Section 4: Constraints on Productivity and Growth
In Section B of the questionnaire we asked firms specifically about the way in which they deal with a series of factors (which were read to them)17, in order to assess what factors are seen as having the most potential to "divert and distract" the firm's managers from improving productivity or concentrating on growth. Respondents were told "the next set of questions is about productivity and growth of businesses in New Zealand. That includes the products and services you have already as well as any initiatives you might take. I'll read out a number of aspects of the business environment in New Zealand and ask you to answer by saying A or B. "A" means your firm can readily deal with it and largely put it out of mind. "B" means that it continues to divert and distract your business. Say not applicable if that is what fits best".
Figure 13: Dealing with the Business Environment
→ Large version of "Figure 13: Dealing with the Business Environment"
Figure 13 presents the responses from the total sample (490 responses), showing that the factors that were most commonly selected as being "distracting" were: B (the regulations that apply to releasing a person who no longer suits the business - referred to in Figure 13 as "firing"), J (the ACC insurance arrangements as they relate to the firm), I (the arrangements that are needed for health and safety of employees - referred to in Figure 13 as "health and safety") and L (providing a range of employment and other data on the firm to government agencies - referred to in Figure 13 as "govt stats").
Conversely, factors F (running the firm's part of the GST system), G (running the firm's part of the PAYE system) and E (the guidelines for firms trading fairly in relation to each others' products and services, and in relation to customers), were seen as least "distracting". Also identified by significant numbers of respondents were factors H (understanding and delivering your part of the New Zealand tax system), I (the arrangements you need to have for health and safety of employees), J (the ACC insurance arrangements as it relates to your firm), A (the regulations that you need to take into account when you are hiring a new person), and L (providing a range of employment and other data on your firm to government agencies) and C (the arrangements expected of you in regard to clean air, water and environment protection). Clearly the identification of these factors as not being distracting by some respondents contradicts the summary in the previous paragraph (where they were identified as being distracting). However, these contradictions are inherent in a study of this kind; issues that are "distractions" to some are "easily dealt with" by others.
In an overall sense it is worth noting the high number of factors where the respondents answered that they readily deal with the issue (and by a large margin). However, given the focus of this research (on identifying aspects of policy where improvements can be made) the emphasis in the analysis is on the distracting nature of some regulations.
A significant number of respondents stated that some of the factors referred to in this question were not applicable, and recalculating the percentages had an effect on the ranking of the factors. However, it should be noted that this new representation may not be any more accurate than the first: While it was clear that some respondents were correct when identifying a factor as not applicable (for example, to a non-employing firm the arrangements needed to release someone from employment are not applicable), it is less clear why some gave the answers they did (e.g. reasonable numbers noted the New Zealand tax system as not applicable). This is an illustration of an issue that has already been noted: the difficulty of gaining an accurate picture of the compliance burden (or benefit) when there is likely to be quite high levels of ignorance about some legislation. Having said this, the analysis below focuses on the reweighted totals (totals that exclude the "don't know" and "not applicable" answers).
Responses by Survey Sub-Samples
As with the previous section, it is necessary to take a more detailed look at the data to understand the issues that are being signalled by the respondents. This shows that the groups had distinctly different views on the relative diversionary potential of the various factors. In the following sections the factors that were most commonly nominated are examined in detail. The data is also analysed in terms of the five groups, and using two techniques: 1) by ranking the issues in order, and 2) by indexing (explained in Appendix C).
Firm Size
The issues of most concern to firms of different size groups are ranked and displayed in Figure 14.18
Indexing the data showed that respondents whose firms employ 6-10 FTEs, and those employing more than 11 FTEs, are over-represented amongst the 45.7% of respondents who answered that "releasing an employee" diverts and distracts them, while non-employing firms and those employing 2-5 FTEs were under-represented amongst those giving this answer. Respondents whose firms employ 6-10 FTEs, and those that do not employ, are over-represented amongst the 20.0% of respondents who answered that "labelling controls and standards" diverts and distracts them, while firms employing more than 11 FTEs were under-represented amongst those giving this answer. Respondents whose firms employ more than 11 FTEs and those that employ 6-10 FTEs are over-represented amongst the 25.9% of respondents who answered that "getting consent to use land, water and air" diverts and distracts them, while those employing 2-5 FTEs and non-employing firms were under-represented amongst those giving this answer. Respondents whose firms do not employ are under-represented amongst the 37.1% of respondents who answered that "making ACC arrangements" diverts and distracts them.
