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Government makes a difference for small business

Tuesday 24 October 2006

Government makes a difference for small business

The government is already acting on most of the latest recommendations of the Small Business Advisory Group, Small Business Minister Lianne Dalziel says.

Lianne Dalziel today released the government’s response to the Small Business Advisory Group’s second report, which contains 12 recommendations to assist small and medium enterprises (SMEs).

“I am pleased to say that in many instances we share a vision on how to improve the business environment for SMEs,” Lianne Dalziel said.

Lianne Dalziel said many of the recommendations were either already being implemented or considered by government, including:

- Instigating the Quality Regulation Review to ensure regulatory frameworks or their enforcement are not acting as a barrier to growth;
- Instigating the Business Tax Review to look at ways of boosting New Zealand’s competitiveness and productivity;
- Simplifying and improving ACC forms to minimise compliance costs;
- Increasing ACC’s and IRD’s flexibility for dealing with disputed invoices or honest mistakes;
- Improving information around the Hazardous Substances and New Organisms (HSNO) Act;

Lianne Dalziel said the government has again rejected the group's call for a performance-based personal-grievance-free probationary period for new employees.

"Employment law already allows for probationary periods to be entered into without taking away an employee's rights. I am pleased that the advisory group has since produced a proposal to streamline personal grievance procedures, not as an alternative to their report, but as a possible way forward. The government is now considering this proposal," Lianne Dalziel said.

The Small Business Advisory Group comprises nine owners of small or medium businesses, and was set up to give this important sector effective input into government policy development. The group released its second report to the government in March.

Lianne Dalziel said the members of the Advisory Group had over the past three years delivered real benefits to small businesses and to government policy-making.

"Some of our most creative ideas are coming out of the SME sector. We're determined to ensure the business environment enables these people to get on with what they do best."

For a copy of the SBAG report and government response go to

Lianne Dalziel's speeches and media releases are on
Q&A: Government response to SBAG 2nd report:

What Is SBAG?
The Small Business Advisory Group comprises nine people who own small and medium sized businesses (SMEs). Their purpose is to give SMEs a greater voice in policy development and to advise Ministers of issues facing SMEs.

The members of SBAG are:

- Murray Cleverley, Timaru, CEO Economic Development Agency, meat processing;
- Peter Kitchen, Kaitāia, tourism sector, Māori business;
- Denise L'Estrange-Corbet, Auckland, fashion design and retail;
- Nigel McKinlay, Dunedin, footwear manufacturer;
- Lachlan McKenzie, Rotorua, farming;
- Cameron Moore, Christchurch, manufacturing;
- Alison Quesnel, Auckland, health products, business mentor;
- Robyn Reid, Nelson, aviation, economic development;
- Stuart Wilson, Wellington/Auckland, information technology.

The government greatly values the work and views of the first Small Business Advisory group. The current members have agreed to stay on until the end of the year to enable the government to respond to their second report. Applications for membership of the SBAG have been sought from people with extensive experience with small businesses, wide networks, and good analytical and advocacy skills. Nearly 250 applications were received and are currently being considered. Announcements should be made at the end of the year.

Why does SBAG produce a report?
Part of SBAG's function is to provide ongoing advice to government on any issues affecting SMEs. Mainly this is done out of the public eye. However they decided in 2004 to produce a report setting out some key things they thought government could do to improve the business environment for SMEs. The group’s second report was released in March 2006.
In introducing the idea of a regular report they were following the example of the Small Business Council in the United Kingdom - the former Chairman of the Council met with SBAG early in 2005.

What were SBAG's recommendations in the second report and what is the government's response?
Recommendation 1: That the Government demonstrate that the quality of cost/benefit analyses contained in Regulatory Impact Statements has improved by 30 September 2006.
Response: Improvements to the regulatory impact analysis and monitoring of cost compliance systems were covered in the May 2006 Cabinet decisions on the Quality Regulation Review (Addresses recommendations 1 and 6).

