will be taxed when they sell their business, leading to an even greater shortage of capital in the New Zealand investment market.

No matter which block comes into power, it looks like Tax Freedom Day, which was 8 May this year, should stay around the same date.

Tax Freedom Day is the day that New Zealanders collectively paid off their tax bill for the year and could keep the rest of their income for themselves, see the Winter 2017 edition of NUMBERS for more details.

Largely, the proposed changes on all sides are a small measure of good news for SMEs and we thank the parties for their contribution to this issue of NUMBERS.

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DOES POLITICS INFLUENCE FINANCIAL MARKETS?

Article by Will Roberts STAPLES RODWAY ASSET MANAGEMENT will.roberts@sraminvest.co.nz

It has been hard to ignore the number of significant political events that have occurred recently and those that will follow in the remainder of 2017. There is also no doubting that we watch elections with close interest to see how they will shape the world we live in.

From an investor’s perspective, how have political events shaped and could they shape financial markets over the next 12 months or more? The challenge is trying to define which events are significant and to potentially determine if financial markets actually care.

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NLESS THEY ARE EXTREME, POLITICIANS like to think they are responsible for any positive stock market rallies but they rarely are. They also look to markets for validation of their ideas. But with the implications of political decisions often taking years to see results, by which time someone else is potentially in power, are we getting too preoccupied with elections and their relevance to investing?

As we look ahead to our own election and the on-going political events unfolding in Europe, we should look backwards at the circumstances around President Trump’s election in November 2016 and the Brexit vote. Have these events shaped (or not shaped) financial markets and what can this tell us about future elections and what they might mean for us?

On 23 June 2016 the UK held a referendum on whether it should remain in the EU or exit. Polling suggested the “stay” vote would win and this expectation was solidly built into market pricing. The degree to which the outcome was priced into the markets was quickly demonstrated in the initial reaction to the result as, within hours, the S&P 500 index fell 6.50%.

It would however, quickly rebound as the result was analysed and determined to be an over-reaction. This was a clear example of how Wall Street reacts to surprises!

Similarly, in the lead up the US election, a Donald Trump presidency was a prospect that no one took seriously. The world generally assumed he would be unelectable and he would have no idea how to handle a crisis, his trade policies would hurt US business, lead to inflation, and his views on debt came straight from the Trump empire playbook and lacked a global perspective. Who would vote for him? But what’s happened since? Record highs in the S&P 500 have

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occurred despite all those concerns continuing to exist. The public wanted change and fundamentally the US and Europe are doing OK. Growth is slow but steady. Unemployment is at historically low levels, and the impact of the Trump presidency is weakened by his divisive talk and political naivety, so change may be limited.

Financial markets dislike uncertainty and political uncertainty is shown to negatively influence markets. The reaction to proposed political events is usually based on speculation and is largely influenced by the narrative and spin provided by the parties involved, as filtered through the media.

So, is there a place for political considerations in the investment process? Logic tells us no; mixing political ideology with the investment process doesn’t help predict markets. When it comes to politics, investors need to vote at the ballot box and not with their portfolios. The two areas that need to be avoided to enhance investment outcomes are short-term thinking, which rarely assists investors in reaching their long-term goals, and allowing emotion to be a part of the investment process.

In summary, don’t let political considerations determine your investment plans, commit to a long-term, fully diversified investment strategy, and avoid the temptation to make frequent transactions.

Staples Rodway Asset Management is a boutique investment advisory service that specialises in providing personalised and impartial investment solutions for individuals and trusts. An adviser can be contacted at enquiries@sraminvest.co.nz or on 0508 220 022.

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LYING, SCHEMING & BACKSTABBING

THE PSYCHOPATHOLOGY OF OFFICE POLITICS Every business could learn a lot about office politics from Ricky Gervais in his role as David Brent, Manager in the TV series The Office. We could even go as far as saying that Shortland Street, which is a lot closer to home, might teach us a bit about the reality within New Zealand businesses. Or, for an example of extreme political manipulation, Game of Thrones provides many examples of less-than-ideal workplace dynamics.

Each of these shows is a satirical or exaggerated reflection of what goes on in an organisation and (apart, hopefully, from Game of Thrones) mostly they are pretty close to the truth. Office politics play out in every business and it is human nature and basic sociology to have power dynamics within a group.

Article by Julie Rowlands STAPLES RODWAY TARANAKI HR julie.rowlands@staplestaranaki.co.nz

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LL ORGANISATIONS ARE POLITICAL IN some way or another, and there are two core reasons why. The first is; work involves dealing with people and, secondly, humans are emotional creatures, all with our own needs, emotions and vulnerabilities. So, working in organisations and working with others is complex. To survive in these social systems we have to find out what works best, how we should behave and what we need to do to fit in.

Within a workplace context, we don’t have to look far to see, at the extreme edges, the sycophants, the creeps, the crawlers, the doormats, the grovelers, the “look at me” types, the leech, the manipulator, the hanger on, the status driven, the condescenders and the bullies to see that a diverse range of behaviours emerge in most organisations. Almost all of these behaviours develop over time as individuals adopt the behaviours that they believe will enable them to be successful and survive in their current workplace. All humans are driven by two core needs: we want to belong; and we want to achieve.

SHOULD WE BE WORRIED ABOUT OFFICE POLITICS AND THE IMPACT THEY HAVE? As a business owner the answer is yes, you should be worried, because there is a dark side. This is characterised by favouritism, with rewards tied to power and social networks, rather than objective performance and delivery. Often flattery and favour-doing can translate into being viewed as a top performer, possibly resulting in long term career success. The impact is hugely negative when good people who work their tail off see others being promoted, people who they believe have destructively manoeuvred their way to the top. How much senior executive time in your organisation is spent politicking instead of producing?

