The SME Stream Weekly Wrap - 10 April

0:00Kilda, and welcome to the Smithstream Weekly Wrap, my name is Willemina O'Keefe, and I'm here to wrap up all of the latest business news you need to know. Now, as a small business owner myself, I know what it's like to do it all. It's hard enough trying to keep up with your own day-to-day, little on what's happening with the economy and how it affects you. But don't worry, because that's where I come in. Pulling together everything you need to know all may have missed into a short, digestible, audio snack, so you can stay informed all while focusing on the tasks that matter most to your business. This week, the OCR holds steady and a ceasefire is called in the Middle East, so does that mean the economy is about to turn a corner. Business confidence takes another hit, plus how to make property investment work for you. It's official cash rate time again with the Reserve Bank opting to hold the all-important number steady at 2.25% despite the uncertainty stemming from the Middle East conflict. The monetary policy committee discussed lifting the OCR, but ultimately decided against it.

1:03All six members agreed to the hold, but Governor Anna Bremen says some members argued for a possible hike in May or July. That might mean that we don't have to do so many retikes going forward, but we also at the same time discussed the risk that that could dampen the weak economic growth we're already seeing. Many have, of course, now breathed a sigh of relief following news of a ceasefire deal, but the Reserve Bank Governor says even if that leads to de-escalation, the tensions will still materially alter New Zealand's outlook. It's forecasting inflation to hit 4.2% this quarter and says it's prepared to hike the cash rate if that inflation becomes embedded. And Anna Bremen says even if the Strait of Hormuz reopens, economic disruptions will linger for some time. But the Reserve Bank is hopeful the spike in inflation will only be short-lived and says it's working on the assumption that the assumptions it's working from

2:07could be wrong. That's because the latest inflation forecast doesn't take into account the fallen fuel prices following the Iran ceasefire announcement. Chief economist Paul Conway says they're continuing to get more information that will inform future decisions. With the world being in such a state of flux currently and things moving so quickly, the future path for the OCR is very conditional on how the economy evolves. It's a situation made even more complex by the fact that households aren't even seeing the full benefits of the hold on the OCR. The Reserve Bank says its carts haven't stimulated the economy as much as expected. A situation worsened by the possibility of future hikes. Some banks have already been lifting interest rates, particularly mortgages, which Assistant Governor Karen Silks says has been because they've been pricing in the impact of the Middle Eastern conflict. Those rate movements there are a reflection of movements in the wholesale rates and that's an interpretation of the disruption we've seen already. Meanwhile,

3:09our finance minister says there's just too many ifs around the Iran War to guarantee that all will be well down the track. There have been differing reports as to whether the Strait of Hormuz is actually open following the ceasefire deal. New Zealand has more than 60 days of petrol and 50 days of diesel. Nicola Willis says a sustained ceasefire and movement of ships will paint a better inflation picture, but it all depends on if it will actually happen. One of the things that I'm particularly conscious of is even when the Strait reopens, you've still had disruption to the energy market in a big way. At the same time, Willis is encouraging rural New Zealanders to call out poor practice by fuel companies. She says relief at the pump could be felt in around a week's time because of uncertainty. Meanwhile, she says she's received reports of distributors moving from weekly to monthly deliveries for some rural areas. Willis says the government is speaking to fuel companies directly when these issues are raised. There are still instances of some farmers who have not been

4:11able to get their usual fuel stock. That is not the cause of a lack of fuel in the country. That is a distribution issue. It may come as no surprise, but business confidence is also stumbling due to the war. And employers and manufacturers association survey found businesses aren't having major issues getting fuel, but there is concern about the future. Advocacy head Alan McDonald says 88% are planning to raise prices, and others are looking to trim costs via job cuts or temporary stand-down orders. McDonald says it follows other tough recent time for businesses like COVID and the war in Ukraine. That's just that idea. Here we go again. I'm just going to put my head down and hug it down for a little bit longer before we start doing things. Like most of us, self-employed Kiwis appear to be trying to cut back on costs as those fuel prices continue to rise. New research by accounting service Henry shows the total distance travelled by salt traders who claim fuel expenses has dropped by 50% in the past month.

