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Tamihere Speech: Small Business Buzzing in Manukau

John Tamihere Speech: Small Business Buzzing in Manukau

Speech to Manukau Small Business Day

Speech to Manukau Small Business Day, Lakeside Convention Centre, Manukau City, Friday March 19, 5.45pm

Good evening and welcome to Manukau Small Business Day. It is great to see you here at the seventh of our series of Small Business Days around the country, and it has been an exciting and inspiring series so far, getting out and hearing what good, hardworking Kiwi businessmen and women have to say.

Who would have thought 20, or even 10, years ago that I could be standing here today and congratulating you on contributing to one of New Zealand's fastest-growing and most successful business centres?

Manukau City today is the third-largest and one of the most rapidly-growing cities in New Zealand. In 35 years Manukau has developed from farmland to become the base of many of the country's largest and most successful businesses, home to more than 18,000 businesses employing more than 100,000 people. In the past decade, the city has been one of New Zealand's fastest-growing industrial areas. Manukau City now accounts for 8 per cent of New Zealand's GDP, and 6.7 per cent of its employees.

Employment in Manukau grew by 1.4 per cent in the year to June 2003. manufacturing continues to be the bigegst emmployment sector, but the fastest employment growth was in cultural and recreational services, property and business services, wholesale, transport and storage industries. Non-residential building consents were up 16 per cent, while residential building consents were up 10 per cent in the last year.

And that growth is expected to continue as Manukau's population increases by 37 per cent to more than 400,000 people in the next 20 years. So I applaud economic development startegy of Manukau City Council, which is to:

"Make Manukau the most desired location for enterprise business and investment . in order to achieve - high growth and sustainable enterprise - increased opportunities for employment - increased standard of living and quality of life.

In Enterprising Manukau you have also got a great team supporting business development and growth in Manukau City - and I have to congratulate Enterprising Manukau in securing $10 million of Government funding for 154 Manukau businesses out of a nationwide total of about $50 million for research and development. Obviously you have some very determined and hardworking people going in to bat for you there.

Some of the most exciting prospects for Manukau's future growth and development are in tourism. While Manukau's close proximity to Auckland International Airport accounts for most of the visitors who stay overnight in Manukau, the city's objective is to grow tourism by increasing the number of significant tourist attractions in the area. Rainbow's End is currently the most significant tourist attraction, but there are three new key tourism developments:

- The Telstra Clear Pacific Events Arena is a new events centre for arts, culture, business and leisure opening in 2005. It will comprise outdoor and indoor arenas, a 700-seat theatre, a gallery, plaza and other facilities for hosting festivals, perfromances, arts, business and sports events. - Butterfly Creek, opened late last year, is a tourism venure and event centre designed for children. It comprises a tropical butterfly house with over 500 species, a petting zoo, playgrounds, ponds and wetlands and children's party room. -

Villa Maria Estate, a multi-million-dollar three-stage project being built on a 40-hectare site in Mangere with views over Manukau Harbour and Central Auckland. When completed it will comprise a wine hall and bottling facility, cellar shop, vineyards, function room and guest accommodation.

So in tourism alone, there are a number of significant development s that wil bring further revenue, employment, growth and opportunity to Manukau City.

In response to a survey of Manukau businesses, local managing directors consistently said that being located in Manukauprovided critical advantages that gave local companies a competitive edge and ability to increase profits. The advantages included good transport access, market proximity, supplier availability, readily available land and buildings, competitively priced rental accommodation, a strong labour pool, working close to home, quality local services and lower operating costs.

So there is plenty of good news for businesses in Manukau City - and as the Government we are here to make sure you have every opportunity to increase those positive things you have got going for you.

Rather than having me here just to tell you how wonderful the Government is, I would like to hear your views - a two-way conversation has to be a lot more constructive than me just telling you what's what.

The problem too often has been that the debate about what the Government should be doing for small business gets captured by the groups at either end of the spectrum - whether it is the unions at one end of Business NZ and the Business Roundtable at the other. The difficulty is that the views of the genuine small business owners in the middle get bypassed. If I get caught up in pacifying those two opposing interest groups at either end of the debate, I spend my time not focussing on the real people.

And often the prescriptions that business lobby groups give me favour the big of town. For example, they don't want to calibrate their tax payments to the same extent that small businesses do. We are offering to allow businesses to align their provisional tax payments with their GST payments. That really helps small businesses a lot because it is geared around their cash flow rather than demands from Inland Revenue. Big business wants use of money - and I can understand that. That's a significant point of difference between the needs of big business and the needs of small business, and the differences don't end there.

The greatest economic unit in New Zealand is the Kiwi family - those Mums and Dads businesses up and down the country are the backbone of our economy. Eighty-seven per cent of Kiwi businesses have five or fewer employees - that's huge, and to understand New Zealand business you have to understand that. You've then got to start to focus on what we can do to alleviate compliance and regulation for those businesses that make up 87 per cent of New Zealand firms.

In addition to these small business days, another tool that will help us to hear more clearly and directly the needs of small business is the Small Business Advisory Group that I set up last year. The nine people on the group come from a diverse range of sectors and regions, but the main thing they have in common is a wealth of talent and experience in running small businesses. They know the challenges and difficulties of setting up and running small businesses, and they know the disappointments as well as the successes small business can bring. In short, they are champions of small business.

I'm finding out exactly what I hoped of the group - they're giving me very direct, very straight-up advice on what small business would like us to be doing on their behalf. Already the advisory group has made a number of recommendations, and right now we're working on those recommendations.

We have to look at what we are doing presently to regulate small business - and I have got a number of reviews going now - to determine the efficacy of continuing to conduct ourselves in a range of ways just because that is what we have been doing it up till now, even though It's not necessarily the most clever thing to do.

