Waikato Business News May/June 2018

22 WAIKATO BUSINESS NEWS May/June 2018
Business confidence - is it turning?
Are we starting to see the signs of a slump
in business confidence? While consumers
might be cheery, the most recent surveys
on this topic are showing a decline in
business confidence in the long term.
The question we need to
ask is whether this a trend
or a blip? The fundamentals
underpinning the economy
haven’t changed – arguably they
have improved. In the Government’s
first budget, the Minister
of Finance signalled ongoing
growth of around 3 percent
accompanied by a surplus of
$3.1 billion this financial year.
Once business starts
to get gloomy, forward
looking investment
decisions, expansion
plans and subsequent
hiring programmes
go on hold; the doom
loop takes hold.
However, this is reliant on
business confidence remaining
stable along with financial performance.
The corporate tax
take is a vital revenue stream for
the Government.
It is not unusual for business
confidence to dip when a Labour
government comes into power,
and rise when a National government
takes over the reins.
What remains key for business
is that issues such as the
labour shortage, skills shortage
and immigration are not going
away anytime soon.
The pre-election rhetoric
around slashing immigration
numbers has taken a more pragmatic
tone since the coalition
was formed. And while we
constantly hear from employers
about the difficulty of navigating
the immigration system for their
particular needs, the headlines
around reducing net immigration
by enforcing targets seems
to have dissipated.
With unemployment remaining
low the ongoing issue of
finding staff with the required
qualifications, skills and a positive
work attitude remains a
headache for employers. We are
yet to see any compelling policy
from the government on how to
address this.
Proposals to change employment
law are likely to exacerbate
this headache rather than cure
it. We remain unconvinced that
the proposed industrial relations
changes will deliver the high
wage, high performing economy
the Government wants.
Rather, the underlying intent
of the Employment Relations
Amendment Bill seems to be
more compulsion, more regulation,
reduced flexibility (for
employees and employers) and
increasing overheads.
We argue that beefing up
the labour inspectorate would
be more effective at addressing
many of the problems the legislation
seeks to rectify, and cost
less overall.
Especially when businesses
are reporting a squeeze on their
profit margins. For example,
while the recent increase in the
minimum wage was well signalled
employers are saying it’s
the parity argument causing a
flow-on impact to their wage bill
which is a concern. Combine
this with other costs to business
such as price of oil and increase
in fuel taxes and you can see
why there will be a mindset to
hunker down.
Businesses sense that costs
may rise in the next few years
and this may not necessarily be
accompanied by an increase in
sales. For example, it’s proposed
the minimum wage will increase
to $20 by 2021. A business with
five full time employees on
the minimum wage will see an
increase of $7,900 per annum
to its wage bill this year with
the minimum wage having just
gone up to $16.50, at $20/hour
the wage bill for the five staff
will increase by $44,800 per
annum.
This raises important questions
for business. If they are
HELPING BUSINESS SUCCEED
> BY KIM CAMPBELL
Kim Campbell is chief executive of the Employers and Manufacturers
Association kim.campbell@ema.co.nz
unable to absorb this cost what
do they do? Do they sell more
units, do they raise the cost of
their products and services or do
they look for ways to automate
processes? Decisions around the
minimum wage can’t be made
in isolation of other dynamics at
play in the economy. Questions
of access to capital for automation
come to mind and proposed
changes to the Overseas Investment
Office further erode confidence.
Hardaker to provide
law services for EMA
The EMA has boosted its
employment law service
offering in the Waikato
region through the formation
of a contract arrangement with
Julie Hardaker Lawyers.
The arrangement means
Waikato-based members of the
EMA will have access to the
specialist employment relations
legal services of Julie Hardaker,
who will act as special
counsel for members under this
arrangement.
Ms Hardaker is an employment
law specialist and brings a
wealth of expertise to the EMA
legal team having practised law
for many years in Waikato and
Auckland, including as partner
in one of Hamilton’s leading
law firms.
Ms Hardaker, who served
two terms as Mayor of Hamilton,
has a master’s degree in
business management and is a
regular commentator on legal
and governance issues.
“This is an exciting opportunity
for my law firm. I am looking
forward to working with
EMA members and expanding
the legal service offering in
Hamilton and Waikato,” says
Ms Hardaker.
“Waikato is a vibrant and
growing area for business
and our members require a
high-quality level of support
from us,” says EMA chief executive,
Kim Campbell.
“Which is why we’re
delighted to have someone of
Julie’s calibre available to our
members for specialist employ-
Once business starts to get
gloomy, forward looking investment
decisions, expansion plans
and subsequent hiring programmes
go on hold; the doom
loop takes hold.
Ill-considered tinkering with
economic policy for ideological
purposes will do nothing to raise
productivity or confidence. To
transition to a high value, high
wage economy we need a confident,
energetic and productive
business sector.
Employment law
specialist Julie Hardaker.
ment law services,” he says.
Julie Hardaker Lawyers will
continue to provide legal services
to its client base, particularly
in the areas of public law
and relationship property.
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