Regulatory system deters foreign investors Uncertainty is main issue consulting firm Castalia says

New Zealand's economic regulatory system is turning off overseas investors and is well out of step internationally, a conference heard this week.

Anton Murashev, of economic consultancy firm Castalia, told the Regulatory Evolution Summit in Wellington foreign investors because they don't know what to expect from New Zealand.

He said the main factors putting off potential investors issue were the amount of discretion regulators had and the lack of guidance about how that discretion was to be used.

New Zealand regulatory system was an outlier, meaning (in the language of statistics) that it was "distant from the rest of the data" or "outside the overall pattern of a distribution".

Soul curry for the corporate samurai

Published in the National Business Review of 24 April 2008

Take six company executives, a passionate transformational leadership coach and put them in a village at the base of the Himalayas and what do you get?

"An amazing experience", " fantastic", "incredibly valuable', "all about redefining your own identity", are some of the comments from the Kiwi managers who have just returned from leadership experience offered by a new company, second base.

Zoe Dryden is the passionate transformational leadership coach who wanted to make a difference to other people's lives and set up second base as the vehicle to make that happen.

The first group of six executives from Maersk Sealand, MORST, Coca-cola Amatil and Contact Energy has just returned from two weeks in Nepal and their response is enthusiastic. Discovering or rediscovering what's important in life is a common theme.

Ms Dryden is a graduate in marketing management who lectured in strategic planning and at the age of 24 found herself running Pinnacle Corporation, a specialist shipping container company.

She sold her shares to going volunteering and ended up in Nepal, but "without trade or medical skills I wasn't much use."

Now she's put together a company that takes executives to Nepal to learn about their values, leadership, and management styles.

Communicators test their own skills and rate them

Published in the National Business Review on 11 April 2008

Study identifies core competencies led by relationship management

Public relations practitioners and communications managers think their job is mainly about managing relations and managing the communications process, a study of the profession has shown.

The study by Massey University for the Public Relations Institute of NZ showed that communications professionals thought there were six competencies central to their profession with relationship management being the most important.

The other five (in descending order of importance) were: managing external relations, being socially responsible communicators, evaluating the results of communications, monitoring the operating environment of the organisation, and being persuasive communicators.

PRINZ's Executive Director Paul Dryden said the academic literature on PR and communications often showed a lack of understanding about the role of public relations and the communications professional.

He said the research showed "consistency and agreement" among practitioners about their job.

"People may wonder about what we do, but in New Zealand at least, the practitioners know," he said.

Senior members of the profession identified the core competencies in focus groups, and these were then tested in an online survey to which over 700 communications people responded.

Need for ethical standards

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

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

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

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

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

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

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.