RBNZ hold at 2.5%

LATEST: The Reserve Bank is holding official interest rates at 2.5 per cent, as the global economy worsens in the face of the European debt crisis.

"There is a risk that conditions weaken further," Reserve Bank Governor Alan Bollard warned this morning.

Given the current "unusual degree of uncertainty around global conditions and the moderate pace of domestic demand, it remains prudent to keep the official cash rate on hold at 2.5 per cent," Bollard said this morning.

Monetary policy was expected to remain "supportive for some time" with the Reserve Bank's expected track for ninety day interest rates now lower for longer than expected in the September statement.

There were "continued difficulties" related to country and bank debt in a growing number of European economies, and financial markets were highly volatile.

International activity had softened including the Asia-Pacific region.

The global slowdown was hitting New Zealand, but the impact so far was limited, Bollard said.

While the central projection was for a "moderate downturn in global activity" risks around that outlook had intensified significantly, the Reserve Bank said in its December Monetary Policy Statement.

That was mainly because of the concerns about the strength of Europe, where activity had worsened faster than expected in recent months.

A sharper than expected slowdown in Europe would "materially reduce activity in other regions including Asia and Australia".

If things turned out worse than now expected, global trade and commodity prices would fall and global activity could remain weak for an extended period the bank said.

Growth in New Zealand would also be weaker than assumed in the central projection of the bank which suggests growth picking up to about 3 per cent in the year to March 2013.

If that happened monetary conditions would need to remain supportive for an extended period, even as the Christchurch rebuild boosted demand.

Meanwhile the Reserve Bank said that business confidence had fallen this year and investment spending was likely to remain weak for some time.

Tight international financial markets meant that it would cost more for New Zealand banks to borrow overseas to some degree in the coming year.

"There remains a high degree of uncertainty around the global outlook and there is a risk that conditions weaken further," Bollard said.

In New Zealand domestic activity was still expanding, but modestly.

Export commodity prices remained high, though off recent peaks.

The fall in the Kiwi dollar had provided some support for the export sector.

However, the Reserve Bank's projections for economic growth were modest, with quarterly growth of 0.6 per cent in the last quarter of this year, rising to 0.8 per cent by the end of 2012."Over time repairs and reconstruction in Canterbury will also provide a significant boost to demand for an extended period," he said.
The rebuild was expected to cost about $20 billion over a number of years, but widespread work would only start in earnest in the second half of next year, peaking in early 2014. The outlook for rebuilding in Christchurch also remained highly uncertain, but eventually it would provide a boost like the mid 2000s building boom.

Annual GDP was projected to be 2 per cent in the year to March 2012, rising to about 3 per cent in the following March year, despite the expected pick up from rebuilding in Christchurch.

Unemployment is projected to trend down slowly from 6.6 per cent now to 5.6 per cent by March 2013.

Annual inflation was estimated to have returned to the central bank's target band of 1 per cent to 3 per cent in the December quarter, with underlying annual inflation about 2 per cent.

- BusinessDay.co.nz JAMES WEIR Last updated 09:11 08/12/2011

How to exit a business and win!

Xero's guest blogger Claire Cilliers looks at why the term ‘succession and exit’ is now a lot more relevant as Baby Boomers start to age.

Google ‘Baby Boomers’ and you’ll soon realise that this is the largest economically active cohort across the globe. In the USA, Baby Boomers make up half the spending power across the country. With greater spending power, and having worked for most of their lives, this group have their sights set on retirement as their reward for a life spent building their asset base. In short they’re looking to slow down and take time to smell the roses.

The broader challenge is the sheer number of Baby Boomers. With improved health and lifestyle the average lifespan of an individual in the developed world has increased dramatically. Undoubtedly a longer life is a positive consequence, though an unintended consequence of more people living longer is that more people want to do the same thing! For example, when more people want to sell their business, the market is flooded, prices come down and the buyer dictates.

Also consider the situation the potential buyers are in. The next generation – Generation X – are fewer in number and on average juggling a mortgage, car payments, credit cards, children etc. So with fewer people, who have less capital, and the current global economic environment, the chances of being able to access any real equity (when selling a business) are slimmer than most would anticipate.

Thinking ahead

Succession and exit are very real threats to any business. Left unchecked, business owners may very well find themselves owning something into which they have invested their blood, sweat and tears but there aren’t many options to release their equity. This is why the same level of planning and consideration that goes into starting, growing and building a business, needs to go into figuring out the best possible way to exit. The analogy of emergency rescuers comes to mind, “Know your way in, but also know your way out!”

There is no one simple answer to the succession and exit strategy or plan. As diverse as businesses are, so too can the plans for exit be. But there is one similarity though: it takes time… and when I say time, I mean a few years to ensure the right people, processes, technology and capital are in place.

It also takes a team to support you through the process. As the one who is exiting, you need to ensure your accountant, lawyer and insurance broker are all working to the same plan. It may mean having frank and honest discussions with your business advisors – if possible, get them into the same room at the same time. This way your money will be well spent, with all actions aligned and geared towards the end goal.

