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Annual ReportNew Zealand Institute of Economic Research
20 08
New Zealand Institute of Economic Research (Inc.)
ESTABLISHED 1958
8 Halswell Street Thorndon PO Box 3479 Wellington 6011 New Zealand
Phone: +64 4 472 1880 Fax: +64 4 472 1211
email: [email protected]
Website: www.nzier.org.nz
Contents
PAGES
Chairman’s Report 2
NZIER Board Members 2008 4
Chief Executive’s Report 6
Public Good Work 9
NZIER Publications 11
List of NZIER Members 2008 15
Financials 17
50th Anniversary 2008 40
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About NZIER
The New Zealand Institute of Economic Research (• NZIER) is an independent economic consulting and forecasting
organisation specialising in quality economic analysis and research to help decision-makers in both the private and
public sectors with strategic and policy advice.
Established in 1958 and based in Wellington we are a non-profit incorporated society. •
We are independent of Government and any other organisation and we conduct our activities in an impartial and •
independent manner free from bias or any sectional interest.
Membership fees form approximately ten percent of our revenue and fund our various membership services. •
Membership is open to all.
Economic consultancy services provide most of our revenue. •
The surplus on consultancy funds our public good research and other activities. •
Our clients and members come from throughout New Zealand, Australia and further afield.•
2
Chairman’s ReportThe past year was a very successful one for the NZIER. Contract revenue increased during the year by 15% to just under $3.4 million. Although a loss of $44,936 was recorded this was entirely due to the decision of the Board to invest in the Institute’s Computable General Equilibrium (CGE) modelling capacity. Without this expenditure, the result would have been a profit in excess of $120,000.
The Board is very pleased with the progress made on the CGE project and confident that its decision to invest in it was the right one for the short-term interests of the NZIER and especially for its longer term prospects.
The Board has decided that additional resources should be devoted to the CGE project in 2008/09 to develop a dynamic version of the model and enhance its treatment of the household sector. The balance sheet and liquidity position of the organisation are both very healthy and easily able to sustain this investment in its future. The commercial undertakings and public good work of the Institute will both benefit from this investment.
During the financial year, the profile of NZIER remained high and it made noteworthy contributions to a number of policy issues, including the debate over emissions trading and the economic integration of East Asia.
Public Good activities
NZIER’s Constitution sets down that its objectives include conducting and promoting research into
economic matters directly or indirectly affecting New Zealand and advancing the understanding of
economic matters directly or indirectly affecting the country. Elsewhere in this report the numerous
activities undertaken in fulfilment of those objectives are listed in more detail. These public good
activities are funded largely from NZIER’s own accumulated resources, as the current subscriptions
from members are just adequate to fund the services provided to them. Each year NZIER devotes
approximately $250,000 of its own funds to public good projects and activities.
This year marks the 50th Anniversary of the formation of NZIER. A number of events and activities will
mark this significant milestone, including a special article in Quarterly Predictions reviewing the work of
the Institute in its first 50 years. Another anniversary event is the offering of a special NZIER Economics
Research Award. The purpose of the Award is to fund the preparation of an economic research report
which will advance the objects of NZIER, as set out in its constitution, being those I have described
earlier. The total sum available for allocation is $50,000. It is intended to announce the winner or
winners of the award at the Annual General Meeting.
The Research Award is additional to the NZIER Economics Award which is offered every year to recognise
a significant contribution to economics of benefit to New Zealand. NZIER also sponsored the dinner
at the conference held to commemorate the 50th Anniversary of the publication of Bill Phillips’ paper
setting out the Phillips Curve.
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Governance
This year’s accounts are the first prepared to comply with the New Zealand equivalent to International
Financial Reporting Standards (NZ IFRS). NZIER qualifies to be a public benefit entity under the standard
and has taken advantage of the differential reporting concessions available to it with the exception of
NZ IAS 7: Cash Flow Statements, with which it has fully complied. The adoption of NZ IFRS has not had
any material effect on the accounts in 2008, apart from incurring the not inconsiderable costs of staff
time and of having the changes vetted by our auditors.
The Board is continuing to work effectively. The Board has two committees: the Audit Committee,
which is chaired by Mr Paul Baines with Mr Norman Geary and me as the other members, and the
Remuneration Committee, which is chaired by me, with the Deputy Chairman, Mr Kerry McDonald, as
the other member.
The Board applied early in 2008 to retain the charitable status of NZIER under the new legislative
provisions, but no decision has been received so far from the Charities Commission. NZIER’s aims
and objectives are educational, and its activities appear to continue to fully meet the requirements for
retaining this status.
Thanks
On behalf of NZIER, and personally, I thank all the Board members for their contributions to NZIER’s
success during the last financial year. I particularly acknowledge the work undertaken by Mr Paul Baines
as Chair of the Board’s Audit Committee. I also express the appreciation of the Board for the hard work
put in during the last year by Brent Layton and all the staff of NZIER.
I also record the Board’s, and my personal, appreciation of, and admiration for, the achievements of
Brent Layton as the Chief Executive of NZIER. He has done much for the Institute, both internally in
terms of leadership, inspiration and standards of scholarship, and externally, in leading NZIER’s work
for consulting clients, members , the economics profession and the interested public in and out of New
Zealand. I and the Board are very sorry that he is resigning as Chief Executive, though we understand
his reasons for doing so. His term as Chief Executive will surely be seen as a very important one in the
history of the Institute.
Michael Walls
Chairman
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NZIER Board Members 2008The roles of the members of the NZIER Board are to:
Be responsible for the • NZIER’s continuing to strive to attain its goals as they are agreed from time to time, and for the
NZIER’s strategic direction.
Monitor and safeguard the continuation of the • NZIER in good financial health and morale.
Ensure the employment of a Chief Executive of • NZIER, on appropriate terms, and monitor the Chief Executive’s
performance relative to those terms.
Keep under review the performance of the Chief Executive and, through the Chief Executive, of • NZIER’s staff.
Give advice to the Chief Executive on questions of general business practice or standards within the knowledge of •
the Board and give advice on strategic planning initiatives and issues.
Mr M Walls Chairman
Mr N M T Geary CBE
Dr T B Layton (Chief Executive) Ex officio
Professor V B Hall
Mr T K McDonald Deputy Chairman
Mr P Baines
Mr R F Nottage CNZM
Auditors PricewaterhouseCoopers
Solicitors Kensington Swan
Secretary J T Matthewson
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NZIER AGM 2007 Held at the Intercontinental Hotel in Wellington on 30 August 2007
Michael Walls addresses the 2007 AGM
Caroline Saunders accepts the Economics Award
Trinh Le and Viv Hall
Nevil Gibson
Michael Bassett
Caryll Shailer and John Dauth LVO
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CGE Modelling and Emissions Trading
In March 2007 the Board decided the financial position of the Institute was strong enough, and the
time right, for us to invest some of our accumulated financial reserves in the development of our CGE
modelling capability. This is of long term benefit to the Institute’s research capabilities and opportunities.
But the scope to apply the capability to analysing the economic impacts of emission trading scheme
proposals provided more immediate opportunities.
The new NZIER CGE model is a New Zealand version of a generic model developed at the Centre for
Policy Studies (CoPS) at Monash University. We worked closely with senior academics at CoPS to develop
the model and our CGE expertise. NZIER arranged for a training course taught by two senior CoPS staff
in January 2008. Attendants included three staff from NZIER, one from the Australian public service,
one from private consulting in Australia, two from Victoria University, and three from the New Zealand
public service. Two NZIER staff went to Monash University for a week to work with CoPS staff on model
development.
The model is currently a “static” general equilibrium model. Model development was facilitated
by funding from NZIER’s own resources of $165,000, plus the additional costs of management and
administration of the project. This expenditure is reflected in the financial results for 2007/08.
The model has been used to assess the impacts of the Government’s proposed emissions trading scheme
(ETS) on the New Zealand economy. This has created an awareness and credibility among public and
private sector clients. There have been a few criticisms of our application from politicians and one
particular newspaper columnist, who have little or no knowledge of economics or CGE modelling, and
do not like our results.
We anticipated criticism, irrespective of our results, because this is an area of policy in which some
hold their beliefs not as a result of logic but with the tenacity of zealots. So, in addition to having our
modelling work reviewed by CoPS, we had our ETS application peer reviewed by Dr Adolf Stroombergen,
who undertook the Government’s CGE modelling of the ETS. The peer review was favourable. It has
been published on our website and distributed to media, politicians, members and parties interested
in emissions trading along with a press release. I believe this is the appropriate way for a research
organisation to respond to ill-informed or politically-motivated criticism.