PEOPLE DON’T LEAVE JOBS, THEY LEAVE MANAGERS Confidence in senior management is the most influential driver of engagement. In fact, people don’t leave jobs, they leave managers. The Corporate Leadership Council recently found that most engaged employees are 87% less likely to leave their organisation. With the high cost of replacing employees it is best to avoid lack of engagement and create a healthy company culture. In today’s world, in which everyone from Director to hourly paid worker should be focused on and concerned about the organisation and their own health and safety, it has been shown that office politics do cause more stress and strain. It decreases job satisfaction and increases intent to leave the organisation. The cost of replacement and high churn can be up to $50,000 even for a mid-level role. It is worth getting it right and it is worth understanding what you are doing in your business that may or may not engage your employees. www.staplesrodway.co.nz

Some steps for an employer to consider: 1. Don’t pretend that office politics don’t exist 2. Understand the culture and the behaviours that are reinforced and valued 3. Engage in truthful and consistent messaging about what is OK and what is not 4. Be transparent about the values that really do matter to the business 5. Ensure all HR practices are clear and unbiased 6. Ensure that employees with equal skills and performance are rewarded and recognised equally 7. Identify those people in the business who are most likely to use self-serving political behaviour Some steps for the employee to consider: 1. Don’t engage in spreading gossip or rumours 2. Do contribute to objectives and understand theoverall business plan 3. Make note of social networks and how best to fit in with these 4. Do learn to make allies and be open with these 5. Gain visibility for your achievements 6. Make and use work place connections to get things done It is worth wondering how many professional service companies in New Zealand could actually say that the politics within their own business are reasonably constructive and don’t have too much of a negative impact on the culture and the people within? New Zealand has one of the highest rates of workplace bullying in the developed world, with an estimated one in five affected, according to Culture Safe NZ. What does this mean for your business and the politics and dynamics within? Most importantly: what are you doing about it?

It is important that we understand what factors within the business may give rise to the risk of psychological injury and identify appropriate preventative measures to manage the risks. We should be concerned about the stress and strain of destructive office politics and we should do something about it.

We need to be thankful that today we live in an era in which Game of Thrones is just a TV show, set in a world where hitting the glass ceiling means being thrown through the moon door, or contract negotiations are completed with a sword fight. For some businesses this might be closer to the truth than we realise. Just remember these key messages from Game of Thrones: Keep cool in heated moments Loyalty pays off The best networkers survive all changes of power A stint abroad can do wonders for your career Your local Staples Rodway office can help review your culture and climate or you can contact one of our HR consultancy team: Julie Rowlands, Taranaki; Andrea Stevenson, Hawke’s Bay; or Chris Wright, Auckland.

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MORE TIPS TO AVOID IMMINENT

CYBER ATTACKS

WITHIN YOUR BUSINESS Cyber Security continues to be a top concern of clients given the recent highprofile Ransomware attacks and data breaches. There is almost always more you can do to reduce the likelihood or impact of an attack on your business.

Article by Daryl Webb STAPLES RODWAY AUCKLAND daryl.webb@staplesrodway.com

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HE BAD GUYS ARE WINNING. Cyber criminals – both organised crime and opportunist hackers – are out there in force, trying to find ways to steal your data, hold you to ransom, or hurt your reputation.

In the Spring 2016 edition of NUMBERS, Rob McEwan offered five key tips to help you avoid cyber attacks. Here, we add another five steps you need to take to reduce your risk of being hacked. Rob’s five points were: 12 • NUMBERS Spring 2017

1 Don’t operate your computer with Administrator-level privileges 2 Ensure operating systems and software are patched and kept up-to-date 3 Remove software you don’t need 4 Always run anti-malware software and keep it up-to-date 5 Make sure to back up your data frequently Additional cyber security tips:

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CHANGE YOUR PASSWORDS

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ENCRYPT YOUR DATA

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EDUCATE YOUR STAFF

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HAVE A PLAN

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A strong password is an effective password. Here, strong refers to passwords that are long, made up of a mix of character types (letters, numbers, and symbols like *&$}), and are not reused across multiple systems or websites. You should aim for passwords that are 12 or more characters in length. A passphrase can be particularly effective. � Change your passwords every three months. � Ensure default administrator passwords are changed. Databases, operating systems, and many applications and website platforms are installed with default administrator logins and default passwords. If these aren’t changed, your systems and data are exposed. � When key users and IT staff leave the company, make sure all passwords and PINs are updated.

CLICK HERE to read more on effective passwords.

If the bad guys can’t read your data, they can’t use it. Critical data should be stored and transmitted in encrypted form. Confidential and sensitive data stored on hard drives, archive systems, and in backups need to be encrypted. Use strong decryption - stored data is easily duplicated, and hackers will be able to attempt decryption of stolen data at their leisure.

Staff are usually the weak link in the majority of successful attacks, so ensuring staff are aware of their security obligations, helping them understand how to recognise bad websites and links, and how to recongnise when they're being manipulated via social or indirect contacts (i.e. 'social engineering'), will pay dividends.

The most effective way to deal with an attack is to have a prepared plan of action so you don’t forget key steps, or spend unnecessary time working out your plan after the fact. Your plan should cover responsibilities; communication to staff, customers, and regulators as appropriate; steps to keep the business operating until core systems are available; how to restore systems and data if they have been corrupted.

DISPOSE OF OLD SYSTEMS CAREFULLY Before an old system leaves the company, you need to ensure all data is erased from disk drives in a way that recovery is unlikely. There is a variety of software that can perform a low-level delete, but extreme physical damage can be quick and effective. This could be as simple as dismantling, physically destroying or drilling multiple holes through the casing and disks, or using a high-powered magnet.

PROFIT VS CASH There is a question I am often asked as a professional advisor: “I have made a profit this year, so why do I have cashflow problems?”

Making a positive net profit doesn’t necessarily mean you will have a positive cash flow.

Article by Wendy Skinner STAPLES RODWAY CHRISTCHURCH wskinner@srchch.co.nz

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OU WILL HAVE HEARD OF the common saying “cash is king”. Whilst making a profit is a good thing, it is irrelevant if you have insufficient cash to pay your debts as and when they fall due. What are some of the reasons that profit is different from cash?

Accrual versus cash Net profit is based on accrual accounting, not cash.

Included in the profit and loss are transactions that have not yet been recorded in your bank account. For example, sales that have been invoiced to customers, but you haven’t received payment for yet. Similarly, there may be invoices for expenses incurred which are still owing to your suppliers.

These transactions are recorded in your profit and loss, but no cash transaction has happened yet.

Asset purchases When cash is used to purchase assets for a business during the year it is not recorded in the profit and loss. Instead, it will be recorded in the balance sheet as an asset. These types of transactions have been through your bank account, but not the profit and loss.

Loan payments Cash is also used to pay business loans. There are two components to loan repayments; principal and interest. While the interest portion of the loan repayment is recorded in the profit and loss as an interest expense, the principal portion is offset against the loan liability recorded in the balance sheet.

Drawings Drawings are cash withdrawn from the business bank account during the year by the owner. This reduces your cash in the bank, but is not recorded in the profit and loss.

