Compliance costs anger businesses

Often referred to as the backbone of the economy, the small business sector is a key group for political parties to woo.

About 96 per cent of local companies are defined as small- to medium-sized enterprises - those that employ 19 or fewer people - and they make up the vast majority of businesses, numbering 312,340 at February last year.

Leaders the Business Herald spoke to identified tax and compliance costs to be among the most pressing issues for these companies.

Business compliance costs were continually ranked by the National Bank quarterly small business monitor as the biggest issue concerning SMEs between 2002 and 2004.

Last year it was replaced by skilled employee shortages as the most concerning issue, matching findings of the Business New Zealand survey last week .

Auckland Chamber of Commerce chief executive Michael Barnett said chamber surveys showed SMEs were spending close to four weeks a year on compliance, and the costs had not been significantly reduced.

"I don't think the Government has a huge appetite for this sort of thing because they look at bigger countries like Australia and say we're not as bad off as them, so there's not as great an urgency - but those are wrong comparisons.

"I think for any business to be losing three to four weeks of productive time annually, then it is an issue of some urgency."

Transport and tax also topped Barnett's list for issues facing Auckland businesses.

"Infrastructure problems haven't been addressed and if you don't have good infrastructure you can't attract business. It means Auckland is a difficult place to move around and with distribution more costly than what it should be people are making choices about where they operate or how big they grow their business based on issues like transport, and they shouldn't be doing that. There should be a good platform of infrastructure provided."

Business compliance costs were also the biggest concern for Howard Frederick, professor of innovation and entrepreneurship at Unitec, and he wanted to see their frequency and complexity reduced.

"People want a simpler way to do business," he said.

Broadband and mobile phone costs were among the highest in the OECD, Frederick said, and lowering the cost of telecommunications and increasing broadband services were crucial to increasing productivity.

He also thought the main political parties were thin on policy that fostered a culture of entrepreneurship.

"Because New Zealand is filled with aspiring entrepreneurs, party strategies should appeal to small businesses and entrepreneurs by using words like that [entrepreneurship]."

Business in the Community chief executive Ray Schofield said feedback from the organisation's mentor programme Business Mentor New Zealand showed skill shortages was the issue SMEs were most concerned about.

Compliance and regulation was the second biggest issue, and most business owners considered the demands these placed on their time to be significant.

"It's quite difficult if you're just an average person getting on with it out there. More structured businesses have a higher level of skill to manage that situation."