Here’s what you need to consider:

1. Do you have a current, documented business plan? Yes, you need one again! Consider this, if you were going to purchase a business, wouldn’t you want to know where it was going… when, where and how?

2. When do you want to be “free” of your business? Is it in two years, five years, ten years? Ensuring the right people are in place and/or selling your business can take far longer than you anticipate and the transaction itself may take place over a few years.

3. Do you want to leave some equity in your business? Are you prepared to do this if this would aid the sale or transition to new owners… and how much would you leave in?

4. Have you noted down all the jobs/roles that you play? You may not realise this, but you fulfill a number of roles and replacing you may take more than one person.

5. What do you believe the value of your business to be? Like a house, your perception and what the market is willing to pay can be considerably different. Have you even got an idea? Start making a note of what other similar businesses have sold for – why were they sold at that specific value and how does your business differ.

Note that while you may want to release your equity, those taking on the business will want to realise and justify how they will grow their wealth.

We’re keen to hear your thoughts on preparing to exit a business, be it a lifestyle change or something completely different.

Claire Cilliers is a Principle Consultant with Hipah Consulting where she specialises in Succession and Exit Strategy and Planning. She has consulted internationally, dealing with small and medium enterprises through to corporates with multiple listings.

Published on Xero Blog in Business on 25 November 2011 by Claire Cilliers

Payroll Giving

Did you know that a nice little addition to the payroll system means that you can make direct donations to charities and community organisations, cool huh! The scheme administered through the PAYE tax system can be set up by an employer and employees can choose whether they would like to donate to support the cause. By donating via the payroll giving method, givers may be able to claim back money more easily therefore may be encouraged to donate more. The organisations that you can donate to have been preapproved by the IRD and the support for the system is growing as businesses learn about it, go on sign up!

Some business tips

Its that time of year when our enthusiasm, excitement and energy levels may be wavering as we start to think about G and Ts in the garden, long summer days on the lake and a well deserved break being just around the corner. We decided to throw you some encouraging business tips to help spark some different thinking into you business approach, try these ideas on for size:

Ask someone on a date

Think about your existing network of clients, suppliers, staff and colleagues. Consider whom you don’t know that you’d like to get to know? Business is about relationships and relationships are about communication – pick up the phone and take someone on a business date!

A little thank you goes a long way

Start to think about some sincere ways to thank your staff for their hard work this year. Typically you’d be looking to give them the Christmas ham or a bottle of wine. Ramp up this year’s appreciation session with a hand written note singling out a memorable contribution they have made and deliver this with a ‘look ‘em in the eye’ expression of gratitude. It’ll work wonders!

Ask for feedback and listen

This is an easy one to pitch as people like to be asked their opinions. Illustrating that you aim for constant improvement and inviting others to have input is a two birds/one stone scenario. Basically if you ask in the right way not only are you getting valuable information about your business performance but as the ‘feedbackee’ you are also strengthening the business relationship by validating the opinion of the ‘feedbacker’. Simple!

Practice your pitch

Yep, the elevator pitch is an oldie but a goody! Yeah you wanna be able to tell people what it is you do in a precise but compelling way. Yep, you probably need some practice right!

Know what you don’t know

A useful consideration to make is to understand what you are good at and where you should get others in to help. Essentially this means if you are better off on the tools than balancing the books weigh up the option of getting a bookkeeper. It’s in the math! Does it make sense for example to have an administration task take you away from being the ‘technician’ in your business for twice as long as it would take to get a paperwork guru in? Yeah, nah…..

Key to manage record number of MPs

Prime Minister elect John Key is expected to formalise his coalition plans with the Maori Party, Act Party and United Future today, but he will also face managing a record number of MPs in his caucus.

Key is wasting no time in getting his team to run the country for the next three years together.

The National Party won the election with an overwhelming result at the polls on Saturday, but Key will still need the support of coalition partners to have a majority in Parliament.

"We've currently got 60. We need one further vote to be able to have a majority in the Parliament," National MP Steven Joyce said on TVNZ's Q+A programme yesterday.

Key met with senior ministers at his Auckland home yesterday, and will hold coalition talks in Wellington today.

And the message is: "We want them all [United Future, Act and Maori Party] involved," Key told ONE News.

Key was guaranteed a second three-year term with the return of current coalition partners, Act and United Future each winning one electorate seat.

"It's a small majority when you think about it in the context of the Parliament, but it's a very rock solid majority," Key said.

Key also expressed interest in including the Maori Party to ensure National has support on the left and right.

"We'd like to keep working with them (Maori Party). We think they got real gains being in government, we believe it did advance the causes of their people and we think it gave a balance."

And there are two cases where the Maori Party could be crucial - the sale of a 49% stake in five state owned companies and also the policy of welfare reform - both cases were very controversial in the election campaign.

Joyce said on Q+A that the Maori Party "will be an additional buffer" but Maori Party co-leader Tariana Turia said she was not prepared to show her support for National just yet.

