Sunday Star Times

A fully-fuelled company car is worth $4000 more than a year ago - and businesses are trimming salaries to claw cash back, writes Esther Harward. If you've got a company car, don't expect a pay rise.

Bosses are cutting salaries to compensate for higher vehicle running costs and cancelling perks such as allowing staff to take vehicles away for long weekend trips.

Remuneration consultant Helene Higbee said higher petrol prices and interest rates had pushed up the value of a company car to an employee. A medium- sized 2.4 litre company car for personal use was now worth $17,306 a year - up from $13,199 last year.

Higbee said employers were now less willing to give staff unlimited use of company vehicles and most set a spending limit on personal travel. One employer asked last week if she could do anything about an employee running up an $800 monthly fuel bill.

Cars were the most emotive part of remuneration negotiations and most companies tried to keep them out of contracts so they weren't forced to meet rising costs, she said.

Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson said employers were starting to factor in the increasing value of a company car when considering a pay rise. It was now very common for employers to reduce salaries to make up for higher vehicle running costs, he said. Companies tended to revise the value of car and fuel packages every year, and the price of petrol had risen by more than a third over the past 12 months.

At the same time bosses were increasingly wanting to cash up vehicles and paying employees the equivalent in cash because they were sick of the hassle of insurance claims, administration and staff abuse of vehicles.

HR consultant Kevin McBride said most employees preferred the cash equivalent of a company car, despite paying more for fuel. "Whereas in the past a company car was a bit of a status symbol, increasingly employees prefer to make their own decisions about what sort of vehicle they buy."

Staff who use their own car for work and claim costs back from their employers could find they are not getting properly reimbursed.

Many companies use the IRD's mileage rate of 62 cents a kilometre to claim back tax. The rate was set in 2005 when petrol was $1.53 a litre, and is under review. The AA says it costs 79c a kilometre to run a medium-sized car.

Meanwhile, the AA says motorists are getting stranded in increasing numbers as they try to stretch out the last few drops of fuel in their tanks. Its staff delivered 2061 emergency fuel drops in May - a 20% increase on the February total.

National road service manager John Healy said more city dwellers than rural people got stranded, and in many cases they ran out of fuel on motorways and bridges. "People are taking a risk, thinking 'I'll just let it get down a bit further and wait till I see a petrol station where fuel's a bit cheaper, or they have fuel vouchers for a particular type of station."

Superintendent John Kelly, of Waitemata's road policing unit, said drivers who got stuck on high- volume roads such as the Auckland Harbour Bridge caused chaos and made it dangerous for police and AA staff to rescue them. "They don't save anything . . . It defies any sort of common sense really."

New Zealand is likely to lose more home-grown companies as head offices follow manufacturing facilities overseas, warns a Treasury report, but ministry officials say there may be little the government can, or should, do about it.  The research was part of a wide array of work at government level assessing the risks of a "hollowing out" of the economy as jobs, firms and ownership go overseas.

Consultants Andrew Sweet and Murray Nash reported to the Treasury in September that New Zealand firms with global ambitions soon encountered the almost irresistible pull of large masses of consumers and bigger manufacturing bases overseas. Once production left New Zealand, they said, sales and marketing soon followed, with head office and R&D usually left last.

"Once a company has begun relocating key components of its supply chain offshore, a self-reinforcing process often begins, with the relocated components acting as `magnets' of attraction for components remaining in New Zealand," the study, based on confidential interviews with 15 firms with substantial overseas sales, said.  Head office functions tended to be "stickiest", or most resistant to uprooting, often because key staff wanted to stay in New Zealand. However in the long run, even this was not always compelling.

The report also found that companies, once purchased by foreign owners, were more likely to have their local offices shut down and moved overseas. Other than to access New Zealand's natural resources, "firms see few compelling benefits from locating activity here".

Although the Sweet/Nash report highlights the risks of corporate exodus, Treasury's position, revealed in papers released to the Sunday Star-Times under the Official Information Act, appears to have shifted in the past 12 months. 

A December 2006 Treasury internal discussion paper on "hollowing out" says the loss of head office type functions and high-skill, high-wage jobs overseas poses risks to the economy because of spillover effects.  These include loss of income for New Zealand; loss of job opportunities and career progression; loss of international connections; and loss of expertise that could encourage the emergence of a cluster of industries.  Prime Minister Helen Clark was briefed by Treasury on the issue in March, a month before Fisher & Paykel announced 350 job losses due to shifting production to Thailand.

But by October this year officials were telling ministers there was no hard evidence any "hollowing out" was under way, and that there was little the government could do about persuading firms to stay in New Zealand.