The types of transactions discussed above show the difference between the net profit result and cash on hand.

Understanding the difference between the two is the first step to managing and ultimately improving your cash flow. The steps detailed below illustrate that effective cash flow management is a three-step, sequential process.

1. MONITOR In order to effectively monitor cashflow you need access to up to date, reliable information.

Accounting systems are very accessible and responsive, and there are many systems available that make it easy to keep your business transactions up to date regularly so you can monitor your cashflow (and your profit).

We assist clients to monitor cashflow by using reporting dashboards. The dashboard reports pinpoint key performance indicators specific to the business.

Some key performance indicators relating to cashflow may include: Debtor days - the average time to collect payment from customers.

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I nventory days - the average number of days that it takes to sell an item of inventory.

Accounts payable days - the average number of days it takes to pay your suppliers.

Cash conversion days - a product of all the above which determines how many days during the sales process that you will be required to fund working capital. It measures the number of days it takes to convert initial cash out to purchase inventory, to final cash collected from the customer.

2. MANAGE Once cashflow is being monitored on a regular basis, you will begin to understand the factors that impact positively and negatively on your cash, identifying trends and patterns. Only then can you start to manage and take action to turnaround the negative impacts on your cashflow.

For example, if debtor days are one of the key indicators highlighted by the dashboard and you have noticed an increase over the last couple of months, you can start to question why this has changed.

Why are customers not paying on time?

Is anyone following up to request payment or ask the reason why they haven’t paid?

What are your terms of trade?

Are your terms of trade being ignored by your customer, (or by you)? E.g. Let’s say your terms of trade state payment 20th of the month following, with interest on non-paid items. If you are not following up unpaid items after the 20th or not charging interest, then the customer is taking advantage of your lack of process for follow up and using your business as an interest free bank.

3. IMPROVE Once you are monitoring cashflow and identifying areas that need closer management, then improvements should naturally follow.

One of the key ways to improve cashflow is to minimise the time that cash is tied up in your working capital.

Simply chasing up on one debtor can reduce cash conversions days, sometimes by up to 80 days, or more. If this result is repeated across multiple customers the combined impact on working capital has the potential to be huge.

With a plan in place to regularly monitor, manage, and then take steps to improve, cashflow problems can be quickly identified and rectified. The expression, “we must learn to walk before we can run” is appropriate. In other words, before you can start to make changes to improve your cashflow, (manage and improve), you must first understand what the root of the problem is (monitor). Remember that even a small change can result in material positive outcomes for your business.

Speak to your Staples Rodway advisor about how you can more effectively monitor, manage and improve your cashflows.

NUMBERS Spring 2017 • 15

LET'S TALK ABOUT

STRESS! Work Safe estimate that in New Zealand each year 600 to 900 people die of work-related diseases and around a further 30,000 people develop serious but non-fatal work related health conditions. These deaths and serious ill-health conditions are not inevitable and are preventable in the vast majority of cases.

Article by Kerry Tattersall STAPLES RODWAY HAWKES BAY HR ktattersall@stapleshb.co.nz

I

N A RECENT SURVEY, SOUTHERN Cross and Business New Zealand found that workers have experienced sharp increases in workplace stress over the past two years. Following their Wellness in the Workplace survey, the stress levels of 31.2% of employees have increased compared with only 8.3% of employees who have seen a decline in their stress levels.

The survey found that those who reported an increase in workplace stress attributed this to excessive workloads, pressure to meet work targets, management style and long hours.

Positive wellbeing is not just about having a work-life balance; whilst that is important it is also about enjoying the work you do and being positively stimulated and challenged, being set realistic targets, receiving regular constructive and positive feedback and feeling valued and empowered – the list goes on. Have this all in check and the rewards the employer reaps are magnificent! Employees are more likely to be highly productive, ‘go the extra mile’, be engaged, have great attendance at work and be an ambassador for their employer to the external world.

What is work stress? It is the adverse reaction people have to excessive pressures or other type of demand placed on them at work. Stress is usually not an illness – it is a state of mind. However, if stress becomes too excessive and prolonged, mental and physical illness may develop (Source: HSE UK).

HOW DO YOU RECOGNISE STRESS IN AN INDIVIDUAL? Many of the outward signs of stress in individuals should be noticeable to you. Look in particular for changes in a person’s mood or behaviour, such as deteriorating relationships with colleagues, irritability, indecisiveness, lateness, absenteeism or reduced performance. Those suffering from stress may also smoke or drink alcohol more than usual or even turn to drugs.

They might also complain about their health: for example they may get regular headaches or have difficulty in sleeping.

In 2016, Work Safe New Zealand published their 10 year

strategic plan for work related health. ‘Healthy Work’ outlines their vision for a New Zealand in which everyone who goes to work comes home not just safe but healthy too! It is unacceptable and morally wrong that illness and in some cases even death continues to happen among New Zealand workers, especially when it is preventable.

Work Safe are confident that improved management of work-related health risks would bring multiple benefits to New Zealand, including those set out in the infographic below.

WHAT CAN YOU DO TO MITIGATE THE RISK? It all starts and ends with your organisation’s culture.

Make sure work load is manageable Regularly meet with your employees giving plenty of positive praise Communicate regularly with your employees on organisational news Discourage employees from emailing outside of work hours Encourage regular breaks and an opportunity for employees to get to know each other Provide fresh fruit and water for your employees Offer services from an Employee Assistance Programme (EAP) Hold Wellness events at work Make work fun! Have morning teas where you can also support local charities, take your team out for lunch or incorporate exercise into team events such as the Staples Rodway challenge.

CLICK HERE to read The Work Safe New Zealand ‘Healthy Work’ 10-year Strategic Plan.

Contact one of our HR Consultants to discuss your organisational development needs or Wellbeing intervention initiatives.

THE POTENTIAL BENEFITS

THE ISSUE

SOURCE: Page 17, Work Safe New Zealand ‘Healthy Work’ 10-year Strategic Plan

$2.4 BILLION

$44,500

The estimated cost of work-related diseases to New Zealand per year.

The estimated average cost of lost productivity over a typical worker's career for each case of work-related ill health.

REDUCED SOCIETAL BURDEN Improving the management of work-related health risks will reduce the financial burden placed on the social and healthcare systems.

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INCREASED WORKPLACE PRODUCTIVITY Workers with good health generally have high levels of productivity and are able to work for longer.

