Compliance costs hitting skills and growth

Compliance costs hitting skills and growth harder than it seems

The findings of the KPMG/Business New Zealand survey of about 1000 firms that compliance levied the average business by $43,876 in 2004 is just the tip of the compliance cost iceberg, the Employers & Manufacturers Association (Northern) says.

“The Survey measured only the time and resources deployed by firms to fulfil their obligations to government,” said Alasdair Thompson, EMA’s chief executive.

“It was not charged with measuring the actual dollar costs involved, and it was not designed to measure the extra skills and other people resources that are a cost to the tax payer nor the opportunity losses.

“These extra costs to all taxpayers are huge and growing rapidly, and are making the skills shortage crisis far worse than it needs to be.

“Since June 2000 central government has added 7500 people to its payroll for administration and defence, an increase of 17 per cent. In the same period the private sector took on just nine per cent more.

“This is unsustainable, but even more so since the government has been increasing the salary and wages of its employees far faster than the private sector.

“Since June 2000 the state sector’s wage and salary bill funded by the taxpayer has gone up 32 per cent to reach $2.5 billion, an increase of $620 million a year.

“The Labour Cost Index confirms these figures: in the last three years central government’s pay packets went up 7.6 per cent while the private sector’s went up 6.4 per cent.

“Though government is blaming employers for not investing enough in skills training to grow their businesses and the economy, it’s the government that is sucking skilled people into unproductive jobs in the public service.

“It has to, to administer all the compliance and new regulations it keeps foisting on the private sector’s wealth creating engine.

“If government was serious about restoring our standards of living to the top half of the OECD to get better education and health services, it would start rolling back its unnecessary regulations and new charges to reduce the numbers and costs of its public service.

“That would free up people and resources that the private sector could make good use of, to the benefit of all New Zealanders.”

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