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Govt's Vision For Small Business - Progress Report

Hon John Tamihere:
4 December 2003 Speech Notes
The government's vision for small business - a progress report

Speech to the Employers and Manufacturers' Association Central Council, Public Trust Building, Lambton Quay, Wellington, Thursday December 4, 3.30pm

We have set an ambitious growth goal for New Zealand. The Growth and Innovation Framework sets out our vision of a New Zealand that is a great place to live, work, learn and do business.

SMEs are the engine room of our economy, and as such they are contributing vitally to our ability to achieve this goal.

We know that small businesses represent a hugely diverse set of ideas, dreams, skills and capabilities - they do not operate the same way that big businesses can afford to. The government is actively trying to understand these characteristics so that we can deliver policy initiatives that are accurately target and meet their needs.

In the past year we have been working hard to better understand and communicate with small businesses.

We have established four groups to further the development and understanding of the small business community.

· Small Business Directorate within MED

· SME Senior Officials Group

· Ministerial Group on Small Business

· Small Business Advisory Group

Small Business Advisory Group

The Advisory Group is made up of nine people who have direct experience as, or with, SMEs. The group is a great blend of experience, enthusiasm and business know how. Members come from a variety of backgrounds and have been selected because of their ability to reach large networks of small business people.

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The group provides another voice for small business, a powerful one. Already the group has provided input into a number of different policy areas (including tax, employment law, and work/life balance) and the group is being listened to.

The Small Business Advisory Group also provides the government with an important link back to the small business community, and it is that link that we are continuing to build when we undertake the Small Business Day Series starting in February next year.

Small Business Day Series

Our Small Business Day series will kick off in Wellington with a day of activities to celebrate small business success and offer advice and assistance.

The series will include nation-wide local business visits by Ministers and MPs, and regional Small Business Days where business owners/managers can access expert advice and engage government on the issues facing small businesses.

The business days will be launched at the Wellington Small Business Day on 13 February, and I hope to see the many of you here today represented there. I see the series as an opportunity for government and small business to continue to build our dialogue with one another.

The level of excitement and commitment from around the country is encouraging and provides confirmation that the event is shaping up with respect to its expected relevance to SMEs, and expected support from business leaders.

Growth and Innovation Framework

While the government recognises that small things can be important for small business - for example we just introduced free postage for businesses sending PAYE, GST and FBT payments - we are keeping our eye on the big picture for small business.

And that big picture is articulated under the Growth and Innovation Framework. The framework recognises that New Zealand must have smart businesses that are globally competitive, that are strongly connected with their customers, and are founded on good ideas and talented, skilled people.

The Growth and Innovation Framework identified four priority areas:
- skills and talent
- innovation
- strengthening international connections, and
- boosting sectors with spill-over effects for the wider economy and society

The framework includes a set of benchmark indicators by which we will measure the country's economic performance in:
· labour productivity
· educational achievement
· research and development spending, and
· GDP per capita.

Already progress under the framework includes:

- Increased research and development spending, especially in the private sector, where R & D spending grew by more than 30 per cent from 2000-2002
- Establishment of the new Tertiary Education Commission and Tertiary Education Strategy
- A new immigration policy that focuses on the skills New Zealand needs to drive development
- Increased investment in apprenticeships and industry training
- The merger of Trade NZ and Industry NZ to form the New Trade and Enterprise NZ, offering a broad range of services to businesses under one umbrella
- Report back from taskforces in the ICT, biotechnology and creative sectors

Small business sector performance

New Zealand's overall economic prospects are encouraging, and I am pleased to report that the small business sector is performing particularly well.

Last year New Zealand's growth rate topped the OECD.
· Unemployment is at its lowest level since the mid-80s.
· Inflation is low.
· Business confidence continues to improve.
· Consumer confidence in the September quarter was the highest since 1996.

Of course as Small Business Minister I would like to point out that the small business sector has been leading performance. Economic activity in the small business sector expanded 1.4 per cent in the June quarter, taking year-on-year growth to 5.5 per cent. This compares to 0.2 per cent for the economy as a whole in the June quarter, and 2.7 over the year.

There was strong performance in small business across all sectors in the June quarter, with manufacturing, construction, wholesale and retail sales and the service sector all recording solid growth.

Government is proactive in support

Business will always demand that the government does more to reduce the tax burden and red tape tangle. We are listening to those grumbles and are making ongoing efforts to reduce compliance costs. Those efforts include:

Tax Simplification - the government is now reviewing its discussion document on tax simplification that outlines a number of proposals that would make paying tax easier for businesses.

I expect these proposals will help make doing business easier for small businesses in particular. They include initiatives such as a subsidy for small businesses to use payroll agents, 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.

BIZ Portal - one of the key recommendations of the Business Cost Compliance Panel was to increase the accessibility of government services and information on compliance requirements via e-technology.

In response to this recommendation he BIZ portal was released in July 2003 as a one-stop business portal under the government's sponsorshipThe web-based portal allows access to business services across government (e.g. IRD, Department of Labour, ACC, Companies Office) as well as providing private sector information. The website allows businesses to get quick help with taxes, regulations, ACC, work place safety and other important regulatory information. A strategic and customer review of the portal is currently in progress, but responses and feedback from businesses using the portal so far have been very positive.


Small businesses are diverse in many aspects including their business needs and we must recognise this when trying to understand their concerns and help to build their capabilities.

Small businesses are vitally important and contributing significantly to economic growth - that's why this government will make every effort in supporting small business. If there is more that you think we should - and realistically can - be doing to support small business, I'd welcome your thoughts on how we can do that.


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