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• Appendix 1

• Small & Medium Enterprises

• Structure and Dynamics

• Archive

• Structure and Dynamics - 2007
• Structure and Dynamics - 2006
• Structure and Dynamics - 2005
• Structure and Dynamics - 2004
• Structure and Dynamics - 2003
• Structure and Dynamics - 2002
• Structure and Dynamics - 2001
• Structure and Dynamics - 2000
• Structure and Dynamics - 1999

• Businesses Covered
• Change in Business Frame Maintenance Strategy
• Changes in Employment Data
• Limitations of Business Demography Data
• Data Quality
• Industry Coverage
• Availability of Information

Business demography statistics are derived from the Statistics New Zealand Business Frame. The Business Frame (BF) is a list of the individual, private and public-sector businesses and organisations that are engaged in the production of goods and services in New Zealand. It provides an accurate and timely population source for economic and financial surveys, so that they produce robust economic and financial statistics. The BF is maintained using information from Inland Revenue (IRD), such as Goods and Services Tax registrations and Employee Monthly Schedule returns, as well as Statistics New Zealand survey information.

Businesses Covered

In interpreting business demography statistics, it is important to take into account the coverage of businesses and the characteristics of the BF. The initial source of information about enterprises is the IRD's client registration file, which currently includes more than 575,000 taxpayers registered for GST. All GST-registered enterprises recorded on the IRD's client registration file are continually monitored to determine whether they meet the "economic significance" requirements for "birth" onto the BF. A buffer zone of $25,000 to $35,000 GST annual expenses or sales has been established to prevent enterprises switching frequently into and out of the BF. The enterprises maintained on the BF represent the target population from which Statistics New Zealand's economic surveys are selected.

Change in Business Frame Maintenance Strategy

In 2003, there was a significant change in the strategy used to maintain the BF, involving greater use of administrative data. Changes that have resulted include:

• change in the employment measure on the BF from the full-time equivalent employee (FTE) measure to the employee count (EC) (see below)
• increased coverage of the BF to include all employing businesses, and reactivating previously ceased businesses that are showing GST activity
• reducing compliance costs by decreasing the reliance on survey-sourced information
• improving coverage of GST-exempt industries by making greater use of tax data (sourced from the Employer Monthly Schedule and IR10 tax returns)
• speeding-up the processing of entries and exits to reflect real-world changes more accurately
• including farming businesses in the maintenance strategy
• defining boundaries for maintenance of enterprises on the BF on the basis of business size. The larger enterprises continue to be updated primarily on annual maintenance survey data, while smaller enterprises are maintained using principally tax data.

The outcome of changing the business size measure in business demography statistics from FTE to EC is discussed below.

Changes in Employment Data

A summary of the main differences between EC and FTE are:

Limitations of Business Demography Data

There are a number of limitations on business demography data:

• exclusion of enterprises involved in farming (Australian and New Zealand Standard Industrial Classification (ANZSIC) subdivision A01 Agriculture). However, data for the farming industry are available for 2004 on request
• lags in recording businesses that have ceased trading or whose activity has dropped below the economic significance threshold
• exclusion of enterprises that fall below the economic significance criteria
• difficulties in maintaining industrial and business classifications for smaller firms using administrative data.

Data Quality

Care has been taken in surveying, processing, analysing and extracting the data for Business Demographic statistics. However, all data are subject to statistical uncertainty. Variation may result, for example, from reporting difficulties for respondents, or from mistakes in the processing of results. Statistics New Zealand aims to detect and minimise avoidable variation and eliminate mistakes, but they may still occur and are not quantifiable. At higher levels of aggregation, much of the individual variability cancels out. Business Demography data are checked at an aggregate level, by industry, institutional sector and region, to find any detectable errors and uncertainty. Where possible, affected figures are corrected or re-estimated. Business demography data may therefore be subject to revision.

Industry Coverage

The coverage has changed in recent years, as more industries have been included in the population. Historically, most of these industries were excluded because they contained a large proportion of enterprises which were not registered for GST, or which fell below the threshold of economic significance. Since 1997, the selection criteria and standard published industry categories for the business demography statistics have been based on the Australian and New Zealand Standard Industrial Classification (ANZSIC). In 1996, the statistics were published using ANZSIC, but the selection criteria were based on the New Zealand Standard Industrial Classification (NZSIC).

The statistics in this report exclude agriculture production (ANZSIC subdivision A01) to ensure consistent industrial coverage with recent releases of business demography data. Business demography data for the agriculture production industry are available on request. Below is a summary of the industry coverage available in business demography statistics, dating back to 1994.

Availability of Information

Standard outputs from the business demography statistics can be used to analyse the industrial activity, location, business type, institutional sector and degree of overseas ownership of New Zealand businesses. Data are available for any of the years 1994-2004 (economically significant enterprise basis) or 1987-1994 (compulsory GST basis). Changes in industry coverage between 1994 and 2004 can be taken into account to produce a consistent time series.

Customised analyses to meet specific user requirements are available on request.