$120 MILLION The estimated annual cost of absences workers attribute to work-related ill health.

REDUCED WORKPLACE ABSENCE Reducing the number of workers who develop work-related health conditions will reduce the number of lost working days and contribute to business success.

INVESTING IN THE TECHNOLOGY SECTOR An aspect of modern life is that we are confronted daily with the opportunities and challenges of fast developing technology. This presents exciting opportunities for investors to ride the tech wave, but with this rapid growth also comes the danger of rapid obsolecence in both traditional and technology stocks. Could today's Facebook become tomorrow's Yahoo?

Article by Simon Reichenbach STAPLES RODWAY ASSET MANAGEMENT simon.reichenbach@sraminvest.co.nz

T

HE SMARTPHONE HAS BECOME PERVASIVE, and for The technology sector is important for investment portfomany, indispensable. Apple's iPhone is the standard lios from several perspectives: bearer for the adoption and seeming ubiquitous application Performance: The sector is high growth. Failure to include of smartphone technology. In doing so Apple has become the some technology exposure excludes the portfolio from parlargest United States corporation by capitalisation, displacing ticipating in one of the most likely value accretive segments the behemoths of the turn of the century such as Exxonmobil. of the investment universe. Not all technology stocks are Using your smartphone, you can connect with friends all winners. An ability to keep reinventing and remain competiover the world through Facebook. This social media titan has tive is critical. Google usurped search company Yahoo. Being over 2 billion active users worldwide as at June 2017. Not only amongst the companies that fail to broadly appeal can result does Facebook provide social interface, but in doing so it has in irrelevance and value destruction. become the world’s largest publisher, although Facebook Disruption: Traditional investments previously considered generates no content itself. In doing so it has significantly blue chip may have their business propositions permanently displaced traditional print media. Facebook also owns teleimpaired or even rendered obsolete by new entrants. Media communications disruptor WhatsApp and photo sharing companies have had their advertising revenues ravaged by application Instagram. Facebook continues to explore new online media. opportunities in artificial intelligence and virtual reality.

Although the technology sector is ripe with opportunity it The smartphone user also has access to Google, enabling is also highly volatile. The late 1990s was a period of ‘irrational instant availability to a plethora of information sources that exuberance’ in terms of enthusiasm for the technology sector are growing exponentially. Google is the major asset of the that culminated in the dotcom crash. Consequently, participacompany Alphabet which is incubating further disruptive tion in the sector should be tailored consistent with an investechnologies. Alphabet was responsible for the development tors’ tolerance for risk and return, with an appropriate degree of the Android operating system that is a fierce competitor to of exposure. Investors wanting ownership of technology comApple’s iOS operating system. Google’s assets also extend to panies should consider doing so with a fully diversified investYouTube and in so doing it has helped facilitate on-demand ment strategy over the longer term. viewing of self-curated content, challenging the relevance of traditional broadcast media companies.

Staples Rodway Asset Management is a boutique investment The smartphone user is equally as likely to dip into advisory service that specialises in providing personalised and Amazon.com for their retail fix. Amazon has expanded from an impartial investment solutions for individuals and trusts. An online book store to a portal that facilitates ecommerce and adviser can be contacted at enquiries@sraminvest.co.nz or on is supported by a massive logistics business that is usurping 0508 220 022. traditional storage and distribution companies. Through its evolution Amazon has also developed a data centre business, Amazon Web Services, which is one of the largest providers of cloud storage globally. Amazon is 50% TECHNOLOGY VS S&P 500 expanding its retailing operations internationally and will, next year, enter the Australian market directly.

40% This represents a significant threat to brick and mortar retailers and Australian listed retailers have 30% been de-rated in part due to the challenges that lie ahead in the retail sector. Amazon is continuing 20% to explore new opportunities and has its own entertainment content and tools to enable the Internet of 10% Things to be realized.

The technology sector has grown massively over the last 0% decade, so much so that the top five technology companies, by market capitalisation, (see right) -10% exceed the value of the bottom Aug 2016 Oct 2016 Dec 2016 Feb 2016 Apr 2017 Jun 2017 Aug 2017 250 companies of the S&P500.

In the last year these companies S&P 500 Amazon.com Inc Facebook Inc have grown much faster than the Alphabet Inc Apple Inc Microsoft Corporation S&P500 index.

www.staplesrodway.co.nz

NUMBERS Spring 2017 • 19

TRUSTEES & SETTLORS BEWARE

FAMILY TRUSTS DON’T TRAVEL WELL Article by Maurits van den Berg STAPLES RODWAY AUCKLAND maurits.vandenberg@staplesrodway.com

Jetlag is a temporary affliction for individuals; but crossing time zones can result in permanent financial damage to your family trust. In this article, we highlight the potential tax damage wrought on trusts when the individuals who happen to be the settlors or trustees of the trust relocate overseas for a period.

The upshot is: don’t let the Taxman become a major beneficiary of your family’s wealth.

OUTBOUND SETTLORS AND TRUSTEES Consider the Dinkum Family Trust. The Trust is established by a New Zealand resident settlor and with New Zealand resident trustees. The New Zealand tax rules apply to this trust in a fair and predictable way. That is, the income of the trust is typically taxed at 33% with no further tax applying to distributions from the trust. Let’s say the trust has built up reserves of $1m from accumulated income and capital gains.

Next step, consider the impact of international mobility on the trust. Let’s say our settlor or trustees go and work overseas for a period of time. As a result, the New Zealand tax treatment of trust income after the overseas move may change (e.g. overseas income could be exempt from New Zealand tax) but this change in treatment could result in the trust permanently losing its favoured tax status. Future distributions from the trust could now be subject to an additional 45% tax (i.e. an additional $301,500 in tax payable). That is, income and distributions from the trust could suffer a total New Zealand tax impost of 63%.

The carnage does not stop there. It is also likely that the trust will become tax resident of another country. For example, Australia in broad terms imposes tax residence (additional tax costs) on trusts that have Australian resident trustees or are controlled by Australian residents

INBOUND SETTLORS AND TRUSTEES The same types of adverse tax consequence operate when individuals (who also happen to be settlors or trustees) relocate to New Zealand for an extended period. Again, the underlying trust tax rules are complex with ample scope to cause inadvertent and permanent financial damage to your trust.

It is highly recommended (if not essential) that non-resident individuals who are settlors or trustees take specialist tax advice before locating to New Zealand. That advice should devise a strategy and outline any elections required to preserve the trusts tax position.

