2. September 2010

MEDIA RELEASE

The New Zealand economy is generally on track despite some risks, according to the BusinessNZ Planning Forecast for the September quarter 2010.

Risk factors include fluctuating exchange rates and some volatility in global markets, although many of New Zealand's trading partners are showing strong growth.

The Forecast reflects steady economic improvement since the recent global financial downturn and shows the New Zealand Government's accounts tracking largely according to expectations, although Budget deficits are expected for some years to come.

The Forecast incorporates BusinessNZ's Economic Conditions Index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures.

 www.businessnz.org.nz<http://www.businessnz.org.nz>

 

31. August 2010

 

29. August 2010

The savings debate has not always been well-informed, and it’s good that the government has put together a well qualified group to advise it.  The last official inquiry was part of the 2001 McLeod Tax Review. It found that:

• it was not apparent that New Zealanders save too little
• there is little evidence that changes to the tax system would induce higher saving
• the current account balance is the result of many influences (such as New Zealand’s international competitiveness), not just saving
• most New Zealanders are making adequate provision for their retirement, given New Zealand Superannuation, and
• higher private savings would lower the cost of NZS only if it were means-tested.

The SWG will need to review these findings, starting with facts about saving.  Total national saving comprises government, business and household saving. They are inter-related. If governments save a lot (run large fiscal surpluses) the private sector is likely to save less. Most economists think the main thing governments can do to raise savings is reduce fiscal deficits.  Saving is difficult to measure, but OECD statistics suggest New Zealand’s national saving rate is above that of the United Kingdom, the United States and some other OECD countries.  Moreover, there is no ‘right’ level of saving. People save to be able to consume more in the future. Arguably the government should not bias lifetime consumption decisions. Rather, it should avoid unduly distorting them.  Simply raising saving is not a valid policy goal, even if it helped to increase investment and economic growth. Legislating for a 60-hour working week might also increase economic growth but most people would regard themselves as worse off (they value leisure).  It is unlikely that New Zealand is missing out on profitable investment opportunities for savings reasons: firms and households, directly or
indirectly, have easy access to world capital markets. And if saving and investment both increased, the current account deficit might be unaffected (it is wrongly diagnosed as just a savings issue).  Another point about compulsory retirement saving is that it could have no permanent effect on national savings as an ageing population would be drawing down accumulations.  At least two parts of the SWG’s terms of reference may prove difficult to handle.  Moving to a dual income tax system would probably require the introduction of a capital gains tax, which the government has ruled out. New Zealand also stands out as a country with high labour mobility, which argues against  taxing capital at (much) lower rates than labour income.  Adjustment to an aging population is not helped by raising the level of income directed to the retired. Therefore making KiwiSaver compulsory would only make sense if the government introduced a means-tested pension (as in Australia). It has also ruled this out (along with an increase in the eligibility age for NZS – a far more obvious way to reduce future fiscal costs).  The Cullen Fund should also be re-examined but seems to be off-limits. Indexing the tax system to offset inflation would be complex and has not been favoured internationally. Again a more obvious solution would be to achieve and maintain price stability through sound monetary policy.

As far as the effects of tax policy on saving are concerned, the government has been moving in the right direction with the GST/income tax switch. Further moves towards a lower, flatter and simpler income tax system are desirable.  The very large fiscal cost of KiwiSaver subsidies is certainly a valid saving issue to examine. So too are changes to welfare rules to encourage saving for lifetime contingencies – an issue that the government’s Welfare Working Group is examining.  Addressing New Zealand’s growth challenges and its vulnerability to high external debt levels requires a broad sweep of policy initiatives, not a narrow focus on saving. Saving may encourage growth, but growth also encourages saving. And only a productive, growing economy can generate the goods and services people need in retirement; they can’t consume bank deposits. So, despite its constraints, the SWG can inform policy in many important areas. I wish it well.

Roger Kerr (rkerr@nbrt.org.nz) is the executive director of the New Zealand
Business Roundtable.

29. August 2010

Southern tourism organisations have claimed almost $1.3 million in government funding aimed at enticing more Australians across the Tasman.

Last year, Prime Minister John Key announced a $5 million contestable fund had been set aside for Tourism New Zealand to carry out joint-venture work with regional tourism organisations.

Gateway regions - those with direct airlinks to Australia - were invited to apply to the fund, which required organisations to match any funding dollar-for-dollar up to a maximum of $1 million.

Of the $5 million fund, the Otago Daily Times understands Destination Queenstown has secured $1 million and Tourism Dunedin $290,000.

A Tourism New Zealand spokeswoman confirmed the southern bids had been successful, but full details were yet to be released.

Tourism Dunedin chief executive Hamish Saxton said the organisation had applied for $310,000, and early indicators were that they would receive $290,000 in fundingThe money, which would be matched by unnamed industry partners, would go towards marketing initiatives in the Queensland area, coinciding with a new Pacific Blue Brisbane/Dunedin flight beginning on September 17.

