John Tamihere Speech: Small Business Buzzing in Manukau
Speech to Manukau Small Business Day
Speech to Manukau Small Business Day, Lakeside Convention Centre, Manukau City, Friday March 19, 5.45pm
Good evening and welcome to Manukau Small Business Day. It is great to see you here at the seventh of our series of
Small Business Days around the country, and it has been an exciting and inspiring series so far, getting out and hearing
what good, hardworking Kiwi businessmen and women have to say.
Who would have thought 20, or even 10, years ago that I could be standing here today and congratulating you on
contributing to one of New Zealand's fastest-growing and most successful business centres?
Manukau City today is the third-largest and one of the most rapidly-growing cities in New Zealand. In 35 years Manukau
has developed from farmland to become the base of many of the country's largest and most successful businesses, home to
more than 18,000 businesses employing more than 100,000 people. In the past decade, the city has been one of New
Zealand's fastest-growing industrial areas. Manukau City now accounts for 8 per cent of New Zealand's GDP, and 6.7 per
cent of its employees.
Employment in Manukau grew by 1.4 per cent in the year to June 2003. manufacturing continues to be the bigegst
emmployment sector, but the fastest employment growth was in cultural and recreational services, property and business
services, wholesale, transport and storage industries. Non-residential building consents were up 16 per cent, while
residential building consents were up 10 per cent in the last year.
And that growth is expected to continue as Manukau's population increases by 37 per cent to more than 400,000 people in
the next 20 years. So I applaud economic development startegy of Manukau City Council, which is to:
"Make Manukau the most desired location for enterprise business and investment . in order to achieve - high growth and
sustainable enterprise - increased opportunities for employment - increased standard of living and quality of
life.
In Enterprising Manukau you have also got a great team supporting business development and growth in Manukau City - and
I have to congratulate Enterprising Manukau in securing $10 million of Government funding for 154 Manukau businesses out
of a nationwide total of about $50 million for research and development. Obviously you have some very determined and
hardworking people going in to bat for you there.
Some of the most exciting prospects for Manukau's future growth and development are in tourism. While Manukau's close
proximity to Auckland International Airport accounts for most of the visitors who stay overnight in Manukau, the city's
objective is to grow tourism by increasing the number of significant tourist attractions in the area. Rainbow's End is
currently the most significant tourist attraction, but there are three new key tourism developments:
- The Telstra Clear Pacific Events Arena is a new events centre for arts, culture, business and leisure opening in
2005. It will comprise outdoor and indoor arenas, a 700-seat theatre, a gallery, plaza and other facilities for hosting
festivals, perfromances, arts, business and sports events. - Butterfly Creek, opened late last year, is a tourism
venure and event centre designed for children. It comprises a tropical butterfly house with over 500 species, a petting
zoo, playgrounds, ponds and wetlands and children's party room. -
Villa Maria Estate, a multi-million-dollar three-stage project being built on a 40-hectare site in Mangere with views
over Manukau Harbour and Central Auckland. When completed it will comprise a wine hall and bottling facility, cellar
shop, vineyards, function room and guest accommodation.
So in tourism alone, there are a number of significant development s that wil bring further revenue, employment, growth
and opportunity to Manukau City.
In response to a survey of Manukau businesses, local managing directors consistently said that being located in
Manukauprovided critical advantages that gave local companies a competitive edge and ability to increase profits. The
advantages included good transport access, market proximity, supplier availability, readily available land and
buildings, competitively priced rental accommodation, a strong labour pool, working close to home, quality local
services and lower operating costs.
So there is plenty of good news for businesses in Manukau City - and as the Government we are here to make sure you have
every opportunity to increase those positive things you have got going for you.
Rather than having me here just to tell you how wonderful the Government is, I would like to hear your views - a two-way
conversation has to be a lot more constructive than me just telling you what's what.
The problem too often has been that the debate about what the Government should be doing for small business gets
captured by the groups at either end of the spectrum - whether it is the unions at one end of Business NZ and the
Business Roundtable at the other. The difficulty is that the views of the genuine small business owners in the middle
get bypassed. If I get caught up in pacifying those two opposing interest groups at either end of the debate, I spend my
time not focussing on the real people.
And often the prescriptions that business lobby groups give me favour the big of town. For example, they don't want to
calibrate their tax payments to the same extent that small businesses do. We are offering to allow businesses to align
their provisional tax payments with their GST payments. That really helps small businesses a lot because it is geared
around their cash flow rather than demands from Inland Revenue. Big business wants use of money - and I can understand
that. That's a significant point of difference between the needs of big business and the needs of small business, and
the differences don't end there.
The greatest economic unit in New Zealand is the Kiwi family - those Mums and Dads businesses up and down the country
are the backbone of our economy. Eighty-seven per cent of Kiwi businesses have five or fewer employees - that's huge,
and to understand New Zealand business you have to understand that. You've then got to start to focus on what we can do
to alleviate compliance and regulation for those businesses that make up 87 per cent of New Zealand firms.
In addition to these small business days, another tool that will help us to hear more clearly and directly the needs of
small business is the Small Business Advisory Group that I set up last year. The nine people on the group come from a
diverse range of sectors and regions, but the main thing they have in common is a wealth of talent and experience in
running small businesses. They know the challenges and difficulties of setting up and running small businesses, and they
know the disappointments as well as the successes small business can bring. In short, they are champions of small
business.