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NEW FOREIGN TRUST DISCLOSURE RULES AND TAX RULES A foreign trust is defined under New Zealand tax rules as a trust established by a non-resident settlor where at all times that settlor (and any other settlors of that trust) continue to be non-resident. A foreign trust is generally not subject to New Zealand income tax on its foreign sourced income.

A trust can still be a foreign trust as defined even if it has New Zealand resident trustees. However from the 2017/2018 income year, if a foreign trust has New Zealand resident trustees then (subject to certain concessions) the existence and details of the trust need to be disclosed to Inland Revenue. If the disclosure does not occur, the trusts foreign income will become subject to New Zealand income tax. Existing trusts (again subject to certain concessions) had until 30 June 2017 to comply with these disclosure requirements.

For these purposes a foreign trust includes a testamentary trust (a trust created under a will) and a trustee includes an executor and administrator.

PRO-ACTIVE TAX PLANNING The worst tax effects associated with inbound/outbound trusts can often be managed with pro-active tax planning.

Typically this will involving considering whether: Additional settlements may be required to preserve the trust’s status.

A change of trustees or the use of a corporate trustee could preserve the trust’s status.

Changing the mix and source of trust income will avoid inadvertent loss of trust tax status.

The trust income could be paid out in full as beneficiary income as a temporary measure.

Elections are made to preserve an advantageous tax status.

Talk to your Staples Rodway’s specialist trust and tax advisors to ensure that the taxman does not become an undeserving and unwanted beneficiary of more than 50% of your family trust estate.

NUMBERS Spring 2017 • 21

ASK AN EXPERT In our regular feature we answer readers' questions on any area in the world of finance, accounting, audit, tax, and other business-related areas.

This issue’s question is about Trusts and whether you need one.

Take advantage of our expertise and send your question to questions@staplesrodway.com and one of our specialists may answer it in a forthcoming issue of Numbers.

I am looking to create a trust, but I heard that they might not be right for my personal affairs. What do they actually do and should I create one?

Answer from Kaison Chang, Associate Director, Business Advice, Staples Rodway Auckland

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ARE TRUSTS STILL A VALID STRUCTURE FOR MY PERSONAL AFFAIRS?

WHY ARE COURTS ‘LOOKING THROUGH’ TRUSTS?

One of the most common question clients have recently raised when looking at how to structure their affairs is the continued validity of trusts and the trust structure. This is in part due to misconceptions about how trusts work, as well as media coverage of recent cases where courts have effectively “looked through” trust structures to come to what in their view is an equitable result.

In our view, the answer is: Yes, trusts still serve a purpose – but whether it is right for you very much depends on what you want to achieve.

In general terms, trusts tend to fall foul of the courts where the line between legal and beneficial ownership has been blurred, where separation of the two interests cannot be clearly established, or where the Trust structure has been knowingly used to effect an unlawful or inequitable result.

A properly constituted and managed trust should not be vulnerable to being unwound, but proper care should be exercised and advice taken to ensure that the integrity of the trust is maintained.

HOW DO TRUSTS WORK? Trusts are a way to separate legal ownership (held by the trustees) and beneficial ownership (the entitlement of beneficiaries of the trust) and is the basis for any structural benefits trusts provide.

Trusts have a long tradition and originate from the time of the Crusades. Before departing, Crusaders would transfer the ownership of their property to a trusted acquaintance on the understanding that they would look after the Crusader’s property and family while he was away before transferring the property back to them when they returned.

SO WHY HAVE TRUSTS? The decision-making around whether to use trusts tends to include the following considerations: Asset ownership and protection Estate/Succession planning Effective tax planning Suitability for charitable purposes Preserving eligibility for state assistance There is no ‘one-size fits all’ answer. It comes back to what you want to achieve. The option of using a trust should only form part of a wider discussion around finding a vehicle or structure that best suits your specific business, personal or other goals.

Similarly, you should be reviewing these goals and the appropriateness of your structure on a regular and ongoing basis.

NOTE: The above is general advice only and should not be relied upon as specific circumstances can vary. Please contact your Staples Rodway advisor for specific advice.

www.staplesrodway.co.nz

NUMBERS Spring 2017 • 23

OKSANA SIMONOFF DEEP GREEN BUSH-SCHOOL CO-FOUNDER Oksana Simonoff has spent much of her career working in senior tax positions. This year she has shifted her focus to a new pursuit: Democratic Education, by starting a Bush-School in Clevedon, the first of its kind in New Zealand.

Deep Green Bush-School is a full nature-immersion bush-school, based on deep ecological principles.

Interview by Claire Dilks & Nicola Hoogenboom STAPLES RODWAY WOMEN IN BUSINESS www.staplesrodway.co.nz/wib

Q:​What made you move from tax to school children?

A: I cannot say I have entirely moved, tax is what funds my other passion. I still want to be plugged into the networks I have in the tax world but I would also like to pursue this. I’ve been researching it ever since the kids were born.

When your kids arrive no-one gives you a manual, so having moved countries I had a disconnect from my cultural roots, and not having parents around, or any guidance meant I actually had a clean piece of paper as to what I wanted to do with them.

I turned to neuroscience because I thought if you want to get direction, you need to go to science and that led to neuroscience. In the last 20 years a lot of research has become available to the general public, especially research on brain development in early childhood and kids’ needs. I was very much guided by the research from the Brainwave Trust as they are at the forefront of consolidating all the international research around the early years and adolescence, so I was guided by their presentations, by their references and gradually a picture started to emerge about how children could reach their full potential.

From my research I ended up with so much information that I felt I must do something about it and I guess that is what has led me to try to do something completely different.

Schools were designed with the industrial age in mind and that is no longer what we need. More and more businesses want creativity, intuition, emotional intelligence, non-cognitive development. So my job was to research what non-cognitive development unfolds before we start teaching them Mathematics and English and all of the other things they are supposed to know when they are 18. What I found was in the early years non-cognitive development unfolds in a beautiful way, mainly through self-directed play, and if you put them in the right environment and don’t direct them too much, they will be fine as they are and will be directed by intuition.

Q: S ​ o what has been your solution?

A: My research has shown there are elements missing in every school I see. I approached one particular school that did a lot of child-led learning however, they did not have outdoors.

