What a Labour-led government could mean for small business

Small business leaders weigh in on the prospect of a Labour-led government. Photo / Mark Mitchell

A Labour-led Government could be problematic for some small businesses, with the minimum wage and length of paid parental leave likely to increase.

Labour leader Jacinda Ardern promised to increase minimum wage to $16.50 and paid parental leave to 26 weeks instead of 18 weeks if her party was to run Government, which could affect small business productivity.

"What small business in particular needs is stability and certainty, and that's what they'll be looking for from this government," BusinessNZ chief executive Kirk Hope said.

"All of the parties in the governing arrangements have said that they want to reduce immigration so they are going to need to think about how education will be able to better deliver the skills that those small businesses need to grow."

Given the policy gap, and that ministerial portfolio duties are currently unknown, it's hard to prepare for what could be around the corner, Hope said.

The Labour party promised to increase minimum wage to $16.50 from April next year, while NZ First announced policy that would increase minimum wage to $20 over three years, providing tax breaks and training incentives.

Xero country manager Craig Hudson believes the incoming government will deliver benefits, but select policies such as increasing the minimum wage will put pressure on small firms.

"It will put pressure on bottom line for small business absolutely but it'll mean they are able to hopefully retain good staff and therefore don't have to go through the pain of retraining.

"When you sit with the majority of small businesses the number one thing they stress about is their staff so hopefully if they are able to survive the increase in cost, which in some cases will be significant if you've got a large lower-paid workforce, then it could be a good thing for staff and business long term."

Sue De Bievre, chief executive of accounting software Beany, said the prospect of Labour raising minimum wage from $15.75 to $16.50 was a "thorny topic".

"The impact on SMEs can be problematic in the short term while they adjust, but if wages are forced up it will release more money into the economy and drive up productivity," she said.

"There's potentially short term pain for medium term gain."

An increase in paid parental leave to 26 weeks could create difficulties, she said.

"It's one of those tricky things of balancing the needs of our small business people and the greater social good. It can create difficulties just because there's a little bit less flexibility for small business owners - if they lose one person it can have a greater impact than say on a multinational," she said.

"Any impact on labour availability does impact SMEs directly."

A Labour-led government could be beneficial for exporters, she said.

"If they manage to weaken the dollar - which I know NZ First would love to do, but I don't know if they can do it, but if they could through some kind of Reserve Bank mechanism then that would have a really positive flow-on effect for our small business exporters," she said.

De Bievre believes small business will be better served with the incoming government, particularly given Adern previously held an Opposition small business portfolio.

"I think she does have the insights in to what business owners need in New Zealand, and particularly small business."

Details on policies and ministerial roles are likely to be announced next week.