Need for ethical standards

Posted Fri, 11/04/2008 - 1:00am by admin

The UK based ethical assessment company the GoodCorporation is expanding to New Zealand with a warning that exporters need to demonstrate that they are as good, clean and pure as they claim to be.

The GoodCorporation was founded in 2000 by a group of former partners and directors of KPMG Consulting who wanted to create an independent system of verifying the ethical business practices of an organisation.

It's targeting New Zealand based exporters to Europe and UK in a drive to lift supply chain ethics and corporate responsibility by addressing issues such as food miles and on farm environmental practices.

Managing director Leo Martin says UK retailers feel that many of New Zealand's primary industries are not able to provide independent information about their business practices.

"In New Zealand our research suggests that while the media plays a role in highlighting shabby business practices there is little measurement or risk management of these areas.

To avoid being locked out of markets, Mr Martin said New Zealand businesses needed to address these issues and provide credible independent verification of their track record.

Arise the Integrated Finance Organisation

Posted Fri, 04/04/2008 - 1:00am by admin

Becoming an Integrated Finance Organisation (IFO) is the way of the future for global enterprises seeking to outperform their competitors according to an international study being released by IBM Global Business Services next week

The study found that fewer than one in seven enterprises are currently managed by the criteria of an IFO but those enterprises are outperforming their counterparts in revenue growth and share prices.

IFOs have globally mandated standards and a standard chart of accounts, common data definitions and standard common processes applied across the enterprise.

The study undertaken by IBM with help from the Wharton School and the Economist Intelligence Unit put 34 questions to 1200 CFOs and senior finance professionals in enterprises with revenues ranging from US$500 million to over US$20 billion in five major sectors in 79 countries.

"IFOs in our sample have revenue growth rates nearly double those of non IFOs: 18 percent versus 10% over the past five years," the study says. Growth in the share prices for IFOs was also nearly double that of non IFOs over the same period.

The 8% difference in growth is a pretty big number, says David Fincher, IBM's Financial Management Leader who lead seminars on the report in Auckland and Wellington.

Bracket creep adds 400 000 to top rate

Posted Fri, 04/04/2008 - 1:00am by admin

Nearly four hundred thousand more taxpayers have joined the two highest tax brackets since Labour came to power, figures from the Inland Revenue Department show.

The number of taxpayers paying the top rate of tax - 39 cents in the dollar on incomes over $60 000 - has nearly doubled in the eight years the rate has been in effect.

The number of taxpayers in the top bracket has increased from 193 620 in March 2001 to 384 720 in March 2007, an increase of 98.6%.

The amount of tax paid by this group has also increased from $5.8 billion to $11.3 billion over the same period, while inflation has increased by 16.2% and average hourly earnings have increased by 25% (Reserve Bank data)

When the top tax bracket was introduced in 2000, the Labour/Alliance government claimed that only 5% of taxpayers would pay the highest rate.

That figure was 11.7% for the March 2007 year, an increase of 83%.

The Treasury forecasts an even higher figure of 14% for the March 2008 year in the Tax Ready Reckoner on its website. The IRD says that this is an estimate and "comes from Household Survey data (HES), not tax administrative data."

In the other tax brackets movement is also evident. In the $38 001 to $60 000 bracket there were 399 190 taxpayers the year ended March 2001 The IRD reports that in the year to March 2007 there are now 596 180, an increase of 49.3%.

Carbon bill closes off thermal power

Posted Fri, 28/03/2008 - 1:00am by admin

Published in the National Business Review on 28 March 2008

Legislation implementing the government's ten year ban on the use of fossil fuels in new power generation offers an opt out in its preamble "except to the extent necessary to ensure the security of New Zealand's electricity supply".

But the phrase 'security of supply" is not in the Bill itself. Clause 62G of the Climate Change (Emissions Trading and Renewable Preferences) Bill provides for eight grounds for exemption from the ban, but none of them will actually lead to an exemption being granted.

For example, an exemption can be granted if the proposed new plant is not base load, but base load is not defined in the Bill. That will come in regulations later, but this might be set as low as 10MW, which would make virtually all but the smallest stations base load.

A generator can also get an exemption "for the purposes of mitigating the effects of an emergency." As no generator is going to be standing about with resource consents obtained, land purchased, equipment ordered and a contractor to build the plant selected before an emergency occurs, any new plant that might be given an exemption will only be operating long after any emergency is over.

There is no relief to a shortage of electricity in this clause.

The same applies for another ground, "for the purpose of providing reserve energy", although some have argued that reserve energy could mean a station that operates only in emergencies.

Ideas distiller opts for new spirit

Posted Fri, 28/03/2008 - 1:00am by admin

Published in the National Business Review of 28 March 2008

Political advertising guru John Ansell describes himself as a distiller - "that's why I took a bottle of bourbon into my job interview with the National Party."

He may not be changing his drink preference but in this year's election campaign he is working for ACT.

I distill ideas, people, and policies into morsels that ordinary people can digest."

New Zealand's slide down the OECD league table of comparative living standards, "we have fallen another place to 22nd this year" - is distilled into the slogan 'bring your children back home".

The slogan promises a benefit. It's emotional as well as rational which helps ACT connect with women, a constituency it has previously neglected.

"The return of the 400 000 Kiwis in Australia will be possible when we have reversed the slide in our living standards and gone past Australia again," he says.

ACT is about guts, he believes. 'The guts to do the right thing' is one version of a campaign slogan he is playing with.

It's a basic word in a simple phrase and is consistent with John Ansell's commitment to simple English and simplified policy contrasts. "Men like it, women like it, but ladies don't."

Iwi/Kiwi, and excuses/exams dramatised the policy choices on billboards in the 2005 election.