It pointed to the fact that total manufacturing jobs have grown by 14% between 2000 and 2006, even as manufacturing declined in relative terms compared to other sectors of the economy.  Treasury said even the loss of entire firms overseas was not necessarily a problem, as long as skilled individuals and capital switched to new ventures in New Zealand. There was already evidence, for example, that ex-Navman staff and management had been re-employed.  "In practical terms this means there is probably only a limited role for policies directly aimed at holding firms in New Zealand, given the fiscal and economic risks of the government targeting support and assistance toward narrowly defined sectors or firms," it said.

Finance Minister Michael Cullen told a law firm's business breakfast meeting last month that firms would succeed by focusing on their strengths.  "If New Zealand can determine which elements in the value chain we can realistically seek to achieve some level of dominance, we can go one step further in improving our competitiveness and in securing greater gains from globalisation," said Cullen.  He pointed to the introduction of a new research and development tax credit from April 1 and said the new research showed policies such as KiwiSaver helped retain local ownership.

The Warehouse Group considered attempting to buy supermarket operator Progressive Enterprises as it looked at options for entering the food business, court documents show.

Ironically, Progressive, which operates the Foodtown, Countdown and Woolworths supermarket chains, was later taken over by Woolworths Australia, which has since applied for High Court clearance to make a takeover offer for The Warehouse.

The information about The Warehouse's ambitions for Progressive was contained in the court's ruling released last week, which cleared the way for Woolworths or rival supermarket operator Foodstuffs to make takeover offers, unless the decision is appealed.

The documents show The Warehouse also considered forming a partnership with another food retailer as a way of entering the food market, but instead decided to go it alone and roll out its Extra stores.  However it appears The Warehouse has not completely abandoned the idea of buying another retailer.

Although much of the evidence the court examined has not been publicly released, the judgement reveals that Warehouse chief executive Ian Morrice told the court: "The Warehouse has a strong balance sheet. The Extra strategy has been testing a number of different things and there is a long list of things the board will need to consider. That includes what other investment opportunities are presented."  The judgement also suggested that at least some of The Warehouse directors shared institutional investor scepticism about the Extra concept and the risks it posed.  It quotes Warehouse founder Stephen Tindall as saying "the boardroom battles we had around going into food were quite historic" and that the strategy was always seen as "risky".

The court papers also throw some light on the difficulties The Warehouse has encountered since opening its first Extra stores and suggested the company has been disappointed at the prices grocery suppliers were prepared to offer the company.  "Suppliers had indicated to The Warehouse that a third player would be welcomed but `reality' and `promise' are two different things," the judgement said.  This meant The Warehouse Extra stores could not match the special promotional prices provided by discount operators like Pak'n'Save.

The Extra concept was also adversely affected by the acquisition of Progressive by Woolworths, which created a common buying umbrella for that company's Australian and New Zealand supermarkets.  Morrice told the court that Woolworths' acquisition of Progressive had put pressure on suppliers to cut their prices. As a result, competitive conditions had fundamentally changed since The Warehouse embarked on the Extra strategy.  When the research for Extra was carried out, the margins in supermarkets were higher than they are now, the court was told.

The Sunday Star-Times also understands that when The Warehouse opened its first Extra store at the Sylvia Park mall in Auckland, it accused Progressive of predatory pricing in its neighbouring Foodtown outlet, and sought a High Court injunction and the intervention of the Commerce Commission. It was unsuccessful in both instances.

Nicky Hager follows the route from September 11 to this country's terrorist responses.

The police "terrorism" case against Maori, peace and environmental activists has its origins long before Operation Eight began last year. Like the five-year case against Ahmed Zaoui, it is part of New Zealand's misguided response to the much wider disaster and folly of the United States' war on terror.

The story begins in January 2002, four months after the September 11 attacks, when cabinet approved new anti-terrorism legislation and "operational capabilities". The result was the Terrorism Suppression Act and, more important, a range of new anti-terrorism forces. The police created: a position of assistant commissioner for counter-terrorism; a 12-person anti-terrorism Strategic Intelligence Unit at police headquarters; a fulltime commando-style Special Tactics Group specialising in terrorism; and police liaison officers in Washington and London to channel anti-terrorism ideas and intelligence to New Zealand. An extra 35 "national security" police posts were added in 2004, the majority in "investigative and intelligence" units.

