NZPA

National has confirmed if it is elected to power it will largely retain the Employment Relations Act (ERA).

National leader John Key told a business breakfast meeting in Wellington the basic principles of the ERA – such as that of good faith bargaining – would remain in place. "We are staying with the Employment Relations Act. We are not going back to the Employment Contracts Act," Mr Key said.

Mr Key said his party's industrial relations policy would keep the ERA in place, but introduce a 90 day trial period for firms with fewer than 20 staff.

"Good-faith provisions will still apply, as will rights to sick leave, holidays, and health and safety provisions. Rules of natural justice and human rights legislation will apply. Mediation will be available in disputes, and employers won't be able to hire and fire the same employee every 90 days," Mr Key said.

National did not see the 90 day trial period as making it easier for employers to fire people, but easier to hire them. Every OECD country, except Denmark, had a probationary period. National has dropped its 2005 policy of restricting union access to work places, but will allow workers to bargain collectively without having to belong to a union.

Mr Key said National would also keep four weeks annual leave, but allow employees to trade the fourth week for cash.

This could only be at the employee's request and could not be raised in negotiations for an agreement.

A National government would also:
* Retain the Mediation Service but ensure it was properly resourced with properly qualified mediators;
* Require the Employment Relations Authority to act judicially in accordance with the principles of natural justice, including the right to be heard, and the right to cross examine before an impartial referee;
* Allow injunctions and important legal questions to be heard in the first instance in the Employment Court, and allow a general right of appeal to the Court of Appeal; and
* Appoint a working party to review the Holidays Act, especially the issue of relevant daily pay.

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.

Children who work need the same level of protection as adult workers doing similar tasks, says the Catholic social justice agency Caritas Aotearoa New Zealand.  Caritas research and advocacy officer Lisa Beech says that for many working children it was not happening.

The agency has published a report – Delivering the Goods – detailing the findings of a survey on children delivering circulars and newspapers to household letterboxes. It included in-depth interviews with 30 children aged 10 to 16 doing delivery work, as a follow-up to a wider 2003 survey of child workers.

"While many children have good working experiences and value much of their working lives, the survey showed many areas of concern," Ms Beech said, "Particularly when comparing children's experience with adult postal workers delivering to the same letterboxes."

Caritas wanted to see a code of best practice for the employment of children in delivery work.

"We believe the single most important step to improve children's working experiences would be to require that their employment status is that of employees rather than contractors," Ms Beech said.  "There was a very marked difference between children employed directly as employees and those who had the status of self-employed contractors."  She said child employees were considerably better off.  "They received holiday and sick pay, age-appropriate relief workers, clothing and bike allowances, the most effective information and oversight of health and safety conditions, and the most direct contact with employers. In contracting situations, these employment rights were mostly absent," Ms Beech said.

Other concerns highlighted by the report include:

• Little attention paid to health and safety concerns such as visibility and loads, particularly compared to adult postal workers.
• Contracts sighted generally showed an unbalanced power relationship between employers and workers.
• Although some companies had an informal age of entry to the workforce of between 10 and 12 years, this was not communicated formally on material supplied to workers. Children were sometimes asked to find their own substitute workers for illness or absence and in many cases children paid siblings as young as six to do the work for them.
• Pay rates were very low, with an effective hourly rate among children in the survey of between $1.67 and $6.25.

Caritas said a code of best practice needed to be developed by employers, unions and appropriate government agencies – working together with the children employed in the industry and their parents.

"New Zealand government reports have frequently stated that working children are adequately protected by our existing legislation," said Ms Beech.  "Caritas believes this position is based on very little information about children's actual working experiences, as there appears to be little oversight by the Department of Labour, or involvement by unions or other community organisations."

Ms Beech said any industry based on child labour, no matter how willing the participants, had a very high level of moral responsibility to ensure that they were well treated.

Infrastructure investor Infratil has reported a 49 per cent fall in first half net profit to $12.5 million.

The reduction in the six months to September 30 compared to $24.6 million in the corresponding period a year earlier.

It followed a rise in interest costs to $68.9m from $31m, with Infratil saying today that $20m of the interest increase reflected the consolidation of TrustPower. Depreciation and amortisation was $35.9m, up from $19.8m.

Earnings for the six months before interest, tax, depreciation, amortisation, realisations and impairments, and fair value movements of financial instruments (ebitdaf), was $165m, from $69m a year earlier, Infratil said.

The operating surplus was $82.2m from $29.3m.

Infratil has a majority stake in power company TrustPower, owns Glasgow Prestwick, Kent International and Lubeck airports, two-thirds of Wellington International Airport and a small share in Auckland International Airport. It also has investments in NZ Bus and stakes in Australian power generators and retailers.

The company is to pay a fully imputed interim dividend of 2.5 cents per share.
Infratil said that as a long-term investor, it considered each of its core investment sectors would deliver attractive returns.