Figure 14: Ranking of Factors that Divert and Distract (Firm Size)
| | | Non-employing | 2 to 5 | 6 to 10 | 11+ |
| B | Arrangements expected when need to fire someone | 1 | 1 | 1 | 1 |
| I | Arrangements for health and safety of employees | | | 2= | 3 |
| J | ACC levy arrangements as they relate to your firm | 2 | 2 | 2= | 2 |
| L | Providing statistics on your firm to government agencies | | 3 | | |
| M | Standards for plant or animal products | 3 | | | |
Export Involvement
The issues of most concern to those that export (cf. those that are not currently exporting but which anticipate doing so) are ranked and displayed in Figure 15.
Figure 15: Ranking of Factors that Divert and Distract (Export Involvement)
| | | Export / earn foreign exchange | Not currently exporting | Not exporting |
| A | Arrangements expected when hiring a new person | | 3= | |
| B | Arrangements expected when need to fire someone | 1 | 1 | 1 |
| I | Arrangements for health and safety of employees | 3 | | 3 |
| J | ACC levy arrangements as they relate to your firm | 2 | 2 | 2 |
| L | Providing statistics on your firm to government agencies | | 3= | |
Indexing the data showed that respondents whose firms are exporting are over-represented amongst the 45.7% of respondents who answered that "releasing an employee" diverts and distracts them, while non-exporting firms were under-represented. Respondents whose firms are not currently exporting and those that are exporting are over-represented amongst the 20.0% of respondents who answered that "labelling controls and standards" diverts and distracts them, while non-exporting firms were under-represented. Respondents whose firms are exporting are slightly over-represented amongst the 25.9% of respondents who answered that "getting consent to use land, water and air" diverts and distracts them, while non-exporting firms were under-represented. Respondents whose firms are not currently exporting are over-represented amongst the 37.1% of respondents who answered that making ACC arrangements" diverts and distracts them, while firms that are not planning to export were under-represented amongst those giving this answer.
Firm Stage
The issues of most concern to firms of different stages are ranked and displayed in Figure 16.
Indexing the data showed that respondents whose firms are "mature" are over-represented amongst the 45.7% of respondents who answered that "releasing an employee" diverts and distracts them, while firms that are "new" and firms that are neither "mature" nor "new" were under-represented amongst those giving this answer. Respondents whose firms are neither "mature" nor "new" and those that are "new" are over-represented amongst the 20.0% of respondents who answered that this "labelling controls and standards" diverts and distracts them, while firms that are "mature" were under-represented amongst those giving this answer. Respondents whose firms are neither "mature" nor "new" are over-represented amongst the 25.9% of respondents who answered that "getting consent to use land, water and air" diverts and distracts them, while firms that are "mature" and firms that are "new" were under-represented amongst those giving this answer. Respondents whose firms are "new" are over-represented amongst the 37.1% of respondents who answered that making "ACC arrangements" diverts and distracts them.
Figure 16: Ranking of Factors that Divert and Distract (Firm Stage)
| | | Recently established | Neither recent nor mature | Mature & stable |
| B | Arrangements expected when need to fire someone | 1 | 1 | 1 |
| C | Arrangements expected re clean air, water etc | 3 | | |
| I | Arrangements for health and safety of employees | | 3 | 3 |
| J | ACC levy arrangements as they relate to your firm | 2 | 2 | 2 |
Growth Intentions
The issues of most concern to those with different growth intentions are ranked and displayed in Figure 17.
Figure 17: Ranking of Factors that Divert and Distract (Growth Intentions)
| | | Contract to smaller size | Consolidate | Grow significantly |
| A | Arrangements expected when hiring a new person | 3= | | |
| B | Arrangements expected when need to fire someone | 1= | 1 | 1 |
| H | Understanding/delivering your part of the New Zealand tax system | | 3 | |
| I | Arrangements for health and safety of employees | 3= | | 3 |
| J | ACC levy arrangements as they relate to your firm | 1= | 2 | 2 |
| L | Providing statistics on your firm to government agencies | 3= | | |
Indexing the data showed that respondents whose firms that intend to contract are over-represented amongst the 45.7% of respondents who answered that "releasing an employee" diverts and distracts them, while firms that are consolidating were slightly under-represented amongst those giving this answer. Respondents whose firms that intend to grow are slightly over-represented amongst the 20.0% of respondents who answered that "labelling controls and standards" diverts and distracts them, while firms that are contracting were under-represented amongst those giving this answer. Respondents whose firms that intend to contract are markedly over-represented amongst the 25.9% of respondents who answered that "getting consent to use land, water and air" factor diverts and distracts them. Respondents whose firms are contracting and consolidating are over-represented amongst the 37.1% of respondents who answered that making "ACC arrangements" diverts and distracts them, while firms that are growing were under-represented amongst those giving this answer.
Industry Type
The issues of most concern to those involved in different industries are ranked and displayed in Figure 18.