The Security Intelligence Service also got 20 new anti-terrorism staff at that time. Their task: increasing terrorism intelligence collection within New Zealand. They provided more field intelligence officers, especially in Auckland, an enlarged surveillance team and new analysts at headquarters. New interception and photographic equipment cost $1 million and, like the police, an SIS officer was posted to the Washington embassy to increase collaboration with the US intelligence and security agencies.  By late 2002 the new anti-terrorism bureaucracy was in place, closely tied into US and British thinking. An internal list of police terrorism-related personnel in October 2002 has 29 names. But already by then the US war on terror was going horribly wrong, with intelligence being invented to justify attacking Iraq, illegal seizure and torture of "terror" suspects and US intelligence and security agencies targeting numerous peaceful Americans. It started to go wrong in New Zealand too.

The first sign of trouble was in December 2002 when the SIS and police thought they had their first real terror suspect. Never mind the unlikelihood that a dangerous terrorist would arrive at Auckland airport and introduce himself to officials using his real name.  Ahmed Zaoui was transported to prison in a cavalcade of police vehicles with a helicopter overhead and thrown into solitary confinement. An embarrassing five-year story of incompetence and unwillingness to back down began.

A second worrying sign came soon after, with hints that the new anti-terrorism personnel were involved in policing protests. Official Information Act documents about peace protests against the March 2003 invasion of Iraq show that written briefings for the minister of police on US embassy protests were not written by the ordinary Wellington police, but by counter-terrorism assistant commissioner Jon White.  At the same time, policing of protest was becoming more aggressive, with heavier treatment of protesters than is normal in New Zealand. Hundreds of arrests occurred, most for actions that don't normally result in charges, such as writing with chalk on a footpath.

After an anti-war protest against John Howard in early 2003, a man was charged with never-before-used legislation for burning a flag. Another man was charged for a protest email to the American embassy with the words "napalming babies".  Hardly any of the hundreds arrested were eventually found guilty of offences, but there was an escalation of distrust and confrontation between police and protesters. The police operations manual instructs officers to protect demonstrators' freedom of speech and peaceful protest. But a pattern developed of heavy-handed policing and intrusive intelligence gathering. Indeed it appears that intelligence gathering was in part driving the police's actions. A police investigation into a small protest in late 2003 illustrates this graphically.

On October 2, 2003 World Farm Animal Day a group of young Aucklanders held a protest at the Tegel Foods offices about treatment of chickens. They scattered some hay on the floor of the reception area and 23-year-old school teacher Jesse Duffield delivered a protest letter. Police documents estimate the cost of cleaning up the hay was $111 plus GST.  However, early the next morning, detectives raided Duffield's home. He was arrested roughly and charged with home invasion (maximum 10 years' prison) and intentional damage (maximum seven years' prison). Police opposed him getting bail and later imposed a 9pm-6am curfew. Meanwhile his car was impounded for a week and his house searched by detectives. They seized his computer and mobile phone, plus 100 floppy disks, posters off the walls and a T-shirt saying "GE, you are what you eat." These possessions were not returned for nine months.

The only rational explanation for their actions was intelligence collecting. The police eventually dropped their absurd charges but they'd got hundreds of thousands of emails and texts to build a profile of the animal rights groups. The detective who led the raid, Mike Paki, was not a normal CIB officer, but a police intelligence officer from the Auckland Threat Assessment Unit who was surprise, surprise studying animal rights and other protest groups. It appears police were working their way through activist groups looking for security threats. It's not hard to see where such ideas would come from.

At the same time as Jesse Duffield's case, there were many such raids occurring in the US. One of them, in Philadelphia in 2004, was at the home of a member of the group Hugs for Puppies, which protests against animal-testing. The agents, who made no arrests but seized computers and mobile phones, were from a special FBI unit called the Joint Terrorism Task Force (JTTF). US animal rights and environmental groups have never killed anyone but are openly branded as terrorists by the authorities.  Since September 11 the JTTF has conducted raids against animal rights groups, environmentalists and other protest movements. In February 2002, the FBI's Domestic Terrorism Section Chief James Jarboe told the US congress that "special interest extremism" had emerged as a "serious terrorist threat".  Many so-called eco-terrorists have received long prison sentences on terrorism charges.

In 2005 the New York Times reported that newly disclosed FBI records showed that "counter-terrorism agents at the FBI had conducted numerous surveillance and intelligence-gathering operations that involved ... groups active in causes as diverse as the environment, animal cruelty and poverty relief".  New Zealand anti-terrorism staff attending US intelligence meetings and reading US publications were constantly exposed to this view of threats.

During these same years, New Zealand police intelligence and counter-terrorism staff dramatically increased their surveillance of protesters, and policing of protest and anti-terrorism seem to have become increasingly mixed. This provides the setting for the terrorism raids last month.