I'm finding out exactly what I hoped of the group - they're giving me very direct, very straight-up advice on what small
business would like us to be doing on their behalf. Already the advisory group has made a number of recommendations, and
right now we're working on those recommendations.
We have to look at what we are doing presently to regulate small business - and I have got a number of reviews going now
- to determine the efficacy of continuing to conduct ourselves in a range of ways just because that is what we have been
doing it up till now, even though It's not necessarily the most clever thing to do.
For example, businesses are required to respond to questions from Statistics NZ on a monthly basis on a number of
matters. My demographers tell me we don't need to do that - quarterly would be good enough, and the sample doesn't need
to be as great. So if we find situations like that where we find we are bugging you more often than we need to, we'll
stop doing it.
There is a hell of a lot of engagement across Government now on stopping duplication of information, where departments
like ACC, IRD and Statistics are start working more closely together.
And we know that the burden of complying with compliance demands is disproportionately onerous on the little fellas. So
we are trying to lighten the burden for small business where possible. For example, we're currently working out the best
way to subsidise the use of a payroll agent for small businesses' first five employees. That is a direct subsidy - I say
around 25-30 per cent of what your costs would be - that will benefit to 87 per cent of New Zealand businesses. That
money is there in the Budget ready to go out as soon as we finish working out the best way of paying it out, and we'll
be moving on that in the next month, I expect.
Another measure we have just announced that is of particular benefit to small business is the 6.7 per cent discount to
businesses who choose to pay provisional tax in their first year of business - that initiative also allows businesses to
avoid getting hit with a double whammy of paying two years tax at once in their second year.
As a Government we have got to be compliance friendly; we have got to drop compliance costs, and we have got to support
small businesses to access external business advice. One of our biggest problems in our SMEs is that often they are run
by a sole trader, and he has taken it as far as he can get it, but if he could just get some external advice, he might
see things in different ways and from different angles that will allow him to take a leap of faith to move up to the
next notch. So Government assistance in terms of measures like the payroll subsidy, like providing business mentoring
and start-up support, provide valuable help to businesses who might otherwise struggle in isolation.
And we shouldn't be hammering the little guys into the ground over compliance before they have even got off the ground.
We should be helping them out, not hunting them down. We have got to review what we are doing and why we are doing it to
justify why we are continuing to do it - or do it differently. Sometimes it probably feels like you are getting
bombarded with all the acronyms - RMA, ACC, IRD and all the rest. 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.
If we compare New Zealand and our biggest market, Australia, on any measure we are ahead - whether it is the top tax
rate, whether it is payroll obligations, or compulsory Medicare, compulsory superannuation payments and so on and so on
and so on. Australian businesspeople who come over here are very relaxed; they commend the approach that we have got.
But one area where I think we can do more is in dealing with the impact of regulation on small business. No Government
in this country or internationally has yet mastered the modelling for business regulatory impact statements. I intend to
get a model up to go before Cabinet this year that will be robust and transparent in assessing the impact of legislation
and regulation on business. Stakeholder groups will be asked to advise on it - sector groups like the CTU all the way
through to the Business Roundtable. All I would ask of them is run the ruler over me in the same way you would like me
to run the ruler over you.
However, too much of this debate in this country in business circles is about compliance and regulation. It has got
nothing to do with how we grow, how we innovate, how we add value, and all those sorts of things. I am not trying to
bury for one moment compliance and regulation impacts, I just want to lift the debate so we get in place a system that
business and everyone else agrees is best practice possible, that will allow business to identify the impost of it, to
know that it has been well worked through and is a robust business process. Because while it might sound good in a
policy manifesto, once you have crunched it through, the unintended consequences and perverse results might mean that
the best thing to do is bury it.
But dealing with compliance issues is kind of like when your wife is giving birth and she gets some pethedine - all you
can do is take the head off the worst of the pain, you're never going to stop the main event. So let's get real:
compliance is a fact of life in all economies and all businesses. What we must do is mitigate the worst excesses, and
have a process in place that informs Government and Kiwis of the wisdom of doing it.
We should at least get an ethical buy-in to this debate from business groups, an acknowledgement that at least we are
looking for solutions, and we are doing that with integrity. We need to give business straight answers to straight
questions - businesspeople can smell spin and smarm coming a mile off. So if we approach it with that attitude, from
both sides, we can have a meaningful debate.
It has been really good going out on the road to talk directly to small business - you get to really feel the pulse. And
you become very aware of the different issues and cultural drivers in different communities.
What surprises me most is how little most Kiwis know about the most exciting business revelations that going on in their
own backyards. Some of the entrepeneurial innovation I have seen up and down this country is just superb. You are just
so proud to see not only the successes, but also the risks that are being taken. You can see etched into their foreheads
the struggles that they have had - but they have come through it. What you have got up and down the country is a level
of stoicism - Kiwi businessmen and women take some big hits, they will live off the smell of an oily rag, but they just
keep on battling away.
Worst of all is that often their communities don't respect that, they don't even know about it. We have this culture
that we have to shift, and that is another thing behind these business days, we have got to start rejoicing and
celebrating. If you see a flash car in New Zealand, a lot of people's first instinct is to take a 50 cent coin out and
scratch it. That's just crazy. We've got to start saying good on that bloke. He's probably employing a couple of dozen
people in our community and putting wages in their pockets and a roof over their families' heads.
So I would like to end by congratulating you for the contribution you are making to your community, to the economy and
to this country. You're doing a great job.