5:13The number of business-related trips has fallen by more than 30%. Henry Chief Executive James Fuller says it's concerning as it shows that salt traders are working less, which could have wider economic impacts. We're actually at their purposes more to not earn, therefore not have to incur the cost than it does to go out there and win further work. Overall, spending habits are also expected to shift as the war pushes up the cost of living. ASB analysis suggests households could face an average extra $55 a week in costs this year. Higher fuel prices have already driven up transport expenses, likely cutting into other areas. ASB Chief Economist Nick Tuffley says people may have to make sacrifices. It tends to be that sort of more discretionary spending and spending on durable goods that gets impacted the most. Basically has to give way and make space in the wallet for the added spending on fuel. And uncertainty also remains for our airlines as our national carrier cuts even more flights from its schedule. In New Zealand's fuel bill has more than doubled,

6:17forcing it to axe about 4% of flights across May and June, including some international services. Affected customers will be notified by the end of the week, and most will be put on an updated flight on the same day. Aviation Industry Association CEO Simon Wallace says airlines are assessing the situation daily. Just as households are looking at how they're conserving the use of petrol, airlines are looking at how they're going to conserve the use of jet fuel. Prime Minister Christopher Luxon says there's a lot for businesses to celebrate, though, in the trade deal with India. India wants it formally signed this month, but the government's reliant on labour, which is hesitant about some of its contents. Trade Minister Todd McClay's trying to rally enthusiasm from the business community, which has been fairly muted. Luxon says it's an important deal, as will desperately need close ties with India, considering the global uncertainty. If just as a 5 million people country done a free trade agreement with a 1.5 billion people country and got a really great deal relative to the Europeans, Australians, and anybody else.

7:20And as if the war wasn't already enough to deal with, new data shows Kiwis are struggling to get ahead, despite more people going into work. Data from Employment Hero shows jobs are up nearly 7% nationwide, but wage growth has slumped to just 0.2% well below inflation. Younger workers are being hardest hit. Employment Hero General Manager Neil Webster says, although employment is up, it's not necessarily into full-time work. NetSafe is urging caution, as scammers get even more sophisticated. It says people are often led through several step scams, which involve fake websites, followed by a call or text from a scammer. Digital harms, service manager Alex Yees says, these can be harder to spot, but there are a few red flags.

8:25There's a push to give more Kiwis the financial advice that they may be lacking. A financial markets authority review shows just 28% of respondents have received financial advice in the past 12 months. The FMA says it'll now engage with financial advice providers and the wider sector to find ways to improve accessibility. Financial advice New Zealand Chief Executive Nick Hakes says engaging with a financial advisor is the first step and opens up a lot of benefits for people. They stay invested, they have risk management plans to write out shocks, they have savings plans. And American New Zealand Businessmen likens artificial intelligence to a tsunami heading towards us with potential opportunities and challenges. Anthropic board member Chris LaDelle believes New Zealand holds some advantages for the AI age, including a global reputation for integrity and trustworthiness. He says we have abundant renewable energy, which could help run the data centers that power the technology. LaDelle says AI is going to impact every sector.

9:29We will see, eventually, in the 2030s, 50 or even 100 years of progress in some areas in a decade. With all of the talk about high property prices, low yields, and the possibility of a capital gains tax if there's a change in government, you'd be forgiven for thinking that property investment was on the way out. But property coach Elsa Wolff doesn't think so, and she tells the prosperity project why there's still plenty of money to be made. Other than other types of assets, yes, there's a high barrier to entry, but the benefit of leverage is what you get with property on top of what we call OPM, OPT, OPK. Are the people's money, OK, the bank, which you make money on their money, right? Are the people's time, so leveraging expertise of the builders, the property managers, and other people's knowledge. So it might be myself as the coach or those around you successfully delivered what you want to copy paste, completely leveraging and leveraging the equity and the value you impact upon this house helps catapult you into the next thing.

10:32So I don't really see it just as a finite project. I see it as a vehicle to get us to the next stage or to achieve the next goal. You can listen to the full chat in this me stream. And that's it for the weekly wrap. We'll be back again next Friday with all of the latest business news and of course the best bits in the speed stream.