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King Country The Heartland Of Small Business

King Country the heartland of small business

John Tamihere visits the homeland of Colin Meads, Jim Bolger and, of course, shearing, to talk small business. Speech to King Country Small Business Day, Waitomo Community and Arts Hall, Te Kuiti, Wednesday March 24, 4.45pm

Good evening and a very warm welcome to King Country Small Business Day. It is always a pleasure to be here in the homeland of Colin Meads, Jim Bolger and, of course, shearing.

Not that a Jafa like me would come down here to have a laugh at your expense. I greatly appreciate the and value regions like the King Country, a region that is genuine Kiwi heartland, and a place where our traditional Kiwi attributes and values are still central to our communities.

And I would like to start by congratulating King Country's David Fagan on winning his 15th Golden Shears title recently. He has to be this country's most under-rated sportsman - if that sort of record was held in more high-profile, glamorous sports, he would have been named New Zealand Sportsman of the Year at least a dozen times.

To outsiders like me your region is perhaps best-known for the area's spectacular caves and glowworms, and activities associated with them such as caving and blackwater rafting. The Waitomo Glowworm Caves are the second most popular conservation attraction in New Zealand (behind the Whakarewarewa geothermal field in Rotorua) and adventure caving attracts about 50,000 visitors a year to the region.

Other tourism ventures in King Country are based on distinctly Kiwi pursuits, adventures you couldn't have anywhere else in the world. Otorohanga recognises this with its "Kiwiana" theme, Te Kuiti with the world's biggest statue of a shearer, its identity as the "shearing capital of the world" and events including the New Zealand Shearing Championships and the Te Kuiti Muster. Other tourist attractions like jetboating along rivers that pass through your stunning scenery, and Otorohanga's Kiwi House and Native Bird Park offer experiences that visitors could not find anywhere but here.

The Waitomo District's 80 kilometres of coastline, and some of the most extensive tracts of forest in the Waikato, and associated wildlife including kokako and kaka, as well as its natives caves, in combination with its relative proximity to the major tourist centres of Rotorua and Taupo, and to the main arrival point for international visitors, Auckland, bodes well for the future development of tourism, and the benefits this will bring for small business.

Further potential lies in attractions that think outside the square a bit regarding what people might expect from the King Country. For example I see that skateboarding website nzskateboarding.com has voted Te Kuiti's Sk8 Park a rating of "sick!" and as the father of a 14-year-old boy, I can tell you that "sick" actually means something much better than old people like us might think it does.

The region is also rich in Maori heritage and has one of the country's largest Maori populations as a proportion of its total populations, and taonga such asTe Kuiti's Te Kokanganui-a-Noho Marae, gifted to Ngati Maniapoto by Te Kooti. Some of the most exciting developments I have seen travelling around the country as minister for small business have been in Maori tourism, and the potential for it to bring income and employment to the region is huge. I hear some new Maori tourism initiatives may be getting off the ground soon locally and I sincerely hope that they turn out to be the King Country's answer to the Tamaki Brothers.

As a region with a proud farming heritage, farming clearly remains a key industry in the region - and I regard farmers as small businesspeople just like any other family business. While manufacturing is the largest single employment sector in the region, agriculture, forestry and fishing remain major employers, and many small businesses service the farming sector - or at the very least have a large rural client base.

Ninety-seven per cent of this country's businesses fit the definition of small-medium enterprises: those with fewer than 20 employees. And with the 1418 businesses in the Waitomo and Otorohanga districts employing 5550 full-time workers, your average of four employees per business is typical of the average across New Zealand.

It is encouraging to see that in the past year there has been a significant increase in the number of small businesses in Te Kuiti, with 55 new businesses starting up, taking the number of small-medium enterprises in the town to 800. The Waikato Enterprise Agency has been approached by six new businesses in Te Kuiti and Otorohanga in the past month alone, so I hope that is a good indication that small businesses aren't doing too badly, despite the challenges they face.

A good example of a local small-medium business that has gone from strength to strength is 3G Teak, an importing company owned by Carol Fagan. Carol is perhaps better known locally for Racewell, the livestock handling equipment company she and husband Robin founded in 1994, and which won a technology commendation at the 003 New Zealand Export Awards. Racewell now has 16 employees and turnover of $4.2 million a year, and its infrared technology, now being patented in North America, is creating huge interest from hog farmers there and is under trial at a Canadian research centre.

Another example of local success is Colleen Coleman of Te Kuiti. What started out as a home-based hobby for Colleen a year ago has turned into a thriving business. Using limestone quarried from near the Waitomo Caves she made a variety of natural soaps by hand till demand became so great she had to contract out orders. Next month three varieties of the limestone soaps go on sale nationwide at the Warehouse. That's a fantastic example of how making the most of your region's natural advantages and identity, and using them to add value to your products can be a business winner, and I wish Colleen every success with that venture.

