The Ultimate Small Business Day
John Tamihere Speech
Speech to Nelson Small Business Day, Rutherford Hotel, Nelson, Thursday May 13, 5pm
Kia ora and welcome to Nelson Small Business Day, the last but certainly not least of the series of regional Small
Business Days I have attended around the country in the last couple of months.
In that time we have held Small Business Days in 24 regional centres, met thousands of small business owners and heard
their views on what they are seeking from the government in terms of helping create the best possible environment for
their businesses to thrive. The days have been attended by a wide cross-section of our business community - from those
just starting out in business to the established movers and shakers in our communities.
The thing that has impressed me most deeply about the Small Business Days is the total drive and commitment among
businesspeople in making their businesses a success. Sometimes that means they have taken some pretty heavy hits, but
they have come back off the canvas wiser for the experience, and have battled on to success.
As businesspeople in the Nelson and Tasman districts you can hold your heads high when it comes to business excellence.
Your 7000-plus businesses employing more than 32,000 people are among the forefront of business innovation in New
Zealand.
While the "big four" industries of horticulture, farming, forestry and tourism remain the mainstays of the Nelson-Tasman
economy, they have grown in sophistication and diversity, and are now supplemented by a range of growth industries,
including the arts, aviation, engineering and information technology.
The Nelson and Tasman District Councils' regional strategy aimed at becoming a "smart, sustainable region" provides a
valuable focus on the need to develop value-added industry, where knowledge, skills, technology and innovators drive
growth.
Given that 96.8 per cent of New Zealand businesses are small-medium enterprises (those employing fewer than 20
employees) and 86 per cent employ five or less employees, the success of small-medium businesses is crucial to the
success of our economy, and the success of our nation as a whole. And small businesses are performing ahead of our
economy as a whole. The National Bank's Small Business Monitor, out last month, shows that small businesses continue to
lead their larger counterparts in year-on-year growth, with 4.7 per cent growth compared to 3.5 per cent for businesses
of all sizes. I was greatly encouraged to see the results of research by UMR for the Growth and Innovation Advisory
Board that show a dramatic turnaround in the public's attitudes towards business in the last year.
The nationwide survey found that most New Zealanders think that business is "cool" and more innovative than ever, and
that there needs to be more pride in our business success stories. That is a huge shift in attitude from last year, when
46 per cent of Kiwis said they saw business as "a necessary evil".
That's great news. A big part of the Small Business Days series has been to celebrate the hard work and innovation of
our small-medium businesses, and salute the contribution they make. As I have said throughout the series, I want our
business heroes to be celebrated as loudly and as widely as our sports heroes.
However the UMR survey also found that many people did not believe that there is a direct link between economic growth
and positives that flow on to the wider community through increased economic growth, such as better education and
healthcare. Well, I can tell you, you should believe it.
More successful small businesses lead to increased growth, prosperity and jobs that help create a better standard of
living for all New Zealanders. Economic growth leads to jobs and higher standards of living for all New Zealanders. For
example if we'd had just 1 percent more growth each year since 1970, by now:
- The number of people in work would be considerably higher.
- There would $175 more in the average weekly pay packet.
- We'd have $3.7 billion more to spend on health each year.
- We'd have $4.2 billion more to spend on education ($3500 more per student).
- We'd have twice as much per capita to spend on roads.
So, contrary to the popular myths and perceptions, business in New Zealand is largely not about the big boys or the fat
cats making piles of money off the work of others to buy expensive mansions and flash cars and big cigars. It is about
ordinary "Mum and Dad" businesses, run by ordinary New Zealanders who work their guts out to make a go of it.
Those businesspeople really deserve recognition and applause for the effort they put in, the risks they take and the
contribution they make to communities up and down this country.
As a government we are committed to supporting those ordinary - yet extraordinary - small businesspeople, and today I
would like to touch on three areas where we are working hard to help make a difference.The first area is communication.
