Commodity boom benefits exporters

A commodities boom sparked by Covid stimulus spending is benefiting exporters.  Dairy prices are high and demand is increasing for other NZ products.  Some Covid relaxation in Europe and US means restaurants are starting to open, increasing demand for NZ beef and lamb.  There's strong demand for kiwifruit and apples (but a large loss in volume through shortage of apple pickers) and high log prices are resulting from strong demand from China.   Exporters will be focused on ensuring they can take advantage of the high demand environment, ExportNZ’s Catherine Beard says.

But…supply chain constraints

But exporters are being hampered by supply chain constraints, ExportNZ says.  A shortage of ships, containers and storage facilities, along with delays at ports, are increasing costs for NZ exporters.  A BusinessNZ survey is showing affected exporters are facing an average cost increase of 60% and a mean increase of 27%.  (Import-focused businesses are also getting hammered: the survey shows affected importers facing an average cost increase of 124% and a mean increase of 40%.) 

NZ Steel subsidy case fails

NZ Steel has failed to prove unfair competition from imported Chinese steel.  NZ Steel alleged the Commerce Minister (MBIE) didn’t fully investigate claims of unfair subsidies for 6 Chinese steel producers selling products into NZ.  NZ Steel said MBIE’s investigation should have shown there are widespread state subsidies for steel makers in China and that Chinese sources of information on the matter are unreliable.  But this week the High Court ruled there was no evidence specifically incriminating the 6 companies, and the charge of unfair competition did not succeed.

Global tax moves

This week saw a major step towards a global tax rate.  G7 nations, led by the US, agreed to push for a global corporate tax rate of at least 15%.  (The plan would make tech multinationals like Amazon, Google etc pay more tax in places where they do business; the global rate would replace digital taxes that some countries have already levied on the tech giants.)  The idea has not been well received by countries like Ireland that achieve competitiveness by way of a low corporate tax rate.  NZ’s Revenue Minister has welcomed the move.

Climate advice still compromises ETS

The Climate Change Commission’s final advice released this week doesn't justify compromising the Emissions Trading Scheme, BusinessNZ CEO Kirk Hope says.  “CCC recommendations would limit businesses’ ability to offset emissions and impair the ability of the ETS to do its job.  We support reducing emissions but in a way that doesn’t harm productivity and jobs.” He said there would be particular challenges for firms in sectors like transport and agriculture, and business would seek reassurance that the CCC advice won’t end up imposing more costs than needed to reach the targets.

Advocacy spot - mining sector

The mining sector faces difficulty getting access to land to explore for minerals, and difficulty getting consents to mine, says Straterra’s Chris Baker. A current review of the Crown Minerals Act could end up removing ‘promoting mining’ from the legislation’s purpose statement, marginalising the sector further.  But Chris Baker says mining delivers over $2 billion a year to the NZ economy, and New Zealanders should consider the trade-offs that can be made to ensure the industry is environmentally safe.

SME share trading

A new share trading market targeted at small and medium businesses starts this month.  It will be targeted at businesses worth $6m-$60m which will be able to issue shares up to $2m on first listing and raise up to $20m a year thereafter.  The Catalist platform will host periodic auctions rather than continuous trading and material information will be required at the time of each auction instead of continuous market disclosure.  The platform will operate under special regulations promulgated by government last month.