New anti-terrorism police intelligence units had identified and profiled radical suspects. The new anti-terrorism Special Tactics Group had collected covert video and photographic evidence in the mountains and the SIS in the cities. New anti-terrorism police staff planned the nationwide operations; and the new anti-terrorism boss Jon White oversaw it all. There has been a buzz around security circles in Wellington for the past year about them being on to something really big.  We can agree with the solicitor-general when he said that the police were right to investigate a group of political activists playing with guns in the mountains. But the police's commonsense quickly ran out as they turned it into a giant terrorism operation. The problem appears to be a mixture of poor judgement, preconceived ideas and organisational vested interest. Anti-terrorism staff arranged ill-fitting evidence, on people they'd already defined as threats, into the picture they were being paid to find.

It was inductive logic reinforced by group think, as NZ officials unthinkingly followed the American-style "security" model that's been so spectacularly bad at providing real security and peace elsewhere.  Sensible cops would have known radical talk is completely different to having real evidence of preparations for cold-blooded murder. In fact, the numerous police raids on and since October 15 appear to have been fishing trips by officers hoping to stumble over evidence of a plot that they had not managed to find in the previous year of intensive surveillance.

Sensible cops should understand the best defence against extremism and political violence is a tolerant, open society and freedom of political actions. Aggressive policing of ordinary healthy protest, heavy-handed intelligence targeting of ordinary people, stormtroopers smashing down doors, machine guns held to people's heads and military-style raids on rural communities are all unforgivably short-sighted.

Erin Brockovich, the woman immortalised by Hollywood for defending Americans against polluting corporates, is fronting an advertising campaign for appliance retailer Noel Leeming.

Brockovich can be seen on New Zealand television screens tonight, the first time she has fronted a commercial brand campaign.  Filming took place in Los Angeles last month. It is not known what Brockovich was paid.

In 2000, a film starring Julia Roberts portrayed Brockovich's fight on behalf of the residents of Hinkley, California, who alleged a nearby plant contaminated their water, causing toxic posioning.  The case was settled in the residents' favour for $434 million ($US333m).

Noel Leeming chief executive Andrew Dutkiewicz said Brockovich agreed to the campaign only on the basis she could talk about what mattered to her most.  In the ads Brockovich talks about doing the right thing, behaving with integrity, giving back to the community, caring for the environment and the need to look after people.  Dutkiewicz said the company had simply called Brockovich's agent and asked if she would be interested.

Brockovich currently heads her own research and consulting company.

The smugness of the National Party at present is positively nauseating. Three months of encouraging poll results and they are already arguing about the colour of the new drapes for Premier House. (Most, naturally, favour royal blue; some a light green; and there's even a staunch minority still holding out for a rich, ethnic brown.)

This overweening confidence is fed by the unceasing drumbeat of anti-government stories, negative cartoons, and wildly-hyped poll data hurled at them almost daily by elements within the news media. "One Party State!" - screamed a recent headline (although it was difficult to tell whether this was supposed to be a prediction, a description or a suggestion). The business community, prone to believing just about everything it reads in the newspapers - even its own propaganda - is now furiously advising itself on how best to "manage the interface" between business and government under the new regime.

All the usual suspects from the 1980s and 90s - along with a crop of up-and-coming acolytes from the country's leading businesses -gathered on Waiheke Island last week to discuss this "interface" at the Business Roundtable's annual "Dunes Symposium". The two Rogers (Douglas and Kerr) were present to deliver their thoughts on "Business Leadership in Public Policy" - an interesting choice of subject for a former politician and a one-time civil servant. As one of the prime movers of the 1980s reforms was later heard to mutter: if New Zealanders had waited for business to take the lead on public policy reform "we'd still be waiting to start".

Rod Deane - once affectionately known as "Dr Death" - was also in good form, discoursing upon "The State of the Nation". (Not good.) The star-turn of the symposium, however, was undoubtedly the new kid on the right-wing block - John Key. (Although his allocated speaking time of 45 minutes on "National's Economic Vision" did strike me as a trifle generous.) Not to worry. The National Party leader was received by these awestruck minions of Mammon with such reverence that the journalists present could have been forgiven for thinking he had actually walked to Waiheke Island. But, not everyone is ready to hail Key as New Zealand's messiah.

More than a few (including the Labour blogger, Jordan Carter, to whom I am indebted for the following quotations) have noted the leader of the opposition's startling revisions of his own - and his party's - stance on the 2003 invasion of Iraq. Responding to visiting left-wing British MP George Galloway's charge that a National government would be more likely to lead New Zealand into a conflict in the Middle East - Mr Key declared: "(We've) made it quite clear we won't be going to Iraq, we wouldn't have sent troops to Iraq. National did support the Coalition of the Willing's right to send troops, but that's because we are of the view that every country is entitled to take its own actions, but we certainly won't be going."