For example, businesses are required to respond to questions from Statistics NZ on a monthly basis on a number of matters. My demographers tell me we don't need to do that - quarterly would be good enough, and the sample doesn't need to be as great. So if we find situations like that where we find we are bugging you more often than we need to, we'll stop doing it.

There is a hell of a lot of engagement across Government now on stopping duplication of information, where departments like ACC, IRD and Statistics are start working more closely together.

And we know that the burden of complying with compliance demands is disproportionately onerous on the little fellas. So we are trying to lighten the burden for small business where possible. For example, we're currently working out the best way to subsidise the use of a payroll agent for small businesses' first five employees. That is a direct subsidy - I say around 25-30 per cent of what your costs would be - that will benefit to 87 per cent of New Zealand businesses. That money is there in the Budget ready to go out as soon as we finish working out the best way of paying it out, and we'll be moving on that in the next month, I expect.

Another measure we have just announced that is of particular benefit to small business is the 6.7 per cent discount to businesses who choose to pay provisional tax in their first year of business - that initiative also allows businesses to avoid getting hit with a double whammy of paying two years tax at once in their second year.

As a Government we have got to be compliance friendly; we have got to drop compliance costs, and we have got to support small businesses to access external business advice. One of our biggest problems in our SMEs is that often they are run by a sole trader, and he has taken it as far as he can get it, but if he could just get some external advice, he might see things in different ways and from different angles that will allow him to take a leap of faith to move up to the next notch. So Government assistance in terms of measures like the payroll subsidy, like providing business mentoring and start-up support, provide valuable help to businesses who might otherwise struggle in isolation.

And we shouldn't be hammering the little guys into the ground over compliance before they have even got off the ground. We should be helping them out, not hunting them down. We have got to review what we are doing and why we are doing it to justify why we are continuing to do it - or do it differently. Sometimes it probably feels like you are getting bombarded with all the acronyms - RMA, ACC, IRD and all the rest. But in fact New Zealand does pretty well on business compliance compared to other nations. The World Bank has just released its Doing Business 2004 report, which reports on the ease (or difficulty) of starting a business, hiring and firing staff, enforcing contracts, getting credit and closing a business in more than 130 countries. The report shows that New Zealand is the least regulated country in the world, and one of the easiest places to start a business.

Judged across five criteria, New Zealand was judged to be the least regulated country, followed by Australia, Canada, Sweden, the United Kingdom and Singapore. According to the report, it costs just US$28 to register a company in New Zealand and it takes just three days. By comparison it cost US$402 and two days in Australia, US$264 and 18 days in the United Kingdom, and a massive US$3228 and 20 days in Switzerland.

If we compare New Zealand and our biggest market, Australia, on any measure we are ahead - whether it is the top tax rate, whether it is payroll obligations, or compulsory Medicare, compulsory superannuation payments and so on and so on and so on. Australian businesspeople who come over here are very relaxed; they commend the approach that we have got.

But one area where I think we can do more is in dealing with the impact of regulation on small business. No Government in this country or internationally has yet mastered the modelling for business regulatory impact statements. I intend to get a model up to go before Cabinet this year that will be robust and transparent in assessing the impact of legislation and regulation on business. Stakeholder groups will be asked to advise on it - sector groups like the CTU all the way through to the Business Roundtable. All I would ask of them is run the ruler over me in the same way you would like me to run the ruler over you.

However, too much of this debate in this country in business circles is about compliance and regulation. It has got nothing to do with how we grow, how we innovate, how we add value, and all those sorts of things. I am not trying to bury for one moment compliance and regulation impacts, I just want to lift the debate so we get in place a system that business and everyone else agrees is best practice possible, that will allow business to identify the impost of it, to know that it has been well worked through and is a robust business process. Because while it might sound good in a policy manifesto, once you have crunched it through, the unintended consequences and perverse results might mean that the best thing to do is bury it.

But dealing with compliance issues is kind of like when your wife is giving birth and she gets some pethedine - all you can do is take the head off the worst of the pain, you're never going to stop the main event. So let's get real: compliance is a fact of life in all economies and all businesses. What we must do is mitigate the worst excesses, and have a process in place that informs Government and Kiwis of the wisdom of doing it.

We should at least get an ethical buy-in to this debate from business groups, an acknowledgement that at least we are looking for solutions, and we are doing that with integrity. We need to give business straight answers to straight questions - businesspeople can smell spin and smarm coming a mile off. So if we approach it with that attitude, from both sides, we can have a meaningful debate.

It has been really good going out on the road to talk directly to small business - you get to really feel the pulse. And you become very aware of the different issues and cultural drivers in different communities.

What surprises me most is how little most Kiwis know about the most exciting business revelations that going on in their own backyards. Some of the entrepeneurial innovation I have seen up and down this country is just superb. You are just so proud to see not only the successes, but also the risks that are being taken. You can see etched into their foreheads the struggles that they have had - but they have come through it. What you have got up and down the country is a level of stoicism - Kiwi businessmen and women take some big hits, they will live off the smell of an oily rag, but they just keep on battling away.

Worst of all is that often their communities don't respect that, they don't even know about it. We have this culture that we have to shift, and that is another thing behind these business days, we have got to start rejoicing and celebrating. If you see a flash car in New Zealand, a lot of people's first instinct is to take a 50 cent coin out and scratch it. That's just crazy. We've got to start saying good on that bloke. He's probably employing a couple of dozen people in our community and putting wages in their pockets and a roof over their families' heads.

So I would like to end by congratulating you for the contribution you are making to your community, to the economy and to this country. You're doing a great job.

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