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Tamihere: Waikato the Chiefs of Small Business


John Tamihere: Waikato the Chiefs of Small Business

Waikato the Chiefs of Small Business

Speech to Waikato Small Business Day

Speech to Waikato Small Business Day, Waikato Stadium, Hamilton, March 22, 5.45pm

Good evening and welcome to Waikato Small Business Day, the eighth in our series of Small Business Days. It has been a fascinating process travelling around the country hearing the views and concerns of people like you who are involved in owning and running small businesses. While the different regions so far have had many interests and issues in common, it has also been interesting to note that priorities can be very different from one area to another.

For example, while agriculture and science is obviously of strong relevance to you here in Waikato, a region that is establishing itself as a world centre in life sciences, the issues being raised in Manukau last week certainly had a lot less connection with dairy cows.

I should mention here that I consider dairy farms to come under the definition of small-medium business - that is, businesses employing fewer than 20 employees. While most people would consider Fonterra to be a giant business, I regard it as a collection of 14,000 small businesses - dairy farmers and their families. And with an average five employees per firm, most Waikato businesses clearly fit the definition of small to medium enterprises.

As a region that is home to 10 per cent of New Zealand's population, 9 per cent of its businesses and 8 per cent of its workforce, obviously as a nation we need Waikato to be doing well.

Where would the rest of us be without Waikato? Not only does most of the North Island's electricity production take place in the Waikato but half of New Zealand's milk is processed by your state-of-the-art milk-processing plants.

The progress being achieved here in Waikato in research, development and production of services in the agricultural and animal science fields holds huge potential for business in the region.

Hamilton-based institutions including Landcare Research, AgResearch and Dairying Research Corporation spend about $80 million a year on life sciences research, and 25 per cent of all New Zealand research and development is conducted in Waikato - and there are clear benefits to life science businesses locating around a research cluster like Hamilton's.

Collaborative initiatives such as the Life Sciences and Innovation Park and the work being done by B2H in helping businesses and other organisations work together have been valuable in supporting and growing business in Waikato.

Already the Waikato region generates 19 per cent of New Zealand's export earnings, and the region contributes 10 per cent of New Zealand's GDP.

The most recent national bank regional survey, for the September quarter last year, shows Waikato moving farthest up the regional rankings, with year-on-year growth of 4.1 per cent - Waikato's strongest quarterly result since December 1998.

House and farm sales grew strongly (the latest house sales rise in September was more than twice that recorded nationally) and commercial construction consents also rose sharply.

In spite of the high New Zealand dollar MAF estimates that gross farm revenue for sheep and beef for the 2003/04 season will not drop more than about 5 per cent. According to Meat NZ, Northland-Waikato-Bay of Plenty is the only area expected to increase profitability in 2003/04 with farm profit before tax increasing by 4 per cent. The productivity gains of the last decade are thought to have allowed the farming sector to achieve a reasonable profit despite the adverse conditions.

Another area with potential benefits and growth for small business in the region is tourism. While Waikato's tourism was up 2 per cent in 2003, lower than increases for many other regions, visitor numbers are expected to increase by 15 per cent in the next five years to reach 5 million.

Developments including the launch of this venue, Waikato Stadium, and Sky Riverside Casino have seen Waikato gain a stronger profile in both international and domestic tourism markets, and a new joint marketing project between Sky Riverside and the Novotel Tainui Hamilton Hotel has seen a notable increase in visitors staying in the city.

The launch of Hobbiton Movie Set Tours, building on the international profile of Lord of the Rings, the British Lions rugby tour coming to Hamilton next year, the Waikato Maori Tourism Group currently being formed, the proposed extension of Hamilton International Airport runway to attract long-haul flights from Singapore, and improvements to State Highway 1 near Hamilton should all significantly boost tourism in the region.

With unemployment of just 4.3 per cent in December last year, below the national average, clearly unemployment is not as great a concern for the Waikato region as skills shortages. It is clearly an unfortunate position for business when you have fruit rotting on trees because of a lack of pickers, and obviously we want to do whatever we can to ensure that similar problems due to skills and labour shortages do not hold your businesses back.

The latest figures out last week show that there are now 12,820 industry trainees in the Waikato region, and that will significantly contribute to lessening the skills shortages, and other measures such as fast-tracking work permits for immigrant workers may help in areas such as fruit picking and pruning work.

However the skills shortage is just one issue that has come to my attention in the Waikato, and I would be keen to hear from you more specifically on this and other issues that have arisen in your region.

We need to celebrate and applaud businesses like yours more often than we do, and acknowledge the contribution they make to our economy and our community. Celebrating small business is a big part of the Small Business Day series - it is something I think we don't do often enough. I want to see us celebrate and recognise the achievements of our businesses as widely as we celebrate our sporting heroes.

The response and feedback from small business so far has been very encouraging. While it has been very useful to hear about specific issues of most relevant to particular areas, I am also developing a clearer picture of the issues and concerns that small businesses have in common around the country, and I will be reporting back to my colleagues in Government about what specific action and policy should flow on as a result of what you are telling us.

So I would really like to hear from you today about what drives you as people involved in small business, what works for you, and what you see as obstacles to your success. This isn't about you just listening to me telling you what the Government is going to do for you - or to you - whether you like it or not. The Small Business Days are an opportunity for us to hear directly from you about what you want as small businesses, and I am here to hear what you have to say.

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.

Clearly one of the issues that concerns small business is the compliance burden they face. However I would like to point out that 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.

But while compliance costs are relatively low in New Zealand, it is my job as Minister for Small Business to see that we are constantly vigilant against the encroachment of unnecessary or excessive compliance costs, and I can assure you I will continue to be diligent in stamping out unnecessary additions to the compliance burden, wherever I see them. Naturally people involved in running small businesses want to spend less time dealing with red tape, and more time getting on with business, and I support that view 100 per cent.

We have introduced a raft of measures to provide practical assistance in easing the compliance burden on small business. For example, we have just set up the Employment Agreement Builder, an on-line tool that lets employers easily set up employment contracts that comply with all legal and regulatory requirements. It's simple: using the template, employers can just tick which clauses they want to include, and delete those they don't.

Another very pragmatic initiative we have just announced is a 6.7 per cent discount for self-employed people who choose to pay tax in their first year of businesses. That initiative has been welcomed by small businesses around the country as a valuable means of assistance in that crucial and vulnerable start-up phase.

However we must ensure that we don't become so focused on the compliance cost issues to the extent that we neglect the really important debate we need to have about the real factors driving this country's economic success. We must not focus all our energy on compliance costs, rather than focus on how we achieve greater growth, wealth, productivity and savings to secure economic growth that is truly sustainable.

As I said earlier, we're not here just to listen to me speaking at you, I'd love to hear your views on whatever matters you believe are most important to the success of your business. So thank you very much for your attendance at Waikato Small Business Day and I would now like to answer your questions.

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