Business survey: ‘The mood of business is sombre’

Businesses are feeling gloomy going into the October 14 election. Photo / Michael Craig

Businesses are increasingly disgruntled with the Government, according to a survey of BusinessNZ members.

A resounding 85 per cent of the 876 businesses surveyed as a part of the Deloitte and Chapman Tripp Election Survey said they didn’t believe the Government had a co-ordinated plan focused on raising New Zealand’s economic performance.

Only 6 per cent believed the Government had a plan.

“The mood of business is sombre,” Deloitte chief executive Mike Horne said.

Businesses were more upbeat ahead of the 2020 election, which saw Labour secure a landslide victory.

In 2020, 19 per cent of businesses thought the Government had a plan, while 65 per cent thought it didn’t.

Three years ago, most businesses either thought the Government was spending about the right amount (43 per cent) or too little (17 per cent) supporting them in the face of Covid-19.

The $18 billion wage subsidy paid to businesses was by far the most costly Covid support measure.

Come 2023, and the arrival of high inflation, businesses surveyed were very concerned about the costs they face – both due to Government policy and climate change.

A whopping 93 per cent answered yes to the question: “Based on your experience of doing business over the past three years, have the changes made by Government increased the costs of doing business?”

Three-quarters of respondents said energy costs were an issue for them looking to the future.

When asked about the impact of climate change, 59 per cent of respondents agreed it was affecting the cost of inputs to their businesses, 53 per cent agreed it was affecting the cost of their insurance and 48 per cent said it was affecting the cost of their products or services.

In 2020, the most common answer to the question (supported by 42 per cent of respondents) was that climate change wasn’t affecting business “at all”. Only 27 per cent said it was affecting their input costs.

Horne noted another theme that came through the survey was that businesses wanted stability in the tax system.

The majority didn’t want to pay more corporate, income, or goods and services tax to help support the Government’s books in the wake of Covid and recent weather events.

However, half of respondents agreed there should be increased “user pays” charges to help fund infrastructure.

Respondents were less opposed to the introduction of a capital gains tax (61 per cent opposed) than they were to a wealth tax (67 per cent opposed) or tax on windfall profits (70 per cent opposed).

Asked whether they believed the tax system should be used to deliver wider social outcomes (like increased research and development or uptake of electric vehicles), 61 per cent of businesses said no and 28 per cent said yes.

The feedback comes as the two major parties are campaigning on making various tax changes.

Labour is campaigning on removing GST from fruit and vegetables – paying for this by no longer allowing commercial and industrial building owners to treat depreciation as an expense when paying tax.

National also wants to stop building owners from making these deductions.

It wants to tax foreign buyers of residential properties worth more than $2 million, tax online gambling operators, and rely more on tolls, congestion charging and value capture to help pay for infrastructure.

It also wants to remove the Auckland fuel tax, adjust income tax brackets for inflation, increase the value of some tax credits for individuals, reduce the bright-line test and progressively allow residential property investors to again write off interest as an expense.

Jenée Tibshraeny is the Herald’s Wellington Business Editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.