The NZIER Board has authorised the expenditure in 2008/09 of a further $80,000 to continue the
development of the model. This investment will concentrate on creating a dynamic version and adding
multiple households to the static model (with limited disaggregation at this stage). The development of
the CGE model presents us with a number of new business opportunities.
East Asia
Our work with the Institute for Developing Economies (IDE) in Japan and 14 other research organisations
spread across the 16 countries that attend the East Asian Summit in creating an Economic Research
Institute for ASEAN and East Asia (ERIA) continued in 2007/08. We contributed in several ways to the
research activities of ERIA. We produced reports on competition policy in ASEAN, barriers to trade in
services in East Asia and small enterprises in the food industry in Cambodia. We also provided a chapter
on trade facilitation in ASEAN for a collection of papers and contributed to a research report on the
economic integration of East Asia. All this material has been published by ERIA. ERIA, in conjunction
with NZIER, also held three symposia in New Zealand on the economic integration of East Asia. These
were open to the general public and attracted around 130 people in Auckland, 50 in Wellington (where
Treasury hosted the meeting) and 30 in Christchurch (where the University of Canterbury was host).
Chief Executive’s ReportThe 2007/08 was a very exciting and rewarding year for NZIER and its staff. Most of the new staff we appointed in 2007 turned out to be well suited to the work of the Institute and very quickly developed into highly productive contributors to our research and consultancy activities. Our work on emissions and the environment has grown and attracted considerable public interest. We successfully developed our Computable General Equilibrium (CGE) modelling capability and employed this in our analysis of the economic impact of the Government’s proposed emissions trading scheme. Our activities relating to East Asia expanded in several ways and now provide us with a range of opportunities.
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I attended as the New Zealand government’s nominee five meetings of the Track II (i.e. private sector)
Study Group on a Comprehensive Economic Partnership in East Asia (CEPEA). The final report of the
group has just been completed and will go to the Economic Ministers and then the leaders of the 16
East Asian Summit attendees later this year. It recommends the economic integration of the region be
actively pursued through increased economic co-operation, trade and investment facilitation and the
liberalisation of trade in goods and services and capital flows. NZIER’s contributed to the final report
both a country chapter and material on the facilitation of trade and investment.
The countries involved in the East Asian Summit and CEPEA are the ten ASEAN members (Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) plus
Australia, China, India, Japan, Korea and New Zealand. NZIER, with the support of the Ministry of
Foreign Affairs and Trade and the Japan External trade Organization, hosted the second meeting of the
CEPEA study group in Auckland in August 2007.
Other staff of NZIER attended meetings of the East Asian Bureau of Economic Research (EABER) in
Singapore, Beijing and Sydney. EABER is an Australian-Japanese sponsored network of economic
research organisations in the East Asian region. Initially, the membership was restricted to a tighter
definition of East Asia, but with the development of the East Asian Summit of 16 the footprint has been
expanded and NZIER was invited to join last year.
NZIER was also represented at two meetings of economists organised by the Pacific Economic
Cooperation Council (PECC) during the 2007/08 year; one in Beijing and the other in Osaka. NZIER’s
involvement with these PECC meetings is long-standing. The meetings provide us access to detailed
forecasts for each of the countries in the region and an opportunity to cross compare our international
outlook with those of other forecasters in the region.
We have over the last 18 months expanded to a considerable degree our involvement with researching
the economics of East Asia. This has been leveraged off our long standing involvement with trade
economics and presents good opportunities for expanding our consultancy business in the region in
the future.
Website
The web is becoming a more important vehicle for distribution of information and reports and as a shop
window for prospective customers and employees. We have not yet decided to move to an exclusively
electronic delivery for our two main publications for members: Quarterly Predictions and Quarterly
Survey of Business Opinion. But this move seems to be one that will be inevitably made in the next
couple of years. In the meantime, we have decided to devote considerable effort and resource during
2008/09 to improving the layout and content of our website.
Change of Chief Executive
I decided that I would not seek a renewal of my five-year contract as the Director/Chief Executive of
NZIER which expires on 14 September 2008. I have greatly enjoyed the job but believe five years is a
long enough term for both NZIER and me. A research organisation needs fresh ideas and impetus every
so often if it is going to continue to be at the forefront of its area. I informed the Board of my decision
last March and they set about finding a replacement. I wish my successor all the best with the job and
hope he or she has as much fun and gets as much satisfaction from the role as I have.
I would like to acknowledge the efforts of all my colleagues over the last year and thank the Board for
their support and encouragement. I would particularly like to thank the Board for its decision to support
a significant investment by the Institute in developing its CGE modelling capability over the last year. I
believe the investment will prove in future to have been a very significant one for the strength of NZIER
as a quality provider of economic research.
Brent Layton
Chief Executive
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NZIER wishes to thank:Major members, members and clients for providing the funding necessary to carry on the NZIER’s work.•
The New Zealand Treasury for providing a grant towards the cost of the Quarterly Survey of Business Opinion.•
The Reserve Bank of New Zealand for providing a grant towards the cost of the Quarterly Survey of Business Opinion.•
The National Business Review for their support of the NZIER Economics Award.•
Sir John Anderson, Dr Alan Bollard, Mr Peter Bushnell, Dr Arthur Grimes, and Professor Frank Scrimgeour for sitting on •
the Awarding Panel for the 2007 NZIER Economics Award.
Dr Michael Bassett, for providing the address at the 2007 Annual General Meeting.•
The New Zealand Committee of the Pacific Economic Cooperation Council (NZPECC) for providing assistance for our •
PECC forecasting and structural work and attendance at meetings in Beijing and Osaka.
The Institute of Developing Economies (IDE, Japan) for providing financial assistance with our work on competition •
policy in ASEAN, service liberalisation and trade facilitation in East Asia, economic integration in Asia and small
business enterprises in Cambodia.
The Ministry of Foreign Affairs and Trade for financial assistance with our participation in the Track II (i.e. private •
sector) Study Group on a Comprehensive Economic Partnership for East Asia (CEPEA) and hosting of the second
meeting of the Study Group in Auckland in August 2007.
The Japan External Trade Organization (JETRO) for financial assistance with: our participation in CEPEA and the •
hosting of the second meeting of the Study Group in Auckland; contract work for IDE; participation in the formation
of the Economic Research Institute for ASEAN and East Asia (ERIA); and the organising of ERIA symposia in Auckland,
Wellington and Christchurch in March 2008.
The AusAID for assistance with our attending meetings of the East Asian Bureau of Economic Research (EABER) in •
Singapore, Beijing and Sydney.
Professor Allan Rae of Massey University and Dr Anna Strutt of Waikato University for collaborative research.•
The Foundation for Research Science and Technology for research funding.•
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Public Good WorkBecause of its public good role, as set out in its Constitution, NZIER is an incorporated society. Each year it undertakes a variety of activities focusing on promoting and assisting research into economic problems directly or indirectly affecting New Zealand. These activities are mostly funded from our own resources, but NZIER welcomes sponsorship to enable it to undertake such work.
During the 2007-2008 year, NZIER staff responded to many inquiries from the public and students who wanted information about the New Zealand economy. Staff were often called upon to provide comment for the media, briefings for international visitors and to make presentations at conferences and workshops.
Some notable visitors 2007-2008
Kim Min-koo Maeil •
Business newspaper, Korea
Mr Daisuke Hiratsuka, Professor Fuku Kimura and Mr So Umezaki •
Institute of Developing Economies, IDE-JETRO, Japan
Sophie Mametz •
Pacific Economist of NATIXIS
Andrew Jaspan •
Editor-in-Chief of The Age newspaper, Scotland
His Excellency Mr Molosiwa Selepeng •
High Commissioner of Botswana
Ms Hu Shuli •
Founding editor of China’s pre-eminent business magazine, Caijing.
Representative Lee Hye-hoon •
Member of the Republic of Korea National Assembly
Hon Bruce Baird and members of the Australian Standing Committee on Economics, •
Finance and Public Administration Jung Kyung-Min, JoongAng Daily, Korea
Simon Hodge •
Senior Civil Servant, Forestry Commission Scotland
Delegates from the International Monetary Fund•
Professor Shujiro Urata, Tatsuhiko Yoshizaki, and Hidetoshi Nishimura from Keio •
University, Sojitzu Research Institute and Institute for Developing Economies, Japan
Professor Yorizumi Watanabe •
Professor of International Political Economy, Keio University, Japan
NZIER Economics Award 2007
The NZIER Economics Award was established in 1994 to promote and recognise excellence in
economics of direct or indirect benefit to New Zealand.
