Transforming the economy

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On the global stage, New Zealand’s economy has obvious vulnerabilities: its reliance on export, uncertainties affecting major markets and political instability across many regions, complicated by a lack of coherent global action on climate change.

This Budget has focused on climate change, land use and national infrastructure. With a capital boost of over $3b, the aim is to create opportunities for businesses, regions, iwi and others to transition to a sustainable low-emissions economy.

The $229m Sustainable Land Use Package will fund projects to protect waterways and wetlands and support farmers and growers in using their land more sustainably. It provides funding for advice to farmers; support for Māori agribusiness and farmers changing over to more environmentally sustainable and higher value production; improving on-farm emissions data and upgrading decision and regulatory tools; protecting high value food exports; and updating the country’s official assurances system. An additional $49m is allocated to help transform the forestry sector and support the One Billion Trees programme.

$1b over the next two years is allocated to modernising KiwiRail. Reduced carbon emissions and increased regional business opportunities are key drivers. If taking heavy traffic off our roads reduces our road toll, the payback will be in human capital.

Building a productive nation

Accounting, Accountant, Wanganui, Budget, Whanganui, Ohakune, Tax, Advice, Business Consulting, Graphic Design, Logo Design, Branding, Business Advisory

Innovation is seen as the key to assist New Zealand industries in the transition to an economy high in productivity but low in emissions. The challenge is for businesses to be more innovative and New Zealanders to adapt to changing job markets.

The R & D legislation born out of last year’s budget has passed and it’s up to Kiwi businesses to take up opportunities there. The Budget allocates $157m to support the “Commercialisation of Innovation” package of initiatives to invest in research and science. An “Innovative Partnerships Programme” seeks to attract globally leading firms and innovators. “Business Connect” establishes a cross-agency digital platform of business-focused services.

New start-up businesses have been spotlighted as likely to run with some of these initiatives, the Minister for Research, Science and Innovation calling them “the ultimate champions of innovation that often introduce more radical, disruptive innovations than more established firms”.

But how does a start-up expand? The Budget establishes a $300m fund to support venture capital investments taking “mid-size” start-up businesses to the next level. This is designed to stimulate growth and help businesses remain onshore, reducing pressure on companies to sell prematurely to overseas buyers.

The initiatives also fund vocational education and training. These include reforms to boost apprenticeships and trade training, increased subsidies to Tertiary Education Organisations, wage subsidies, and funding for an “Industry 4.0” demonstration network to help businesses embrace smart technologies and data driven solutions.

Teaching your kids about money

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Mom and daughter are shopping at the supermarket, the concept of family relationships and healthy eating

The money we spend each day tends to be invisible. When was the last time you withdrew your cash for the week and used it to make purchases? Rather than dealing in notes and coins, we tend to reach for our cards or shop seamlessly online. It’s entirely possible to spend money without even reaching for your wallet.

This can give kids some confusing messages about how money is spent. The danger here is that they won’t develop financial literacy and will struggle to manage their own money later on. One way to help them to build their financial management skills is to choose moments to talk to them about money and why you’re making certain decisions.

These moments could include:

Shopping at the supermarket – If you’re taking your kids on the weekly shop, get them involved in the process. Involve them in drawing up your shopping list and talk through your budget. Have them help you to find items, and weigh up differently-priced options. As a bonus, helping them to understand how a food budget works might just cut down on all those requests for treats!

Withdrawing money from the ATM – Getting out money does seem a little magical. So it’s important that kids can make the connection between the money you go to work for, and what they see coming out of the wall. Talk to them about where the money you’re withdrawing will go and help to understand the importance of knowing what’s in your bank account.

Letting them make choices – When it comes to pocket money or money from a birthday or Christmas, it can be helpful to let your children experience the consequences of their financial decisions. It’s tempting to tell them what to do with their money, but once they discover that they can only spend their precious cash once, take the time to talk with them about what they are feeling and how they might use their money differently in the future.

Choosing activities – When you choose what to do as a family, don’t forget to talk through the costs of different options. Kids will appreciate balancing an expensive trip to the movies with a free picnic in the park or will be amazed when they compare the cost of an icecream at a parlor versus a whole tub at the supermarket. Encourage them to brainstorm and research low-cost ideas and get creative!

What my Netflix algorithm showed me about business

Whanganui Chronicle – By Russell Bell

I grew up with a love of statistics and mathematics. So much so that as a child I used to while many hours away creating my own sports leagues – cricket, football and rugby – and with dice I would pit each team against each other in matches and maintain leagues and player statistics.

All good statisticians know that you should avoid bias but I have to say that when Liverpool were playing or Richard Hadlee was bowling in my games they had a high rate of success. Needless to say EA Sports and Playstation have rendered these very enjoyable games redundant.

So, you can imagine that when an article appeared regarding how the Netflix algorithm shapes it’s offering to my viewing preferences – the mathematics of it boggles the mind. Not simply because algorithms are a challenge to understand but the results are quite astounding once you have established trends in your viewing.

After setting up a new user profile for my own viewing (after Mrs Bell and Miss Bell sent the algorithm into overdrive for gardening shows, La La Land – like movies and teen dramas) the titles recommended for me (including documentaries) are incredibly aligned with what I like to watch.

This is a very powerful tool and, inevitably, there will be variants on other platforms which are both designed to deliver what customers ultimately want but also drive sales for businesses. In effect, what a cold and heartless computer is doing is ‘learning’ in much the same way as a business owner learns about the habits of their customer. The good news is that it will never replace the heart and instinct of person to person relationships, but being housed on the World Wide Web it is much easier to access.

Therein lies the challenge facing today’s businesses and those of tomorrow; an inexorable march of technology from venues far and wide into your marketplace and replicating the things which you do (some things done well, others not – but rest assured refinement of these models will be ongoing and inevitable).

Which is why continuous improvement of everything we do is crucial. When in the past businesses could get by with passable service that is no longer the case because the alternatives are many and easily accessible. The great irony being that the businesses like Netflix, Spotify and Amazon are effectively platforms of continuous improvement.

For me, strategic planning engagements over the years have evolved into change management exercises. Clients are acknowledging that fundamental shifts need to occur to deal with a fluid market. One client came up with a great analogy, likening the market and their presence in it to that famous video of a polar bear on a floating sheet of ice – “the bear had better learn and brace for a swim in the cold water (where once he had solid ground to stand on)”.

The point being that the ice may never return for the bear and he had to evolve or soon face consequences which may not be palatable. The good news, as was the case with this client, we designed strategies and tactics which are both moving with the times and delivering results but “the bear had to swim and let go of the melting ice sheet”.
So tonight when you watch Netflix, stream music or buy something online think of your business and what’s next. I’d be delighted to talk with you about what you are seeing.

To discuss business strategy, process excellence and leadership mentoring – contact Russell on 021 2442421 or John Taylor on 027 4995872.

Ring Fencing of Residential Losses

Are you aware that legislation is before parliament that will deny taxpayers the ability to claim rental losses against other sources of their income?

If you would like to learn more about the proposed application of  this law, please contact Craig McKinnon on (06) 3481324 or email craig@balanceonline.co.nz