However, she did hint that they were in favour of becoming a partner with National.

"You can't make gains unless you're sitting at the table of the Government," she said.

Michelle Boag, former National Party president, told TVNZ's Q+A it was clear Key wanted to have the Maori Party involved and it is going to be a "critical negotiation".

"The Maori Party also has to think about its transition to a new generation."

Joyce said it depends on numbers in terms of whether they can credibly lead a Government without the Maori Party being involved as ministers on confidence and supply.

"I think the Maori Party, United Future and Act are all crucial... and in that respect, it's not that much different to last time," Joyce told TVNZ's Q+A.

"With a 48% party vote, it's a pretty strong endorsement of where the Government sits, and we're confident we'll be able to build the relationships needed to go ahead with the programme."

At the 2008 election the Maori Party sat down with National and came up with a confidence and supply agreement.

"They didn't agree with everything that we proposed to do, and they didn't vote for some of it, but they voted for confidence and supply. So that's the sort of relationship we'd be looking to form, but those discussions have to take place," said Key.

Where the numbers do fall nicely for National is that it has the ability to pass legislation by teaming up with just Act and United Future or by just adding National and the Maori Party votes together - so Key does have flexibility there.

He also said he would "sit down and have a talk" with the Green Party, who have won 13 seats, about signing a memorandum of understanding - similar to 2008. It is a less formal deal but will allow them to work on particular projects like home insulation.

Key has not ruled out ministerial positions for Act's John Banks, United Future leader Peter Dunne and members of the Maori Party.

The other thing to watch out for is more cuts in government spending as they are pushing hard to get the books back into surplus and that will mean money will be tight.

Celebrations

Key made a late arrival to National's celebratory party in Auckland on Saturday, saying he was "delighted".

"What a fabulous night to be supporting the New Zealand National Party," he told the National faithful.

"New Zealand has voted for a brighter future, and there will be a brighter future," Key, draped in blue and white streamers, told ecstatic supporters.

National campaigned on promises to build on policies of the past three years with an emphasis on sparking economic growth by cutting debt, curbing spending, selling state assets and returning to a budget surplus by 2014/15.

"The government will be focused on building a more competitive economy, with less debt, more jobs, and higher incomes," added Key, 52, flanked by his wife Bronagh and son Max.

He said he expected the election would be tight and that he was proud to be Prime Minister.

"More people voted National today than three years ago and I want to thank each and every one of you," he said.

He said he was not "entirely surprised" that Winston Peters had been returned to Parliament.

The final tally of seats may change when tens of thousands of absentee votes are counted over the next two weeks.

Christchurch Central has ended in a dead heat with Labour's Brendan Burns and National's Nicky Wagner ending the night with exactly the same number of votes, 10,493.

Labour's poor result

Labour suffered a dismal election, and will have just 34 MPs in Parliament on preliminary results compared with National's 60.

Nine Labour seats were lost.

National took 48% of the party vote, compared with Labour's lowly 27.1%. Although voter turnout was low with just under 74%.

Goff has vowed Labour will continue to fight and he celebrated the few wins Labour managed - Te Tai Tonga, West Coast-Tasman and some new MPs.

"It wasn't our time, but we are members of a great political party ... our time will come again, and we will be ready to take New Zealand forward at that time. We are a bit bloodied, but we're not defeated."

Goff is expected to make an announcement on his future tomorrow.

Published: 5:19AM Monday November 28, 2011 Source: ONE News

• 
  
  
  

Mo-vember

This solid campaign has rolled around again in an effort to raise awareness for men’s health, specifically prostate cancer and depression. Participants are invited to register their clean-shaven faces on the nz.movember.com website then seek sponsorship for the growing efforts for the month of November. This is a global movement and in 2010, over 9,500 kiwis raised one million NZ dollars, choice!

Why you should vote

• Voting is an expression of an opinion, however you actually need to form that opinion by trying to be somewhat informed. This election campaign timeframe is short and sweet (bless you RWC) and it's worth putting aside wishy washy media driven information to get to the facts you need to make an educated decision about where your votes land.

• Voting is a privilege, not everyone everywhere gets to have their input counted. Imagine a country where you had no say?

• Voting upholds and supports the democratic system, if no-one voted the democratic system would fail and we would be replaced by another form of government, eeek?

• Voting sets an example

• Voting for the lesser of what you consider to be two evils (or ninnies, or fruitcakes, or ding dongs however you like to refer to your politicians) is still a valued vote?

• Voting is important because the elections.org.nz website says:

"When the Governor, Lord Glasgow, signed the Electoral Act into law on 19 September 1893, New Zealand became the first country in the world to grant women the right to vote in parliamentary elections.

As most other democracies - notably Britain and the United States - did not enfranchise women until after the First World War, women's suffrage quickly became a central element in New Zealand's image as a trail-blazing, progressive 'social laboratory' of the South Pacific."

There is still time to register, get out and vote!

Thanks to this wee article for the ideas http://www.essortment.com/should-vote-60856.html