The 2007 award was presented to Dr Caroline Saunders for her contribution to the Food Miles
debate.
The citation presented to Dr Saunders can be viewed on the NZIER website www.nzier.org.nz
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Public Good Work Continued
Conferences, briefings and presentations
Some of the conferences attended and papers presented at conferences by NZIER staff during the
2007/8 year are listed below. All of the presentations listed are available from www.nzier.org.nz.
Public Hearing for the Major Electricity Users’ Group, Auckland, April 2007 •
Presentation titled “Electricity security of supply review”
National Freight and Shipping Summit, Wellington, April 2007 •
Presentation titled “International economy and the transport industry”
Electricity Commission Conference for the Major Electricity Users’ Group, •
Auckland, April 2007
Presentation titled “Transmission pricing methodology”
Major Electricity Users’ Group to the Electricity Commission Conference, Wellington, •
May 2007
Presentation titled “North Island Grid Upgrade Proposal”
New Zealand Regulatory Evolution Summit, Wellington, June 2007 •
Presentation and paper titled “Competitive markets and regulation”
New Zealand Society for Risk Management Climate Change Seminar, Wellington, •
July 2007
Presentation titled “Climate change - potential economic impacts”
Climate Change and Energy Emissions Management Forum, Wellington, August 2007 •
Presentation titled “Post 2012 options for emissions trading”
Institute of Directors in New Zealand Fellows’ Dinner, Wellington, September 2007•
Presentation titled “Economic and environmental challenges for New Zealand in a post
Kyoto world”
New Zealand Road Transport Forum Conference, Christchurch, September 2007 •
Presentation titled “Economic effects of climate change on the transport industry”
Water and Waste Association Conference, Rotorua, September 2007•
Presentation titled “Funding water services and infrastructure”
5th Health Services & Policy Research Conference, Auckland, December 2007•
Presentation titled “Impact of reduced copayments on GP access for injuries”
9th Annual SuperFunds Conference, Wellington, March 2008 •
Presentation titled “KiwiSaver in the context of New Zealand’s superannuation and savings”
New Zealand Vocational Education and Training Research Forum 2008, Wellington, •
March 2008
Presentation titled “Applying a regional lens to labour market analysis”
Pacific Economic Outlook Forecasters meeting, Osaka, Japan, March 2008•
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MEMBERS ONLY*
NZIER offers its members a comprehensive macro-economic forecasting service. Successful organisations
need a clear picture of the economy, and how it is likely to develop. Economic forecasts can help our
members understand the economic circumstances that are likely to prevail in the future, allowing them
to take advantage of economic opportunities and minimise the impact of downturns.
Quarterly Predictions
Quarterly Predictions contains detailed and comprehensive forecasts for the New Zealand economy.
Each issue contains forecasts for four to five years ahead, with focus on the composition and drivers of
economic growth in the coming two years. Empirical analysis is complemented by an examination of
related economic and policy issues, and any risks attached to the forecasts.
During the 2007/8 year issues 170-173 were published.
Quarterly Survey of Business Opinion
Begun in 1961, NZIER’s Quarterly Survey of Business Opinion is New Zealand’s longest running and most
comprehensive business confidence survey. The resulting indicators are a valuable tool for assessing the
current state of the economy, and forecasting short term economic activity.
The survey samples manufacturers, builders, architects, wholesalers and retailers, and service sector
firms. Information from these industries provides useful indicators of future investment patterns, and the
likely direction and composition of economic growth in coming quarters.
During the 2007-8 year issues 184-187 were published.
CPI Forecast Summary Table
This specialist web-based publication is aimed at members of NZIER who are electricity line distribution
companies subject to the price-path threshold regime under Part 4A of the Commerce Act 1986. It
provides in one place the forecasts of inflation in the Consumer Price Index (CPI) of all the major
forecasting organisations. This assists our members in setting their prices as the thresholds to which
they are subject are defined in terms of movements in the CPI.
The CPI Forecast Summary table is published four times a year, in March, June, September and
December.
NZIER Publications
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PUBLIC GOOD** Update
Update provides a monthly economic commentary on topical business and policy issues. It discusses
recent NZIER work of interest to business and policy makers. An ‘economic diary’ highlights recent and
up-coming releases of economic information and statistics. Update also includes a roundup of the latest
economic data for New Zealand.
Eleven issues of Update were published in 2007-8.
Consensus Forecasts
Consensus Forecasts presents short term forecasts of the New Zealand economy. It does this by averaging
forecasts produced by a variety of organisations, including NZIER. Because forecasts are averaged across
contributors, they provide a useful benchmark. Variables covered include economic growth, prices and
interest rates.
Consensus Forecasts is published four times a year, in March, June, September and December.
Public discussion papers
NZIER prepares and publishes working papers on topics it considers to be of interest to the general
public. The aim is to better inform the general community and policy makers on issues of importance to
the performance of the New Zealand economy.
The papers published during the 2007-8 year were:
Does New Zealand have a household savings crisis
NZIER working paper 2007/1
Is poor household saving the cause of New Zealand’s high current account deficit?
NZIER working paper 2008/1
The impact of the proposed Emissions Trading Scheme on New Zealand’s economy
NZIER working paper 2008/2
* available to NZIER members for downloading from the ‘members only’ section of
the NZIER website.
** available to the public for downloading from the NZIER website.
REPORTS TO CLIENTS**
Most reports commissioned from NZIER by clients are for the clients own use and are not available for
general circulation. Some clients do allow publication of the reports they have paid to have produced.
The reports to clients from the 2007-8 year which are available to the public through the NZIER
website are:
Electricity security of supply policy review
Report to MEUG, April 2007
Off-farm agribusiness compliance
Report to the Ministry of Agriculture and Forestry, May 2007
Alternatives to rates: A review of revenue mechanisms to supplement local authority rates
Report to The Local Government Rates Inquiry, July 2007
Evaluating emissions standards: An assessment of the effectiveness of the proposed
draft rule
Report to the Independent Motor Vehicle Dealers’ Association (IMVDA) and Motor Trade Association
(MTA), July 2007
Younger people’s attitudes towards consumption and saving
Report to the Retirement Commission, August 2007
Vehicle emission standards: Feasible policy alternatives to the Government’s proposed
draft rule
Report to the Independent Motor Vehicle Dealers’ Association (IMVDA) and Motor Trade Association
(MTA), August 2007
Economic indicators for the Northland region
Report to Enterprise Northland, November 2007
Compliance with regulatory impact analysis requirements: 2007 evaluation report
Report to the Ministry of Economic Development, February 2008
Te Wa o Te Ao Hurihuri ki te Ohanga Whanaketanga Maori: A time for change in Maori
economic development
Report to Te Puni Kokiri, February 2008
NZIER Publications Continued
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* available to NZIER members for downloading from the ‘members only’ section of
the NZIER website.
