Crisis Response a Welcome Break Through Red Tape

The Government’s response to the Canterbury earthquake is not only a welcome relief to local businesses, it also provides a model for the kind of legislative environment businesses want across the country, according the latest MYOB Business Monitor.

The Monitor – a survey of more than 1000 Kiwi business owners – shows increasing dissatisfaction with red tape and the performance of the Government. The Monitor highlighted that almost twice as many businesses are dissatisfied with the support of the Government (29%) than those that are satisfied (15%). The level of satisfaction has fallen steadily over the past nine months, with 21% of businesses expressing satisfaction in the Government in November 2009 Monitor, and 19% in March 2010.

MYOB New Zealand general manager Julian Smith says the response to the Canterbury earthquake – not just in supporting the victims of the quake, but providing essential assistance to local businesses – has been impressive.

“The Government has demonstrated how quickly they can act in response to an emergency to provide essential lifelines for business,” says Julian Smith.

“In less than a week, they cut through red tape to provide wage assistance for employers, access to emergency funding, and a truly impressive level of flexibility from the IRD, with much of it managed through a central, local source.”

“This has been great for the businesses of Canterbury, and we applaud the Government for its responsiveness. However, the kind of model they have put in place – and clearly demonstrated they have the capability to do so – is essentially one that businesses all around the country are asking for.”

Julian Smith says businesses have been struggling over the past year with both the sluggish pace of the recovery and the implementation of a range of new legislation, and that is clearly reflected in falling support for the Government’s business policies.

“In particular, those sectors hardest hit by the recession, which are also taking the longest to recover, now strongly feel the Government should be providing them with more help,” says Julian Smith.

According to the August Monitor, retail and hospitality business owners are the most dissatisfied (38%) with Government support, followed by construction, trades and transport (30%).

Some relief is on the way, with the 1 October personal and company tax breaks popular with Kiwi businesses. Almost half of all businesses (48%) believe the reduction in personal tax rates will be helpful, while 42% support the reduction in the company tax rate.

“While – not surprisingly – Kiwi businesses are happy to be getting a tax break on 1 October, they continue to see most significant business legislation as unhelpful to their operation,” says Julian Smith

According to the August Monitor, ACC legislation and climate change initiatives continue to be the most unpopular legislation – seen as unhelpful by 44% of businesses – with a dramatic rise in the number of businesses unhappy with the carbon credit and emission trading schemes, up from 29% in the March Monitor.

Also unpopular are the changes to tax rules around property and depreciation, the RMA, and the Holidays Act.

“There are a couple of bright spots for the Government in the survey, though, with the new Making Tax Easier initiative from the IRD well received and a growth in the number of businesses finding online tools like business.govt.nz useful,” says Julian Smith.

Mr Smith says the major issue for the Government is the expectation that it can deliver policy change through New Zealand businesses, when not only do they feel the burden of red tape is costly and hampers their business, they struggle to understand its relevance.

Over half of the businesses surveyed in the Monitor (52%) say dealing with Government red tape has a high or medium impact on their business, while only 13% see no impact. At the same time, 58% of businesses struggle to understand how to apply Government legislation in their business.

“A good example of this is the 1 October GST increase,” says Julian Smith. “While businesses are well aware of the change, as more and more businesses have recognised how much impact it will have on them, we’ve seen a massive increase in demand for information, and advice through our online GST portal, our call centre and our GST seminar series.”

“This is a good example of the Government driving a major change in the tax system through Kiwi businesses – in effect turning them into the nation’s tax collectors – while perhaps not recognising the level of impact every increase in red tape has on business owners.”

“Ultimately – even with sweeteners like the tax breaks – Kiwi business owners would prefer to see a model where they are given more freedom to do what they do best – generate investment, wealth and jobs for New Zealand, while getting essential support for Government for things like cash flow, investment funding and regional development.”

ENDS

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