economics

High food prices may be helping supermarket operators.

Australia's Woolworths, the second largest supermarket operator in New Zealand, today reported sales here increased by 10.6 percent in the June quarter, although only 2.2 percent when normalised and an extra week's trading is excluded.

Comparable sales rose 3.5 percent, which Woolworths said reflected tighter macroeconomic conditions and a decline in the growth of the overall market. The company reports profits next month.

Yesterday, Statistics New Zealand reported food prices in the year to June leapt 8.2 percent, the highest rise in 18 years.

Woolworths bought Progressive two years ago and runs the Foodtown, Countdown and Woolworths brands, whose combined sales rose 7.3 percent in the June year to $4.9 billion.

Chief executive Michael Luscombe said the New Zealand operations were off to a better start this new fiscal year despite his earlier comment that there is "no doubt that New Zealanders are doing it tough", as weak economic conditions persist.

Mr Luscombe said economic cycles come and go and he believes that New Zealand will recover. "We want to be ready for when that happens," he said.

Woolworths said its overall food inflation for the quarter in NZ was 4.6 percent, an increase from the 3 percent experienced in the third quarter, "reflecting increased price pressure on certain products in perishables and bakery and the ceasing of price deflation in produce". Sales growth has declined from 9.9 percent in the first quarter, 5.7 percent in the second and 6.2 percent in the third.

Australia's biggest retailer reported group sales worth nearly half of New Zealand's GDP. Sales including NZ, for the 53 weeks ended June 29, rose 10.7 percent to $A47 billion (NZ$60 billion). Mr Luscombe said fiscal 2008 earnings before interest and tax (EBIT) were expected to grow faster than sales while net profit is expected to grow in a range of 21 per cent to 25 percent. On a normalised basis, which removes the impact of the 53rd week, sales were up 8.7 percent.

Woolworths has been taking customers from rival Coles, which is undergoing a major facelift under new owner Wesfarmers, which has said it will take about five years to turn around Coles. Mr Luscombe said trading in fiscal 2008 has been extremely rewarding with the business performing well overall. "The significant re-investment in each of our businesses will continue to drive future growth," he said. "These key investment initiatives include the rollout of our 2010c format stores in supermarkets and our new format BIG W, which are both progressing well."

Woolworths is still awaiting a Court of Appeal decision on whether the Commerce Commission can both Woolworths and Foodstuffs from making takeover bids for The Warehouse. New Zealand-owned Foodstuffs and Australia's Woolworths each have 10 percent stakes in The Warehouse and successfully went to the High Court to overturn the commission's decision to block any potential takeover. The Commerce Commission appealed that decision and the court case was completed in early May. Interested parties expected a decision last month.

Group supermarket sales rose to $A40.313 billion in the year, to be up 8.3 percent on a normalised basis. Sales for the Australian food and liquor business climbed 9.9 percent to $A30.5 billion in the year, with comparable sales up by 6.3 percent. Woolworths opened 30 new Australian supermarkets during the year to bring its total to 780 Australian supermarkets, and 89 Dan Murphy's liquor stores.

Woolworths also owns the Dick Smith electronics chain. Fourth quarter sales in consumer electronics rose 16.3 percent, boosted by 5 new store openings in the quarter. Comparable-store sales rose 3.8 percent.

Finance Minister Michael Cullen has given his strongest call yet for a fundamental change to monetary policy, saying it is harming long-term growth by discouraging investment in exporting.

"The accepted consensus has been that ... monetary policy helps keep the economy stable by moderating economic cycles, without impacting on the sustainable rate of growth of the economy.  My overriding concern is that this view no longer holds," he said in notes for a speech to accountants Ernst & Young yesterday.  "We need to look seriously at the monetary policy framework and whether it can be made more effective at curing the inflation disease without killing the patient in the process."

He later told The Dominion Post he and the Reserve Bank were at odds.  "Oh yes, I have doubts about that consensus. I think it is probably the view the Reserve Bank would still hold but it's not a view that I would share."

Despite the dollar's recent fall, it was still much higher than was justified by medium-term fundamentals - and had been for much longer than in previous economic cycles, he said.  "That can have an effect on how people see the long-run returns to exporting and there's a risk that people decide that exporting or investing in exporting is simply not worth the effort."  He expected the current select committee inquiry into monetary policy to look at the issue.

