Labour's Jacinda Ardern and National's Nikki Kaye on how the government can help small businesses.
Before I came into Parliament, I was the holder of possibly the worst job title going: Assistant Director at the Better Regulation Executive in the British Cabinet Office. If I ever wanted to end a conversation with someone, I simply told them what I did for a living.
It may have sounded dull, but the job itself taught me some huge lessons. The unit was set up after the then British Prime Minister realised he had a problem: that business didn't feel like it was being heard by government and that the government knew it needed a much better relationship with business.
It was run differently to every other part of the civil service. We had an executive chair from the private sector; we were given our own cabinet committee to halt regulation that we believed wouldn't achieve its goals or where the benefit would outweigh the cost to business, and we spent 12 days a year sitting alongside the businesses and frontline staff that government regulation had an impact on day in and day out.
The whole experience has shaped my view of the relationship between government and business and just how important that relationship is.
When Labour was last in government, we recognised that, for far too long, small business had been neglected. We created the role of Minister for Small Business; created a small business advisory group to advise government on issues that impact on the SME sector; lowered the company tax rate for the first time since 1988; conducted the Quality Regulation Review; started the process of regular regulatory improvement and brought legislation before Parliament to reduce compliance costs by raising a number of tax thresholds (something the National government finished ushering through when we left office.)
That's not to say everything has kept moving. The Small Business Advisory Group used to report to government every two years on matters that needed addressing - 2004,2006 & 2008. The Labour government responded to each of these reports. Since National has been in government, there has been no report.
We know from things like the KPMG compliance cost survey in 2008, which showed compliance costs had fallen by a third since 2005, that we were on the right track, but there is definitely more to be done. I frequently hear from SMEs in particular that they cannot understand why different government departments demand the same information from them and multiple times over. A very fair question. We surely are small enough to be able to implement Standard Business Reporting in New Zealand: allowing businesses to file information only once and in one place. Sounds simple, but the savings for business have been conservatively estimated to be between $55 and $75 million every year.
But I know not just from my time in London, but from talking to the significant number of small business owners in Auckland, that issues like employment are also at the top of some small business owners minds. Some have raised the 90 day legislation with me and, each time, my message has been pretty simple: there is nothing wrong with giving someone a fair probation period, but you could already do that. The 90 day legislation went a step further though by allowing employers to sack an employee without giving them a reason. This takes it beyond a fair and notified probation period, and we don't believe that is fair. Not one of the employers I have spoken to would want their son or daughter sacked from their job without reason. Healthy employment relationships include feedback loops which ensure employees understand what is expected of them and employers understand what their employees' needs are in terms of training or professional development.
We can and should be doing more though to make sure that employers have more support when taking people on, just as we should be doing more to ensure that employees have the skills they need for today's work places. Builders, plumbers and electricians, for instance, all operate in areas with huge skills gaps. In a recession, the idea of taking on new staff, especially apprentices is a massive ask, even if there might be a need for more workers down the track. That's why Labour has said that we will transfer the dole that a young person might otherwise receive and give it as a subsidy to an employer who takes them on as an apprentice. I know that will make a difference not only for the 9,000 young people we want to move into employment through this plan, but to many businesses.
As for ensuring that we keep more of our skilled people in New Zealand where they're needed by business rather than heading off shore, that means facing up to our massive wage gap. We can't have it both ways. If we want to retain people, we need to make sure that we can compete with the likes of Australia. That means ensuring that some of the productivity gains we have made are reflected in our wages. Labour has a plan to address this, but we have also built in provisions that recognise and respond to the unique pressures that small businesses face.
Ultimately though, the best thing Government can do for small business, is create a strong economic environment for them to operate in. It's time that Government got off the side line and gave business some confidence that it knows where it's going, and why. It doesn't require long winded job titles and new government departments, it just requires a plan.
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The last three years have been tough for many New Zealanders. It doesn't matter whether you are a person in Canterbury hit by the devastating earthquakes, someone who has been made redundant, or a small business owner that has struggled through, or worse, been forced to shut up shop.
The way forward is centre stage as we head into the election, and Kiwis are being offered two very different options to help improve our economy.
National's opponents offer more debt, more taxes, more spending, and more Government intervention in our lives. The extra costs that Labour would impose on employers and business are growing rapidly, and include; an expanded ETS, increased KiwiSaver contributions, a higher minimum wage and backwards looking industrial relations policies.
It's worth remembering that when Labour left office in 2008, the forecasts were for ever growing debt, and never ending deficits. Labour want six income tax rates, a GST that applies to some things and not others, a big gap between the company rate and the top personal rate which would encourage tax avoidance, as well a capital gains tax on productive industries that raises virtually no revenue in the first few years.
We're starting to see the green shoots of growth from some of the tough decisions that National has made during its first term. More people are finding work, and the forecasts are for a return to surplus in three years.
The last thing New Zealand needs right now is new taxes - especially a new tax system full of complexities and exemptions. New Zealand needs more taxpayers, not more taxes, to build on the signs of faster growth we are seeing. National's estimates show Labour would need to borrow an additional $17 billion over the next four years, and this extra borrowing would be at a time when the world is saying no to too much debt.
Over the last three years I have met many small businesses owners. In Auckland Central there are more than 7500 small business owners and self-employed people. I have met them and have been there when some of them have closed down. It is difficult to describe the emotion of seeing someone choking up and talking about the sacrifices they made to get their business going.
That is why I actually get pretty upset when I see the cumulative effect of the costs that Labour is proposing for small businesses and employers.
We have 500,000 small businesses in this country. Many of them are not rich people. They are builders, they are graphic designers, they are printers and they are just trying to get ahead through their own efforts.
The cumulative effect of Labour's proposed policy mix would ramp up costs to employers, depress wage increases, and make businesses think twice before taking on new workers.
Businesses, both big and small, have only a handful of ways to meet these sorts of costs - reduce wages, cut jobs, increase prices or simply shut up shop. National believes the way out of New Zealand's situation is to not for the Government to pretend it can alone find a silver bullet. It is to ensure that the 500,000 small businesses are given a positive environment to employ people and produce more goods to the rest of the world.
That's why we've worked hard to improve essential infrastructure like roads and rail, and why we're investing in ultrafast broadband - why we're delivering on Trades Academies, why we are developing trade partnerships in Asia and why we introduced the 90 day trial period so workers could get a foot in the door.
National has made significant steps to reform the Resource Management Act to make it easier to get things done, it has taken steps to reduce red tape, and it remains focused on education so the nation can benefit from the huge potential that we have here.
Labour's alternative of uncertain new taxes, more debt, and a Government-fuelled spending binge would undo many of the gains we've made. I believe part of the Kiwi dream is that regardless of your background many people have the opportunity to be self-employed or start a business. Let's not lose that. New Zealand is a nation of small businesses and now is the time to back those people to help power up the New Zealand economy so that we can all improve our standard of living.
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