Businesses Struggling To Keep Doors Open As Energy Costs Surge
That's the main take-out from a new survey carried out by the Auckland Business Chamber, together with policy and advocacy organisation the Northern Infrastructure Forum (NIF). Survey responses were garnered mainly from SMEs in the Upper North Island, with manufacturing the most heavily represented sector.
Chamber CEO Simon Bridges says the survey findings show that energy costs are right at the top of the list of concerns for businesses, in what is a very challenging operating environment.
'Nearly 90% of respondents say that energy costs have increased in the past year, and just under 50% describe those costs as highly concerning. When energy costs combine with the pressure from weak market demand, inflation and increased compliance costs, the result is that many businesses are struggling to keep their doors open.'
Mr Bridges says one unexpected, and troubling, insight from the survey was the reluctance on the part of businesses to be identified when sharing their struggles with energy costs, for fear of commercial repercussions.
'Many of the businesses we spoke to – especially those dependent on gas supply – were really uneasy about speaking publicly, for fear that it could jeorpardise their ability to secure future energy contracts with the gentailers, who control close to 85% of the retail market. Whether this fear reflects an actual or perceived risk, it points to serious issues with the way market power is being exercised, and is really worrying.
'It's high time the Government had a good, hard look at the vertically integrated gentailer model, and the impact it's having on the performance of the sector.'
NIF Executive Director Barney Irvine says the survey results also underline the drag that energy costs are placing on New Zealand's growth and productivity, and on people's livelihoods.
'As a response to rising energy costs, 52% of business surveyed say they have increased the prices they charge to customers; a quarter say they cut back production; the same proportion say they have laid off staff; and just under 20% have cancelled or deferred investment. Unnecessarily high energy costs impact on everyone.'
Businesses are looking to the Government for leadership, he adds.
'Over three-quarters of survey respondents believe that the Government should treat addressing energy costs as a high or very high priority, and they're absolutely right.
'The Government has a good sense of what needs to be done to turn the performance of the sector around for the long-term; what's needed now is swift, decisive action.'
In particular, the Chamber and NIF want to see the ten-point Energy Action Plan they launched in February this year – which focused on strengthening sector stewardship, improving resilience, and increasing generation and competition – incorporated into government policy.
Key findings from the survey include:
Nearly 90% of respondents say that energy costs have increased over the past year, with over 40% reporting that the increase has been large or very large
Just under 50% of respondents describe energy costs as highly concerning (i.e., a rating of 8-10 out of 10), similar to the level in concern in relation to market demand, inflationary pressure and compliance costs
Over 60%% report an impact on their business as a result of rising costs, with 34% describing the impact has as large or very large
As a response to rising costs, 52% of respondents say they have increased their own prices, while 25% report having cut back production, and the same proportion report having laid off staff. Just under 20% have cancelled or deferred investment
Over 80% expect prices to increase again in the year ahead
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
1News
4 hours ago
- 1News
Are NZ banks being taxed properly?
The Government is looking at whether banks in New Zealand are taxed appropriately. Finance Minister Nicola Willis said she is continuing to receive advice from IRD on how income tax laws applied to the major banks in New Zealand, particularly compared with Australia. Willis asked for the advice last year, but said no announcements would be made until Budget next year. The key issues were around how the "parent banks" and branch banks in New Zealand interacted for tax purposes. She said there was some "very arcane and complex tax law" in that area where the OECD had guidance, but New Zealand operated slightly differently. ADVERTISEMENT Willis was also looking at the Australian "major bank levy" which New Zealand did not have. This forced banks with more than $100 billion in liabilities to pay a levy to the government, raising significant sums a year. Willis would not rule out applying something similar here, but she did confirm the Government was not looking at a windfall tax. "There's a range of highly technical, highly complex issues with the way that banks are taxed, and we're just doing a check in to make sure that it's resulting in an overall fair system." Willis said it was possible more revenue could be generated for the Crown if the Government found banks were not paying the full amount of tax expected. Acting Prime Minister David Seymour was asked about the issue on Monday and said he believed banks were being fairly taxed. "Some of the biggest taxpayers in New Zealanders are banks," he said, and stated they were all paying the 28% average tax rate as their company tax. "There's nothing to suggest that they are not paying the same share that they would if they were any other kind of business." ADVERTISEMENT Asked about Willis' work, Seymour said, like most ministers, she was "always asking for advice, always tossing around the ideas". He suspected the result of that work would show banks were fairly taxed. Seymour said, from what he saw, there seemed to be a "consistent pattern" in terms of what banks paid, and the question around any proposals to change the settings would need to be based on "fairness". He pointed to a dairy, retail or manufacturing company that were doing "pretty much the same stuff, making the same profit and paying the same tax, would you treat them differently"? "One of the core principles of taxation is that 'like taxpayers pay tax alike', and 'unlike, taxpayers pay tax un-alike' based on the size of the difference. "So you'd start with fairness as your principle." He acknowledged there may be more information he was not aware of. He also wanted more information on the major bank levy. "I've seen the argument for that, and it goes something like this: Banks inevitably get bailed out. ADVERTISEMENT "If they're so big that their failure would affect the entire economy, maybe they should be putting something aside for that rainy day, if it happens one day. That's the argument. "It's, in a way, a form of de facto deposit insurance." He said it was an interesting argument, but would need to see the detail before deciding on supporting a proposal or not as ACT leader.
