"An article in the latest Reserve Bank Bulletin provides some useful facts about developments in the New Zealand corporate sector in recent years", Roger Kerr, executive director of the New Zealand Business Roundtable, said today.

It reports that there has been a 41 percent increase in the number of corporate enterprises between 2000 and 2004, with all industries recording gains.

Corporate profitability recovered after the 1997/98 recession to run at around 11 percent a year since 2000, and over the past few years company tax has been growing at a faster pace than corporate profits.

The corporate sector has improved its aggregate balance sheet position over the past few years, with the ratios of debt to profit and debt to assets both falling.

The sharp rise in business investment growth in 2004 was not matched by a similar rise in total corporate debt, suggesting that the corporate sector is funding new investment either from retained earnings or through raising new equity.

"These findings refute a number of common myths. Unions have complained about company tax payments. Brian Gaynor and Rod Oram are two commentators who have frequently claimed that New Zealand businesses pay out too much in dividends, are poor at reinvesting earnings and are falling into the hands of overseas lenders. The article suggests these claims are wrong. In general, it appears the financial position of the corporate sector is sound and being well managed", Mr Kerr concluded.

For more information, contact:

Roger Kerr
Executive Director
Ph: 04 499 0790
Email: rkerr@nzbr.org.nz

Web: www.nzbr.org.nz