On March 11, 2003, however, the Rodney Times reported that: "New Zealand should support its allies first and the United Nations second, says National MP John Key. `Any relationship with the United States or Britain has to take precedence over the United Nations.'... He would be prepared to commit any support requested by the United States for a war against Iraq, including SAS and combat troops. `New Zealand should be prepared to fight for the values it believes in."'

At the Dunes Symposium dinner on Thursday night, the keynote speaker, Jonathan Ling, chief executive of Fletcher Building, emphasised the crucial importance of getting the big leadership decisions right. But the statements quoted above expose Key as a leader who made the wrong call on one of the biggest decisions any prime minister is ever likely to make: whether to commit our nation's troops to an illegal war of aggression. Even worse, he is now unwilling to acknowledge his error.

Applauded by New Zealand's business leaders and cheered to the echo by the National Party faithful Key may be - but he still has a long way to go before he's ready for the responsibilities of Premier House. National's redecorators should hold off buying those drapes for a while yet.

About 8500 mum and dad shareholders in collapsed carpetmaker Feltex were yesterday asked to stump up $980 apiece to fund a lawsuit against the company's directors and two brokers who participated in its initial public offering (IPO) in May 2004.

Investment banker Tony Gavigan and Christchurch lawyer Garry Wakefield are spearheading the legal action after failing last December to prevent the High Court putting Feltex into liquidation. To issue representative proceedings, they have written to IPO investors, asking them - and those who bought Feltex shares on market before the end of March 2005 - to join the group in a bid to recover their losses. An initial payment of $600andasigned consent is required.

Gavigan says time is of the essence because some Fair Trading Act recovery rights have time limitations. About 600 Feltex investors late last year forked out $380 apiece - or $228,000 - in an abortive bid to save the company from liquidation. The balance is held in Wakefield's trust fund to cover the cost of writing to investors and bringing the action to trial. Christchurch barrister Chris McVeigh QC will act for the group and an expert opinion has been obtained from Professor Alan Robb, who recently retired from Canterbury University's accounting department.

Gavigan says the key issue is whether the IPO document painted an untrue picture of the company's accounts and future prospects. He notes the prospectus forecast a net $24 million surplus in the year ending June 2005. Instead Feltex lost the lot, he says, and reported a shortfall of $20m in the first two years. Gavigan says that rather than suing the IPO board under the directors' duties provisions of the Companies Act, he and Wakefield are concentrating on Fair Trading Act and Securities Act actions. "Just like the Ribena situation, there wasn't a lot of vitamin C in this box."

He says the group needs at least $1m to bring the matter to trial and he expects at least 1000 people to join the action. The median loss for Feltex investors is about $10,000. Included as defendants in the court action will be those directors who signed the IPO - Tim Saunders, Michael Feeney, David Hunter and Peter Thomas - and the company's vendors and lead brokers, First NZ Capital and Forsythe Barr.

Gavigan says director John Hagen will not be part of the lawsuit as he was not a director at the time of the IPO; nor will the shareholder group be suing Feltex's auditors, lawyers or any other members of the NZX. To succeed in a Fair Trading Act suit, the plaintiffs must prove misleading or deceptive conduct or conduct that is likely to mislead or deceive. The Securities Act causes of action will include technical matters required when companies issue a prospectus before seeking money from the public.

The High Court put Feltex into liquidation last December, owing at least $13.1m to unsecured and employee creditors. There was a $A19m shortfall to the debenture holder, the ANZ Bank. This followed a fierce courtroom battle between Gavigan and the would-be liquidators, insolvency specialists McDonald Vague and Associates.

Gavigan was seeking a court order to become a Feltex director. This, he said, would have enabled him to resuscitate the company by calling a shareholders' meeting, appointing more directors, relisting and recapitalising Feltex, auditing its expenditure and the actions of its directors for the past six years, investigating the IPO and the claims made in its prospectus, coming to a scheme of arrangement with creditors and recasting Feltex's most recent accounts. There was at least $50m in value remaining in the company in the form of tax losses, he told the court. But Justice Rodney Hansen said the law was clear. If Feltex was insolvent, it had to be liquidated.

New Zealand business thinks it needs a change of government to unleash its potential. But all it needs is to change its own culture. The dysfunction starts right in the boardroom and seeps out from there.

That's the harsh but crucial truth demonstrated in spades in the latest New Zealand Herald Mood of the Boardroom annual survey. Once again, it showed what a miserable bunch of unambitious deniers run many of the country's businesses. They were very quick to blame everybody else, particularly the government, for their difficulties. They trotted out the usual long list of complaints about tax, regulation, labour shortages, exchange rate and policies. The poll results showed they were certain the government would lose the next election; and they believed they would then be better off under National.

