Destruction and rebuilding costs from Cyclone Gabrielle, higher interest rates and continuing inflationary pressures are bringing lower economic growth prospects, according to the latest BusinessNZ Planning Forecast. Activity indicators such as retail sales point to a slowing economy, along with low business and consumer confidence. Domestic and international events are combining to bring significant headwinds and risk of a mild recession, the Forecast says.

BWA Insolvency in NZ report suggests a rise in business failures may be a delayed response to pre-Covid conditions. Insolvency proceedings, voluntary administrations and liquidations in the last quarter, mostly of small firms, were over 10% higher than in the previous quarter, and this might be highlighting firms that would have failed earlier without Covid-19 assistance, the report says.  New challenges include interest rate hikes affecting consumer demand, staff and materials shortages and less leniency from IRD, it says.

Policy settings for education and immigration aren't delivering the skills employers need, EMA says. EMA’s survey of 500+ employers shows 90% struggling to fill job vacancies, with 71% unable to find highly-skilled people and 44% unable to find low-skilled workers.  Among applicants, 72% lack basic digital skills and 43% lack numeracy or literacy skills, respondents say. 30% had been advertising vacancies for over 6 months. Key roles needing to be filled were health, construction and operation workers and professional roles.

Govt has announced another review of the ETS. Currently the ETS is designed to prioritise lowest-cost sources for emissions reductions regardless of where the reductions come from, but Govt is concerned the ETS is not effective. The BusinessNZ Energy Council says we need to let the ETS do its thing - constant reviews are destabilising and causing too much hesitation: “While we are aware the ETS must change over time to be effective, too many unforeseeable adjustments are unhelpful at a time when we need investment confidence in order to decarbonise faster.”

NZ might miss emissions reduction targets because of problems consenting infrastructure, a Sapere report says. Consenting infrastructure is getting more protracted and the result could be a $13-16 billion emissions liability by 2050. For NZ to meet net zero targets, current resource management reforms will need to be operational by 2028 and bring a 50% reduction in processing times thereafter. Emissions reductions in energy and transport are most at risk, with a projected emissions liability of $5-7 billion by 2050, the report says.

NZ is forging ahead of other countries with legislation that would make digital platforms subject to OECD rules on information-sharing and GST collection. It’s premature given few other countries are doing so, and rushed implementation by NZ would mean costs outweighing benefits for NZ, BusinessNZ’s Kirk Hope says. The rules would require e.g. Uber and Airbnb to collect GST on their services in NZ and provide IRD with information about income earned by NZers on their platform. The Bill had its third reading this week.

The Therapeutic Products Bill is not well suited to exporters, ExportNZ says. The Bill, intended to replace NZ’s current medicine and dietary supplement laws, would require exporters to comply with NZ domestic regulations, even where their products are for export only, while also complying with importing countries’ rules that differ from NZ’s. ExportNZ says local authorisation should not be required for products that satisfy the regulations of the receiving market, and says domestic regulation of therapeutic products should be more aligned with that of international trading partners.

Accelerated depreciation would  help exporters invest in R&D, plant and equipment, ExportNZ says, submitting on a draft Food & Beverage Industry Transformation Plan.  And MPI should develop fit-for-purpose regulations to encourage value-added exports: currently exporters must comply with NZ labelling rules even when their product is for export only, and small package shipments sold via e-commerce must comply with the same rules as large consignments. ExportNZ says for value-added F&B exporters, compliance costs can comprise up to 10% of a product’s total cost.