Appendix 1: The Small Business Advisory Group's Assessment of the Government's Response to Our First Report
SBAG published its first report on 25 August 2004. The government's response was made public on 13 December 2005. We were disappointed that, after 16 months, there was not a great deal of progress to report.
Set out below are the ratings we have given each response. Generally, up to five marks were given if we discerned positive or proactive consideration of a recommendation, and up to another five if we found signs of something tangible having been achieved.
Overall the government scored 5.3/10 - a marginal pass.
Recommendation 1
That the government enhance funding to upskill mentors and mentor co-ordinators in order to provide a superior service to clients and to market their services.
In this year's Budget, the government allocated an additional $3.07M over the next five years to meet this objective.
Score: 10/10
Recommendation 2
That the government provide funding to SMEs with growth potential to engage an advisory board to assist them in the governance of their business.
Funding of $0.711M per annum has been made available to implement the advisory boards scheme. The scheme was implemented from 1 December 2005, though we understand that, to date, no grants have yet been made.
Score: 7/10
Recommendation 3
That the government support the use of existing and new local business awards programmes as a way of providing benchmarking information to firms.
The Business Capability Partnership, a private-public partnership aimed at enhancing business and management capability in New Zealand, is managing a government-funded project to develop and promote a suite of business diagnostic tools. This project is expected to be completed by mid 2006. SBAG is pleased that a project has been developed to meet this recommendation. However, as there has been no progress report on this project, we are unsure how the implementation is proceeding.
Score: 5/10
Recommendation 4
That there be readily and cheaply available to all SMEs a checklist of things they need to do, and the assistance that is available, when starting and growing a business.
Recommendation 5
That a complete checklist of issues to be considered when hiring an employee, together with supporting advice and guidance, be made quickly and cheaply available for businesses.
There have been significant improvements in the type and quality of information available for businesses, for example, the Department of Labour Employment Agreement Builder. Additionally, the government in Budget 2005 provided over $9.9M to transform the www.biz.org.nz website into a world-class business portal. This is a step in the right direction, though SBAG would like to have seen more implementation.
Recommendation 4 - Score: 5/10
Recommendation 5 - Score: 10/10
Recommendation 6
That the government undertake policy development work aimed at making access to funds easier for SMEs with growth potential.
The government has set aside $40M over the next five years to implement the Seed Co-investment Fund to help develop the capability and participation of equity investors in early-stage equity markets. Under the scheme, the government will co-invest up to 50% in an equity investment, with a limit of $250,000 investment in any proposal.
Score: 10/10
Recommendation 7
That the government urgently undertake a revision of rates of tax deduction for depreciation.
The government has amended the tax depreciation rules to better reflect how assets decline in value, and will put in place changes to reduce compliance costs for businesses. We would have liked to have seen more change.
Score: 7/10
Recommendation 8
That the government develop a strategy for providing assistance to SMEs to implement sales and marketing strategies and plans.
The Market Development Assistance Scheme (MDAS) was launched in January 2005 and provides up to 50% of the costs of offshore marketing and promotional activities, allocated on a first-in, first-served basis. The scheme was successful and was over-subscribed within two days. SBAG would like some feedback on what results have been achieved.
Score: 8/10
Recommendation 9
That the government ensure basic enterprise education is part of the core curriculum at Year 10 (4th form) and that provision is made for better support for enterprise education providers and for promoting careers in business to school pupils.
SBAG was disappointed with the government's response to this proposal as we do not consider that the current curriculum provides an adequate introduction to enterprise education. We consider this recommendation to be vital, both to increase the economic literacy of New Zealanders and in teaching young people what creates wealth in our community. We have resubmitted this recommendation in our second report.
Score: 2/10
Recommendation 10
That the barriers to government agencies purchasing from New Zealand suppliers be identified and remedied.
We understand government is working on this issue. We have received briefings on the project. Its completion, and hence any practical benefits, seems to be a long way off.
Score: 2/10
Recommendation 11
That the government make greater efforts to harmonise borders with Australia and make trading with our neighbour easier.
We understand that greater efforts are being made (for example, the recent announcement on Rules of Origin), although progress is somewhat slow.
Score: 7/10
Recommendation 12
Each government department have a small business advocate responsible for presenting the SME perspective on proposals that might impact SMEs.
Several departments have responded to this call. However, government as a whole has not done well in implementing this recommendation. SBAG considers that MAF, DoC, MfE, Education, Customs, TPK, MPIA and the Treasury should all have small business advocates.
Score: 6/10
Recommendation 13
That a senior manager in each government department be charged with scrutinising all the regulations designed by the department.
Only two departments are reported as having implemented this recommendation, which is disappointing.
Score: 2/10
Recommendation 14
That the government measure and publish the cumulative effects of the costs of compliance with regulations passed in the previous six months.
The government has suggested that investigative work has begun in this area. We would like to see some more tangible results of this work.
Score: 2/10
Recommendation 15
That all business-related legislation and regulations come into effect on only one or two pre-determined days per annum.
Several departments have committed to this recommendation, although it is not yet implemented. To be effective and to make a difference to the business environment for SMEs, we would like to see more departments commit to common commencement dates.
Score: 5/10
Recommendation 16
That regulatory proposals that affect business are subject to three months of consultation and do not come into force until three months after the changes have been agreed to.
Two departments have agreed to implement this recommendation, and two more already largely follow the principle. However, given the relative simplicity of this recommendation, we would like to see more departments take up this recommendation.
Score: 4/10
Recommendation 17
That government agencies (particularly ACC, OSH and ERMA) run regular local information nights.
A pilot series run by DoL's Small Business Support Unit began in May 2005. It was moderately successful but with small attendance. However, it is now some months since they ran the last event. SBAG would like to see this work continue and efforts made to increase attendance, such as working in closer partnership with existing local business networks. We support, too, DoL's efforts also to focus and refine their approach to meet the needs of specific client groups.
Score: 6/10
Recommendation 18
That FBT on business vehicles be simplified by allowing adjustments on annual tax returns.
Some small changes to FBT were announced in Budget 2005. However, we do not consider these to have gone far enough. We have resubmitted this recommendation in our second annual report.
Score: 3/10
Recommendation 19
Personal-grievance-free probationary periods.
This recommendation was rejected. Therefore we have resubmitted it with a clearer explanation of the exemption period that would apply and that it would apply only in cases where the grounds for dismissal are non-performance.
Score: 0/10
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