The sweet smell of Rotorua small business success
Hon John Tamihere
The sweet smell of Rotorua small business success
Speech to Rotorua Small Business Day
Celebrating Small Business
Good evening and welcome to Rotorua Small Business Day. This, the 12th regional Small Business Day, marks the halfway point of 24 Small Business Days we are holding around the country, and I have been inspired by the journey so far.
There are just so many innovative and dedicated people involved in running small businesses up and down our country and it has been fantastic getting out there are celebrating what they do.
Rotorua is no exception, and there is an amazing amount of activity going on in small business in your region that I think we should acknowledge and celebrate - and assist in whatever way we can.
Small-medium enterprises (defined as businesses with fewer than 20 employees) make up 97 per cent of this country's businesses, so their success is absolutely crucial to the success of our economy, and as a result, the success of our nation. With nearly 5000 businesses employing more than 25,000 employees in the Rotorua District, that works out to an average of five employees per business, and the area is typical of the nationwide pattern of having many small businesses, plus a few of the big boys employing upwards of 20 staff.
I don't need to tell you that tourism is the dominant industry in Rotorua, employing one in five employees in the district. With its renowned geothermal areas, 14 lakes and considerable areas of open public space, Rotorua is a natural attraction for millions of visitors.
In 2002 3.2 million tourists visited the Bay of Plenty region, spending $828 million. Of these, 1.8 million tourists visited Rotorua and they spent $447 milion and accounted for 5.9 per cent of all tourist visits to New Zealand.
By 2009 tourist numbers to Rotorua are expected to increase by nearly a third to 2.3 million, and the proportion of international visitors is expected to increase to more than half of all visitors. The positive impact of that growth for small businesses will be tremendous.
Recent tourism growth has been fuelled by strong international visitor growth, most from Australia, US, UK and North Asia, and that growth has led to some exciting new developments in Rotorua's tourism industry. Some of the innovative new tourism ventures to set up or expanded here include:
- Rotorua Duck Tours, which uses a WWII amphibious military vehicle to transport visitors around the region - on land and water. - Waiora Spa, which combines natural geothermal mud baths and relaxation using traditional mirimiri massage and healing practices. - Treetops Lodge, award-winning, world-class luxury accommodation set amid 2500 acres of native forest, lakes and trout streams, is now in its second year of operation and will host this year's Oscar winners and finalists. - The Legends of Maui, a new $2 million cultural experience centre, combines high technology and the latest audio-visual effects to tell the story of Maui. - Daily tours to "Hobbiton" near Matamata allow Lord of the Rings fans to see the locations where the Rings trilogy was filmed. - The $10 million Rotorua Energy Event Centre is due to open by the end of next year. - The $6 million Rotorua Airport upgrade will handle new Qantas and Air New Zealand jet services. - A new $10 million Ibis Hotel will open on the Rotorua lakefront by the end of the year. - The Heritage Hotel will get a $9 million upgrade.
All of these new developments will have a considerable direct or flow-on effect to small businesses, and I should acknowledge Tourism Rotorua for the work it is doing in vigorously marketing the region, and the vision for a comprehensive and long-term strategy for growth under the Destination Rotorua banner.
Although tourism plays an obviously major role for the region's economy and businesses, other sectors have also shown significant growth in recent times, and agriculture and forestry continue to play a particularly significant role.
Rotorua's location in the most developed forestry region in New Zealand, less than an hour's drive from the two largest forestry-processing sites in the country, and with good port access through Tauranga, means it is the leading forestry centre in New Zealand. More than 200 local businesses are involved in the forestry sector and this number is expected to increase.
While the forestry industry has been going through some challenging times recently, not least with the lay-offs in the sector in this region, there have also been some encouraging developments.
In particular I hope the provision of technical and research training at Radi National Centre of Excellence will contribute to transforming the wood-processing industry from its current commodity orientation to one that focuses on high value-added products for export.
The Rotorua CBD retail strategy led by Rotorua District Council will enhance the development of the CBD, with retail stores, office blocks and a new 120-room hotel currently under construction, and I hope the strategy will bring considerable benefits to Rotorua small businesses.