National finance spokesman Bill English has rejected options for change, including a mortgage levy and ring-fencing losses on investment properties.  He has suggested the current interest rate tool would be sufficient.  However, Labour probably sees political capital in opting for change, leaving National to defend the status quo at a time when exporters are being hit by a high dollar and interest rates are pushing up housing costs.  Both main parties have identified affordable housing as a key election battleground.

Dr Cullen said yesterday that his cash surplus for the past financial year would be higher than forecast on Budget night, reinforcing the view that he was running the tightest fiscal policy of any party.  "When you add up government spending and subtract taxation, and the investment we are making in the New Zealand Superannuation Fund, the Government is removing demand from the economy."

KiwiSaver would also reduce pressure on monetary policy.  "If we save more, we consume less."

Mr English said the improved cash surplus signalled Dr Cullen was preparing an unprecedented election year spend-up.  "It's called lollynomics."  He said Dr Cullen continued to blame others for high interest rates and high inflation caused by his economic management.

Massey University business researcher Claire Massey stated in The Dominion Post that lifestyle and mum and dad firms are just as valuable to the economy as embryonic multinationals . For New Zealand Trade and Enterprise, supporting the mums and dads and more ambitious businesses is not an either/or – we have to do both.

New Zealand is a country of small businesses. We don't have enough big ones. From a national economic perspective it's misleading to present it as a competition and it creates a misunderstanding of NZTE's priorities and activities.

Which makes a bigger contribution towards increasing the wealth of all New Zealanders – a local shop selling to the local market or a similarly sized export business taking New Zealand products to world markets? From NZTE's point of view it's got to be the exporter, though that doesn't mean the needs of other businesses are ignored.

So, for local economies what Professor Massey says is true. But it's not clear that the activities she refers to will increase the wealth of the nation. The question for NZTE is: How do we quickly extract the biggest possible amount of economic growth out of our $180 million annual budget for the benefit of all New Zealanders? Professor Massey sets out one option – spread ourselves thinly and support as many small businesses as possible in what she calls a bottom-up approach.

Business size is not an overriding factor in our decisions on who to support. Ambition to expand matters a lot more.

All the same, a business with a turnover of $100,000 growing 10 per cent is not as valuable to the national economy as a $1 million business growing at the same pace. And a business wanting 50 per cent annual growth is potentially more valuable than a less aspirational one.

Also businesses that export help make the economic cake bigger in a way that domestically focused ones cannot by taking advantage of the much larger growth opportunities available on world markets. A critical element in export growth is the type of jobs they tend to generate.

For most New Zealand businesses, major international opportunities revolve around using technology and innovation to add value to their products and services. To do this they need skilful workers. Paying the minimum wage is not an option. These realities drive what NZTE does on the ground. It explains why we spend about 60 per cent of our operating budget overseas and about half our grant funding on international market development. The percentages devoted overseas are increasing.

When NZTE started in 2003, grant funding available to help businesses developing international markets was $7.6 million. Now it is more than $60 million. Most recipients of this support are small businesses. Last year we had 659 high growth clients on our books. Nearly half had turnover of less than $3 million.

Professor Massey also suggests NZTE is only interested in these businesses. A look at NZTE's activities shows this is not so. Last year 13,000 small businesses took part in NZTE training courses, there were 121,525 unique visitors to our biz.org.nz website and the Biz 0800 Contact Centre and our regional offices received 17,740 calls.

If you add in the companies benefiting from broad NZTE programmes such as the regional and sector initiatives and event support, it is clear that NZTE is helping a large percentage of New Zealand businesses. In 2006-07 NZTE spent $11.7 million on business training and capability building and $7.3 million on information and advice.

These services are available to all New Zealand businesses though they are often delivered through other organisations. Many businesses probably don't know the funding comes from NZTE – which may explain the 15 per cent figure reached by the Massey University researchers.

The balance between what NZTE does to support all New Zealand businesses and high growth ones and between our overseas and local work is a source of debate. But NZTE recognises it has to help ensure that there is a healthy and resilient base of companies in New Zealand. From this base will come the companies with the desire and ability to take advantage of opportunities for out-of-the- ordinary business growth – the embryonic multinationals.
# Tim Gibson is New Zealand Trade and Enterprise chief executive.

Government departments are elitist and ignorant when it comes to helping small firms, one of New Zealand's leading small business experts says.  Massey University professor Claire Massey has criticised the Ministry of Economic Development (MED) and New Zealand Trade and Enterprise (NZTE) for ignoring most of New Zealand's small businesses.

