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Swain sets out business programme for the year

Hon Paul Swain
20 February 2001 Speech Notes

20th February 2001
Speech to Wellington Regional Chamber of Commerce

Swain sets out business programme for the year

Thank you for the opportunity to speak to you this evening. I would like to congratulate and welcome Philip Lewin to the role as Chief Executive. I intend to pursue a close relationship with chambers of commerce this year as part of the ongoing partnership between government and business, and I look forward to working with Philip on issues relevant to the Chamber.

What I want to do this evening is outline my work programme for the year. Much of this programme is designed to be of benefit for small to medium sized businesses in New Zealand.

We need to be much more vocal in trumpeting the successes of our SMEs ¡V they risk the money, they employ people, they pay tax. They are the backbone of the economy and we must ensure they are able to expand and grow.

SMEs make up the majority of all enterprises in New Zealand, they account for 42% of all employees and account for 35% of the economy. That is why we have given a high priority under this government to business reforms that will improve life for the small to medium sized business owner.

As a country we've started the year well, the outlook's positive, and business confidence is strong. The economy is looking healthier with a broad range of positive indicators, especially in the areas of employment and trade. This has been driven by a number of factors, including an export friendly dollar and good commodity prices.

This is a good time to promote the modernisation and transformation of our economy from one that is over dependent on commodities to one where information and knowledge both add and generate value for traditional and new products and services.

In my own areas of portfolio responsibility I have a programme of work for this year which I believe will help do that.

Information Technology and E-Commerce
Many of you may be aware that late last year the Government launched its E-Commerce Strategy at the successful E-Commerce Summit in Auckland.

The strategy identified three key commitments for government:
1. We are committed to providing leadership, by being a model user.
2. We recognise we have a key role in building the e-commerce capability of business, individuals and communities.
3. We are committed to building an enabling regulatory environment.

The priority this year is to take the Strategy forward. All government departments are being asked to regularly review and sharpen up the initiatives that were listed in the E-Commerce Strategy. This will form the basis for the development of a government six-quarter action plan.

My efforts will focus on getting the E-Commerce Action Team ¡V or ECAT - up and running. ECAT will be a partnership between government and the private sector, and will have two functions ¡V to advance the implementation of the government's E-Commerce strategy, and to report on the progress of E-Commerce strategies throughout industry.

I will be announcing the core membership later this month and it will meet early in March. I have asked the Wellington Regional Chamber of Commerce to put forward a nomination.

On the back of this we are organising a string of regional ECATs and a series of regional workshops in partnership with business and local communities. These will underscore the importance of both building information technology capability and the opportunities to be exploited through e-commerce.

The first of these is to be held in the Waikato and there are plans for at least two others in the provinces this year.

More generally we are investing in a much wider research programme to better understand the e-commerce capability of our SME sector.

Lifting our capability in E-Commerce is more than a business issue. It is about preparing all New Zealanders to take part and take advantage of the new economy.

With talk of the new economy and modernisation of the way we work ¡V our telecommunications infrastructure plays a pivotal role in that. Late last year the government announced a range of measures in response to the Ministerial Inquiry into Telecommunications.

Using the principle of 'as much market as possible and as much government as necessary' these measures are aimed at improving the regulatory regime for telecommunications.

We aim to ensure delivery of cost-efficient, timely and innovative telecommunication services on an ongoing, fair and equitable basis to all New Zealanders.

The measures include:
„h The establishment of a new Telecommunications Commissioner operating from within the Commerce Commission;
„h Regulation of key services including interconnection with Telecom's fixed telephone network and wholesaling of Telecom's fixed network services;
„h An updated Kiwi Share, including bringing basic Internet access to virtually all New Zealanders by upgrading Telecom's network to provide 9.6kbps data capability to 99% and 14.4kbps to 95% of residential lines.

It is expected that legislation will be introduced in March/April and will come into force later this year. Preliminary work on appointing the first Telecommunications Commissioner will start soon. Getting the telecommunications infrastructure right is critical if we want to be a player in the knowledge society.

To this end we will be focussing in particular on bandwidth ¡V the size of the telecommunications pipe through which information and data flows. As Ian Taylor from Virtual Spectator is keen on saying, this is the yellow brick road of the new economy. That is it is the path along which information and data will travel to grow our wealth as a nation. I will be making announcements on this shortly.

