In February this year, New Zealand Deputy Prime Minister Bill English laid out a stark assessment of the NZ economy. Rising unemployment, sluggish growth even in the pre-GFC era and a five year drop in exports were the highlights – or lowlights – of what English described as an extended passage of decline. English’s prognosis about the long term challenges may be correct, but credit must also be given where it is due – the NZ economy, like its trans-Tasman neighbour, has proven to be surprisingly resilient. The Reserve Bank of New Zealand’s latest forecast is for about 3% growth this year and 4% growth the following year.
Meanwhile NZ government has laid out an ambitious long term plan to help revive the NZ economy. It has increased its capital allowance by NZ$7.5bn over the next five years, with much of this is earmarked for infrastructure projects such as the roll-out of ultra-fast broadband, better hospitals and more modern schools. NZ$7bn will be spent on the road network and NZ$3.3 bn to strengthen the national electricity grid. Sweeping regulatory reforms – which have been in train since last year – will continue, led by more reforms in the tax and resource management space. The reforms to taxation will sound rather familiar to Australian readers - but as NZ lawyers have tartly pointed out, the NZ government has not shrouded its plans for taxation in the same level of secrecy and obscurity as its Canberra counterpart.
It is a mixed environment for lawyers, many of whom remain optimistic that transactional activity is on the mend. However, the counter-cycle appears to be playing a stronger part in firm workflows than is the case in Australia, and firms are also strengthened by the government’s renewed commitment to infrastructure investment. The result is an operating environment for law firms which is fragile, but not without redeeming features.
How are firms performing? Observing the customary secrecy surrounding New Zealand revenue figures, nearly all firms interviewed by ALB described their results with adjectives rather than numbers. Russell McVeagh’s Gary McDiarmid said that his firm was tracking towards “comfortable” growth in 2010 following a “flat” 2009. Chapman Tripp’s Alastair Carruthers was even more cautious, saying that he was “very happy” with his firm’s performance. That can presumably be understood as meaning that the firm is, at least, recording growth. Minter Ellison Rudd Watts’ Mark Weenink said that his firm had recorded “double digit” growth last financial year. Bell Gully’s Roger Partridge said that his firm recorded “modest” growth last year and was expected a similar result for 2010.
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