The global trend to renewable energy and public transport was only starting, air travel was increasingly within reach of the world's growing middle classes, and restructuring of the Australian energy sector continued, the company said. "Infratil's businesses are continuing to build long term value through efficient operations and providing excellent services in a manner which ensures widespread community support."

Developments during the half-year illustrated the disparate nature of its businesses and the relative complexity in measuring their performance, Infratil said.

As at September 30 debt comprised 42 per cent of Infratil's capitalisation. That reduced to 39 per cent if the proceeds of the October issue of partly paid shares was included.

The issue of new shares was undertaken to ensure Infratil was well placed to be able to take advantage of opportunities should current financial market volatility result in further deterioration. With that possibility in mind, the company had started to purchase hedges against equity market risk, with $1.5m of those hedges expensed during the half year, Infratil said.

Infratil shares closed at $2.93 on Friday, having ranged between $2.26 and $3.25 in the past year.

The company said today that from next June it would stop issuing quarterly reports and work to upgrade the quality and materiality of its monthly reports. Reporting had been done quarterly since 2004, but that frequency had attracted some negative feedback from share analysts and institutional investors. Investors and financial analysts interviewed said the two quarterly reports were not of particular benefit, given the ongoing information Infratil provided about its operations, Infratil said.

After 70 years the makers of a classic Kiwi biscuit are leaving Lower Hutt.  Griffin's Foods Ltd announced today it would close its Lower Hutt factory – at a loss of 200 jobs – relocating production to its newly redeveloped Papakura site.

Chief executive Ron Vela said much of the factory's equipment was nearing its end date, and the company could not justify the investment needed to bring it up to scratch.  Griffin's was committed to retaining its manufacturing base in New Zealand but could not do so without rationalisation of its operations, Mr Vela said.

The company was established in Nelson by John Griffin in the 1860s.  The Lower Hutt factory was opened in 1938 and the Papakura factory in 1967.  The company now has nearly 1000 employees – 228 in Lower Hutt – and operates four manufacturing sites in New Zealand.

Pacific Equity Partners bought Griffin's in June last year, and since then has invested more than $130 million into the business, Mr Vela said.

Griffin's turnover is in excess of $300 million and it produces more than 350 products, including toffee pops, gingernuts, snax, meal mates, cameo cremes, mallowpuffs, krispies and wine biscuits.

The Lower Hutt site is expected to close in October 2008.  Mr Vela said Griffin's was the only major biscuit supplier in New Zealand that produced all its company branded product lines locally.  Competition from imported products continued to be fierce and the company wanted to counter this competition by producing top quality products for the New Zealand market, and growing offshore market opportunities, he said.  Mr Vela said the decision to close the Lower Hutt plant was extremely difficult, given the potential impact on staff.  There would be a number of positions available for staff wishing to relocate to Auckland, and "generous" redundancy packages would be available, he said.

The Service and Food Workers Union (SFWU) said its 200 members at the site were "extremely disappointed" the decision had been made without consultation.  SFWU national secretary John Ryall said the shock was compounded by the fact that in 2002 the company's former owners worked on a study with the union and the Lower Hutt City Council that concluded the plant should stay open and was a viable business.

"We think the company is under pressure from their investors to squeeze a bigger return from their investment," Mr Ryall said.  "Private equity companies like PEP have a long, established history of breaking apart investments like food manufacturers and selling the parts off in exchange for larger shareholder returns.  "This closure announcement comes hot on the heels of the announcement to close Avondale's Cadbury factory.  "We have some very real concerns about the future of food manufacturing in New Zealand." Mr Ryall said.

The Commerce Commission said today it had cleared Cavalier Corp and Norman Ellison Holdings to form a joint venture company that will acquire the carpet businesses of Norman Ellison and its subsidiaries. Commission chair Paula Rebstock said the watchdog was satisfied the proposed acquisition would not substantially lessen competition in any relevant market.

Auckland-based Cavalier manufactures and distributes broadloom carpets to domestic and export markets.

Norman Ellison is a privately owned and operated yarn and carpet manufacturer with tufting machinery and a yarn spinning plant in Auckland. It manufactures a range of carpets marketed under the Norman Ellison carpets brand in New Zealand and Australia. Cavalier shares were untraded today, having last traded at $3.13. They have traded between $2.96 and $3.62 in the last year.

The iconic New Zealand brand Swanndri has been bought by Christchurch apparel company Longbeach Holdings for an undisclosed sum. Longbeach, fully New Zealand owned, is an apparel supply specialist with operations in New Zealand, Australia, South Africa, UK and China.

It has been working with Swanndri for the past two years including developing new innovations in fabrications and styling.