Business and competition law
The work programme over the next 12 ¡V 18 months includes a very substantive programme of business and competition law reform designed both to improve and update the law, to reduce compliance costs for business and to improve the competitive environment.

The Commerce Act Amendment Bill:
The Commerce Amendment Bill, which will strengthen the Commerce Act, has just been reported back by the Commerce Select Committee and it is a high priority for the Government to enact the Bill as soon as possible. This Bill will bring our competition law in line with our largest trading partner Australia. This is important ¡V last year we signed a Memorandum of Understanding on Business Law Coordination with Australia. The MOU promotes similar rules as far as possible between New Zealand and Australia so that business on both sides of the Tasman can do business with greater certainty.

The Takeovers Code ¡V
Recent events, particularly the takeover of Montana by Lion, have brought new focus on New Zealand's need for a Takeovers Code. The new Code will take effect on July 1 this year. It will achieve several things.
It will:
„h Lay out an orderly process for companies to follow when staging a takeover.
„h Be governed by an independent Takeovers Panel.
„h The Takeovers Code and Panel will mean that all shareholders, big and small, are treated equally in a takeover situation.

Insider Trading
As important as the Takeovers Code in restoring investor confidence is the strengthening of New Zealand¡¦s insider trading regime.

Last year we released a discussion document that focussed on detection and enforcement. Officials have reported to me on this and I will be announcing policy decisions on a more robust Insider Trading regime shortly.

I am also doing more work on other more fundamental issues relating to insider trading - which will be helpful, whether or not our stock exchanges merge.

Stock Exchange
The stock exchange has requested that the government assist in its demutualisation and that is happening in a private bill from Marian Hobbs. That Bill will, among other things, bring the NZSE under the Companies Act. The wider debate on whether the NZSE and ASX should merge is a matter for them to resolve. The government has said that it will facilitate the merger if that is what is decided.

Reducing Compliance Costs ¡V
Business compliance costs arise from a wide variety of Government activities. We know they can have a significant impact on business competitiveness and are a major concern of the business community.

We accept that to improve the regulatory environment, and reduce compliance costs to business, there must be a ¡§whole of Government approach¡¨. All Ministers are making business compliance cost reduction a priority.

The Business Compliance Cost Panel, made up of a good cross-section of business people and headed by Alan Dunn, is conducting a review of business compliance costs.

The Panel will hold a series of regional meetings and will produce an issues paper. I urge chambers such as this one to make submissions to the panel.

The Panel will identify and prioritise compliance costs faced by business, and suggest ways that they can be reduced. This is the first time a government has taken this approach. Getting government off the back of businesses as much as possible so that they can get on and do business is our goal.

The Compliance Cost Panel will report back to the Finance Minister and me by June 30th.

In addition to this each new legislative or regulatory proposal from government will be accompanied by a Business Compliance Cost Statement. These Statements will be made public and will focus our minds on the costs imposed on business before legislation is passed.

Tax Simplification
As Associate Revenue Minister I have responsibility for the government's tax simplification regime.

In mid-April the government will be releasing discussion documents relating specifically to simplifying provisional and PAYE tax as well as the penalties regime. I am sure these moves will be welcomed by businesses and I look forward to your input.

Other Issues
There are a number of issues that I will be resolving this year, including making improvements to the antiquated motor vehicle dealer laws, and parallel importing. There are discussion documents currently available on these and I encourage you to make submission if the issues are of interest.

Overseas Trip
As part of this overall programme I will soon be embarking on a trip to Chile, the UK, Ireland and the USA. This trip is to examine information society policies and e-commerce/IT initiatives, to promote New Zealand as a destination for investment, particularly in our IT industry, and to attend Microsoft's Government Leaders Conference in Seattle.

If possible I am hoping to use the trip to facilitate some opportunities for New Zealand businesses particularly in areas relating to venture capital for the IT sector.

In conclusion, the government is serious about its commitment to business growth, and is determined to develop the partnership approach begun last year under the Prime Minister's leadership. I look forward to working with you during the year.

Thank you for your attention.


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