15 August 2005

Hon Jim Anderton MP, Progressive Leader

National admits plans to ignore needs of individual businesses

The National Party policy to axe grants to individual businesses announced today by John Key shows how out of touch it is with the needs of our economy and especially small to medium businesses. National has clearly missed the importance of working in partnership with individual businesses, Progressive Leader and Minister for Economic Development, Jim Anderton said today.

"It is also a reminder that National's borrowing based tax cuts will be at the cost of businesses and families around the country as they lose services to pay for the cuts," Jim Anderton said.

"In the 2004/05 year 12,372 businesses utilised the Enterprise Training Programme and 1078 individual businesses received grants. Most of those were small to medium enterprises (SMEs), which make up 96.3 per cent of all businesses in New Zealand. Axing support for these businesses is short sighted and ideological - not based on best practice nor experience.

“The Labour Progressive Government is focussed on helping small to medium sized businesses succeed, because they are a key driver in our economy and contribute to improving our level of innovation and creativity - qualities which lift value and stimulate economic growth.

"This government's partnership approach to working with SMEs has clearly contributed to consistent year on year growth in every region of New Zealand in every quarter since the 1999 election.

"The development assistance offered to businesses by New Zealand Trade and Enterprise is conservative on a comparative international basis, and such grants are standard practise for our trading partners.

"National and international studies show that only 57 per cent of small firms are still trading after 2 years. That is why we need to work together to help businesses survive and grow in order to strengthen our economy and lift living standards for all New Zealanders.

"We also need to work together to expand our larger businesses. New Zealand relies on just 160 companies out of a total 300,000 (or 0.053 per cent) to earn 80 per cent of our entire foreign exchange earnings. That has and does put our economy at risk, especially if a whole industry sector, such as agriculture or forestry, suffers any major set back.

"Without supporting the development of larger high growth companies, we will not sustain, let alone improve, our living standards," Jim Anderton said.

Examples of grants to larger businesses

EDS

"The government invested in EDS's Best Shores programme in order to attract the company to New Zealand. Without that investment we would have lost an opportunity to strengthen our ICT industry, lift the skill levels of New Zealanders working in the field and allow them to experience working in a high tech global company.

"The investment agreement required the company to employ 360 people within three years, that is by March next year. By May this year, EDS had already employed 267 people in their Best Shores programme.

PAC - Growth services fund

Pacific Aerospace Corporation (PAC) has been granted $480,000 from the Growth Services Fund to develop and enhance its manufacturing capability.

The grant is for the following activities: International certification in targeted markets, Addition of further capabilities to the Standard 750XL, Expansion of manufacturing capacity, and Development of human capital.

"Pacific Aerospace plays an integral role in New Zealand's aircraft manufacturing sector. This year it will celebrate the manufacture of its 600th aircraft and contribute to lifting our level of high value exports.

"Companies like Pacific Aerospace can make a huge contribution to New Zealand by developing high skill, high tech industries. These are the sorts of businesses, which will help New Zealand compete in the world market and grow our economy for the future," Jim Anderton said.

NZTE Grant schemes for individual businesses

Enterprise development grants

Enterprise Development Fund - Capability Building component: Grants are available for businesses, groups of businesses and entrepreneurs to engage the services of a business mentor, undertake training, employ specialized advice and expertise for a specific project, or to undertake international market development activities. Up to a maximum of 50% of the qualifying cost is available for individual or groups of businesses.

Just under three hundred and forty companies received help through the Capability Building component of the Enterprise Development Fund in the 2004/2005 year.

Enterprise Development Fund - Market Development component

Financial assistance is available for New Zealand businesses committed to and capable of seeking out and developing international business and connections. This fund will cover up to 50 per cent of a business's eligible market development expenditure that is related to developing new markets and improving current market positions offshore. Projects eligible include market visits, in-market representation, advertising/promotion/marketing collateral, exhibiting at trade fairs and events, and market research.

Just over 80 companies received assistance through the Market Development component of the Enterprise Development Fund in the 2004/05 year. Growth development

Growth Services Fund

Grants are available to support high growth potential firms to purchase external advice and expertise, market intelligence and development services, to help them achieve their growth potential within a much shorter timeframe. Grants up to a maximum of 50 per cent of the costs of qualifying projects are available for individual or groups of firms to access new business opportunities, skills and expertise, innovation and new technologies and finance.

The fund is accessible only for businesses that have clear and significant growth potential and for which a development plan has been compiled with an NZTE client manager.

One hundred and thirty-eight companies received assistance through the Growth Services Fund in the 2004/05 year.

ENDS

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