David Searle: Budget 2022 needs to address business blues

A mere 3 per cent of the 450 firms polled believe Budget 2022 will improve their financial or overall wellbeing. Photo / Dean Purcell, File

Opinion

OPINION

After more than two years of headwinds from Covid-19, with worker shortages, rising supply and finance costs and rocketing mortgage rates affecting both corporate and personal bank balances, it's no surprise that businesses are feeling sceptical about whether the Budget can truly change the weather.

However, the scale of the change in a short timeframe is notable.

When Baker Tilly Staples Rodway surveyed nearly 450 businesses around the country about whether they felt this week's Budget announcement would bring good news, the overwhelming picture was one of huge despondency.

Eighty-four per cent of businesses felt the Government was managing New Zealand's economy poorly. This could be put down to simple business opposition to a left-wing government – except that in 2018, only 48 per cent of businesses felt the same way.

Seventy-one per cent of this year's poll respondents also felt the coming Budget would have a negative impact on both their business and their personal circumstances. In 2019, again, just 48 per cent of businesspeople expected the Budget would make them personally worse off, illustrating how much trust has been eroded in the last three years. And this trust is crucial.

It's easy to dismiss this as "just the business sector's opinion", not that of everyday New Zealanders. Except that businesspeople are everyday New Zealanders too – and more people around the world are turning to businesses to take the lead on key issues, disillusioned with their political leaders.

The latest Acumen Edelman Trust Barometer Report reveals that business is the only institution Kiwis trust, among governments, NGOs and media. This makes it even more important for this Budget to demonstrate our leaders care about businesses' concerns, helping create a more positive outlook for all of society.

This statistic from our Baker Tilly Staples Rodway poll is arguably the most striking of all: just 3 per cent of those polled believe the Budget will improve their financial or overall wellbeing. Is such negativity really warranted? Yes and no.

More than four in five businesses polled reported at least some difficulty in finding suitable workers in their industry and region. An overwhelming 85 per cent would like to see immigration rules loosened to enable them to attract more workers. Last week's immigration announcements around reopening migrant work visa applications and dropping wage thresholds will have been extremely welcome, although more certainty is needed.

The details of the sector agreements have yet to be announced, and as Duncan Cotterill immigration law partner Nicola Tiffen observed recently, many businesses would likely not have bothered applying for accreditation to take on migrant workers at the $27.76 per hour wage requirement. The unheralded drop to a much more affordable $25 per hour will have caught more than a few unawares, leaving them scrambling to apply for employer accreditation ahead of borders opening.

The positive is that the Government has shown signs it's now listening to businesses on the skills shortage, after a long period of no change. What's more concerning is that around 80 per cent of businesses ranked infrastructure at the top (or second) on their list of priorities for government spending – something that sits uneasily alongside the recent promise from Minister Grant Robertson to set a new debt cap.

David Searle. Photo / Supplied

While a third of businesses voted "reining in government spending" as the most important thing our leaders could do to improve the business environment, there's still a huge demand for more infrastructure projects that combat congestion and address historic underinvestment. Health spending ranked second.

While the Finance Minister has promised infrastructure delivery will not be compromised by the debt ceiling, businesses will be looking for reassurance in this Budget.

There's a consensus that political pressure on spending should not be allowed to overturn key infrastructure projects that continue to provide jobs for workers, improve the flow of goods and people and support urban renewal. Getting this balance right is essential, so Minister Robertson's response as Infrastructure Minister to Te Waihanga's recent infrastructure strategy will be equally important come September, to identify exactly what "key" infrastructure looks like.

The watchword for this Budget seems to be "balance", just as previous Budgets have focused on "delivery" or "wellbeing". But listening to the voices of New Zealand businesses, it really needs to be about "trust".

Will there be enough in tomorrow's announcement to satisfy every business leader? Impossible. But building essential infrastructure, and rebuilding our workforce, will go a long way toward rebuilding an optimistic outlook for all New Zealanders.

• David Searle is national chair of Baker Tilly Staples Rodway, a New Zealand-wide network of accountancy and business advisory firms providing services from tax & audit to business advice, investment & cloud accounting.