Manufacturing is also a growing industry in Rotorua, employing nearly 4000 people, and focusing mainly on the food, timber products and engineering areas. There is potential for growth in this sector and key factors which are likely to fuel that growth are Rotorua's central location, its proximity to other major population centres, good transport access to major ports, and a relatively high level of skills and ready availability of its labour force.
Other regional industry developments impress me with their high level of innovation, their ability to think outside the square, and by making the most of your region's natural assets. For example:
Volcanic Films is developing a film-friendly environment to attract film-makers to the area. - Rotorua's geothermal mud is being exported to Thailand for its beauty therapy properties. - Rotorua business Conecta International has secured a multi-million-dollar deal to build pre-fabricated houses in Europe. - A surge of new small businesses in Rotorua has included motorcycle accessories store and café Highly Devious, Chung Hak Dong Korean gourmet restaurant and a new 50-bed backpackers wing attached to Hennessey's Irish Bar.
FILLING THE SKILLS GAPS
Of course growth and success also present challenges, and skills shortages are likely to become more of a problem the more you succeed. However the Rotorua Employment Skills Strategy - a partnership between the council, the Waiariki Institute of Technology, the Tertiary Education Commission, Work and Income and NZ Trade and Enterprise - will see a cluster development programme launched in the next few months that I hope will help address the skills gaps. In addition, the Government's commitment to getting more people into education and training in the areas they are most needed has already seen more than 4000 people in industry training in the Rotorua District alone.
The Enterprise Training Service and Be Your Own Boss schemes have also been very successful in helping Rotorua small businesses grow by upgrading the skills of existing business owners, and encouraging people out of work to start their own businesses.
But while skills shortages may be an issue for some businesses, it is good news that unemployment in Rotorua is at a 20-year low, and at 4.3 per cent is below the national average.
MAORI BUSINESS SUCCESS
We so often hear that Maori are underachieving in just about every area you can think of: health, welfare, justice, employment and so on. Yet some of the best and most dynamic businesses I see are owned and run by Maori, particularly those in the tourism industry. Here in Rotorua you have what I think must be the best example of Maori tourism success in Mike and Doug Tamaki's Tamaki Maori Village, New Zealand's most successful privately-owned Maori tourism enterprise.
Given that about 35 per cent of the Rotorua District's population has Maori ancestry, compared to about 14 per cent for New Zealand as a whole, and that you live in what must be one of the best natural tourism areas in the world, the potential for growth in this area is truly awesome, and I would love to see that potential fulfilled.
The latest annual Global Entrepeneurship Monitor, just out yesterday, shows that if Maori were a nation they would be the fourth most entrepeneurial in the world (New Zealand as a whole rated sixth most entrepreneurial in the world). This global study found that in 2003 17 per cent of Maori started a business, compared to 13 per cent of non-Maori. And this is nothing new - Maori have a long tradition of entrepenurial spirit, running successful shipping lines to London as long ago as the mid-1800s. So I hope to hear more about our business successes, and less about how many of us are on the dole.
I read a very interesting commentary by Rotorua businessman Rod Meharry the other day in which he suggested that businesspeople's attitude to business was perhaps the most important factor in whether or not they did well.
According to Rod, having a terrific and positive attitude - and putting it into action by learning from those who do succeed, rather than just listening to the moaners and the "it's too hard mob," changing your thinking, changing the way you deal with staff and customers - could well be the difference between having a so-so business and having a really successful business.
It is that sort of can-do attitude among businesspeople that I really admire, and as I have travelled around the country meeting people in business, I notice it is people with that kind of positive attitude that seem to be reaping the biggest rewards.
CUTTING COMPLIANCE COSTS
Of course the Government does have a very important role in supporting business success, and one of the most common complaints we hear from small business is that they endure a heavy compliance burden.
First I think we need to put this issue in some perspective - and the reality is that New Zealand does comparatively well by international standards regarding the level of compliance and regulation.
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.
However we can always do better, and this Government is doing a number of things to reduce the compliance burden:
- 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.
So that outlines just some of the things we are doing as the Government to make doing business easier, but of course I would welcome any comments and suggestions from you on what you think would be of most assistance to you. So I thank you for your participation here today and welcome your comments and questions.