** available to the public for downloading from the NZIER website.
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List of NZIER Members 2007–2008
Major members
ABN AMRO New Zealand Ltd
Air New Zealand
Department of Labour
Electricity Commission
Inland Revenue Department
Ministry of Economic Development
Ministry of Foreign Affairs & Trade
PricewaterhouseCoopers
Reserve Bank of New Zealand
The Treasury
Standard Members
3M New Zealand Ltd
AAPC Properties Pty Ltd
Accident Compensation Corporation
AgResearch
Airways Corporation of New Zealand Ltd
AllianceBernstein New Zealand Ltd
Amalgamated Engineering Printing & Manufacturing
ANZ Banking Group Ltd
APN News and Media
APR Consultants Ltd
ASB Bank Ltd
Auckland City Council
Auckland City Libraries
Auckland Regional Council
Auckland University of Technology
Auguste Holdings Ltd
Aurora Energy Ltd
Australian High Commission
Bancorp New Zealand Ltd
Bank of New Zealand
Barclays Capital Bank PLC
BASF New Zealand Ltd
Bayer New Zealand Ltd
Bayleys Real Estate Ltd
Bell Gully
Bic New Zealand Ltd
BOC Gases Ltd
Boston Consulting Group
Business New Zealand
Cameron Partners Limited
Canterbury Employers Chamber of Commerce
Canwest New Zealand
Capital Economics Ltd
Career Services
Carter Holt Harvey Limited
CB Richard Ellis Ltd
Cerebos Greggs Ltd
Chapman Tripp
Citigroup Global Markets New Zealand Ltd
Colenso BBDO
Colliers International New Zealand
Commerce Commission
Connell Wagner Ltd
Croxley Stationery Ltd
Darroch Valuations
Deloitte Touche Tohmatsu
Department of the Prime Minister and Cabinet
Deutsche Bank
Dilworth Trust Board
DTZ Darroch
Du Pont (New Zealand) Ltd
Eastern Equities Corporation
Economic Solutions Ltd
Energizer New Zealand Ltd
Ernst and Young
First New Zealand Capital
Fonterra Co-operative Group
Foundation for Research, Science and Technology
Fuji Xerox (New Zealand) Ltd
GE Commercial Finance
Genesis Energy
Golden Bay Cement
Goldman Sachs JB Were (New Zealand) Ltd
Gough Group
Graham Scott (New Zealand) Ltd
Grundfos Pumps New Zealand Ltd
Hay Group Ltd
Holcim ( New Zealand) Ltd
Holden New Zealand Ltd
Honda New Zealand Ltd
Housing New Zealand Corporation
Hynd Pipe Systems Ltd
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IBM
Infometrics Ltd
Ingersoll-Rand Architectural Hardware Ltd
JETRO Auckland Office
Jones Lang LaSalle Advisory Ltd
JP Morgan Securities Australia Limited
Kiwi Property Management Ltd
KPMG
L.E.K.Consulting
Land Information New Zealand
Landco Ltd
Landcorp Farming Ltd
Library of Congress Washington
Lincoln University
Livestock Improvement Corporation
Macquarie Bank
Maersk New Zealand Ltd
Manukau Institute of Technology
Market Economics Ltd
Massey University
McKinsey and Company
Meat and Wool New Zealand Ltd
Meridian Energy Ltd
Methven Ltd
Microsoft New Zealand Ltd
Ministry of Agriculture & Forestry
Ministry of Education
Ministry of Social Development
Ministry of Transport
Ministry of Womens Affairs
Mitsui & Co. (New Zealand) Ltd
Moore Capital Management
Motor Trade Association Inc
NALCO
National Australia Bank
National Library of Australia
New Zealand Industry Training Organisation
New Zealand Lotteries Commission
New Zealand Meat Industry Association Inc
New Zealand Racing Board
New Zealand Refining Co Ltd
New Zealand Seafood Industry Council Ltd
New Zealand Steel Ltd
Nissan New Zealand Ltd
Novartis New Zealand Ltd
Office of the Controller & Auditor-General
Office of the Minister of Finance
Open Polytechnic of New Zealand
Opus International Consultants Ltd
Orion New Zealand Ltd
Palmerston North City Council
Parliamentary Library
Powerco Ltd
PRP Valuers & Consultants
Retirement Commission
Rider Hunt Wellington Ltd
Rio Tinto Aluminium (New Zealand) Ltd
Rockwell Automation New Zealand Ltd
Sandvik New Zealand Ltd
SC Johnson and Son Inc
SCION
Securities Commission
Sky City Entertainment Group Ltd
Smith and Smith Autoglass
Solid Energy New Zealand Ltd
Spotless Services (New Zealand) Ltd
State Services Commission
Statistics New Zealand
Steel and Tube Holdings Ltd
Tainui Group Holdings Ltd
Te Puni Kokiri
Te Runanga o Ngai Tahu
Television New Zealand Ltd
Tertiary Education Commission
The Radio Network
The Royal Society of New Zealand
The Todd Corporation Ltd
Toyota New Zealand Ltd
Transpower New Zealand Ltd
UBS New Zealand Ltd
University of Auckland
University of Canterbury
University of Otago
Vector Ltd
Victoria University of Wellington
W Stevenson & Sons Ltd
Wallenius Wilhelmsen Lines New Zealand
Wellington International Management Co Pte Ltd
Wesfarmers Ltd
Westpac
Westpower Ltd
Wigram Capital Advisors Ltd
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Contents
PAGES
Report of the Auditors 18
Board Report 19
Income Statement 20
Balance Sheet 21
Statement of Changes in Equity 23
Cash Flow Statement 24
Notes to Financial Statements 26
THE NZ INSTITUTE OF ECONOMIC RESEARCH (INC.) ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2008
18
Auditors’ Report
To the Board Members of New Zealand Institute of Economic Research (Inc.)
We have audited the financial statements on pages 2 to 18 (pages 20–39 in this report). The financial statements provide information
about the past financial performance and cash flows of the Institute for the year ended 31 March 2008 and its financial position as at
that date. This information is stated in accordance with the accounting policies set out on pages 7 to 11(pages 26–29 in this report).
Board Members’ Responsibilities
The Institute’s Board Members are responsible for the preparation and presentation of the financial statements which give a true and
fair view of the financial position of the Institute as at 31 March 2008 and its financial performance and cash flows for the year ended
on that date.
Auditors’ Responsibilities
We are responsible for expressing an independent opinion on the financial statements presented by the Board Members and reporting
our opinion to you.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also
includes assessing:
(a) the significant estimates and judgements made by the Board Members in the preparation of the financial statements;
and
(b) whether the accounting policies are appropriate to the circumstances of the Institute, consistently applied and adequately
disclosed.
We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We planned and performed our
audit so as to obtain all the information and explanations which we considered necessary to provide us with sufficient evidence to give
reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming
our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
We have no relationship with or interests in the Institute other than in our capacity as auditors.
Report of the Auditors
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Auditors’ Report
New Zealand Institute of Economic Research (Inc.)
Unqualified opinion
We have obtained all the information and explanations we have required.
In our opinion:
(a) proper accounting records have been kept by the Institute as far as appears from our examination of those records; and
(b) the financial statements on pages 2 to 18 (pages 20–39 in this report):
(i) comply with generally accepted accounting practice in New Zealand;
(ii) give a true and fair view of the financial position of the Institute as at 31 March 2008 and its financial performance and
cash flows for the year ended on that date.
Our audit was completed on 11 June 2008 and our unqualified opinion is expressed as at that date.
Chartered Accountants Wellington
The Board has pleasure in presenting the annual report of the New Zealand Institute of Economic Research (Inc.), incorporating the
financial statements and auditor’s report for the year ended 31 March 2008.
The Board of the New Zealand Institute of Economic Research (Inc.) approved these financial statements, presented on pages 2 to 18,
(pages 20–39 in this report) for issue on 11th June 2008.
Michael Walls Paul Baines
Chairman of the Board Chairman of Audit Committee
Board Report
20
Income Statementfor the year ended 31 March 2008
2008 2007
Note $ $
Revenue 4 3,715,518 3,302,015
Other Income 4 154,695 147,694
TOTAL REVENUE AND OTHER INCOME 3,870,213 3,449,709
EXPENSES
Public Good Costs 14 135,732 150,756
Employee Costs - Salaries and Wages 3,111,928 2,630,420
Depreciation and Amortisation 5 91,820 92,845
Operating Expenses 11 558,447 442,460
Operating Lease 17,222 12,592
TOTAL EXPENSES 3,915,149 3,329,073
NET PROFIT ATTRIBUTE TO MEMBERS (44,936) 120,636
The above income statement should be read in conjunction with accompanying notes.
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Balance Sheetfor the year ended 31 March 2008
2008 2007
Note $ $
ASSETS
Current Assets
Cash and Cash Equivalents 1,565,879 1,476,929
Trade and Other Receivables 6 439,370 594,442
Prepayments and Accrued Income 458,972 419,236
Total Current Assets 2,464,221 2,490,607
Non-Current Assets
Property, Plant and Equipment 8 1,995,876 1,961,892
Intangible Assets 9 40,626 8,999
Total Non-Current Assets 2,036,502 1,970,891
TOTAL ASSETS 4,500,723 4,461,498
22
2008 2007
LIABILITIES Note $ $
Current Liabilities
Trade and Other Payables 7 123,210 133,602
Employment Entitlements 1,206,182 934,232
GST Payable 52,228 89,058
Accruals and Deferred Income 97,175 237,195
Related Party Payable 15 21,953 22,500
Total Current Liabilities 1,500,748 1,416,587
TOTAL LIABILITIES 1,500,748 1,416,587
NET ASSETS 2,999,975 3,044,911
EQUITY
Accumulated Funds 10 2,999,975 3,044,911
Total Equity 2,999,975 3,044,911
Balance Sheet continued
The above balance sheet should be read in conjunction with accompanying notes.