Massey targeted the Government organisations' definitions and the policies they used to interact with small and medium enterprise (SME).  "They are using a construct -- the business life cycle -- which comes from large firms. If that is the only framework you use to look at small businesses, it misses the point," she said.

SMEs made up 99 per cent of New Zealand's business community, yet NZTE only dealt with the top 4% -- firms with at least 20% growth over five years.  "We love to see David beat Goliath, to see Icebreaker, Weta and Trade Me take New Zealand to the world. But most New Zealand firms are not like this," she said.  "We have to stop griping about lifestyle businesses and mom and pop firms as if they were a bad thing. They are not all embryonic multinationals, but they are just as valuable to the economy," Massey said.

The focus also missed the real force behind eight out of 10 businesses -- that of the owner.  A 2005 survey by Massey University showed less than 15% of small firms had got any help from MED or NZTE, and many knew little about what was available.  "They don't seem to mind being treated like second-class citizens, while we run around looking for the next Sam Morgan," Massey said.  While NZTE had $180 million a year mostly devoted to businesses with up to 100 staff, they blamed budget constraints for the fact they only interacted with the top echelon of those, Massey said.

But if that attitude was adopted within other Government responsibilities, such as education, it would be intolerable, she said.  "That's like dealing only with A students. It is easy to make a success out of A students."  New Zealand was not alone; most countries had an ill- thought out approach to small business development, she said.  "Countries just say `What should we be doing, let's focus on high growth.' There's not much sophisticated thinking going on there."  Taiwan -- "one of the development miracles of the world" -- had a bottom-up approach to development, putting the majority of their resources into small business, acknowledging that was where the growth potential was.  "That completely woke me up, they are doing the exact opposite of what we are doing," Massey said.

A MED report last month on structure and dynamics in SMEs showed that firms with 20 or less employees accounted for nearly 60% of new jobs in New Zealand from 2001 to 2006.  The findings showed firms with up to five workers comprised 87% of New Zealand enterprises, contributed 30% more new jobs than firms with 500 or more staff and made twice as much real profit per employee than any other sized grouping.

Encouraging the owners of "low-growth" businesses would have a massive effect on the economy, because even a small change in productivity over the large grouping would have a big upside, Massey said.

Wellington economist Gareth Morgan is calling on the Government to clean up the fund management sector and make KiwiSaver "safe" to invest in.  "This government has to clean up the industry before it hands the heads of four million Kiwis to it on a platter," Dr Morgan said.

Savers might be seduced by tax breaks and employer levies in the form of KiwiSaver announced in last week's Budget, Dr Morgan said.  Dr Morgan called for government regulation to protect savers from fund managers contracting out of their fiduciary positions of trust and creating reserves that might be lost to some savers.

He is offering his own KiwiSaver scheme and has pointed out that money in KiwiSaver schemes is not government-guaranteed.  "There is no guarantee as to the safety of your money, no undertakings whatsoever as to the returns you can expect, and it is delivering you holus-bolus into the arms of the long-term savings sector."

Finance Minister Michael Cullen confirmed last week that KiwiSaver would not be government-guaranteed, and a spokesman pointed out yesterday that there was no government guarantee in Australia either.

The spokesman for Dr Cullen said no one was being forced to save.  "If you have a guarantee, that would surely reduce the incentives for the fund managers to perform."

The Government had added requirements that KiwiSaver schemes be registered with the government actuary, and have certain disclosure and reporting conditions consistent with international standards.

Dr Morgan said if KiwiSaver underperformed, lost people's money or even took it, then that was "tough - buyer beware".

Fund managers have rejected Dr Morgan's recent criticism of the sector, saying KiwiSaver would be governed by strict regulations putting considerable onus on fund managers to operate in the best interests of investors.

KiwiSaver schemes were reviewed by the government actuary before approval, to ensure all fees and charges were fully disclosed and were not unreasonable.  The six default providers (AMP, AXA, ASB, ING, Mercers and Tower) have been reviewed by an independent, government-appointed panel.

The KiwiSaver Act contains provision for the government actuary to apply for cancellation of registration of a KiwiSaver scheme that fails to operate in an acceptable manner.