But this view of the world is more an indictment of businesses than government. The business respondents were remarkably illogical, ill-informed and inconsistent in many of their opinions. Yes, for example, there are labour shortages. But, by and large, the solution lies with the companies themselves.   The best, most profitable companies will attract the staff they need because they can offer them interesting work, career progress and good pay. Refreshingly, the survey quoted chief executives of two such companies.

Of course, governments play vital roles in getting education, skills training, welfare, tax and immigration policies right to maximise the number and quality of people in the workforce.  But if business thinks New Zealand is seriously off the rails on any of those issues, it should lift its gaze from its navel to the wider world. You can find many nations where businesses do better with worse governments. That said, there's always room for improvements. But those take time and even then the success of policies depends on how businesses then use the national workforce.

So it is down to business. If New Zealand is to prosper, businesses have to make the shift from being labour intensive to capital intensive. That is the only way they will improve their technology, sophistication of their products and the wages they can afford to pay. That's the nub of the productivity debate. That's why the Budget cut the corporate tax rate to 30% and offered a raft of other incentives to those companies that have a bit of ambition and plan to invest in their future and the country's.

Superannuation was another crashing, ill-formed and self-serving contradiction revealed in the Mood of the Boardroom survey. On one hand, 82% of respondents supported compulsory superannuation. But on the other hand, they see it as somebody else's problem. Asked before the Budget, only 50% of large companies and 15% of small and medium companies said they would contribute to a super plan.   Who do they think is going to pay for super? Don't they know that Australian employers pay 9% of their wage bills into employees' compulsory super plans? Don't they know that's the main reason why Australia has $A1000 ($NZ1122) billion of pension assets so it can afford to buy up lots of companies here?

It is just as well the government used the Budget to spring compulsory KiwiSaver contributions on employers. Given businesses' desire to push the bill on to somebody else, the talks would have ground on for years, even as the country's hopeless dis-savings record (that is, the rapid accumulation of household debt) went from chronic to catastrophic.

Tax cuts were another topic surveyed. Business strongly supports personal tax cuts. At first glance, it seems so noble to put their staff first. The truth, though, is that quite a few employers hope that they could skip a wage rise or two if taxes were cut. And again the illogicality, the sheer ignorance, is a worry. Don't businesses understand personal tax cuts will increase pressure on spending, house prices, imports, interest rates, the dollar and the current account deficit?   So, they argue, government should cut spending instead to relieve the pressure. OK, so what will they give up from the long list that runs from roads, apprentices and research to universities, export services and lots of other essential investments in economic capability and growth?

Amazingly, National is just as irresponsible. The day after the Budget it voted against cutting the corporate tax rate. The vote was on that alone, not the whole Budget. Asked to explain the party's curious decision, John Key said National's top priority was personal not business tax cuts. And this is the party that business thinks will deliver what it needs to unleash its potential?

What business really needs is a hefty slug of reality and responsibility. Not much was evident in the survey. The views were particularly parochial. Apart from a few references to falling behind Australia and oil prices being their greatest international worry, there was scant evidence the chief executives had much knowledge or interest in what was going on out in the world.

Their views on climate change were particularly revealing. To the question, "Are you sufficiently convinced the science of climate change is accurate and robust?", 72% answered "no" or "unsure".  They would have answered "yes" if they had taken even passing interest in the latest, well-publicised reports from the UN's Intergovernmental Panel on Climate Change. "Warming of the climate system is unequivocal," it said. "Most of the observed increase in globally averaged temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations." By the way, "very likely" has a precise scientific definition of 90% likelihood and anthropogenic means human activity is the cause.  This large majority of climate deniers prove to be equally muddled on related issues. Although they don't believe the science, 82% believe that New Zealand should prepare for a carbon-constrained future anyway. In addition, 64% don't believe or are unsure that the country has enough electricity to fuel business growth. But 93% don't believe power prices should be increased. That's nonsense. There's no way we can increase electricity capacity, either in non-carbon ways like wind or carbon ways like coal, without putting up the price.

Quite simply, business wants lots of things gifted to them - a break on climate policies, more infrastructure, employee tax cuts, superannuation, roads and electricity to name but a few. It is not prepared to pay for them. For example, 52% of respondents want the government to invest in broadband but then they reject by strong majorities the three ways it could happen.  In stark contrast, what would a constructive corporate culture look like? Business leaders would be ambitious, confident about themselves and the country, excited about New Zealand's opportunities in the world, ready to shoulder a fair share of the responsibility and investment; be strategic, well-researched and deeply analytical.