The campaign, a partnership between Tourism Dunedin, Venture Southland, Tourism Waitaki and Tourism Central Otago, would promote Dunedin International Airport as the gateway to the city and surrounding area, he said.

Tourism Dunedin confirmed it had closed its office in Sydney.

Mr Saxton, who manned the single-person office from its establishment in 2006 until he became chief executive two years later, confirmed the Australian office was now surplus to requirements.

His replacement in the Sydney office, Heather Mollins, left the position in June.

The office was established to build relationships with airlines, Australian-based travel wholesalers, and the media.

The Dunedin office would now handle all Australian work, barring some public relations projects which would be contracted out to specialist firms.

Money budgeted for the office would go towards additional marketing in Australia, he said.

- hamish.mcneilly@odt.co.nz

 

www.odt.co.nz/regions/otago/123561/13m-marketing-support-tourism-south

12. August 2010

The main theme this week is one of increased worries about growth in the United States, some new concern about the European debt situation, evidence of slowing Chinese growth, and even talk of a further easing of UK monetary policy. The fall in investor risk tolerance has produced further declines in long term interest rates along with a 2.5 cent fall in the NZ dollar against the greenback.

As we have noted for quite some time now there is massive uncertainty about the world economy’s path out of a near Depression scenario and that means shocks in the financial markets are likely to continue for quite some time yet – both upward and downward.

10. August 2010

10. August 2010

9. August 2010

Better businesses aim of PM's Business Scholarships

Prime Minister John Key today launched a pilot $1 million scholarship scheme to boost the capability of New Zealand businesses, particularly those with a focus on exporting.

 

The Prime Minister's Business Scholarships will allow people to apply for up to $110,000 to study at internationally-recognised business schools.

 

It is expected between 15 and 25 scholarships will be awarded annually with the exact number depending on the applications received.  Recipients will be selected from a shortlist drawn up by the Prime Minister and the Economic Development Minister.

 

"Recipients will choose which business programme they attend, and will each get up to $110,000 to cover half of the costs of their course and direct expenses.  Other costs are expected to be paid by the applicant or the nominating firm," says Mr Key.

 

"The scheme is designed to complement the existing Prime Minister's Science Prizes, which are helping raise the profile and prestige of science. 

 

"We want the business scholarships to have a similar impact in the business world by providing senior managers and executives access to top overseas business programmes.

 

"The aim is to build the capability of our businesses and help make New Zealand more internationally competitive.  It is expected that applicants would come from firms looking to export more," says Mr Key.

 

Economic Development Minister Gerry Brownlee says while applicants could come from a wide variety of businesses, the Government hopes to see applicants from areas identified as high priority for the Government's economic growth agenda, including dairy, food, high-value manufacturing and services, and petroleum and minerals.

 

"Successful applicants will need to show how they will benefit from the opportunity to develop their international business skills, the value they can add to their business, and that they have the full support of their employer."

 

Funding for future years' scholarships will be dependent on the outcomes of this year's pilot.

 

For more information go to: http://www.med.govt.nz/prime_minister's_scholarships  

 

Applications close on 19 September, and the inaugural awards are expected to be announced in December. 

 

Prime Minister's business scholarships: questions and answers

 

Why are such scholarships needed?

 

The structure and size of New Zealand's economy, our distance from markets, and a lack of large export-focused firms make it difficult for New Zealand managers to acquire the management skills they need to succeed in the globally-competitive marketplace.  We must look for ways to increase the level and application of the management and leadership skills required to succeed in international markets.

 

What sort of courses might be funded?

 

The business scholarships could include a range of medium and short-term international business education programmes, from one to two-year full or part‑time executive MBA degrees, to shorter courses focusing on topics relevant to the needs of individuals and their firms.  Education programmes focusing on the Asia-Pacific region will be preferred.  This area offers the most potential for New Zealand to increase trade and build the networks and relationships that underpin exporting.

 

What will the selection criteria be?

 

To be eligible for a business scholarship, applicants will need to be New Zealand citizens or permanent residents and employed by a New Zealand-resident business.

 

Selection criteria will include the following:

 

 

·                     The applicant is working in a firm which is internationalising or intensifying the internationalisation of its business

 

 

·                     Course relevance. Applicants must provide evidence the study will enable them to improve their knowledge of management and international business, benefit their firm after completion of the course and expose the applicant to a learning environment unavailable in New Zealand

 

 

·                     The application is of a high quality and the applicant would be a worthy ambassador for New Zealand business

 

 

·                     Education programmes focusing on the Asia-Pacific region will be given preference

 

The full criteria and conditions can be found at: http://www.med.govt.nz/prime_minister's_scholarships  

 

Who will be on the selection panel?

 

The three-person panel will have representatives from the Government and business sectors.  They will review the scholarship applications and recommend a shortlist to the Prime Minister and the Minister for Economic Development for their final decision. Panel members will be appointed by the Minister for Economic Development and the Prime Minister from a short-list developed by the Ministry of Economic Development.