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Statement of Changes in Equityas at 31 March 2008
2008 2007
Note $ $
Equity at the beginning of the financial period 3,044,911 2,924,275
Profit for the Year (44,936) 120,636
Total recognised income and expense for the period (44,936) 120,636
TOTAL EQUITY AT THE END OF THE FINANCIAL PERIOD 2,999,975 3,044,911
24
Cash Flow Statementfor the year ended 31 March 2008
2008 2007
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Grants 37,500 37,500
Subscriptions 248,415 427,553
Contract Research 3,490,771 3,100,192
Interest Received 96,798 92,233
Miscellaneous Income 16,528 6,889
3,890,012 3,664,367
Cash was applied to:
Payments to Employees and Contract costs (2,961,638) (3,282,901)
Operating Expenses (546,261) (479,320)
Public Good Projects (135,732) (150,756)
3,643,631 3,912,977
Net Cash Inflow/ (Outflow) From Operating Activities 246,381 (247,610)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was applied to:
Purchase of property, plant & equipment (157,432) (46,909)
Net cash outflow from investing activities (157,432) (46,909)
Net Increase/ (Decrease) in cash held 88,949 (294,519)
Cash at beginning of year 1,476,929 1,771,448
Cash and cash equivalents at end of year 1,565,878 1,476,929
Composition of Cash
Cash at Bank 225,656 343,863
Funds on Deposit at Bank 1,340,222 1,133,066
1,565,878 1,476,929
Continued next page
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2008 2007
$ $
Reconciliation of net profit with net cash flow from
operating activities
Net (loss)/profit (44.936) 120,636
Add non cash items
Depreciation 81,616 84,973
Amortisation 10,204 7,867
Movements in other working capital items:
Decrease in trade and other Receivables 158,941 183,603
(Increase) / Decrease in Trade and other Creditors (146,213) 6,281
Decrease in GST Payable (36,830) (2,277)
Decrease in Payments and Accrued Income 816 486
Increase / (Decrease) in Employee Entitlements 233,907 (580,334)
Decrease in Accrual an Deferred Income (11,124) (68,845)
Net cash from operating activities 246,381 (247,610)
Cash Flow Statement continued
26
Notes to Financial Statementsfor the year ended 31 March 2008
1. General Information
New Zealand Institute of Economic Research (Inc.) (“the Institute”) provides economic
consulting services in New Zealand and overseas.
The Institute is registered as an incorporated society under the Incorporated Societies Act
1908. As a registered not-for-profit organisation it is exempt from interest and dividend
PAYE under section NF9 of the Income Tax Act 2004. The Institute is incorporated and
domiciled in New Zealand. The address of its registered office is 8 Halswell Street,
Thorndon, Wellington.
The entity’s owners do not have the power to amend these financial statements once
issued.
The financial statements are presented in New Zealand dollars, which is the Institute’s
functional and presentation currency.
2. Summary of Significant Accounting Polices
The financial statements have been prepared in accordance with New Zealand generally
accepted accounting practice (NZ GAAP). They comply with New Zealand equivalents to
International Financial Reporting Standards (NZ IFRS), and other applicable New Zealand
Financial Reporting Standards, as appropriate for public benefit entities that qualify for and
apply differential reporting concessions.
(a) Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are
set out below. These policies have been consistently applied to all periods presented.
Entities reporting
The financial statements are for New Zealand Institute of Economic Research (Inc.) as
a separate legal entity. The Institute is designated as a public benefit entity for financial
reporting purposes.
Statutory base
The financial statements have been prepared in accordance with the requirements of the
Financial Reporting Act 1993.
Differential reporting
The Institute is a qualifying entity within the Framework of Differential Reporting. The
Institute qualifies on the basis that it is not publicly accountable and it is not large. The
Institute has taken advantage of all differential reporting concessions available to it with
the exception of NZ IAS 7: Cash Flow Statements, with which it has fully complied.
Application of NZ IFRS 1 First-time Adoption of New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS 1)
Financial statements of the Institute until 31 March 2007 had been prepared in accordance
with previous New Zealand Financial Reporting Standards (NZ FRS). NZ FRS differs in
certain respects from NZ IFRS.
When preparing the Institute’s financial statements for the year ended 31 March 2008,
management has amended certain accounting and valuation methods applied in the
previous NZ FRS financial statements to comply with NZ IFRS. The comparative figures
were restated to reflect these adjustments.
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Reconciliations and descriptions of the effect of transition from previous NZ FRS to NZ IFRS
on the Institute’s equity and net income are given in note 17.
In preparing these financial statements in accordance with NZ IFRS 1 the Institute has
applied certain optional exemptions from full retrospective application of NZ IFRS. Further
details are given in note 3.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as
modified by the revaluation of certain assets as identified in specific accounting policies
below.
(b) Revenue recognition
Revenue comprises the fair value for the sale of services, excluding Goods and Services Tax.
Revenue is recognised as follows:
(i) Sales of Services: Sales of services are recognised in the accounting period in which
the services are rendered, by reference to completion of the specific transaction assessed
on the basis of the actual service provided as a proportion of the total services to be
provided.
(ii) Grants: Grants received are recognised in the income statement when the requirements
under the grant agreement have been met. Any grants for which the requirements under
the grant agreement have not been completed are carried as liabilities until all the
conditions have been fulfilled.
(iii) Interest Income: Interest income is recognised on a time-proportion basis using the
effective interest method.
(c) Deferred Income
Income received which relates to services to be provided in future periods is recognised in
the balance sheet as deferred income.
(d) Goods and Services Tax (GST)
The income statement has been prepared so that all components are stated exclusive of
GST with the exception of non-deductible revenue and expense items. All items in the
balance sheet are stated net of GST, with the exception of receivables and payables, which
include GST invoiced.
(e) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by
the lessor are classified as operating leases. Payments made under operating leases (net of
any incentives received from the lessor) are charged to the income statement on a straight-
line basis over the period of the lease.
(f) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial
institutions and bank overdrafts.
Notes to Financial Statements continued
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(g) Trade and Other Receivables
Trade and other receivables are recognised initially at fair value and subsequently measured
at amortised cost, less provision for doubtful debts.
(h) Property, Plant and Equipment
All property, plant and equipment is stated at historical cost less accumulated depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of the
items.
Depreciation on assets is calculated using the straight line method to allocate the cost of
the assets, net of any residual value, over their estimated useful lives, as follows:
Plant and equipment 50 years
Furniture and fittings 10 years
Office equipment 3 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at
each balance sheet date.
If an asset’s estimated recoverable amount is less than its carrying amount, the asset is
impaired and written down.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These are included in the income statement.
(i) Impairment of Non-Financial Assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash generating units).
(j) Intangible Assets
Intangible assets consist of software assets. Software assets have a finite useful life.
Historical cost less amortisation is deemed to be fair value as the assets are purchased at
market value.
Software is amortised over its estimated useful life of 3 years.
(k) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Institute prior to
the end of the financial year which are unpaid. The amounts are unsecured and are usually
paid within 30 days of recognition.
(l) Employee Entitlements
Liabilities for wages and salaries, including annual leave and accumulating sick leave,
expected to be settled within 12 months of the reporting date, are recognised in other
payables in respect of employees’ services up to the reporting date. These liabilities are
measured at the amounts expected to be paid when settled.
Liabilities for accumulating sick leave are recognised when the leave is taken and measured
at the rates paid or payable.
The liability for employee entitlements is carried at the present value of the estimated
future cash flows.
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3. Transition to New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS)
Application of NZ IFRS 1 First-time Adoption of New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS 1)
The Institute’s financial statements for the year ended 31 March 2008 are the first annual
financial statements that comply with NZ IFRS and NZ IFRS 1 has been applied in their
preparation. The financial statements have been prepared as described in note 1(a).
The Institute’s transition date is 1 April 2006. The Institute prepared its opening NZ IFRS
balance sheet at that date. The reporting date of these financial statements is 31 March
2008. The Institute’s NZ IFRS adoption date is 1 April 2007.
In preparing these financial statements in accordance with NZ IFRS 1, the Institute has
applied optional exemptions from full retrospective application of NZ IFRS as outlined
below. No mandatory exemptions were applicable to the Institute.
Deemed Cost
The Institute has applied the ‘deemed cost’ exemption in NZ IFRS 1. It has used the fair
value of the Halswell Street property as at the date of transition as its deemed cost.
Land and Buildings were revalued on 31 March 2006 in accordance with a valuation
report from independent registered valuers Telfer Young (Wellington) Ltd. The basis of
the valuation was under a highest and best use approach and resulted in the value of
$1,320,000 for land and $532,500 for buildings.
