Celebrating Marlborough Small Business - Tamihere

Celebrating Marlborough small business
Speech By John Tamihere

Good evening to you all and welcome to Marlborough Small Business Day. This is the fourth Small Business Day in the series of 24 and it has been great to get out into the regions to see what a great job small businesses are doing around the country.

On Wednesday I was in Greymouth for the West Coast Small Business Day in the region with the country's highest rainfall, so I must say what a pleasure it is to be here today in the region with the highest sunshine hours in the country.

The Small Business Day series has been a valuable experience so far in hearing what people in small business have to say, and I am sure Marlborough will be no exception. The purpose of the Small Business Days is to hear directly from you, the people involved in the hard yards out there of setting up and running businesses and creating wealth and employment.

It is people like you, people running small businesses, who are the backbone of our economy. Small-medium enterprises (those with fewer than 20 employees) make up 97 per cent of New Zealand's businesses, employ 43% of all employees and produce 39% of all the goods and services, and I think you should be celebrated for that vital contribution you make to the success of our country and our economy.

Through the Small Business Days I aim to see that you get the applause you deserve. We all heard about the success of Peter Jackson and the Lord of the Rings success at the Oscars this week - I want to see New Zealand celebrate its small business heroes in the same way it celebrates its film industry heroes.

It is fantastic to see the work being done in your region by local groups such as the Marlborough Chamber of Commerce, the Marlborough Economic Development Trust, Destination Marlborough and Marlborough District Council to support and recognise small businesses. The chamber's Business Excellence Awards recognises the best of local businesses, and events like the Marlborough Wine Festival have firmly stamped Marlborough's achievements on the national consciousness. I'm also pleased to hear that my colleague, Economic Development Minister Jim Anderton, will be here to open the Wine Centre of Excellence later this month.

Marlborough business make up just one per cent of New Zealand's businesses, but it is still vital to this country's success that the 3555 businesses in Marlborough are doing well, because it is the combined success of businesses like these up and down the country that underpins our economic success nationwide. Marlborough has a long tradition of producing quality fruit and horticultural produce, seafood and timber, as well as strong industrial engineering and manufacturing industries. In combination with a burgeoning wine and gourmet food industry, its aquaculture industry, and its obvious attractions as a tourist destination, Marlborough's continued business growth is assured. In particular the growth of the viticulture industry over the last decade has transformed the region's economy and communities, bringing with it both challenges and opportunities.

While the fact that New Zealand is enjoying the lowest unemployment in 16 years, and Marlborough has unemployment below even this record low, is obviously great news, there is a downside to that good news in terms of labour and skills shortages in some regions and industries. While it is fantastic in many ways that last year Marlborough had just 400 people on the unemployment benefit out of a total population of 40,000, this situation can pose difficulties for employers in getting the staff they need.

I have read of vineyard arrests and deportations of workers who are working here in breach of our immigration laws - which demonstrates how seriously skills and labour shortages can affect the wine and horticulture industries in the region.

Unfortunately you are suffering as a result of your own success - as the grape harvest increases, so does the shortage of workers. Obviously it would be of benefit to all if the industry is able to get the workers it needs, and the Immigration Service is fast-tracking work permit approvals within 48 hours to help solve the problem. That's a solution tailored specifically for this region, but if you have any further suggestions as to how the worker shortage might be addressed, I'd welcome your input, and will pass on any suggestions to the Minister of Immigration.

We have already heard from a number of small businesses around the country in a series of visits to businesses by MPs in the lead-up to the Small Business Days. The issues most frequently raised during those visits were the Holidays Act, taxation, employment relations and compliance costs. Clearly those issues will also be of concern to you here, so I'd like to take some time to address them.

Regarding the Holidays Act - while four weeks leave will be a fact of life, the Small Business Advisory Group suggested that setting a firm future date for the introduction of this provision would allow businesses time to adjust, so we decided on an April 1 2007 implementation date.

Small businesses told us that taxation removes incentives for business growth. While I can't promise you that we will be making cuts to business tax rates, we are working on making the processes surrounding payment of taxes easier for businesses. For example, from among a raft of measures in this area, my colleague, Associate Finance Minister David Cunliffe, announced this week that we will give a 6.7 per cent discount to self-employed people who pay provisional tax in their first year of business, and it is encouraging to see that this measure has been warmly received by businesspeople.