There are some. The search is on for more. Nominations, please, to oram@clear. net.nz

Outraged at criticism of the savings industry by Gareth Morgan, six of the nation's most powerful money men hit back at the accusations.

The savings industry welcomes and encourages analysis and commentary on the range of new KiwiSaver products that will be available to investors.

But it does expect analysis and commentary to be based on fact, to be current and accurate. The savings industry totally rejects recent comments by Gareth Morgan, of Gareth Morgan Investments, accusing the savings industry of "naughty behaviour", by implication, in KiwiSaver products. (Gareth Morgan Investments offers a KiwiSaver scheme.)

We accept that Morgan has achieved recognised standing as a trusted investment authority with the public.

This position requires that comment he provides is current, free of bias and factually correct. Instead Morgan has used his position as an industry commentator to promote his own KiwiSaver scheme, at the same time painting his competitors in a negative light through comments that do not reflect current industry practices - either in respect specifically to KiwiSaver or the industry more generally.

We encourage investors to ask questions and to seek independent advice before committing their hard earned savings to KiwiSaver.  However, investors can take great comfort from the safeguards that government and officials have built into the KiwiSaver approval and governance process:

1. KiwiSaver will be governed by strict regulations that place considerable onus on fund managers to manage the funds in the best interests of investors.
2. All KiwiSaver schemes are reviewed by the government actuary before approval and registration to ensure all fees and charges are fully disclosed and are not unreasonable. The government will also make a contribution to subsidise fees.
3. The six default providers (AMP, AXA, ASB, ING, Mercers and Tower) have been reviewed by an independent government- appointed panel and carefully selected before being formally appointed by the Minister of Finance.
4. 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.
5. KiwiSaver products will be managed in accordance with a trust deed. Each product will have an independent trustee who must ensure that the plan is administered in accordance with the trust deed and the law.
6. Reporting to investors will be required to meet standards prescribed by the KiwiSaver legislation and regulations.

Any suggestion that the industry will not be working in the best interests of investors and consumers or that they offer KiwiSaver products and service that is not best practice, simply does not stand up to scrutiny.

Investors can be confident that hidden fees and expenses simply cannot occur.  The Securities Act and Regulations and the KiwiSaver process require full disclosure of all fees and charges payable from KiwiSaver schemes. Trustees are responsible for management of KiwiSaver funds. Individual member contributions to KiwiSaver cannot be channelled into any "reserve".

Reserves only arise in very specific circumstances involving invested employer contributions in participating funds and then only in accordance with the trust deed under the control of the scheme trustees.

Unit pricing errors have occurred in some funds from time to time, but with equally as many in favour of the investor - the important point is where errors have occurred they have been promptly remedied and the investor put into the correct position.

Pooling of funds for investment purposes is an accepted worldwide practice. Pooling provides cost efficiencies (ie, each transaction costs less), asset/security diversification and access to specialist fund managers.

All represent major advantages.  For example, the most efficient and effective way for individuals to invest in property is to invest through a pooled managed fund providing exposure to a number of properties.

Pooled funds provide accurate and independently verified statements to individual investors. Pooling is recognised as a significant advantage to investors in managed funds.

Investors can be confident that the investment savings and insurance industry has responded to the challenge of providing transparency, full disclosure, quality advice and sensitivity to its consumers.

We provide best practice standards which - coupled with the safeguards government and officials have built into the KiwiSaver design, approval, and governance processes - combine to provide great assurance and comfort to investors. There will be a range of KiwiSaver products on offer and investors need to ensure that they select the product with the level of diversification that suits their circumstances and risk profile.

Decisions regarding the investment fund for KiwiSaver should be reviewed regularly to ensure it continues to fit individual requirements. Advice will be available from product providers, financial advisers and sites such as the Retirement Commission website www. sorted.co.nz. Greg Camm, managing director, AMP Financial Services.

Marc Lieberman, chief executive officer, ING (NZ) Ltd.
Tony Hildyard, chief executive, Tower Asset Management.
Ralph Stewart, chief executive, AXA New Zealand.
Sean Carroll, managing director, Asteron Life NZ.
Milton Jennings, chief executive, Fidelity Life Assurance.

Those on lower incomes will miss out on many KiwiSaver benefits, reports Rob Stock.

The poor may have to take some circumspect routes to participate in KiwiSaver.

KiwiSaver, a government-devised universal workplace savings scheme starting on July 1, was devised with contribution rates at 4% and 8% of gross salary - effectively just over 5% and 10% of take-home pay.

That's a chunk many lower-income New Zealanders would struggle without.

As a result, many lower income families will have little choice but to opt out of KiwiSaver, and miss out on the $1000 new account subsidy, annual fee subsidies and possibly tax breaks on contributions - all things middle income and rich savers will get, and need far less.