While I think we do need to celebrate the success stories and achievements of small business more often, and that is a large part of what the Small Business Days series is all about, we also need to tackle the obstacles that small businesses face.

Skills shortages may present difficulties in creating the dynamic business growth you need, and there are factors that exacerbate this problem in the King Country - such as declining populations and the fact that the proportion of people with no qualifications, or low qualifications, in King Country is higher than the national average.

However, increased numbers of people now in industry training - including 740 in the Waitomo and Otorohanga districts - will help to remedy those shortages. Development King Country's recruitment service, which is working to attract skilled personnel into the region and retain the young people already here, through local training opportunities or work-based programmes, will also help in relieving the shortages.

I also hear complaints from small businesses regarding the level of compliance they have to deal with in running their businesses. Before I outline for you what the Government is doing to reduce the compliance burden, I just wanted to share with you the views of business and economics commentator Rod Oram, from his interesting and thoughtful column in the Sunday Star-Times last week.

Oram, echoed by Business NZ and the Business Roundtable, commented that a 3 per cent cut in the corporate tax rate, as proposed by Don Brash, would do nothing to lift business performance.

"The tax rate is a red herring. Our companies are already better off than their Australian competitors. They are taxed only on their profits, but Australian companies pay that plus a compulsory superannuation charge of 9 per cent of wages, as well as state taxes varying from 3.65 per cent to 6.85 per cent of payroll. Aussie workplace compensation levies average 2.74 per cent of payroll against the less than 1 per cent ACC charges here; other government charges are far higher - for example building consents in Queensland cost roughly nine times the equivalent here. Every study of red tape shows Australians are much more burdened than we are. To add insult to injury, Australia's top personal tax rate is 48.5 per cent."

In short, we don't know how lucky we are, mate. But as Oram concludes, National and big business's fixation on macro-economic issues like tax rates divert the debate away from the real focus we need to build sustainable economic growth. That is not to say that the Government should do nothing to reduce compliance for small business, and as minister I am making it a priority. Here are just some of the things we have done to ease the compliance burden. We have:

- Increased the amount of compliance that businesses can deal with electronically. You can now file electronic tax returns, make on-line payments, access tax calculators and receive advisory support on-line. Soon it will be possible to complete and submit all major forms electronically and view your tax information online. Last year I launched the Biz portal that allows businesses access to a range of information and Government agencies through one Internet site. And the Employment Agreement Builder launched last month allows businesses to use an easy on-line template to draw up employment agreements.

- Made sure we are listening to small business. In December 2000 we set up the Ministerial Panel on Business Compliance Costs to advise on how we should be reducing compliance costs, and the Government has implemented, or is in the process of implementing, 80 per cent of the panel's 162 recommendations. And last year I set up the Small Business Advisory Group so we can hear directly from real small businesspeople about what we can do to help them.

- Put up barriers to new compliance costs. Since 2001 the Cabinet has required that a business compliance cost statement be completed for any proposals that have red tape implications for business. This provides a robust, transparent process that means we are thinking about the impact on small business before any regulation or legislation is implemented, rather than trying to tidy up afterwards.

- Made it easier for small businesses to pay tax. Last year we released the discussion document Making Tax Easier for Small Business. It includes initiatives such as a subsidy for small businesses to use a payroll agent, standardising GST and provisional tax rates to the 28th of the month, and a 6.7 per cent discount for new businesses as an incentive to pay tax in their first year of business. Small-medium businesses are a big priority for the government, and their success is crucial for the wellbeing of every New Zealander - that's why this government is making every effort in supporting small business and will continue to do so. Today I have outlined some of the initiatives we believe will support small business. If there is anything more that you think we should, and realistically can, be doing to support small business, I'd welcome hearing your thoughts.

Unless the small business sector is stimulated, unless we lift our export capabilities, and the capacity and capability of our business leadership, we'll have some major problems. We must be focused on how we lift productivity, how we market and package and add value to our goods and services, rather than looking for answers solely from the Government. We have to move forward as a partnership between small business and the Government in which we both bear a leadership responsibility. That's a relationship and a challenge I very much look forward to being a part of.

Thank you again for your attendance at King Country Small Business Day, and I hope you had the opportunity to hear many of the other speakers throughout the day, in particular our Lunchtime Inspiration Speaker, Kowhai Consulting founder Tania Simpson, and I hope their experience and expertise has been useful in helping your business succeed.

But the Small Business Days aren't about you just listening to me tell you what is good for you in small business - this is about establishing a dialogue, and that is a two-way street, so I would like to now hear your comments and questions.


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