KiwiSaver products will be managed in accordance with a trust deed.  Several fund managers said recently that any suggestion that the sector would not be working in the best interests of investors and consumers or that it offered KiwiSaver products and service that were not best practice did not stand up to scrutiny.

Dr Morgan said yesterday that the Government had to make KiwiSaver safe to invest in, but that did not involve a government guarantee.

The life insurance sector should be forced to accept a fiduciary duty to its investors through KiwiSaver and should not be allowed to contract out of that through trust deeds.  The companies should not create reserves from savers' money that savers would never see again if they left the scheme or changed provider.

Economists are warning that KiwiSaver could pump up the already soaring housing market when employees start withdrawing money for their first home.

From July 2010, KiwiSaver members will be able to put their and their employers' contributions toward a first-home deposit. At the same time, they will be eligible for a Government subsidy of $1000 a year, capped at $5000.

Experts are warning that the scheme could cause a flood of money into the property market, boosting already high prices.

BNZ chief economist Tony Alexander said any subsidy such as KiwiSaver would put upward pressure on house prices, though the extent of this was impossible to predict.

Westpac economist Donna Purdue agreed. "Any kind of subsidy to housing is obviously going to push up house prices."

Mr Alexander said there was a school of thought that once people saw their savings grow, the desire to own a house would subside - but warned that had not happened in Australia, which had compulsory superannuation.

Finance Minister Michael Cullen said Inland Revenue would get $14.6 million to get tough on property speculators, ensuring they are paying tax in a bid to dampen their effect on the property market.

Workers on the average wage will be saving at least $100 a week by 2011 if they sign up for KiwiSaver, but the decision to force employers to contribute is likely to dampen pay rises.

After weeks of hints that the Government planned tax incentives to kick-start KiwiSaver when it goes live on July 1, Finance Minister Michael Cullen dropped a Budget bombshell with the news that employers will be made to contribute.

Under the revised scheme, workers who sign up for KiwiSaver - meaning they pay either 4 or 8 per cent of their gross pay toward retirement or a first home - will have contributions matched by the Government up to a cap of $20 a week.

Employers whose workers join KiwiSaver will be made to pay a further 1 per cent of their gross wages into accounts from April 1 next year, rising by 1 per cent each year to a maximum of 4 per cent by 2011. The Government will reimburse employer contributions up to a maximum of $20 a week.

The plan means that by 2011, workers on the average wage - expected to be about $52,000 - will be saving at least $40 a week, with $20 a week from the Government and $40 from their boss.

Workers who put aside 8 per cent of their pay will be saving $140 a week.

The Government subsidy will also apply to people not in work - such as stay-at-home parents and students - who independently open accounts, provided they contribute $20 of their own.

Everyone who opens a KiwiSaver account will also get a one-off $1000 kick-start and those who use accumulated funds to buy a first home will receive government grants of between $3000 and $5000.

From July 1, all new employees will be automatically enrolled in KiwiSaver, though they will be able to opt out.

Employers must also offer schemes to all existing employees. The Treasury estimates up to 50 per cent of all workers will join.

The plan received a hostile response from business groups and was attacked by National, which said the plan would punish the lowest-paid who could not afford to sign up.

"In the end there is only one group of people who will pay the bill for all of this, the average New Zealand wage and salary-earner and the lower-income self-employed," finance spokesman Bill English said.

National leader John Key said employers would use compulsory contributions to deny or resist pay rises.

Dr Cullen conceded that compulsory employer contributions were expected to be taken into account in wage rounds, but said the scheme would address New Zealand's current account deficit - the difference between what the country spends and earns overseas.

Prime Minister Helen Clark says the closure of a Fisher & Paykel plant in Auckland is the "way of the world" and that the future of manufacturing in New Zealand lies in design, research development and niche products.

Kiwi whiteware maker Fisher & Paykel announced last week it was moving production of its washing machines and clothes dryers to Thailand, at the cost of 350 jobs in the next year.

The company said many of its competitors were already making machines in low-cost Asian countries. It expects the move will deliver annual benefits of $10 -$15 million.

Clark said yesterday: "It's the way of the world... For a long time, processing work like the type Fisher & Paykel does has been migrating from western centres to low-cost centres..."The key for [New Zealand] is where the company is based, and where the high-value design R&D work is done, where it's branded, where the export revenue comes."

The F&P news triggered a warning from Sleepyhead that manufacturers were being squeezed out of New Zealand by interest-rate hikes and the high dollar. It said others would be forced to move offshore if conditions didn't improve. Clark said: "That's a business decision for them."