It could turn out to be worse. Should the next round of company pay rises be offered as KiwiSaver contributions by employers (some say this is likely as employers could offer 5% pay rises costing them 2.5%), the poor who want the money in their pocket could easily end up getting 2.5% less than others as they cannot afford to save into KiwiSaver.

Elliott Burcher, who is helping set up a KiwiSaver scheme for credit unions, said there was a strong argument for a 2% savings rate to encourage those on lower socio-economic rungs to participate, though the unions' plea for it was brushed aside by Wellington.

The credit unions' 176,000 members include many on low incomes, so their scheme was designed with partner Mercer with the intention of making it easier for them to participate.

The Credit Union Association hopes the scheme will have a minimum contribution of $5 a week, so even beneficiaries could participate. It will also make it attractive for grandparents to open up accounts for grandchildren.

Strategies for poorer families to get benefits from KiwiSaver could include:

Get a second job and open a KiwiSaver account attached to it: One of the minor, but potentially useful loopholes in KiwiSaver is that in some circumstances, a person with two incomes only need save into KiwiSaver from one. That is, someone who does not believe they can afford to save could get a second, part-time job - say delivering marketing fliers or local newspapers a couple of evenings a week, or buffing car-lot cars on a Saturday - and open a KiwiSaver account making contributions from the money they earn from that. There's no requirement they also make contributions from their main salary. Should the family move onto a firmer financial footing in the future, they could change that and save more. That second job could put the family in so much better a position that the most profitable thing to do could be to start saving from their main salary, getting them whatever employer contributions come from that.

Split the contributions with the boss: If an employer is willing, a worker can contribute 2% of the 4% minimum. It will cost employers about 67c for each dollar they put in because of tax breaks. The chances are, some bosses will accept this only if their contribution is part of the next pay rise they offer people, but it is a way which could limit the impact on take-home pay.

Non-working partners: Getting round the 4% problem is a biggie, but for families with one non-working parent who cannot afford to save much, there is a route. Instead of opening an account for the worker, open one for the non- worker. 4% of nothing is nothing, so contributions can be as low as the scheme provider allows. Of course, should they get a job, they would have to start saving 4% or 8% of their salary automatically, though after 12 months, they could take contributions holidays.

Skip a generation: Some parents may decide there is not much they can do for themselves, but that they can help their kids climb the wealth ladder. Credit unions say grandparents are likely to be interested for this reason. The first of their weekly $5 contributions for grandkids would effectively be a $1005 contribution, and all it would cost them would be 52 contributions of $5 - just $260. Children would be able to get subsidies of up to $5000 when they buy their first home, which could one day help bridge the affordability gap. It could mean kids instantly have savings worth more than their parents have ever managed, though parents/guardians must open the account, and the child must save at least 4% of their salary into it when they start working, though they could take a perpetual contributions holiday.

Beneficiaries: It is expensive being poor. Power is more expensive (no early repayment discounts), credit is expensive (rates of 30% or so can apply), and soon saving will be more expensive thanks to the KiwiSaver tax breaks wealthy and middle-income earners will be getting. But at $5 a week, saving into a KiwiSaver account will be possible for beneficiaries who are careful with their pennies, says Elliott. Once again, when they find work, they will be obligated to save, though anyone who has learnt to live on less could find it much easier to save from a salary.

SORT ME: A FINANCIAL WARRANT OF FITNESS

Hundreds of thousands of New Zealand families may need a financial overhaul to take advantage of KiwiSaver, and the Retirement Commission has launched an online financial healthcheck to help them do it.

Sort Me launches this weekend on the commission's website at www.sorted.org.nz six weeks before the launch of KiwiSaver, and that timing is more than a happy coincidence, says Retirement Commissioner Diana Crossan.

"We would have done it anyway," says Crossan of the Sort Me launch, "but the timing now is perfect.

"Before the launch of KiwiSaver, which may or may not be suitable for individuals, people need to look at their needs and current situation." The truth is, she says, "A lot of people don't know what their current financial situation is, and before they can decide if Kiwisaver is for them, they need to find out."

Sort Me asks users to answer questions on eight areas of their finances: goals and dreams, income and making ends meet, debt, saving and investing, protecting their assets, keeping their affairs in order, preparedness for big life changes and retirement.

In each area the users' answers are graded either "sorted", "sort of" or "sort it out" and suggestions are made on sensible action to take. There are also links to budgeting tools, further information and calculators.

Joan Baker, co-creator of Sort Me, says the majority of New Zealanders could afford to save into KiwiSaver, if they had more control over their finances.