From what I have seen with my kids going through nature kindergarten where they are outside all-day in all-weather, their skills developed very differently outside compared to those confined indoors. I wanted them to go to a free range school, where they figure out who they are and what they want in more stimulating settings outside before they are made to do things. I asked schools with free-thinking if they were interested in doing an outside classroom on a full time basis and everyone said it’s a great idea, but they just cannot do it.

We thought “well, why not” and spoke to the Ministry of Education to see if they would ever fund this kind of learning environment. It is very early days but well overdue, from the feedback we have had and especially from the Māori community as they understand this model very well; that is how they educated their kids before we came along and they did extremely well.

Pitching the idea to the Ministry of Education I thought they would say you are “off the planet” or “dreaming” and they www.staplesrodway.co.nz

looked at us and said “we know it works, so go and write a curriculum”. That was the start of our school, which is completely child-led and obviously surrounded with resources that are healthy and promote a healthy lifestyle for brain development, one that excludes technology entirely, and the Ministry was happy to approve it.

Q: Do you feel New Zealand has enough diversity in education?

A: I feel New Zealand is very much behind and extremely conservative. You will have diversity when people take risks, it’s a bit like entrepreneurship, people need to come up with ideas and be bold and brave to put their time and money on the table and start testing and trying, then you will have diversity.

I met with the Chairwoman of the Brainwave Trust four years ago and I said “the research is there, it’s in New Zealand, so why aren’t you engaging with people to create some momentum around it? Why aren’t you putting this together?”

She said “look, we are scientists and we don’t have funding.

It’s up to parents like you to do something about it.”

It is easy for a person to start a business in New Zealand and it takes a person who looks outside the box, so that is what we have done.

Q:​ From a Woman in Business’ perspective, do you think this method will help girls develop an interest in STEM (Science, Technology, Engineering and Math)?

A: Personally I think STEM is over-rated. From one perspective as a parent, and coming from a STEM academic background, I understand what STEM does and I understand what careers are there and I understand what would have been available to me if I’d gone into science as opposed to economics and banking. You are basically being highly educated in a very narrow area and putting all your eggs in one basket.

In addition, Western science is unrestrained by ethics and gives the wrong worldview as it exists for the purpose of exploiting the natural world for human benefit at the expense of all other life forms. Pre-historic societies saw the big picture, how everything fits together and what comes at the expense of what. They did not lock kids from an early age inside because that teaches them to be separate from everything else, teaches them to exploit, not honour.

Sustainability was used with reference to the eco-system, as opposed to sustainability of a business that uses resources.

We have a lot to learn from that worldview.

Our kids will not be too concerned with how hard we worked if they can’t breathe the air, water is polluted and wildlife is gone. Education is not complete and really is “miseducation” without a healthy angle on the human role in the eco-system. Our goal for the students graduating our school is to see the big picture and know better than that.

Q:​ How do you introduce these philosophical ideas to the children? Do you have discussion groups?

A: Yes. We have a lot of freedom in the early years, as free play nurtures intelligence, but when they hit 9 they are included in discussion groups three times a week. We have an adult who introduces a topic and does a talk, then the kids will contribute ideas and write reflections in their journals.

NUMBERS Spring 2017 • 25

Oksana with her daughters who are students at the school

Q:​ Has it been popular in your first year?

A: It has been interesting to be honest, finding our crowd. We are learning ourselves and always searching for our brand, unfolding as we go. So far, we have a bunch of really outdoorsy kids, but we are starting to get enquiries from parents with very traditional backgrounds.

Q:​ You said it was a private school, does that mean it excludes people who cannot afford to send their kids there?

A: Yes, there are fees of course, as at any private school. I guess this is where we have had to balance our decision, from a commercial viability point of view, and also making it available to as many people as possible, from all different backgrounds. We have priced it at a level that is not private school, but at the same level as an integrated Steiner school, where all of the teacher salaries are government funded. We are $5,000 plus GST per year, which is not too expensive unless you have 2 or 3 kids.

We have been told by people it will take 10 years to integrate the school with the state education system, but once you get funding you lose your freedom.

Q: Who else is involved in the facility? Is it a family business?

A: For now it is a partnership run business. My partner is from the States and is a secondary school teacher, so he’s perfectly placed. The ecology end of it and that whole perspective on what education is for is very much a brain child of his. We initially thought of hiring a teacher from outside, and had applicants from all over the world, but for now we want to keep it small and work with stakeholders that are either parents, or those who are buying into what is going on here day-to-day. We have a mum volunteer 4 days a week and I am there 1 day a week. We have a ratio 1 to 5 and are focusing on taking on students who are 9 and older. We almost want to build a village of kids who can learn together, starting from the older to the younger.

Q: What is the gender mix of your school?

A: Of our ten students, four are girls and two of those are mine.

We would like to have more girls.

Q: ​Is there a global group that you can feed into? You mentioned the forest schools in Europe.

A: They have already written to us asking if they can come and hold their forums here, there are many organisations globally, we haven’t decided what memberships we want to take. We are going to the States in December and will visit a few there.

26 • NUMBERS Spring 2017

Q: So is this part of a wider global trend?

A: Yes it is. It’s called democratic education, which is a very American term. When you Google democratic schools there are a bunch of models. It is basically a direction or movement towards intrinsic motivation, trusting your child to learn. What neuroscience is also showing us learning through abstract concepts, a method schools are very versed in (i.e. reading, writing and math) introduced in earlier years is counterproductive, because we never evolved with those concepts, we evolved learning through concrete experience, that is how our right brain works. We now know the right brain is responsible for intuition, emotional intelligence, creativity; and the left brain is reading, writing and maths and any other linear, process oriented thinking. It’s interesting those pathways are like a corn field, you only see where you walk. If you only walk a particular way then you give no chance to other pathways.

Q: Does ERO recognise your school?

A: We will see what they come back with from our recent review. The curriculum and methods had to be approved for us to even be able to start the school. From there we were provisionally registered and now they are completing the review.

Q: What have been your biggest challenges?

A: I think it is educating parents. Engaging with parents is the biggest opportunity for me, it is challenging, but parental education is everything I have just talked about, not just neuroscience of how children learn, but also what kind of world view we are giving them, what we should be educating for. If we keep giving children education around the same things then we will get the same outcome, just look at the world today and try explaining to kids that 40% of wildlife is gone just in my lifetime.

Q: Do you enjoy what you are doing?

