Tangible Support For SMEs?

Tangible Support For SMEs?
Statement made by Gavin Holley, Director, KPMG

New Zealand’s SMEs may well ask themselves three questions when assessing the 2011 Budget.

• Will it increase economic activity? Outside the rebuild of Christchurch, there was little in the Budget to directly stimulate economic activity. The goal of the Budget’s fiscal restraint is to keep New Zealand’s sovereign credit rating stable and SMEs will welcome interest rates and exchange rates remaining steady as a result. While the Government is forecasting growth, its spending cuts may slow growth in parts of the economy. Businesses should assess their ability to benefit from the Government’s expenditure on the earthquake recovery.

• Will it make it easier to do business? This Budget does not directly reduce the red tape that hinders SME growth. The much discussed tax reforms for SMEs remains a work-in–progress. Other areas, such as immigration, will cause increased frustration as SMEs seek to hire skilled immigrants to assist business growth should the economy improve.

• Will it assist me in finding skilled employees? This no-frills Budget will do little to stem the loss of skills offshore, especially to Australia. SMEs may also find skilled staff drawn from their local economies as the rebuild of Christchurch gets underway.

Owners of small-to-medium sized businesses may not be truly satisfied as a result. There will also be wider concern that changes to KiwiSaver and Working for Families will see additional costs move from the Government onto SMEs.

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