Business will always demand that the compliance burden is reduced, but in fact New Zealand does pretty well on business compliance compared to other nations. The World Bank has just released its Doing Business 2004 report, which reports on the ease (or difficulty) of starting a business, hiring and firing staff, enforcing contracts, getting credit and closing a business in more than 130 countries. The report shows that New Zealand is the least regulated country in the world, and one of the easiest places to start a business.

Judged across five criteria, New Zealand was judged to be the least regulated country, followed by Australia, Canada, Sweden, the United Kingdom and Singapore. According to the report, it costs just US$28 to register a company in New Zealand and it takes just three days. By comparison it cost US$402 and two days in Australia, US$264 and 18 days in the United Kingdom, and a massive US$3228 and 20 days in Switzerland. So if any of you were planning to move your business to Switzerland, or even across the Tasman, I wouldn't recommend it. Sometimes we just don't know how lucky we are.

But while compliance costs are relatively low in New Zealand, it is my job as Minister for Small Business to see that we are constantly vigilant against the encroachment of unnecessary or excessive compliance costs, and I can assure you I will continue to be diligent in stamping out unnecessary additions to the compliance burden, wherever I see them. Naturally people involved in running small businesses wanting to spend less time dealing with red tape, and more time getting on with business, and I thoroughly support that view.

However, while I do want to hear about the impact of compliance issues on small businesses, I don't think we should get so focused on that issue that we fail to see the big picture as far as small business success is concerned.

In particular the need for improvements in New Zealand's productivity growth if we are to enjoy sustained economic growth is an issue we must not lose sight of. So I am pleased to announce that my colleague, Labour Minister Paul Swain, has today announced the establishment of the Workplace Productivity Working Group.

The group aims to raise awareness of workplace productivity, and will advise the Government on ways for businesses to boost productivity.

Labour productivity is basically the value of what employees produce for each hour worked. We can increase labour productivity by working smarter, selling higher value products, re-organising businesses, increasing investment in research and technology and increasing skills. More productive businesses mean a more productive economy, more economic growth, and allow New Zealand to be more competitive in the global economy.

I know you are probably all groaning and thinking that this is yet another committee, another talkfest or yet another layer of bureaucracy, but this isn't just a lot of talking - this is an initiative that will bring about action in this crucial area. For example in your region, it may provide solutions to the skills shortages that threaten the productivity gains of the Marlborough wine industry.

In the area of employment relations, we have just set up the Employment Agreement Builder - an online tool that helps businesses build employment agreements that meet legal and regulatory requirements, while providing flexibility to meet individual requirements. Using this template, businesses can add their employees' details, tick the clauses they wish to include, and delete those they don't want. It's a great of example of how we are trying to make employment relations as straightforward for business as we can.

One Government initiative I really want to see enjoy the huge support it deserves is the Small Business Advisory Group which I set up last year. The people on the group are people just like you - hardworking businessmen and women who put an enormous amount of energy, dedication and money into developing successful businesses. The group members have experience in producing everything from helicopters to designer fashion. In fact one the members of the group, Robyn Reid, is based not too far away from here with her aviation business in Nelson.

Like the rest of the group, Robyn is a straight talker. The people on the group are not academics, or politicians, or lobbyists or unionists - they are the real deal, and I am confident they will honestly champion the cause of small businesspeople in advising the Government.

Already this group has advised us on what it thinks should be priorities for the Government in helping small business in the areas of tax, employment law and work/life balance.

Before Christmas the group told us that we needed to address the issues of:

- model employment contracts available on-line

- one-month probation periods for new employees

- accelerated depreciation on assets

- the FBT system for motor vehicles

- availability of better mentoring for SMEs.

The Government agreed to include these in its own priorities and I'm pleased to say that we have implemented, or in the process of implementing, those issues.

But as well as hearing from the Small Business Advisory Group, I would very much welcome your contribution here today in terms of what advice you can offer on what the Government can do for small businesses. Also if you have any questions about the Government's plans regarding small business, I'm here to give you straight answers. So I'd like to now hear your contributions and questions. Thank you again for your participation in the Marlborough Small Business Day and I trust you have found it as worthwhile as I have.

ENDS

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