The Green Party and the Engineering, Printing and Manufacturing Union both say the Government's sole reliance on the official cash rate as a brake on inflation is hurting exporters.

Clark yesterday conceded the official cash rate was a "blunt instrument". But she said there was no cross-party consensus on workable alternatives. She also dismissed suggestions Government spending was driving the dollar upward.

Cabinet ministers reacted like headless chooks to news that major NZ exporters are upping sticks to Asia.  Instead of lashing out at political opponents ("Just take a cold shower please, Trevor Mallard"), they would have been better off calling a summit to find a common accord on how to avert a looming exchange-rate crisis.

There's no need to subject National to another round of wedge politicking, as Mallard is obviously attempting by focusing on his opponents instead of a rather serious problem. Ministers and their National counterparts tried to do just that at a secret meeting with the heads of the Reserve Bank and Treasury last year.

They got together to study a range of supplementary stabilisation instruments devised by Reserve Bank and Treasury officials. The secrecy was blown in February after some politicking from both sides.

On the agenda this time should be an investigation into non-politically correct options: These could include currency controls under study in much of Asia; Reserve Bank intervention in the dollar; pegging the NZ dollar to its Australian counterpart, and dropping interest rates to spark an outflow of hot money.

None of these are particularly palatable. They could all fail - and might attract another judgment from Bollard that they simply won't work.

What should go onto the agenda are the elements over which the politicians do have control. Primarily lavish government spending levels, which are increasing the pressure on monetary policy, as Bollard notes.

We are all paying for the 2005 electoral auction. Labour offered interest-free student loans and expanded its Working for Families tax credits. National countered with wide-ranging tax cuts.  Irrespective of the ideological differences between the respective policy stances, the impact is obvious.

The OECD suggests that, while supplementary stablisation instruments should be pursued, adjustments to fiscal settings provide an obvious alternative. It noted that the Treasury forecasts a significant fiscal impulse in the current and next two fiscal years, which is helping to underpin domestic demand. If the stance was neutral, the burden on monetary policy would be easier and interest rates could be lower.

It suggested there is limited ability to scale back spending plans. But there should be greater flexibility around 2008-09, which happens to be smack in the middle of the 2008 election bidding cycle.

The OECD doesn't say so outright, but if Labour and National could reach an accommodation for 2008-09 - or, better still, allow Labour to reduce committed spend in 2007-08 in return for a National ceasefire on opportunistic political attacks - much economic heartache may be avoided.

The outlook for exporters is not great. If the NZ dollar remains high, squeezed profits in the tradeables sector will spread via slower wage growth, job losses and postponed or forgone business investment.

The OECD notes three potential possibilities over where the burden of adjustment might fall:

* On exporters and import-competing producers;
* Through households deciding to cut back their consumption in response to the impact of higher interest rates; and
* The risk of a less benign scenario triggered by a sharp shift in foreign investor sentiment.

If investors decided to pull out of NZ dollar denominated assets, this could lead to a large, potentially disorderly fall in the exchange rate, which would restore the external balance and boost exporters' competitiveness.  This, in turn, would place households under renewed stress as the Reserve Bank would have to increase the interest rate premium to attract investors back into the currency.

Given the potential variables, we should not be surprised at the decisions by some of our leading exporters to shift production offshore.

Fisher & Paykel's plant move to Thailand had been widely telegraphed among the Auckland business community. But the forthcoming departure of this iconic company has touched many New Zealanders, as F&P had defied the odds by keeping its Auckland plant going for so long.

The decision to move closer to markets is a rational one. The alternative is to stay at home, be punished by crippling exchange and interest rates - and still be left without sufficient critical mass to achieve the economies of scale to stay competitive.

Other competitive pressures will emerge as we slip further behind Australia. The New Zealand Institute's number-crunchers released a graphic report at last week's Australia New Zealand Leadership Forum in Sydney.

Australia's GDP per capita (A$47,181) is about 30 per cent higher than New Zealand's (A$33,682), with NZ well below the OECD average. NZ's figure is now lower than all Australian states, including Tasmania.  Top performers are resource-rich Northern Territory (A$59,649) and Western Australia (A$58,688). The lowest is Tasmania at A$35,253 - but even that state heads off New Zealand on A$33,682.