Unions join hands to set up productivity centre

Posted Thu, 20/03/2008 - 1:00am by admin

Published in the National Business Review 20 March 2008

Two of the country's major unions are joining forces to establish a centre to help companies and unions boost productivity in small and medium sized firms.

The Engineering, Printing and Manufacturing Union (EPMU) and the Diary Workers Union are setting up the Centre for High Performance Work after what EPMU Secretary Andrew Little says is a successful history of co-operation in the dairy industry, particularly in Fonterra's Milk Products company.

Mr Little told a Wellington business audience that big companies in New Zealand were prepared to invest in productivity negotiations and were willing to share the gains with employees.

"Small and medium sized companies are much less willing and they find it much harder to share," he said.

The new centre aims to make the intellectual property "around the productivity question" accessible to small and medium sized businesses.

The Department of Labour is helping with funding of a study of 12 workplaces (eight selected by the EPMU and four by the Dairy Workers) to test how various different processes work.

The project aims to gives employers, unions and staff willing to make a practical commitment of lifting productivity a head start based on real life experience.

Mr Little said that to address the productivity question, "which is at the heart of improving wages and incomes", the right environment was needed.

Too many social campaigns- Saatchi

Posted Thu, 28/02/2008 - 12:00am by admin

Published in the National Business Review of 29 February 2008

There are too many social marketing campaigns running at any one time, and many of them focus too much on advertising, M&C Saatchi's boss Nick Baylis says.

His agency was recently responsible for the Buy Kiwi Made campaign and he describes himself as an expert in government marketing and communications.

He told a Wellington Chamber of Commerce breakfast that social marketing campaigns needed to focus on changing behaviour not just on getting a message across.

In the social policy area "we are often asking people to do things that they can't, won't or don't want to do.

He adds: "in social marketing there is too much emphasis on advertising. In a lot of cases it's social advertising not social marketing. And that's a copout. Too often advertising is seen as the only tool.

"If we believe that running an ad in isolation will change ingrained behaviour, we are kidding ourselves."

Mr Baylis said there were far too many social marketing campaigns and they are typically using measures like awareness, noticeability and recall of the message.

"The average mid 30s female resting on her couch will see ads to quit smoking, cut back on alcohol, get more exercise, get a cervical smear and consume five types of vegetables and fruit each day.

How entrepreneurs meet investors

Posted Thu, 28/02/2008 - 12:00am by admin

Published in the National Business Review of 29 February 2008

Bill Payne is a rich white American in his mid 60s who trained as a ceramics engineer, now has a touch of arthritis and a golf handicap of 15. He lives in the town of Henderson, outside Las Vegas and travels the world helping entrepreneurs and angel investors to get to know each other.

"Entrepreneurs typically have never sold anything and they aren't deal makers. On the other hand angel investors are either entrepreneurs who have exited their businesses well cashed up, or they are people who have otherwise made a fortune by being deal makers."

After selling his own business in 1980 he became an angel investor. He's invested in 45 businesses. "Some were successful, others not. Most angel investors stick to the knitting. Mine is in software, but I have lost money in low tech, high tech and no tech."

Angel investment is a key source of capital for the 60% of companies not represented in the public markets, according to a background paper prepared by the New Zealand Seed Company for the angel investment workshops Mr Payne held in Auckland and Wellington last week.

He's affiliated with the Kauffman Foundation, founded by a Kansas City businessman who sold his business to Merrill Dow in 1959 for $6.3 billion and gave $1.3 billion to the foundation to promote skills in entrepreneurship.

Get real on cost of carbon neutrality says business

Posted Fri, 08/02/2008 - 12:00am by admin

Published in the National Business Review of 8 February 2008

Business and energy interests have given the government a blunt 'get real' on the cost of its carbon neutrality policy, but Climate Change Minister David Parker has dismissed the group's economic analysis as "scaremongering."

Business Roundtable chief executive Roger Kerr says the government should be more open about the cost and implications of its policy of making New Zealand carbon neutral by 2050

The Business Roundtable and Petroleum Exploration and Production Association of New Zealand (PEPANZ) commissioned a report from Infometrics economist Dr Adolf Stroombergen, who had previously done work for the government's Emissions Trading Group.

His report models three scenarios including a business as usual case and concludes that the government's twin ambitions of carbon neutrality and a high rate of economic growth are mutually exclusive.

Based on the assumptions of an annual growth rate of 4%-5%and a shadow carbon price of $300/tonne, the model shows that the cost of the government's carbon neutrality policy would be $19 000 per household by 2025.

Electricity prices would double. Petrol prices would rise by 50% and carbon emissions would still be 40 per cent higher than 1990 levels.

The shadow price of $300mT factors in the (yet to be determined) trading price for carbon emissions and the cost of related policies such as ban on new thermal plant.

Blackout blues weren't there yesterday

Posted Fri, 08/02/2008 - 12:00am by admin

Published in the National Business Review of 8 February 2008

This is a tale of warm air, hot water, no wind, resource consents, and inter-company rivalry and co-operation arising from recent incidents of grid emergencies in the electricity system.

There was a three and half hour "grid emergency" on Monday night where Transpower asked major users to cut usage and for generators to increase supply.

This follows four other grid emergencies in December, three in the Upper South Island due to "insufficient generation and reserves" and a fourth involving a loss of supply on the West Coast according to incident reports from Transpower filed with the Electricity Commission.

All three Upper South Island incidents required demand management from Transpower.

A combination of low lakes levels in the South Island, no wind in the Tararuas, the closure of Contact's New Plymouth plant, scheduled maintenance at its Stratford plant and the loss of some transmission capacity from the South Island to the North Island means both generation and transmission are operated within tight margins.

Low lake levels in the South Island are not unusual at this time of the year, and the normal response would be to run the coal and gas fired power station at Huntly to allow lake levels to build up water for the winter.