Swanndri chairman Bryan Pearson, said the board and management of Swanndri had spent the past four years repositioning and growing the business. Two years ago Swanndri, which brands itself "a New Zealand legend,", decided to shut its Timaru factory and manufacture in China for economic reasons. "We all felt the time was right for a major company like Longbeach to come in and take Swanndri to the next level," Pearson said. "Longbeach has the expertise and infrastructure to support further growth of this great kiwi brand in New Zealand and international markets."

Longbeach chairman, Ken Sparrow, said it was a great deal for both companies and the Swanndri.

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CAPTION: NEW HOME: the Swanndri brand, which features designs by Karen Walker, has been bought by Christchurch firm Longbeach.

Figures out today show salary and wage rates as measured by the labour cost index (LCI) rose 3.1 per cent in the year to the end of September.

At the same time the quarterly employment survey (QES) for the same period, also published by Statistics New Zealand (SNZ), showed the annual increase in total gross earnings exceeded the annual increase in total paid hours.  That resulted in a 3.9 per cent annual increase in average total hourly earnings, to $23.10, SNZ said.

The LCI showed salary and wage rates, including overtime, for the private sector rose 3.2 per cent in the year to the September quarter, while in the public sector they increased 3 per cent.

Steady growth in earnings was also evident in the QES, where seasonally adjusted total gross earnings increased 6.1 per cent for the September year.  Employment, as measured by full-time equivalent employees remained relatively unchanged for the September quarter but increased 2.5 per cent for the September year.

The LCI showed private sector wages and salaries, either including or excluding overtime, up 0.9 per cent in the September quarter from the previous three months.  In the public sector the quarterly rise was 1.3 per cent.

According to the QES , private sector average total hourly earnings rose 1.3 per cent from the previous quarter and 3.5 per cent over the year to $21.59.  A 0.1 per cent slip left the number of full-time equivalent employees around 1.4 million.  The QES results showed the continued growth in business demand for labour, SNZ said.  The 2.5 per cent increase in full-time equivalent employees for the year was mainly driven by the property and business services and construction industries.

An expected, seasonal downturn in manufacturing activities had reduced the industries' contribution to average total hourly earnings during the September quarter, SNZ said.  According to the LCI, the industry groups with the largest annual increases in salary and wage rates, including overtime, were mining, which rose 4.9 per cent, followed by finance and insurance up 4.8 per cent.  Other notable movements were 3.1 per cent rises in both education and wholesale trade.

ASB Bank economist Daniel Wills said today's figures suggested the labour market remained tight.  Those ongoing wage pressures were going to underpin medium term inflation, he said.  Goldman Sachs

JBWere economist Shamubeel Eaqub said the data presented a contrasting picture, with the LCI pretty strong, while the QES was coming off.  "It looks like cost pressures are still there but the earnings impact from this is waning on the household sector," he said.  "Also the activity side of things was pretty weak, with paid hours growing by only 0.2 per cent in the quarter, consistent with our view that GDP in the third quarter was pretty soft."

The LCI measures changes in salary and wage rates for a fixed quantity and quality of labour input, while the QES average earnings statistics reflect not only changes in pay rates, but also compositional and other changes in the paid workforce.

Retailer Briscoe Group has warned its annual tax paid profit could be 15 per cent below last year's $26 million.  The result would depend particularly on the buoyancy or otherwise of the retail market during the Christmas period, group managing director Rod Duke said today.

"The competitive trading conditions experienced throughout the first half of this year have continued into this third quarter.  "Although total sales and margin were higher than for the same period last year, the group did not generate the improvement we were anticipating, with the negative same store sales performance offsetting the positive impact of our new stores," Mr Duke said.  "If the recent trading performance continues for the remainder of the year, our full year tax paid profit could be as much as 15 per cent below the $26 million achieved for last year."

Releasing its third quarter figures, for the 13-week period to October 28, Briscoe said sales were $87.6 million, 8.1 per cent higher than the corresponding period a year ago.  On a same store basis, the group's sales for the period were 0.6 per cent below those for the third quarter of last year.  Homeware sales increased 7.7 per cent to $59.2m while sporting goods sales increased by 8.9 per cent to $28.4m. On a same store basis, homeware sales increased by 1.2 per cent for the quarter, while sporting goods sales decreased by 5.5 per cent.

The October quarter sales figure took unaudited group sales for the year-to-date, starting January 29, to $277.9m, an increase of 11.9 per cent above the first nine months of last year.  Homeware sales increased 11.4 per cent during the period, while sporting goods sales increased 12.8 per cent.

Two new Briscoes Homeware stores in Pukekohe and Upper Hutt and the opening of Living & Giving at Albany, on Auckland's North Shore increased homeware store numbers to 52.  Sporting goods store numbers increased to 32 during the quarter with the opening of new Rebel Sport stores in Wairau Park, Pukekohe and Timaru.

A further two stores were due to be added before the end of the year with the opening of Living & Giving stores in Manukau and Nelson.  Briscoe shares were down 1c in mid-morning trade to $1.50, having ranged between $1.45 and $1.80 in the past year