The reconciliations in note 17 provide a quantification of the effect of the transition to NZ
IFRS. The reconciliations provide details of the impact of the transition on:
• Profitfortheyearended31March2007
• Equityat1April2006
• Equityat31March2007
Notes to Financial Statements continued
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2008 2007
Note $ $
REVENUE FROMCONTINUING OPERATIONS
Subscription Revenue 339,268 368,555
Contract Research Income 3,376,250 2,933,460
TOTAL REVENUE 3,715,518 3,302,015
Other Income
Grant Income 37,500 37,500
Miscellaneous Income 20,397 16,961
Interest Income 96,798 93,233
TOTAL OTHER INCOME 154,695 147,694
4. Revenue
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2008 2007
Note $ $
PROFIT INCLUDES THE FOLLOWINGSPECIFIC EXPENSES:
Depreciation
Building 15,290 7,293
Office Equipment 66,326 77,685
TOTAL DEPRECIATION 81,616 84,978
Amortisation
Software 10,204 7,867
TOTAL AMORTISATION 10,204 7,867
TOTAL DEPRECIATION AND AMORTISATION 91,820 92,845
5. Expenses
Notes to Financial Statements continued
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2008 2007
Note $ $
Trade Receivables 423,566 582,507
Other Receivables 15,804 11,935
439,370 594,442
The Institute has recognised a possible loss of $12,500 (2007: Nil) in respect of doubtful trade
receivables during the year ended 31 March 2008. The loss has been included in ‘operating
expenses’ in the income statement.
7. Trade and Other Payables
2008 2007
Note $ $
Trade Payables 52,941 62,565
Other Payables 70,269 71,037
123,210 133,602
6. Trade and Other Receivables
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At 31 March 2007
Cost 1,320,000 542,227 970,099 2,832,326
Accumulated Depreciation - (15,160) (855,274) (870,434)
Net Book Amount 1,320,000 527,067 114,825 1,961,892
At 31 March 2008
Cost 1,320,000 542,466 1,085,460 2,947,926
Accumulated Depreciation - (30,450) (921,600) (952,050)
Net Book Amount 1,320,000 512,016 163,860 1,995,876
8. Non-Current Assets - Property, Plant and Equipment
Lands $ Buildings $Office Equipment $ Total $
2008 2007
$ $
Cost at the Beginning of the Year 67,484 25,653
Accumulated Amortisation (26,858) 16,654
Net Book Amount at the End of the Year 40,626 8,999
9. Intangible Assets - Software
Notes to Financial Statements continued
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10. Accumulated Funds
Movements in accumulated funds are as follows:
2008 2007
$ $
Balance 1 April 3,044,911 2,924,275
Net (loss) / Profit for the Year (44,936) 120,636
Balance 31 March 2,999,975 3,044,911
11. Remuneration of Auditors
During the period the following fees were paid or payable for services provided by the auditor
of the Institutes:
2008 2007
$ $
Assurance Services
Audit Services
PriceWaterhouseCoopers
Audit of Financial Reports 10,609 10,300
Audit of NZ IFRS Opening and Comparative
Financial Statements10,300 -
Total Remuneration For Audit Services 20,909 10,300
Other Assurance Services - -
Total Remuneration For Other Assurance Services - -
Total Remuneration For Assurance Services 20,909 10,300
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12. Contingencies
The Institute has no contingent liabilities at 31 March 2008 (2007: nil).
13. Commitments
Operating leases
The Institute leases photocopiers under non-cancellable operating leases.
2008 2007
$ $
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within One Year 16,998 42,757
Later than One Year but not later than Five Years 1,373 16,998
Later Than Five Years - 1,373
Capital Commitments
The Institute has no capital commitments at 31 March 2008 (2007: nil).
14. Public Good Work
In addition to direct operational expenditure of $135,732 (2007: $150,756) on a wide
range of public good projects, the Institute incurred a further $197,117 (2007: $139,153)
at normal charge out rates of staff time on Institute public good activities.
15. Related Party Information
At 31 March 2008, $21,953 has been accrued in respect of payments to be made to Board
Members for services rendered during the year ended 31 March 2008 (2007: $22,500). A
total payment of $22,500 was also made to Board Members during the year.
16. Events Occurring After Balance Date
No significant events have occured after balance date.
Notes to Financial Statements continued
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17. Explanation of transition to New Zealand equivalents to IFRS
(1) Reconciliation of equity reported under previous New Zealand
Financial Reporting Standards (NZ FRS) to equity under New Zealand
equivalents to IFRS (NZ IFRS).
(a) At the date of transition to NZ IFRS: 1 April 2006
ASSETS
Current Assets
Cash and Cash Equivalents 1,771,448 - 1,771,448
Trade and Other Receivables 767,973 - 767,973
Prepayments and Accrued Income 436,582 - 436,582
2,976,003 - 2,976,003
Non-Current Assets
Property, Plant and Equipment (i) 2,016,827 (8,433) 2,008,394
Intangible Assets (i) - 8,433 8,433
Total Assets 4,992,830 - 4,992,830
Effect of Transition to NZ IFRS $
Previous NZ FRS $ NZ IFRS $
Continued next page
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LIABILITIES
Current Liabilities
Trade and Other Creditors 1,684,038 - 1,684,038
GST Payable 91,335 - 91,335
Employee Entitlements 124,492 - 124,492
Accruals and Deferred Income 152,690 - 152,690
Related Party Payable 16,000 - 16,000
Total Current Liabilities 2,068,555 - 2,068,555
Total Liabilities 2,068,555 - 2,068,555
Net Assets 2,924,275 - 2,924,275
EQUITY
Revaluation Reserve (ii)1,009,613 (1,009,613) -
Accumulated Funds (ii)1,914,662 1,009,613 2,924,275
2,924,275 - 2,924,275
Total Equity 2,924,275 - 2,924,275
Notes to Financial Statements continued
Effect of Transition to NZ IFRS $
Previous NZ FRS $ NZ IFRS $
38
(b) At the end of the last reporting period under previous NZ FRS: 31 March 2007
ASSETS
Current Assets
Cash and Cash Equivalents 1,476,929 - 1,476,929
Trade and Other Receivables 594,442 - 594,442
Prepayments and Accrued Income 419,236 - 419,236
2,490,607 - 2,490,607
Non-Current Assets
Property, Plant and Equipment (i) 1,970,891 (8,999) 1,961,892
Intangible Assets (i) - 8,999 8,999
Total Non-Current Assets 1,970,891 - 1,970,891
Total Assets 4,461,498 - 4,461,498
Effect of Transition to NZ IFRS $
Previous NZ FRS $ NZ IFRS $
Continued next page
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LIABILITIES
Current Liabilities
Trade and Other Creditors 133,602 - 133,602
Employee Entitlements 934,232 - 934,232
GST Payable 89,058 - 89,058
Accruals and Deferred Income 237,195 - 237,195
Related Party Payable 22,500 - 22,500
Total Current Liabilities 1,416,587 - 1,416,587
Total Liabilities 1,416,587 - 1,416,587
Net Assets 3,044,911 - 3,044,911
EQUITY
Revaluation Reserve (ii)1,009,613 (1,009,613) -
Accumulated Funds (ii)2,035,298 1,009,613 3,044,911
3,044,911 - 3,044,911
Total Equity 3,044,911 - 3,044,911
(i) Software that is not integral to hardware has been reclassified from property,
plant and equipment to intangible assets.
(ii) Following the Institute applying the deemed cost exemption to property held at 1
April 2006, the revaluation reserve previously held in respect of that property has
now been transferred to accumulated funds.
(2) Reconciliation of profit for the year-ended 31 March 2007.
No changes to the income statement occurred as a result of adoption of NZ IFRS.
Notes to Financial Statements continued
Effect of Transition to NZ IFRS $
Previous NZ FRS $ NZ IFRS $
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In my opinion, as the New Zealand Institute of Economic Research prepares to celebrate
its 50th anniversary in 2008, Professor Horace Belshaw deserves to be remembered as the
“father of the Institute”, for the work he did during the 1950s to secure support for its
establishment. As the Board of the Institute said in an obituary in its 1963 annual report,
“As far as we are concerned he will always be remembered as the one man without whose
foresight, enthusiasm and energy the Institute would not have come into being.”
Horace was distressed at the relative lack of serious, independent economic research going
on in New Zealand as he took up his position at Victoria in the early 1950s. He was
determined to try to do something to rectify this situation. He involved me to some extent
in his efforts to do so. One of the milestones in public policy that assisted those efforts was
the report of the Royal Commission on Money Banking and Credit Systems 1956. When I
received an invitation to serve on the Secretariat of that Commission, Horace encouraged
me to accept. I was able to continue my teaching programme, which in those days was
concentrated in the late afternoons and early evenings, but it was inconvenient for the
Department in limiting my capacity to be involved in other aspects of its work.