Figure 18: Ranking of Factors that Divert and Distract (Industry Type)
| | | Primary sector | Food industry | Non-food industry | Tourism & allied service | Software & business service | Wholesale/ retail with export / manu-
facturing |
| A | Arrangements expected when hiring a new person | | | | | 2 | |
| B | Arrangements expected when need to fire someone | 1 | 2 | 1 | 1 | 1 | 1 |
| I | Arrangements for health and safety of employees | 3= | | 3 | 2 | | 3 |
| J | ACC levy arrangements as they relate to your firm | 2 | 3 | 2 | | 3 | 2 |
| K | Getting consents to use land, water or air | 3= | 1 | | | | |
| L | Providing statistics on your firm to government agencies | | | | 3 | | |
Indexing the data showed that respondents whose firms are from the primary, non-food, wholesale, retail and manufacturing sectors and the food industry are over-represented amongst the 45.7% of respondents who answered that "releasing an employee" diverts and distracts them, while firms from the software and business service industry and the tourism sector were under-represented amongst those giving this answer. Respondents whose firms are from the food, and wholesale, retail and manufacturing sectors are over-represented amongst the 20.0% of respondents who answered that "labelling controls and standards" diverts and distracts them, while firms from the software and business service industry and the tourism and non-food sectors were under-represented amongst those giving this answer. Respondents whose firms are from the food and primary sectors are over-represented amongst the 25.9% of respondents who answered that "getting consent to use land, water and air" diverts and distracts them, while firms from the software and business service industry, non-food, and the tourism sectors were under-represented amongst those giving this answer. Respondents whose firms are from the primary, food and non-food sectors are over-represented amongst the 37.1% of respondents who answered that making "ACC arrangements" diverts and distracts them, while firms from the tourism and software and business service industries were under-represented amongst those giving this answer.
Summary
In relation to factors that divert and distract the firm away from focusing on productivity and growth, it is noticeable that on almost all of the factors the majority response was that the firm readily deals with the issues involved. However, given the focus of this study (on providing MED and other agencies with information that they can use to reduce the compliance burden for New Zealand firms), the researchers identified all those factors where more than 30% of respondents identified the factor as an issue - irrespective of the proportion of those who indicated that they were "dealing with it". On this basis the issues of most concern to the 490 respondents were:
- The regulations that apply to releasing a person who no longer suits the business (46% said this was a factor that diverts or distracts them, compared to 39% who said that this factor was not a concern).
- The ACC insurance arrangements as they relate to the firm business (37% said this was a factor that diverts or distracts them, compared to 58% who said that this factor was not a concern).
- The arrangements that are needed for health and safety of employees business (32% said this was a factor that diverts or distracts them, compared to 59% who said that this factor was not a concern).
- Providing a range of employment and other data on the firm to government agencies (30% said this was a factor that diverts or distracts them, compared to 57% who said that this factor was not a concern).
However, the factors were not raised to the same degree by the five different groups that were surveyed. The key differences between the groups in relation to the top three factors shows that:
- Respondents who identified "releasing an employee" as a factor that diverts and distracts them were most likely to be from firms that: employ 6-10 FTEs and more than 11 FTEs, export, are "mature", intend to contract, and are from the primary, non-food, wholesale, retail and manufacturing sectors and the food industry.
- Respondents who identified "labelling controls and standards" as a factor that diverts and distracts them were most likely to be from firms that: employ 6-10 FTEs and those that do not employ, are not currently exporting (but anticipate doing so) and those that are exporting, are neither "mature" nor "new", intend to grow and are from the food, and wholesale, retail and manufacturing sectors.
- Respondents who identified "getting consent to use land, water and air" as a factor that diverts and distracts them were most likely to be from firms that: employ more than 11 FTEs and those that employ 6-10 FTEs, export, are neither "mature" nor "new", intend to contract and are from the food and primary sectors.
Viewed from the perspective of the groups themselves, there were also some differences, although the responses to this question provided the least differences between the groups.
- In terms of firm size, all groups identified "arrangements expected when need to fire someone" and "ACC levy arrangements as they relate to your firm" as factors that divert and distract them. Respondents from larger firms were more likely to identify "arrangements for health and safety of employees" as a factor that diverts and distracts them.
- In terms of export involvement, all groups identified "arrangements expected when it is necessary to fire someone" and "ACC levy arrangements as they relate to your firm" as factors that divert and distract them.
- In terms of firm stage, all groups identified "arrangements expected when it is necessary to fire someone" and "ACC levy arrangements as they relate to your firm" as factors that divert and distract them.
- In terms of growth intentions, all groups identified "arrangements expected when it is necessary to fire someone" and "ACC levy arrangements as they relate to your firm" as factors that divert and distract them.
- In terms of industry type, almost all groups identified "arrangements expected when it is necessary to fire someone", "ACC levy arrangements as they relate to your firm" and "arrangements for health and safety of employees" as factors that divert and distract them.
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