Recommendation 2: That IRD and ACC develop, implement and communicate a strategy for dealing compassionately with minor misdemeanours or unintentional mistakes.
Response: Changes are being made to ACC and IRD processes for dealing with minor misdemeanours and unintentional mistakes.

Recommendation 3: That HSNO controls be made less complex and simpler to implement.
Response: Improved processes for HSNO controls took effect from 1 July 2006. The Quality Regulation Review (QRR) is also considering the HSNO, HSE and ACC frameworks.

Recommendation 4: That the Holidays Act 2003 be re-visited, particularly the relevant daily pay clause, to reduce the costs of complying with it.
Response: An independent evaluation found that both employers and employees understand the new law better than the previous Act. The Department of Labour (DOL) is working on an on-line tool for assessing holiday entitlements. The government has been subsidising small employers to use payroll intermediaries since 1 October 2006. .

Recommendation 5*: That the employment law be amended to provide for a performance-based personal grievance-free probationary period of 12 months for new employees.
Response: Rejected because current employment law already allows for probationary periods to be entered into without taking away employee rights. It would send the wrong signal on the importance of beginning and managing employment relationships successfully.
*NB: Since publishing their second report the SBAG has suggested a streamlining of personal grievance procedures. This proposal is attached in Annex 1 of the government's response and is currently being considered.

Recommendation 6: That all government business forms contain a time box in which the person filling out the form indicates how long it took to complete (including research/ understanding time) and that the results and trends from the information in these boxes are published.
Response: This is being addressed by Cabinet decisions referred to in the response to recommendation 1. Responding to the publication of the SBAG report, ACC included a time box in its self-assessment form for the new Workplace Safety Discount Scheme.

Recommendation 7: That Fringe Benefit Tax on business vehicles be simplified by moving it from the Fringe Benefit Tax return to an adjustment in the employer’s income tax return.
Response: Consideration of further changes to Fringe Benefit Tax rules is being made as part of the business tax review - SBAG will be consulted in that process.

Recommendation 8: That improvements to the presentation and information on ACC invoices, and their timeliness, be urgently implemented.
Response: The invoices for self-employed people were simplified in August 2004, and similar improvement to employer invoices will occur in 2007. ACC will continue to work with SBAG and other business groups to ensure the changes address their concerns.

Recommendation 9: That the government run a Small Business Day Series in 2006.
Response: Meetings with small businesses are currently being held around the country as part of the Quality Regulation Review.

Recommendation 10: That every year the Ombudsman target business audiences, as well as individuals, during his regional visits, in order to allow SMEs to communicate specific concerns about regulatory enforcement actions by government agencies and local authorities.
Response: The Chief Ombudsman has agreed to advise local business associations of Ombudsmans' visits to their region so businesses can be alerted to the opportunity to raise any concerns.

Recommendation 11: That the government implements a programme that will help it better understand SMEs. That programme should include appointing SME champions in government departments, requiring a senior manager scrutinise all departmental regulations, and a public/private sector secondment programme.
Response: There are examples of departments developing an SME focus (small business units in the Ministry of Economic Development and Department of Labour, industry group in the Ministry for the Environment and an SME champion in the Inland Revenue Department). However, SBAG has recently completed a review of a sample of regulatory impact statements in which an independent reviewer also raised questions about the capability of departments to understand and assess impacts of proposed regulations on small businesses’ operations. This issue will be addressed as part of the Quality Regulation Review.

Recommendation 12: That the government ensure basic enterprise education is part of the core curriculum.
Response: References to Enterprise Education and entrepreneurship have been included in the Draft Curriculum Discussion Document released on 31 July 2006.

What happens next?
Work will continue to complete the work identified as being in progress in the report back. Ministers and officials will continue to meet with SBAG and to consider their views of improvements needed to the business environment.
The website is available for businesses wishing to register to be consulted by government agencies during the formulation of policy, or who have regulatory issues they would like to raise with the government.


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