Lets face it, small business owners just don't have the time to make submissions to government or to keep informed of
all the ongoing policy developments - this series of small business days is a start in making that information more
accessible to a wider audience.In developing this roadshow, I made a commitment to hear first-hand, from small business,
about small business. During this series of events I want to hear and understand where the real barriers lie, and also
how these barriers can be addressed. I have heard from the unions on one side and from the business lobby groups on the
other - now I want to hear from you about exactly how we can help to provide the best possible environment for your
businesses to shine.Building on this communication is the Small Business Advisory Group, which I appointed last year to
be the government's honesty box. This group is comprised of small business owners, not academics, not policy wonks, and
certainly not paid lobbyists. The group presents your views, the views of small business, to me as Minister for Small
Business, and to my colleagues who also oversee policies that have implications for business.The advisory group's role
is essential in ensuring that the information flow between government and small business is two-way. I acknowledge that
not all of its suggestions will be formulated into government policy, but at least you can be sure that the view of
small business is being presented at the highest levels.The second area I would like to touch on tonight is compliance
costs. And I'm sure the ears will prick up at this. I would like to start by acknowledging that, yes, this government is
aware that there are costs imposed on business, and that in some instances it seems that these costs are overly
burdensome. Let me assure you, we are working to reduce the compliance burden. In 2001, a Ministerial Panel appointed to
investigate compliance costs, reported back to the government and provided 162 recommendations. Of the recommendations
agreed to, 81 per cent have been implemented or are in the process of being implemented.And we have been working with
government departments to continue this good work. For example in another of my portfolios, as Minister for Statistics,
I am pleased to report that we have made some very good inroads into reducing the amount of paperwork that small
businesses have to deal with.For example, we have made changes to the Retail Trade Survey that has reduced compliance
for small business by 25 per cent since they were introduced in October. We have streamlined questionnaires for
Statistics New Zealand's Business Frame annual survey - in some cases businesses that previously had to fill in 22 pages
of forms now have to fill in just two.Just the other week, my colleague Commerce Minister Margaret Wilson announced a
number of reductions for online interactions with the Companies Office. From 1 July the cost of filing an annual return
online will be eliminated, other services will be reduced from between a third and a half.In December last year the IRD
released a discussion document investigating ways to make tax simpler for small firms. Amongst the ideas mooted were
subsidising a payroll agent for those firms employing five or fewer employees and also calibrating GST and provisional
tax payments to reduce the financial strain that businesses face at certain times during the year.We have established a
one-stop-shop web portal where you can find out all you need to know about interacting with government - and you'll find
that at www.biz.org.nz. The website also provides valuable information on where to get help and support and provides
access to useful business tools such as an online employment agreement builder.And these are just a few examples from a
whole raft of measures we have introduced to cut down the red tape for small business. We are also tightening up the
policy development process to ensure that compliance costs are not passed on unnecessarily. Every Cabinet paper with
business impacts is now required to contain a business compliance cost statement, and I am working hard to ensure that
we make the development process even more robust and transparent.My advisers tell me that since 2001 the government has
introduced more than 100 measures that have reduced compliance for businesses interacting with the government.My third
point is that we need to move the debate forward. I accept that compliance needs to be dealt with, but lets gain some
perspective. Across every indicator, New Zealand appears to be regulatory light on compliance compared with our trading
partners. For example our biggest trading partner, Australia, has a top tax rate of 47 per cent, compared to our 39 per
cent. Australia's second-highest tax rate, 42 per cent, is also higher than ours. The Australian company tax rate is 30
per cent, but they have to lump on top of that a payroll tax of 6 per cent, a Medicare levy of 1.5 per cent, and they
pay an average of 2.5 per cent for their equivalent of ACC - almost three times higher than our average ACC employers'
levy of 0.9 per cent.Australian workers have a minimum wage of $NZ13.49 - 26 per cent higher than our $NZ9. They have
more than 80 per cent of workers protected by multi-employer agreements, and Australian workers have had four weeks
annual leave for 30 years. Sometimes we just don't know how lucky we are.We must move on, in the sense that there are
more fundamental business issues to address. And many businesspeople recognise that fact already. For the first time
since the National Bank's Small Business Monitor began, regulation is not the primary concern for small business, with
just 19 per cent of businesses rating it as a major concern.As I have said, cutting red tape for small businesses is a
priority, so I am pleased to see that businesses are finding it less of a problem. But it is also time to move the
debate forward and consider the most important issues - like how we can lift the capability and productivity of our
businesses.The most pressing concern for small businesses in the survey was a lack of skilled employees, and that issue
is something that this Government is working very hard to resolve.For a long while this country had somehow got the idea
that trades weren't cool; suddenly it wasn't sexy to be an apprentice plumber or builder, and so we had abandoned much
of our strong tradition of skills and trades-based training. And previous governments decided that the State didn't have
a role to play in encouraging people to be trained in the skills our industry needed - the almighty Market would take
care of that. Well it didn't, and the price to pay for that empty ideology was a shortfall in the skills we now need in
a number of sectors.So now we are catching up on filling those gaps. Getting more people into training in the areas
where skills are most urgently needed is a key focus for this Government. Across New Zealand last year the number of
people in industry training rose by nearly 20,000 to a record level of nearly 127,000, and we aim to have 150,000 people
in training by the end of next year. In Nelson alone there are 3440 people in industry training.So we are doing what we
can to help create a business friendly environment. While this Government might not deliver 100 per cent of the things
you want, we are committed to delivering as much as we can to make doing business easier. And we are genuinely committed
to hearing what you have to say, and taking on board your advice when considering any legislative or regulatory change
that may impact on business. While this may be the end of the road trip for the Small Business Days, it is definitely
not the end of this government's commitment to making business easier for small-medium enterprises. The feedback we have
been getting from each region will all be analysed and collated, and the Small Business Advisory Group will be reporting
back to me on the key findings and lessons to be learned from the Small Business Day Series. And I can assure you this
won't be just another talkfest - the findings and recommendations from that report will strongly influence and guide
future government policy and decisions regarding small businesses.
So now's your chance - rather than listen to me tell you what the government should be doing for you, I want you to tell
me what you think I should be doing - so now I'd like to hear your questions and comments. Thank you again for taking
part in Nelson Small Business Day - it has been a pleasure to be here.
For more information about the Small Business Days series go to www.smallbusiness.med.govt.nz