In this newsletter we are going to cover:

The Economy - the Good, the Bad and the Ugly

The Good
The good is unemployment, which is at 3.3% and is the big buffer against the economy slipping into a long-term recession. However, that is presenting challenges for businesses needing to employ staff.

The Bad
The Reserve Bank, which is tasked with controlling inflation. It has two tools. “Jawboning,” which is talking about increasing the Official Cash Rate (OCR), in the hope it will alter how the banks act, or it can increase the OCR. An increase to the OCR has the effect of, increasing mortgage rates / mortgage payments. This in turn reduces disposable income which reduces demand for goods and services. This will (eventually) cause inflation to fall.

The OCR is currently at 4.25%, with the Reserve Bank forecasting (jawboning) that it will peak in 2023 at 5.5%. But more than this they talking about the country going into recession from the middle of 2023 for up to a year.

The Ugly…
Inflation, it is painfully obvious every time you visit the supermarket or put diesel in the truck that inflation is high, the only question is how high?

Currently it is 7.2% annually and we would need to go back to June 1990 to find a time when it was higher. As an aside, in 1990 New Zealand removed the one and two cent coins as legal currency (casualties of inflation) and unemployment was at 8% and rising. On a brighter note, we hosted the Commonwealth games, Once Were Warriors was published and the All Blacks retained the Bledisloe Cup.

Returning to the present, the price of petrol rose 19% in the year to the September 2022. Which looks high, until you compare it to diesel prices which have increased an eyewatering 72% over the same period, with all the corresponding impact on transports costs.

Know Your Numbers

From a business perspective all three factors, inflation, the OCR, and unemployment need to be considered in your decisions and planning. To do this successfully you need to not just know your numbers (turnover, margins etc.) but also understand how they affect each other.

The current high rate of inflations means that it is vital that you maintain an understanding of your true cost structure and margins, as these will be changing rapidly. Parts of your business that may have been marginally profitable 2 or 3 months ago, could now be operating at a loss.

The changes to the OCR will eventually start to slow demand. So, you cannot just rely on historic sales data for your forecasting. You need to monitor your sales closely for any indication of the change in demand that the change in OCR will cause. More than just monitoring your sales, you should be actively talking with your clients about their plans. That combination of information will make the task of forecasting that much easier.

Lastly, the low unemployment means that any plans for growth will need to focus on capital rather than labour. Whilst it may seem strange to talk of growth, the changes in the economy will present opportunities for growth as some businesses are unable to respond. However, to take advantage of those opportunities it will not be the traditional solution of just hiring more staff, because at a 3.3% unemployment rate they are not there to hire. Rather it will rely on investing in capital, a bigger or faster machine to do the job.

If you would like to learn more about what your numbers really mean, please do not hesitate to contact your Partner or Manager.

Planning the Great Office Christmas Party of 2023!

The Christmas season is fast approaching and with Covid restrictions all but gone it is time for the great office Christmas party of 2023. This is the perfect opportunity to get together and celebrate.

Even if your party is not at work or outside of work hours, you still have obligations to look after the health and safety of your staff. This means actively taking steps to avoid both accidents and or inappropriate behaviour. You will need to check the venue for any hazards or risks before the event starts and if any are identified, take steps to mitigate them

How you deal with the risk of inappropriate behaviour (bullying, sexual harassment) will depend on your team. It could range from a simple reminder email that “workplace policies” apply at the function to a chat at morning tea about what is acceptable.

Be a responsible host! Have lots of non or low alcohol options for your staff to drink and make sure that no one under 18 drinks alcohol. What would Christmas be without food? Not only does it bring cheer it also slows downs drinking and reduces the effect of any alcohol that is consumed. So, ensure there is plenty of food for everyone. Lastly have some games or entertainment, so that there is more to do than simply drink.

Consider arranging for safe transport home from the event for your staff. Have taxis, Ubers or sober drivers organised so everyone gets home safely and that the stories on Monday are all about what a fantastic time everyone had!

If you have any questions around your Health and Safety obligations at your staff Christmas Party or any other HR matters feel free to contact our HR team.

The Glamorous Life of an Accountant…

So, our Tess Brais-Laflamme is certainly living the glamorous life of an accountant with her current role as treasurer of ID Dunedin Fashion. Tess is undertaking this role as part of Polson Higgs charity initiative, and we are thrilled to be supporting this iconic event as it returns to live shows at the Dunedin Railway Station 2023.

Ryan’s Idea of Work Live Balance

Ryan Ehlers is one of our Tax Partners and is (with apologies to Barry Crump) a good keen Accountant. When he is not in the office or coaching volleyball you will find him in the outdoors hunting or fishing. So, it was no surprise that Ryan’s October saw him in Tauranga for a week at the national competition coaching the Women’s B team from the Scorpions Club. He is pictured below as the girls' chauffeur. 

Or that his idea of a restful Labour weekend was to walk the Routeburn Track. Where he was joined by his sister (who had organised everything) and Dad for the three-day, two-night tramp.

Now back in the office he is refreshed and ready to tackle those complex tax issues that cross his desk. If you want to talk about Volleyball, tramping or even tax, feel free to give Ryan a call on 03 479 4801.

Fair Pay Agreements – it all Starts 1 December

The Fair Pay Agreement Act has been passed and the new bargaining system will take effect from 1 December 2022. It aims to improve pay and conditions for workers, especially those in low-wage sectors such as cleaning and security.

At its core, the Act creates a process for unions and employers to negotiate Fair Pay Agreement (FPA) for a specific occupations or industries. Once that process is completed then that that agreement will become law and employers will have to abide by its terms.

The process is quite complex but some of the key points are:

• A union initiates the process by applying to the Chief Executive of the Ministry of Business, Innovation and Employment for approval to negotiate a FPA for a specific occupation or industry.
• If that application is approved then employee and employers bargaining sides may form, and the bargaining process begins. It is unclear who will represent employers under such a process with the possibility that a “default employer representative” will be offered the chance to bargain on behalf of employers (if no employer representative is willing or able). Failing this the Employment Relations Authority will fix the terms.
• Once a majority of both sides agree on the FPA it will become law and any employee that a FPA applies to, will be entitled to those, as a minimum, employment terms.

This is a complex issue for employers, and we have provided a very high-level overview. If you have concerns or want more details, then we suggest that you contact your lawyer.

Movember!

“Captain” Tom Hanning has once again rallied the team at Polson Higgs to get behind this worthy cause. Movember covers a range of men’s health issues, but the Polson Higgs team focus is around men’s mental health. Already around our office you can see some exceptionally fine and distinguished looking mo’s! If you would like to support our Movember team, click on the link found below our Proud Mo Growers of 2021.

If you have a question about anything, please don’t hesitate to ask on info@ph.co.nz.

Stay safe and keep in touch.

Kind regards

Polson Higgs Team

You have received this email because you are subscribed to Polson Higgs mailing list. 
If you no longer want to receive messages from us simply click the link below to unsubscribe. 
Unsubscribe Here 
Copyright © 2022 Polson Higgs, All rights reserved