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• 2008
• Introduction

• Small & Medium Enterprises

• Small Business Advisory Group

• SBAG Reports

• 2008
• 2006
• 2004

SBAG Mandate

The government established the Small Business Advisory Group (SBAG) in October 2003 to advise the Minister for Small Business and government officials about the potential and actual impacts of policies and programmes on small and medium-sized enterprises (SMEs). The intention was to create an efficient means of communication between government and small business. In doing this, the government recognised that, while individually small in size, SMEs are an important component of the New Zealand economy, making them key players in the government's quest for economic transformation.

We commend the government for continuing with the Small Business Advisory Group and for being open to "free and frank" views from the small business community, some of which do not always align with the government's views.

Members of the first SBAG completed their term in December 2006. In February 2007, a new team, appointed by the Minister for Small Business, met for the first time. We all have significant experience as owners of small and medium-sized enterprises and have been drawn from a range of business sectors and regions. Another key change was the decision to appoint a CTU representative as a special advisor to SBAG. More recently, a representative from Business New Zealand was appointed as a special advisor also.

The Annex has information on the membership of SBAG and its terms of reference.

Work of SBAG

Throughout the year, SBAG has met monthly, with some meetings involving consultation with local business people about their experiences and concerns. Meetings took place mainly in Wellington, but were also convened in Hawke's Bay, Rotorua and Auckland.

SBAG has had two main focus points:

• To identify the areas in which government effort or change would most benefit SMEs and, in turn, the New Zealand economy.
• To provide the Minister for Small Business and a range of departmental officials with feedback on policy proposals and their implementation. A key aspect of this was to inform the government about which things were working well and which weren't, and to recommend how things could be improved for SMEs.

During our first year, we have seen some very good examples of government proactively working to improve the competitive position of New Zealand's SMEs.

The most outstanding of these was the Companies Office – a world-leading example of continuous improvement and the use of IT to better meet customers' needs at competitive prices.

Other positive initiatives we have seen during the year include the following:

• Education for Enterprise – introducing future generations to enterprise and entrepreneurial skills that they will be able to use in their personal, community and work lives. These skills are now officially recognised in the national curriculum (although they are still to be sufficiently inculcated in practice in classrooms).
• Workplace Productivity Tool – commonsense ways for helping businesses improve their productivity, which the government should be promoting more vigorously to encourage greater uptake.
• Pacific Economic Development Strategy – a good start for Pacific people but it needs to be linked in better with the Economic Transformation agenda and to have the full support of government agencies.

However, many of these and other government initiatives are poorly marketed. We understand that this is mainly due to budgetary constraints. SBAG acknowledges that the government is putting significant resources into developing useful material that assists business development or facilitates compliance. However, this work must be supported by funding for effective marketing, otherwise the business community will fail to use that material, simply because they are unaware that it exists.

Focus of the 2008 SBAG Report

Just over 96 per cent of enterprises in New Zealand are SMEs. Collectively, they can contribute substantially towards making New Zealand much more prosperous for the benefit of all New Zealanders. Therefore, the government needs to do more to ensure that SMEs are at the forefront of its efforts for economic transformation in New Zealand.

This means enabling and facilitating more SMEs to become internationally competitive. We need more firms that are able to compete successfully on the international stage. This cannot be left to chance. To grow, these firms need a supportive domestic business environment. They must be able also to rely on having competitive world-class suppliers of products and services, based in New Zealand, to support and sustain their expansion overseas.

This report provides our recommendations for improving the policies and programmes that impact on SMEs and fall within the government's Economic Transformation agenda:

• Growing globally competitive firms
• Innovative and productive workplaces
• World-class infrastructure
• An internationally competitive city – Auckland
• Environmental sustainability.

In this report, we want to focus on three areas where we believe decisive government action would assist the competitiveness of our SMEs:

• Delivering a more competitive environment for business – one that incentivises business growth, innovation and risk-taking and that encourages businesses to base themselves in New Zealand.
  It also encourages the attraction and retention of the skilled staff needed by growing international businesses. It provides the world-class infrastructure needed to support world-class firms.
• Creating smarter business owners – like the rest of the workforce, the skills of SME owners need to be constantly upgraded. Therefore, facilitating access to business assistance and support that provides business owners with more time to focus on growing their business and exploiting new markets is crucial. Also, more tools are needed in order to make business processes and transactions with government as easy as possible.
• Benefiting from sustainable business – this includes giving SMEs the information and support they need to make the most of the opportunities and challenges posed by the world-wide trend towards more sustainable businesses.

We set out below, under each of these topics, some of the measures we think the government should put in place if it wants to continue to increase the proportion of competitive, world-class SMEs in New Zealand.

SBAG Recommendations

The recommendations of the 2008 SBAG Report¹are:

1. That the government establish a policy goal of making the environment for business in New Zealand competitive with Australia's.
2. That the government develop, and publish in a high profile way, a set of benchmarks comparing
   the key components of our business environment to those in competitor countries (and especially in Australia).
3. That local government consents processes be simplified by removing the need for minor building works to get a prior resource management or building consent.
4. That information on good practice in employment relationships tailored to small business owners and managers, preferably endorsed by employer organisations, be made more readily available and be better promoted. This should include easier access to educational material and to support mechanisms (for example, free access to knowledgeable people who can provide practical and balanced advice to employers or employees on handling employment disputes).
5. That, in relation to personal grievances, decision-makers be required to place greater emphasis on the substance of a dispute over the process developed by the Employment Court, and on the contributing behaviour of the employee as provided for in s124 of the Employment Relations Act.
6. That employers be compensated (either tax credit or grant) for the costs of every employee they have in formal training.
7. That the expense limits for tax deductions for childcare and housekeeping be increased to 50 per cent of the actual costs as a means to encourage people into the workforce and to give SME owners
   a greater opportunity to balance work and family pressures.
8. That fringe benefit tax (FBT) be abolished
9. That all business advisors and staff in government-funded and government-assisted economic agencies receive on-going training in sensitivity to cultural difference and in culturally appropriate behaviours, and that they use this training and closer relationships with the relevant communities to measurably improve Ma^-ori, Asian and Pacific business peoples' access to, and benefit from, business support programmes.
10. That the government develop a web-based business centre that provides: access to commercial business systems software for the better management and unning of a small business a seamless interface with the government agencies that require information from businesses, making communications and information collection easier between government and small business.
11. That persons offering services as business brokers be required to have specific training and qualification/licensing.
12. That the financial and non-financial support offered to SMEs by other economic development agencies in a representative selection of overseas market places be compared with the support offered by NZTE and consideration be given to where the NZTE services can be improved in
    order to maintain New Zealand's competitiveness.
13. That easy-to-use online checklists/guides/case studies be developed that alert New Zealand businesses to the risks of internationalisation and ways to mitigate those risks.
14. That the government consider broadening the range of products and services offered by the New Zealand Export Credit Office in order to achieve more sustainable international market participation by SMEs.
15. That publications be produced that give practical and implementable advice and support for SMEs to improve their environmental performance and to derive business benefit from the recognised or certified environmental sustainability of their products and processes.
16. That all foodstuffs sold in New Zealand be required to be labelled with the country of origin of the "defining component" or the most significant component of the foodstuff.