In the course of their deliberations, the Commissioners also became concerned about the
lack of economic research being done at the time. Their report was especially useful to
Horace in his efforts to gain support for an Institute. Section 9 of their report has two
elements that are relevant to the history of the NZIER. Part XI D on pages 193 to 194 deals
with the proposal to establish an Economic Research Institute. Part XII B on pages 199 to
200 deals with the proposal to establish an Economic Advisory Council.
In its evidence, the Reserve Bank made a strong recommendation to the Commission that
“an Institution to conduct original research in the economic field should be established in
New Zealand.” The Bank emphasised that New Zealand was lagging well behind what was
being done in other countries. It listed a number of overseas institutions that conducted
the sort of research it had in mind. It observed that most of the work being done by
government institutions in New Zealand was limited to the day-to-day investigations
necessary for the determination of important matters of policy. There was a need for more
long-term systematic research which would prove helpful to both government and private
enterprises.
The Bank listed 14 topics that would be suitable for research. The items that were included
in the list reinforced its emphasis on how little research was being done in the country on
very important economic relationships at that time. The Governor expressed the view that
the necessary research would be best carried out by an “absolutely independent institution”
rather than, for example, as a branch of the Reserve Bank, although he indicated that the
Bank was ready and willing to undertake the responsibility.
The Royal Commission was satisfied that New Zealand needed such an organisation, “of
modest size and scope commensurate with our population and financial resources”. They
therefore recommended that steps should be taken to establish an Economic Research
Institute to undertake investigations into fields and on the lines set out in their report.
Extract from Prof Sir Frank Holmes’ contribution to The Evolving Institute (Wellington: NZIER, July 2008). Available on www.nzier.org.nz
42
The Commissioners were firmly of the opinion that the organisation should be a completely
independent body, “not an appendage of the Reserve Bank or any similar concern”. (They
mentioned the Council for Educational Research as a body functioning in the independent
manner required.) They did not want it to be encumbered with collecting statistics that
it needed, which should be obtained through the Department of Statistics. Its primary
function would be economic research.
Given the need to ensure economy in the use of existing facilities and the desirability of
relative independence, they considered that the most suitable arrangement would be for
the organisation to be attached to the Economics Department of one of the university
colleges. Victoria University College would be “the appropriate institution” because of
its situation in the capital city. This would enable close contacts to be established with
government departments, the Reserve Bank, and the head offices of many business concerns.
Funding should be obtained by contributions from the Reserve Bank, the Department of
Statistics, Victoria University College, organisations representative of business, workers and
employers, trading banks and other private concerns that might be sufficiently interested to
give the venture material support.
Extract from Prof Conrad Blyth’s contribution to The Evolving Institute (Wellington: NZIER, July 2008). Available on www.nzier.org.nz
August 1960 can be taken as the effective start of work in the Institute. I found a house
in Kelburn Parade and a secretary, the one bought the other chosen by Jim Andrews. The
house was partly occupied by a student tenant, and our first months were spent coping
with the living arrangements of a young woman who seriously worried my elderly secretary
until she left at the end of the year and we could get the builders in. (Actually, the tenant
was responsible for the purchase of the house: her father worked in the National Bank with
Jim Andrews and had passed on the information that the owner was ready to sell.)
What were my expectations and what did I find? I had no experience of working in a
research institute, although I knew how the Cambridge Department of Applied Economics
functioned. After my appointment I visited the National Institute in London and received
much useful advice from Christopher Saunders, the Director, who was in the early stages
of launching the National Institute Review, containing a periodic macro analysis and
forecast of the British economy. The Review probably gave me an idea, but certainly not a
firm intention, although it fitted well with the work I had done on the American business
cycle. The other intellectual baggage I carried back to New Zealand was Solow’s work on
factor productivity and technical change, and Chenery and Clarke’s demonstration that
programming models could be applied to development problems and the allocation of
resources on a national scale. The former formed the basis of our first research paper, and
the latter sowed the seeds for the Blyth-Crothall programming model.
When I got off the ship at Lambton Quay I was aware of some impatience on the part of the
Board, reflecting their awareness that members had paid two years’ subscriptions without
seeing anything for their money. Jim Andrews deflected this impatience away from me;
Gert Lau felt it his duty to let a little through; the other Trustees were understanding and
let Jim and Gert be my mentors. Before I arrived, the Board, concerned at the delays, had
set up a group of Wellington economists - Arthur Ward of the Dairy Board was prominent
- to discuss suitable research topics, but apart from providing a list the group played no
advisory role, although as individuals they certainly contributed to the emerging plans.
43
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For the first six months I felt under some pressure, largely of my own making, to demonstrate
the Institute’s presence: we appointed good staff and they started to work, but it seemed to
me essential to “get something out”. That something turned out to be a few pages on New
Zealand’s economic growth which we pretentiously called our first research paper. Using
official statistics it drew attention to what most economists already knew that our growth
in the 1950s appeared to be slow, and it suggested (thanks to Solow) some reasons. There
was not much to it, it was done in a hurry (after Jim Andrews had supported my idea), and
Horace Belshaw was I believe a little disappointed at the substance of our first effort. But,
it got the publicity and (I like to think) launched us and gave us some breathing space.
An old Cambridge friend of mine, reviewing it for the Economic Journal, said it was my
research agenda!
How did the ideas for what subsequently came to be our two flagships emerge? Neither
I nor anyone else on the staff had previous experience of conducting or using opinion
surveys. Furthermore, we had no plans at the time to move into the short-term forecasting
business. However, two academics, Colin Simkin of Auckland, and my former teacher at
Otago, Harro Bernardelli, each suggested starting an opinion survey, modelled no doubt
on the Munich konjuncturtest. With the impatient member problem in mind, my response
was that by using the members as the surveyed panel we might forge closer links. Thus the
manufacturing members formed the initial panel; the survey form had nothing to do with
Munich but was modelled on the Bank of NSW-ACMA survey form (we decided to survey
every quarter while the Australians did it every four months).
I can remember no specific event which signalled the decision to move into short term
macro forecasting and launch Quarterly Predictions, although the Monetary and Economic
Council had been set up in 1961 with Frank Holmes as its chairman. Frank inquired if the
Institute would act as the secretariat of the Council; I demurred on the grounds that so
early in its life the Institute would appear to be falling short of full independence. However,
the institution of the MEC raised the question of short term analysis and forecasting
amongst the Institute’s staff at the same time that we launched the opinion survey. There
were, however, competitors. BERL had been founded about the same time as the Institute
and the members of their team became good friends: Brian Philpott, Norman Macbeth,
Hugh Walls, Jim Rowe I think left when he went to the Bankers’ Association, and Alan Catt
may have been a member before he joined the Institute. BERL, a private enterprise, was
concerned that it might have to compete unfairly with the Institute, a charity. It was clear
to me that if the Institute did get into this line of business we would need to differentiate
our product. We first of all experimented with the idea of each research officer specialising
and producing a forecast of a particular sector of the economy i.e. industry by industry.
That did not work; it was too difficult for junior staff, would require extensive and intensive
supervision, and for some sectors there was little data.
What we decided to do (foolishly, I think it transpired) was to create quarterly national
income and expenditure accounts and forecast ahead on a quarterly basis. There was no
doubt our product was differentiated! New Zealand had no official quarterly income and
expenditure (or output) statistics. We actually tried to construct quarterly business profits
using information supplied by (some) members. We were persisting with this foolishness
when I left, and my successor properly abandoned it and revamped the whole Quarterly
Predictions approach. The initial foolishness was entirely my doing; despite this Alan Catt
as editor successfully launched the Institute into macro analysis and forecasting.
