Chapter 1
There are factors within New Zealand's general environment that currently work against business and economic growth. They need urgent government action.
Competing Internationally
Australia presents the greatest opportunities as well as the greatest threats to business enterprise growth in New Zealand.
Australia is perceived as the easiest international market into which New Zealand's SMEs can export products and services. It is also the country to which we lose too many of our best businesses and too much of our skilled labour force.2
New Zealanders are attracted by the higher standards of living they see available in Australia:3 a combination of higher wages, lower headline tax rates,4 lower prices of goods and services, and ease of wealth accumulation. To turn this around, New Zealand needs to take action now to increase incomes (through greater productivity) and to create and sustain an environment that allows us to attract and retain workers in competition with our trans-Tasman neighbour.
Also, the government has to be more aggressive in promoting and marketing New Zealand as a great place to do business. To do this, the government should develop a set of benchmarks comparing the key components of our business environment to those in competitor countries (and especially in Australia).5 The results of that benchmarking should be published in a high profile way and be regularly updated.
Moreover, to ensure that maintaining the competitiveness of our business and economic environment is actioned effectively by all government agencies, the government should agree an overarching and cross-cutting policy goal of achieving competitiveness with Australia, and then use the benchmarking reports (described above) to demonstrate the quality and success of its efforts in achieving that goal.
SBAG recommends:
That the government establish a policy goal of making the environment for business in New Zealand competitive with Australia's.
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).
Support for Business Start-Up
Many people enter business without a good understanding of what will be required of them, or of the support that is available for business start-up through government and other agencies.
People can operate in business for up to a year before tax and other government commitments catch up with them. During this time, they have developed liabilities with other businesses and with government. If their business fails, it has an impact on other businesses and the wider community.
There are a wide range of business support services available. The government, local agencies and
private sector organisations, such as banks and Chambers of Commerce, all fund such programmes.
New businesses would benefit from this support and information, but many do not know that the services exist or how to access them.
Businesses could be advised automatically of the support available to them when they register their company. Registering for GST is another threshold over which all businesses will pass as they grow. That, too, would be an ideal time to advise all businesses of the support that is available for them.
Moreover, government could do more to encourage people who want to start a business to get adequate training and advice before they start-up. One way to do this would be to impose a requirement that access to government grants and other funding be contingent on evidence that the SME has undertaken the necessary training or has in place effective mentoring arrangements or business network support.
World-Class Infrastructure
Infrastructure is as important to SMEs as it is to large corporates. Infrastructure has a significant impact on SME performance, security and future planning. In many cases, SMEs are price-takers and so
rely on good regulatory environments and government investment in order to get access to world-class infrastructure at reasonable prices.
SBAG wishes to add its voice to those who are advocating that the government should continue to address, with urgency, issues related to the security and affordability of the power supply, an efficient and accessible transportation system for people and goods, and the extension and upgrading of broadband.6
Back to Top