A: I think it is pretty interesting. It is a bit like when you invent something and no one else is doing it, it becomes more exciting and makes you a bit of a pioneer. It gives you lots of energy, which is great. We need to raise thinking kids and it is kind of a thrill to have that validation, whether I talk to a business person or an environmentalist, we seem to be on the right track.

Q: So what are your proudest moments?

A: Being a parent this is hard question, because it’s probably yet to come.

14 OCTOBER 2017

32KM RUN OR WALK Individual or Relay Team of Three

The Staples Rodway Challenge is now regarded as one of the most popular sporting events in the Hawke’s Bay region. It takes in some of the Bay’s most stunning landscapes on a course that is mainly on private land and includes windswept beaches, native forest, waterfalls, river gorges and stunning coastal farmland. The area includes the world renowned five-star Lodge "The Farm", Cape Kidnappers Wildlife Reserve and passes through the largest gannet colony in the world. The course is 32km, with three legs forming a triangle along the two sides of Cape Kidnappers and back across the headland, starting and finishing at Clifton Bay Café, Staples Rodway Hawkes Bay has been instrumental in establishing the Staples Rodway Challenge, a walk or run event, now in its ninth and final year. The event has raised significant funds for local charities since its inception in 2009. Charities such as the Youth Development Trust – Graeme Dingle Foundation, Cystic Fibrosis, www.staplesrodway.co.nz

‘4 Friends After School’ programme (run through Sport Hawke’s Bay), U Turn Trust, Hayseed Trust, Surf Lifesaving Hawke’s Bay, Child Cancer, Cranford Hospice and the Hawke’s Bay Helicopter Rescue Trust, along with local schools and orienteering clubs, have all benefited from this great community minded event which has raised in excess of $150,000 to date.

The event encompasses Staples Rodway's commitment to the local community, the promotion of the Hawke’s Bay, health and wellbeing, fun through participation and helping others through charitable endeavours.

The event has been supported over the years by teams and individuals from Staples Rodway offices in Taranaki, Tauranga, Auckland and Wellington.

For further information on the event, contact Sue McIvor on 021 293 8104 or smcivor@stapleshb.co.nz.

www.staplesrodwaychallenge.nz

STAPLES RODWAY

SNAPSH T At Staples Rodway, it's our people that set us apart.

Take a look at what our team has been up to lately.

RIGHT: Auckland Managing Director, David Searle, addresses the guests.

WILDLIFE PHOTOGRAPHER OF THE YEAR Wildlife Photographer of the Year has been showcasing awe-inspiring images of fascinating animal behaviour and amazing landscapes for over 50 years.

Over 200 of Staples Rodway Auckland’s clients, friends and staff were treated to an evening at the Auckland Museum and an opportunity to enjoy the exhibit of over 100 stunning photographs at their leisure, wine in hand.

With some of the most incredible shots coming from photographers as young as 9, guests were captivated by the amazing talent on display.

The Auckland Museum is hosting the exhibition until the 3rd of December. Entry is free to Auckland locals or by donation to New Zealand residents (bring proof of address if you don’t already have a MyMuseum card).

28 • NUMBERS Spring 2017

LEFT (L-R): David Searle, Nicola Hoogenboom, Chris Wright, Kaison Chang, Lee Harris, Annette Azuma, Mike Rudd, Tony Maginness, Sachin Patel & Phil Pavis

ABOVE: Arctic Showtime ©Audun Rikardsen (Norway) LEFT: Paul Carter & Andrew Dickeson BELOW: Nosy Neighbour ©Sam Hobson (United Kingdom)

www.staplesrodway.co.nz

NUMBERS Spring 2017 • 29

HER THRIVING BUSINESS We are more than half way through the Her Thriving Business five part series that was created by Jo-Anne Randall, Auckland Business Advisory Services Associate Director, in collaboration with ASB Bank.

The series is designed to empower women in business to create successful and sustainable businesses.

Over 90 women in business have attended the first three events being Know Your Numbers, Driving Customer Relationships and Practical Business Growth. The women have been informed, inspired and connected with like-minded women. A number of women have already implemented some of the strategies discussed at these events and have achieved great results.

All proceeds from the events are donated to charity and over $1,600 has been raised for Shine, Make-A-Wish and Canteen. Each of the charities have all inspired us with their amazing stories. There are two more events this year: Building Effective Networks on 19 September and Being Digitally Savvy on 24 October. All women in business are welcome and you can register by visiting www.staplesrodway.co.nz/wib

PINK RIBBON BREAKFAST – AUCKLAND In early June Staples Rodway Auckland’s staff and clients came together to support the New Zealand Breast Cancer Foundation by hosting a Pink Ribbon Breakfast.

Nikki Kaye (pictured right) kindly spoke to our 50 attendees about her experience with breast cancer and the audience was greatly moved by the fantastic support she received from her mother and the National Party’s leadership.

Attendees entered into raffles for donated cakes, vouchers and treats, while being indulged with lots of pink breakfast goodies. The beautifully prepared muesli pots were devoured quickly and there were leftover cupcakes and baked goods sold to staff and fellow building residents.

After counting the beans, we are pleased to announce that we proudly raised $2,791 through the generous donations of staff, attendees, visitors and neighbours.

PICTURED LEFT: Staples Rodway's Jo-Anne Randall, Tracy Hickman & Annette Azuma with Nikki Kaye

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CEMARS CELEBRATION Our Auckland office recently held an event with Enviro-Mark to celebrate our CEMARS accreditation. CEMARS means “Certified Emissions Measurement And Reduction Scheme” and Auckland Director David Searle (right) spoke to Staples Rodway’s reasons for joining over 300 companies that are already registered.

We’ve had a few questions about why we have chosen to go through the process to become the first accounting firm in New Zealand to register, given our perceived (and actual) low carbon footprint. David articulated that we want to participate in making our business sustainable for future generations and that registering put us in good stead to provide leadership to our clients. As one of the major providers of accounting services to the property and food manufacturing sectors, we have a real opportunity to influence positive change in these industries.

Already, Auckland has gone some way to reducing our footprint. Just by changing to LED lighting last year, we have reduced our total electricity consumption by 30% when comparing May 2016 to May 2017.

It was a great evening chatting to fellow businesses that have drunk the (delicious) CarboNZero wine. There were prizes on the night and NBR Content Director Hamish ColemanRoss (pictured near left with William Van Ausdal, Sustainability Manager from Waitemata District Health Board) managed to secure himself the use of an e-Bike for two weeks courtesy of Big Street Bikers, as the winner already had one!