Scoop
11 hours ago
- Scoop
Cutting Red Tape So Young Kiwis Can Start Saving
Associate Minister of Justice Associate Justice Minister Nicole McKee is making changes to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act that will make it easier for parents to open bank accounts for their children. 'Opening a bank account for children should be a simple and positive step toward teaching them the value of saving. Unfortunately, regulations designed to prevent serious crimes can make the process unnecessarily difficult,' says Mrs McKee. 'The Government is cutting red tape that can make it harder for parents to do the easy thing and open a bank account for their children. 'According to the Act, a parent who wants to open an account for their eight-year-old child needs to gather and verify a long list of information, including their child's address, date of birth, name, and their own authority to act on their child's behalf. The Act also requires banks to obtain the nature and purpose of the business relationship, evaluate whether further due diligence is required, and monitoring the child's transactions on an ongoing basis. 'Under the Government's new reforms, banks will be allowed to apply a simplified processes when risk is low. This means that if a bank puts measures in place to make a child's bank account low-risk (e.g. by setting appropriate transaction limits) all that could be required is a birth certificate to confirm the child's name and date of birth, and prove the relationship to the parent. 'They could also skip the intrusive and unnecessary questions about the 'nature and purpose' of the account, and reduce or forego ongoing monitoring of a child's banking activity, until the account's settings are changed (e.g., removal of transaction limits when a child turns 18). The Government has also directed the future AML/CFT supervisor to issue clear guidance so that businesses like banks know exactly how to apply these simplified checks without fear of penalty. 'This is a common-sense reform. Parents shouldn't be asked to jump through bureaucratic hoops just to open a bank account for their kids. We're streamlining the system so that New Zealanders can spend less time on paperwork and more time teaching their children the value of money. 'These changes reflect the Government's wider commitment to smarter regulation, focusing on outcomes rather than ticking boxes, and trusting New Zealanders to make responsible decisions without being buried under red tape.'
1News
11 hours ago
- 1News
Changes to make it easier to open a bank account for kids
The Government has revealed "common sense" changes to anti-money laundering laws to slash paperwork for small businesses and to make it easier for children to open bank accounts, the Acting Prime Minister says. David Seymour said the changes to anti-money laundering laws would "remove a lot of the insanity so that ordinary people, including parents who want their children to bank, can actually have a bit of relief". "We want young people to learn about the benefits of saving and investing and planning for the future," he said to Breakfast this morning. The ACT leader said families were being discouraged from opening accounts for young people because the paperwork was too cumbersome, calling it "the most un-Kiwi thing" that needed fixing. Under current anti-money laundering rules introduced in 2011, parents must provide documentation including photo IDs, birth certificates, proof of address, and evidence of their financial relationship with their child when opening accounts. ADVERTISEMENT In a statement this afternoon, Associate Justice Minister Nicole McKee said under the Government's new reforms, banks would be allowed to apply a simplified process when the risk is low. Associate justice Minister Nicole McKee. (Source: 'This means that if a bank puts measures in place to make a child's bank account low-risk (e.g.) by setting appropriate transaction limits) all that could be required is a birth certificate to confirm the child's name and date of birth, and prove the relationship to the parents.' McKee said they could also skip the 'intrusive and unnecessary questions' about the 'nature and purpose' of the account – and reduce or forego ongoing monitoring of a child's banking activity until they turn 18 or the account settings are changed. The Government has also directed the future Anti-Money Laundering and Countering Financing of Terrorism supervisor to issue clear guidance, so businesses like banks know exactly how to apply the simplified checks without fear of penalty. The ACT party had previously campaigned on reducing business compliance costs with anti-money laundering and terrorism financing laws. At the last election, ACT said small businesses needed a more "risk-based approach" that was "less punitive." McKee announced reform of the laws last October. ADVERTISEMENT Seymour also said this morning upcoming AML/CFT changes would include "a whole lot for business". "If you're, for example, engaged in property transactions, or you're a lawyer, or whatever. We're going to be simplifying the amount of customer due diligence there. We're going to be moving to just a single supervisor," he said. GST was very effective as a tool for the government to readily raise a large amount of money. (Source: "We have to show that we're doing our bit to fight money laundering and terrorism. We've got our own problems with organised crime in New Zealand — we have to keep on them. "But we also need to remove a lot of the insanity so that ordinary people … can actually have a bit of relief." Seymour said the reforms would help benefit small businesses and professional services, allowing New Zealanders to spend "less time dealing with red tape". "It's going to be small business. It's going to be people in the professional services who have to do a lot of this stuff, because they manage transactions, lawyers, accountants and so on." ADVERTISEMENT The morning's headlines in 90 seconds, including deadly Texas floods, Australian woman attacked by a lion, and Elon Musk's new political party. (Source: 1News) McKee said in her announcement last year that the changes would make complying with the law more "user-friendly for small businesses". "I have heard from countless New Zealanders that the current regulations are unnecessarily risk-averse, resulting in complicated, repetitive processes. Simple tasks shouldn't be made confusing and difficult to complete," she said. "I'm taking a pragmatic approach to this work, by prioritising changes that will deliver significant regulatory relief to businesses while also reducing the harm caused by money laundering in our communities. "In fact, these reforms will deliver the most significant regulatory relief since the Anti-Money Laundering and Countering Financing of Terrorism Act came into force in 2013."
