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Lowering compliance costs for Kiwi businesses

10 April 2008 Media Statement

Lowering compliance costs for Kiwi businesses

New software technology is the latest weapon in the government’s arsenal to reduce compliance costs for small Kiwi businesses.

Small Business Minister, Clayton Cosgrove, says the Business Compliance Cost Calculator works out the potential cost new regulations may have on small-to-medium sized businesses.

“This latest technology will bring even more certainty to businesses that the government is making regulatory decisions in a consistent way. It also ensures that the impact of future policy on small and medium-sized enterprises (SMEs) is taken into account, not just the impact on big business,” Mr Cosgrove said.

The Business Compliance Cost Calculator will be used by government departments or agencies to assess the cost of new regulation before it is implemented. The technology is currently in use in Australia, where it is proving to be an effective tool in improving policy decision-making. A modified version of the Calculator tailored for New Zealand’s regulatory environment is available here.

Mr Cosgrove says he has fast-tracked the implementation of the new software, rather than wait for it to be available online to all departments, which will occur later this year.

“From today, any government department can further measure the potential compliance costs a new regulation may impose on SMEs by accessing the new software through the Small and Medium Enterprises team in the Ministry of Economic Development.”

“Companies with fewer than 20 employees make up a staggering 97 percent of businesses in New Zealand, and are vital to our future economic growth. However their small size means they do face disproportionately larger overheads, and the government is working hard in many areas to lower the compliance costs they face,” said Mr Cosgrove.

The Ministry of Economic Development already has three agencies keen to put proposals through the Calculator. It will be trialled with the intention of making it compulsory.

“The importance of the small business sector to the New Zealand economy cannot be underestimated. With this initiative small businesses will have even more certainty that their contribution to the country’s economic transformation is being valued,” said Mr Cosgrove.

Background Information on the Business Compliance Cost Calculator

What is the Business Compliance Cost Calculator?
The Business Compliance Cost Calculator is a software tool that will be used by government departments and agencies to assess the cost of new regulation before it is implemented. The Calculator helps officials identify the activities and related costs that a business will have to take on to comply with new regulations or government policies. The Calculator then provides a consistent analysis of the total compliance costs involved, which helps departments to identify where savings can be made and efficiencies gained.

What real difference will this make to decision making?
It will mean that the real costs to small and medium businesses are laid out for the government in a more consistent way. It will mean that the information will be more easily understood and comparisons made. This all means better decision making.

When can departments start using the Calculator?
From today, any government department can access the new software through the Small and Medium Enterprises team in the Ministry of Economic Development.

When will the web version be ready for New Zealand agencies to use?
The Ministry of Economic Development is working with the Australian government to re-develop the software for the web and add some data recording functions. This process is expected to be completed in about 12 weeks’ time.

Why are we using the Australian model as the basis for our own Calculator?
It made sense for New Zealand to utilise the Australian model of the Calculator which has been in use for some 18 months in Australia and is proving to be an effective tool in improving policy decision-making. Both countries want very similar functionality from the web version of this software, and so are working together to improve the software overall. Australia is meeting the bulk of the cost of the development. The New Zealand government is modifying its online version of the Calculator to fit the New Zealand regulatory environment.

Has it made a difference in Australia?
Yes, departments are regularly sent back to find less costly ways of achieving the same objectives. Some States use the Cost Calculator as a benchmarking tool to measure government and departmental regulation-making performance.

Why isn’t the New Zealand government making it compulsory straight away?
The government wants to make sure that the Business Compliance Cost Calculator works effectively before it is made compulsory. The trial period will allow any needed changes to be made, which will help ensure the Calculator is as easy as possible for agencies to use.


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