Those low incomes are driven off the low wages are paid here, which have acted as an incentive to keep manufacturing exporters here.  But there's problems ahead. Each week, about 700 Kiwis join the exodus to Australia.

If companies want to stay here and develop high-growth technologically advanced industries to replace the departing manufacturing base, they will be hard-pressed to compete for highly-skilled labour.

Other figures presented to the forum suggest that a million New Zealanders now live offshore - roughly 20 per cent of our population.

Australia, with a population of 20 million, has just 800,000 offshore.  While Australia turns to our highly-skilled people to fill gaps, New Zealand's ethnic mix is changing as we turn to the rest of the world to cover shortages. The business implications from this are profound.

Half of New Zealanders want a common transtasman currency, says a poll issued last night in Australia.

The UMR poll reveals 49 per cent of New Zealanders favour a shared dollar, against 41 per cent of Australians.

That is a dramatic change since 2000 when only 29 per cent of New Zealanders supported such a change.

But Prime Minister Helen Clark warned today that a common transtasman currency would mean New Zealand adopting the Australian dollar.

"The convergence of trying to bring the two together could be quite rough on the smaller party," she said.

Miss Clark said an Anzac dollar had never been on offer and it had always been clear there would be one currency - the Australian dollar.

The issue has been debated for years, but shot back into the limelight after National Party leader John Key suggested last week it was an idea that should be explored.

Finance Minister Michael Cullen attacked Mr Key then, and repeated his opposition last night, saying New Zealand would lose control of monetary policy if the Kiwi dollar was abandoned in favour of a joint currency.

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He was backed by National Bank chief economist Cameron Bagrie, who said: "We would have to be insane to do it."

The poll result was revealed at the Australia New Zealand Leadership Forum in Sydney.

The annual two-day forum, attended by 80 leaders in their fields, tries to develop economic and other links between the two countries.

Dr Cullen said the poll should have asked whether New Zealanders supported the adoption of the Australian dollar, as the Howard Government had already made it clear it would not abandon its currency in favour of an Anzac dollar.

But Mr Key - who is also at the forum - pledged to raise the issue again at today's economic debate.

Supporters of a joint currency say lower transaction costs in transtasman trade and the removal of currency uncertainty between New Zealand and its most important trading partner should contribute to increased trade and enhanced economic integration.

But opponents say full currency union would mean the end of an independent monetary policy, loss of economic sovereignty, and a reduced ability to insulate ourselves from any shocks that might befall the Australian economy.

Inflation

Inflation in Australia was 3.3 per cent to last December. In New Zealand, it was 2.5 per cent to March 31.

But New Zealand's interest rates are higher. The official cash rate is 7.5 per cent, against 6.25 per cent in Australia.

Mr Bagrie said New Zealand would be "giving up a lot for getting nothing in return".  "Our currency will be dictated by Australian conditions, by what the Reserve Bank of Australia does, by hard commodity prices such as gold, tin and coal which Australia exports but we don't."

UBS New Zealand economist Robin Clements agreed that having a joint currency would make New Zealand too dependent on what was happening in Australia.  "If exporters here now are complaining about the dollar, and homeowners are complaining about interest rates rising because Auckland house prices are going up, how will people feel when it gets painful because Sydney house prices are going up?"

There were benefits for companies moving into Australia, but the two economies would have to be far more closely integrated before it could make sense.  "The conditions aren't there for it, and I don't think it's a sound argument."

Mr Clements and Mr Bagrie were surprised the level of public support was so high, and said the way the question in the poll was worded could have influenced the replies.

"If it asked, 'Are you prepared to have monetary policy run by the Reserve Bank of Australia?' you might get a different answer" said Mr Clements.  In the UMR poll, 70 per cent of those surveyed are positive about Australia.

But they are concerned about the hollowing-out of the NZ economy, and 62 per cent feel the permanent movement of New Zealanders to Australia is bad for New Zealand.

At a pre-forum press conference Australian Foreign Minister Alexander Downer said the increasing amount of investment by companies across the Tasman showed the trans-tasman relationship was working.

Australian companies have invested about $A40 billion ($44 billion) in New Zealand, and New Zealand companies have put about $A22 billion into Australia.  But the UMR poll suggests New Zealanders are not comfortable with the Aussie buy-up - 52 per cent of those polled believed the increasing Australian ownership of New Zealand companies was bad.

- Additional reporting Claire Trevett, NZPA