Economy in holding pattern

The BusinessNZ Planning Forecast shows the economy in a holding pattern, with a number of firms close to the edge.  “The immediate forecast is for only modest  growth until the border is properly opened,” BusinessNZ CEO Kirk Hope says.  “Until then, we face prospects of a two-speed economy, with some sectors and regions growing while others struggle.”  A comprehensive plan is needed with a clear pathway forward for dealing with the economic fallout from Covid, Kirk Hope says. 

Removing interest deductibility

BusinessNZ says removing interest deductibility for rental properties is problematic for property investors and raises concerns for investors in other sectors.  This week the Govt signalled it would remove investors’ ability to offset interest expenses against income from rental properties.  BusinessNZ says the move makes NZ’s tax system less consistent by disallowing legitimate  deductibility in one sector only, and raises concerns that other sectors could receive the same treatment in future.

Easter trading still restricted

Businesses in several parts of the country will be prevented from trading next Sunday.  It’s now up to local councils to decide whether businesses in their region can open on Easter Sunday.  While most have voted to allow it, councils in Auckland, Wellington, Christchurch, Dunedin and other main centres continue to restrict trading on Easter Sunday, even though it is not a public holiday.  The list of districts where trading is restricted is here.  

R&D challenges

Some firms are facing challenges in applying for the new R&D tax incentive, being told the new scheme will allow tax incentives for research that is original or ‘new to the world’, but is less supportive of the ‘development’ part of Research & Development - meaning a lot of product development in software and manufacturing could miss out.  ManufacturingNZ is working with the Minister and agencies overseeing the scheme with a view to ensuring that approvals reflect the legislated definition of R&D, which is inclusive of development.  More information on this will be coming soon from the Govt.

Apprentice funding

Over 10,000 businesses have taken on more than 21,000 apprentices in the last 8 months, with more than half of the apprenticeships in construction and related trades including plumbing, gasfitting, drainlaying, electrical, roofing and scaffolding.  Last week the Govt extended until August 2022 the subsidies under Apprenticeship Boost:  $500-$1,000 per month for 1st year and 2nd year apprentices. The high level of uptake is a vote of confidence in the Govt’s apprenticeships policy, BusinessNZ says, and it would be good to make the subsidies permanent to build the skills pipeline for years to come.

Climate change feedback

Businesses are generally supportive of the Climate Change Commission’s plans and want more flexibility around their path to carbon-zero, according to BusinessNZ’s and BEC’s submission to the CCC.  The submission calls for more analysis of the effects of higher carbon pricing on the economy and on firms’ international competitiveness, and more recognition of the effects of the CCC plan on the Emissions Trading Scheme.  Current assumptions in the CCC plan should be tested further, say BusinessNZ and BEC, as business will play a significant role  enabling NZ’s carbon emission reductions.  

'Other than transport' fuel use

Businesses using petrol or diesel for purposes other than transport - EECA is surveying non-transport fuel use and would like to know where you get it from and what you use it for.  Please take this short survey here about your company’s use of petrol and diesel.   Responses are confidential and will be used to create statistical summaries relating to  energy efficiency and conservation.  

Covid-19 and employee wellness

How has Covid-19 affected businesses’ wellness policies?  The Southern Cross-BusinessNZ Workplace Wellness Survey asks new questions in 2021, including how much sick leave firms provide, whether they promote working from home, and whether Covid-19 has increased stress or anxiety among staff. The survey provides a snapshot of NZ business health policies, and covers wellbeing programmes, absenteeism, and the impact of health and wellness on productivity.  Businesses wishing to take part in this year’s survey are asked to contact Steve Summers: ssummers@businessnz.org.nz.