WOMEN INFLUENCING WOMEN: IONA COLLEGE 40 people attended our Women Influencing Women where we were hosted in the world class facilities of The Blyth Performing Arts Centre

by Lesley Mawley, Business Manager of Iona College. According to professionals who have played at the Performing Arts Centre, this venue is acoustically the best in the country, so we are very fortunate to have a facility of this calibre in Hawke’s Bay. Lesley outlined how the girls of Iona College are responsible for all aspects of hosting concerts and events, so there are opportunities to gain valuable experience in sound, lighting and staging, along with being able to play in this magnificent venue.

Guests were treated to a tour of The Blyth Performing Arts Centre (right), which is stage 1 of the project. The Blyth Music School will be Stage 2. www.staplesrodway.co.nz

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&

MOVERS

SHAKERS

ST JOHNS TAURANGA NEW BUILDING

CHRISTCHURCH APPOINTS NEW DIRECTOR

In July 2014 it was announced that St Johns Tauranga would get a much needed $4m upgrade to their premises with construction set to start in 2015, subject to grant applications. This came on the back of significant growth to the Tauranga branch, resulting in St Johns Tauranga outgrowing the existing station.

We are delighted to announce that Wendy Skinner has been appointed as a Director in our Christchurch office.

In support of this, the businesses in Tauranga’s 247 Cameron Road ANZ Business Centre got together and formed a Trust and working group called the St John Building Project Trust. Staples Rodway Tauranga is one of those businesses, and director Mark Robinson jumped at the chance to be involved.

“Supporting charities and not for profit organisations is part of who we are at Staples Rodway and our way of giving back to our community” says Mark Robinson. “When the opportunity arose to get in behind a new St John Building the partners and business owners within the 247 Building jumped at the chance to really get their teeth into a big community project. It has been a rewarding experience on two fronts; to be involved with an amazing organisation like St John, and at the same time having the opportunity of working alongside the other tenants of the ANZ business centre to generate a fantastic outcome for the community that we all live in”.

Since then the Trust and St Johns have been working together to raise the much needed funds, and in late 2016 demolition work started on the St John building to make way for the new St John hub, and ground works commenced. Completion of this took longer than anticipated due to severe rain storms, with the site looking more and more like a swimming pool at times! Since then the weather has improved and we are pleased to report that construction is now underway and good progress is being made (pictured right).

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Wendy has more than 20 years’ experience in the industry, with an established clientele and professional networks in Christchurch. She was previously an executive director of a Big Four accounting firm in Christchurch.

Since joining Staples Rodway last year, she has quickly gained the respect and warm regard of our clients and staff.

As well as providing advice on accounting and tax compliance issues, Wendy specialises in helping businesses with restructuring, set-ups and succession planning. Wendy’s appointment adds to our ability to provide high quality and personalised service for our clients.

In addition to her client work, Wendy is a keen runner, having completed a number of half marathons.

She chairs a school board, and also assists her parish board and other charitable causes. Wendy’s community involvement aligns strongly with our people values at Staples Rodway.

HAWKES BAY EXPANDS HR TEAM Staples Rodway Hawke’s Bay has recently appointed Kerry Tattersall as a Manager to the team; focussing on human resources and organisational development.

Kerry has a Post Graduate Diploma in Human Resource Management (UK), majoring in employment law and employee relations, a Diploma in Occupational Safety and Health (NEBOSH) and is an accredited workplace coach through the Institute of Leadership and Management.

Kerry’s passion lies in organisational and people development with a keen interest in employee engagement and wellbeing and in supporting businesses in the development, management and growth of people in their organisations. She also has extensive experience in HR compliance and employment relations; specifically collective bargaining, personal grievances and complex disciplinary investigations.

Prior to joining Staples Rodway Hawke’s Bay, Kerry worked at a senior level business partnering within Human Resources for a global FMCG organisation which owns a very famous and much loved Kiwi brand – Wattie’s.

As an ambassador for women in leadership roles and specifically future leaders, Kerry is a Board of Trustee member for Iona College – a state integrated girls’ school in Hawke’s Bay. A classically trained soprano; Kerry sings in the Napier Cathedral Choir and Octavius (a chamber choir) and enjoys getting out and about on her bike exploring the beautiful Hawke’s Bay region.

AUCKLAND APPOINTS NEW ASSOCIATE DIRECTOR Auckland’s tax team are happy to announce the appointment of a new Associate Director in Taxation Services, Claire Dilks.

Claire is new to Staples Rodway and has spent the past 18 years at EY, including stints in its international offices in Australia and the UK, specialising in corporate tax.

She has broad experience providing international and domestic structuring advice and corporate tax compliance and consulting, as well as liaising with the IRD and dispute management.

Outside the world of taxation, Claire is a keen painter, and also loves to read, cook and travel.

www.staplesrodway.co.nz

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AUCKLAND Level 9, 45 Queen St PO Box 3899 Auckland 1140 Phone 64 9 309 0463 Fax 64 9 309 4544 enquiries@staplesrodway.com

WAIKATO 4th Floor, BNZ Building 354 Victoria Street PO Box 9159 Hamilton 3240 Phone 64 7 834 6800 Fax 64 7 838 2881 staples@srw.co.nz

TAURANGA Level 1, 247 Cameron Road PO Box 743 Tauranga 3140 Phone 64 7 578 2989 Fax 64 7 577 6030 info@staplestga.co.nz

HAWKES BAY Cnr. Hastings and Eastbourne Streets PO Box 46 Hastings 4156 Phone 64 6 878 7004 Fax 64 6 876 0078 info@stapleshb.co.nz

NEW PLYMOUTH 109-113 Powderham Street PO Box 146 New Plymouth 4340 Phone 64 6 757 3155 Fax 64 6 757 5081 newp@staplestaranaki.co.nz

STRATFORD 78 Miranda Street PO Box 82 Stratford 4352 Phone 64 6 765 6949 Fax 64 6 765 8342 stfd@staplestaranaki.co.nz

WELLINGTON Level 6, 95 Customhouse Quay PO Box 1208 Wellington 6140 Phone 64 4 472 7919 Fax 64 4 473 4720 info@stapleswellington.co.nz

CHRISTCHURCH

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Level 2, Tavendale Centre 329 Durham Street North PO Box 8039 Christchurch 8440 Phone 64 3 343 0599 Fax 64 3 348 0186 info@srchch.co.nz

www.staplesrodway.co.nz