Business mentor: Healthy SMEs testament to NZ's top rank

* For the second year running, New Zealand has been singled out by the World Bank as the easiest country in the world to do business. Small-business sector specialist Sarah Trotman asked Small Business Minister Rick Barker about the milestones of his time in the role and his plans if re-elected.
Things are going well for small and medium-sized enterprises (SMEs) and this Government has focused on creating an environment that is good for business.

It's the first time New Zealand has had a Cabinet minister advocating for the SME sector. I have enjoyed the challenges of the portfolio, getting out and meeting SME owners who are committed, focused and driven.

Last month, the Ministry of Economic Development reported that SMEs now number 312,000 - 10 per cent more than last year - they employ more than 40 per cent of the Kiwi workforce and the sector contributes more than one-third of New Zealand's economic output.

Supporting this, the Government has eliminated 139 business compliance costs, according to the independent Ministerial Panel on Compliance Costs.

This year's Budget contained $1.42 billion of tax changes for SMEs. These include:

* Increasing the threshold for the fringe benefit tax.

* Aligning payment dates.

* Aligning depreciation with the life of the item.

* A payroll subsidy initiative.

All these moves are geared towards enabling SME operators to spend less time complying with rules and more time on innovation, creativity and research and development.

The Small Business Advisory Group (SBAG) has been operating for a year and has proved invaluable in providing a small business perspective for me as minister.

This group of nine small-business people from all sorts of backgrounds was created to provide advice to the Government with a strong sector focus.

We'd like to continue working with SBAG and to use its advice in the shaping of policy and legislation impacting on SME owners.

These initiatives have enabled New Zealand to hold its position as the easiest country in the world in which to run a business.

In its report Doing Business in 2005, the World Bank showed that New Zealand is, in fact, the easiest of all developed countries for operating a business.

Again, in the 2006 report, we are first and this is great news - first out of 155 countries is no mean feat.

This was confirmed in an earlier report from KPMG in its Compliance Cost Survey 2004 that showed the number of compliance costs for SMEs was on the decline.

The report notes that for an SME in New Zealand last year, the average cost of doing business in terms of compliance per full-time employee had reduced by $2440 or 28.6 per cent.

From here, the Government intends to:

* Maintain pressure on the reduction of the regulatory burden.

* Continue to ease engagement with the Government.

* Build on two-way communication between the Government and the sector.

* Create opportunities for greater enterprise education.

* Commission more in-depth research to help us more effectively identify the needs of the sector so we can continue to do things to make it easier to operate a business.

Also key will be to continue investment in the Modern Apprenticeship scheme and industry training for young people.

* For more information on Rick Barker's small-business portfolio, phone (04) 471- 9917.