44
NZIER Past and present
Chairpersons
J T Andrews 1959-1972
Dr GA Lau 1972-1976
Sir Ronald Trotter 1976-1978
Sir John Mowbray 1978-1984
RWR White CMG 1984-1988
Sir Spencer Russell 1989-1992
KM Vautier CMG 1992-1998
M Walls 1998-present
Directors/Chief Executives
CA Blyth 1960-1965
AJ L Catt 1965-1966
JW Rowe 1966-1971
WD Rose 1971-1976
TK McDonald 1976-1981
BH Easton 1981-1986
DG Mayes 1986
AE Bollard 1987-1994
J Yeabsley 1994-1997
A Sundakov 1997-2003
TB Layton 2003-present
Board
Dr G A Lau 1959-1975
W G V Fernie 1959-1973
W Fisher 1959-1962
E C Marris 1959-1972
LC Nisbet 1959-1964
Sir Clifford Plimmer 1959-1983
Sir Philip Proctor 1959-1976
R Porter 1963-1972
JK Skinner 1966-1976
FRA Hellaby 1973-1979
Sir Ronald Trotter 1973-1986
EW Mace 1974-1980
Sir John Mowbray 1974-1993
EE Barringer 1977-1984
JES Hammond 1977-1980
RW Steele 1977-1996
GE Pearce 1978-1987
Prof CA Blyth 1978 & 1989-2006
DA Watkins 1978-1981
HA Fletcher 1980-1984
RWR White 1984-1995
J Shaw 1985-1995
Sir Roderick Weir 1985-1997
CGO Wise 1985-1988
RE Sayers 1987-1988
KM Vautier 1987-1988
Sir Allan Wright 1987-1989
JB Macaulay 1988-1999
Sir Spencer Russell 1989-1993
GW Valentine 1989-2006
TK McDonald 1991-present
Sir Peter Elworthy 1992-2004
M Walls 1993-present
Prof Viv Hall 1996-present
Prof AW Mann 1996-2006
G Spencer 1996-1998
RF Nottage 1999-present
NMT Geary 2000-present
P Baines 2005-present
45
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A
NN
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L REPORT 2008
Ex-officio Trustees
Dr J Williams 1959-1967
Sir FW Holmes 1959-1966
EC Fussell 1959-1961
EL Greensmith 1959-1964
Prof CA Blyth 1961-1964
G Wilson 1962-1966
DWA Barker 1966
JW Rowe 1966-1971
NR Davis 1967-1968
AR Low 1967-1976
BH Easton 1982-1985
Prof BM Niculescu 1968-1978
Dr DBC Taylor 1968-1981
HG Lang 1969-1976
WD Rose 1972-1975
TK McDonald 1976-1981
NV Lough 1977-1980
RWR White 1977-1981
Prof BP Philpott 1979-1991
BVJ Galvin 1981-1986
Dr WI Axford 1982-1984
DL Wilks 1982-1983
ST Russell 1984-1988
Prof L Holborow 1985-1990
Dr DG Mayes 1986
Dr AE Bollard 1987-1994
Dr DT Brash 1989-1996
Prof AW Mann 1991-1996
Prof VB Hall 1992-1996
Dr J Yeabsley 1994-1997
A Sundakov 1997-2003
Dr TB Layton 2003-present
Co-opted Trustees
Prof H Belshaw 1959-1961
TH Leys 1963-1966
R King 1967-1970
CW Mace 1969-1973
LN Ross 1971-1974
Professor CA Blyrh 1973-1977
WGV Fernie 1974
GE Pearce 1975-1977
DA Watkins 1976-1977
Staff
CA Blyth 1960-1965
AJC Catt 1961-1966
PG Elkan 1961-1970
P Hamer 1961-1970
M McBride 1961-1963
M Pitcairn 1961-1963
WA Poole 1961-1971
D Ridler 1961
HB Smith 1961-1967
GA Crothall 1962-1966
C Gillion 1962-1972
E Banks 1963-1966
E Philipp 1963
DO Sewell 1963-1964
R Atkinson 1964-1966
BH Easton 1964-1965 & 1981-1986
BR Greenslade 1964-1966
H Mendham 1964-1966
PA St John 1964-1968
J Braithewaite 1965
E Burbridge 1965-1969
TK McDonald 1965-1966 & 1969-1981
JW Rowe 1965-1971
PA Brunton 1966-1967
Z Frankel 1966-1970
JC Hunter 1966
WD Rose 1966-1976
KM Vautier 1966-1975
DK Heather 1967-1968
KD Lowen 1967
CP Vautier 1967-1969
MJ McKinlay 1968-1969
LJR Suckling 1968
J Thomason 1968-1969
AJ van Zijl 1968-1970
VC Weststrate 1968-1973
B Hurrelle 1969-1980
AJ McDonald 1970-1979
MB McKenzie 1971-1976
H Oliver 1971-1975
TR O’Malley 1971-1981
MM Niculescli 1972-1973
J Richards 1972-1974
SM Usher 1972-1982
CA Cannegieter 1973-1976
MC Copeland 1973-1981
JA Ellis 1973-1976
RE Low 1973-1974
DB Webber 1973-1974
ND David 1974
SL Snively 1974-1980
DJ Burtt 1975-1980
R Sanderson 1975-1976
46
PB Ryan 1976-1978
R Davis 1976-1987
J McGill 1976-1979
DJ O’Dea 1976-1984
MD Weatherston 1976-1978
E Haywood 1977-1978
G Noviskey 1977-1980
RA Buckle 1978-1981
C Ashley-Jones 1979-1984
JM Boullon 1979-1985
GV Butcher 1979-1984
J Gallacher 1979-1986
A Horsfield 1980-1981
C McKee 1980
JP Wilson 1980-1981
B Bhall 1981
RP Braae 1981-1983
S Davis 1981
N Armsttong 1982-1989
GC Forgie 1982-1987
LB Kay 1982-1984
TA Keenan 1982-1985
P Marks 1982-1984
P Wilson 1982-1986
RD Bowie 1983-1988
D Grimmond 1983-1992
C Propper 1983-1984
G Wells 1983
M Benseman 1984-1985
A Bollard 1984-1994
N Hunn 1984-1986
PJ Keenan 1984-1985
K Wheeler 1984
J Ayto 1985-1986
WT Baker 1985-1986
S Bano 1985-1986
P Briggs 1985-2004
H Cartmell 1985
J Culy 1985-1997
D Harper 1985-1986 & 1989-1993
P Pryke 1985
J Savage 1985-1990 & 1994-1997
A Smith 1985
D Witt 1985
E Assendelft 1986-1989
S Gale 1986-2003
M Malan 1986-1997
D Mayes 1986
J Mushin 1986
P Clough 1987-present
R Hodges 1987
G Sellens 1987-1995
MA Thompson 1987-1989
S Toplis 1987
S Vandersyp 1987-1993
N Williams 1987-1988
A Froggatt 1988-2004
AB Orr 1988-1989
R Taylor 1988-1994
B O’Donovan 1989-1991
P Colgate 1990-1994
I Duncan 1990-2007
E Hodgson 1990-2003
C Nixon 1990-present
G Malcolm 1991-1993 & 1996-1997
K Featherstone 1992-1994
S Chapple 1993-1997
S Gorbey 1993-1994
D James 1993-1994 & 2001-2003
T Mears 1994-1998
J Yeabsley 1994-present
D Cook 1995-1998
D Cooling 1995-1997
A Dellow 1995-1997
D Irwin 1995-1996
J Peters 1995-1997
J Barnett 1997-1999
C Basher 1997-2000
M Clarke 1997-2003
F Gamble 1997-2002
M Hassan 1997-2001
W Park Weir 1997-1999
D Steel 1997-2005
A Sundakov 1997-2003
P Bishop 1998-2004
D Purdue 1998-1999
N Strong 1998-2001
E Fan 1999-2001
J Feil 1999-2003
V McWha 1999-2004 & 2005-2007
L Yee 1999-2001
J Beckett 2000-2003
P Gardiner 2000-2004
C Morgan 2000-2002
D O’Connor 2000-present
J Smith 2000-2003
J Ballingall 2001-2005
JP de Raad 2001-2003 & 2004-present
R Lattimore 2001-2004
A McKinlay 2001-2003
M Walton 2001-2007
P Davies 2002-2006
S Hope 2002-2006
C Lopez 2002
J Matthewson 2002-present
P Neilson 2002-2004
S Spring 2002-2007
A Coetzer 2003
M Cox 2003-2007
D De Joux 2003-present
TB Layton 2003-present
C Ramsey 2003-2004
A Rodrigues 2003-2004
M Thomas 2003
J Branson 2004-present
V Evans 2004
K Kam 2004-present
S Pells 2004-present
R Schrage 2004-2005
J Stephenson 2004-present
J Stevenson-Wallace 2004-2005
G Andrews 2005-present
L Simpson 2005
L Thomason 2005-2006
A Wang 2005-2007
S Wear 2005
T Eaqub 2006
P Nolan 2006-present
B Speirs 2006-2008
S Vita 2006-2007
P Bailey 2007-present
G Dallimore 2007-present
J Guria 2007-present
R Ito 2007-present
K Johnson 2007-2008
T Le 2007-present
C Schilling 2007-present
M Willcox 2007-2008
G Hawke 2008-present
A Dalziel 2008-present
8 Halswell Street Thorndon PO Box 3479 Wellington 6011 New Zealand
Phone: +64 4 472 1880 Fax: +64 4 472 1211
email: [email protected]
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