Small Business Advisory Group chair David Downs said that while some small businesses are supportive of the Government's recent Investment Boost Policy, the mood of the economy is pretty negative. Photograph / Dean Purcell
Small businesses support the idea of the Government’s Investment Boost policy but there are concerns many won’t be able to benefit from the scheme because they don’t have the funds to invest, an advisory group says.
The Small Business Advisory Group was formed last year by former Minister for Small Business Andrew Bayly to bring together voices from across the community to give insights and advice on issues and opportunities for small businesses.
The group, made up of around 50 small business owners, representatives of industry body organisations, and regional and national business chambers, meets throughout the year.
Chair David Downs said one of the things the group was really keen on was accelerated depreciation.
“And of course that’s now actually come to pass with the Investment Boost policy.”
Announced at the Budget in May, the policy enables businesses to deduct 20% of a new asset’s value from that year’s taxable income, on top of normal depreciation.
Downs said reaction from the group about the new policy was generally positive but there were some concerns about implementation of it.
The minimum value of new investments is $1000 and many believed the policy was out of reach for the majority of small businesses because of the lack of funds they have available.
Downs was hopeful the policy could be tweaked to widen access to the scheme, perhaps through incentives for debt-funded purchases by small businesses.
“That’s longer-term, big-picture stuff. We know that other countries around the world have schemes that allow small businesses to get loans and not have to put their houses on the line.
“The chances of that happening in New Zealand in the near future are pretty slim. We’d have to go through quite a lot of thinking and and policy work, but that’s the direction that I think the group would like to go eventually.”
Last year, the group was influential in informing the minister on what changes needed to be made to invoicing within government departments and agencies.
It led to a crackdown on late payments, the moving of all government departments to electronic invoicing or e-invoicing and made it mandatory to pay invoices within 10 business days.
Downs said the move had worked and was flowing through really well.
“One of the pieces of advice that we gave the minister and the Ministry [of] Business, Innovation and Employment was that Government should require, particularly for their major suppliers, that they pass on the same payment terms that they’re getting,” he said.
“So if the Government’s going to pay large suppliers within 10 days ... those large suppliers should pass on those things in any sub-contract. They picked up on that, which has been really good.”
Another area of advocacy by the group has been around digitisation and the adoption of tools, particularly artificial intelligence.
Downs said that the group was quite animated about how the Government could ensure businesses had access to education and tools to boost productivity.
He said the Government had already started a programme through the Regional Business Partner Network to train them on artificial intelligence, so that knowledge could then be passed on to small businesses.
The sector has already seen a change in minister, with Bayly stood down following an “inappropriate” incident with a staffer.
The new minister in charge is Chris Penk, who is also the Minister for Building and Construction, Land Information, Manufacturing (also formerly Bayly’s role) and Veterans.
Downs said that the news at the time was surprising but acknowledged the enthusiasm Bayly had for the portfolio while he was in it.
“There was a bit of a fear that we were going to lose some of that sponsorship and senior level support, but it actually hasn’t transpired. Chris has really grasped it.”
Downs said Penk was very keen to get himself up to speed with a lot of the businesses involved in the group to help understand their reality.
“We have to be realistic. The Small Business Advisory Group is not going to be able to change the massive direction of government policy, but in the areas where we think that change needs to happen, the Government’s definitely receptive to our input.
“On one hand, we want to think about the big-picture, long-term strategy and policy direction. On the other hand, we need quick wins and to actually boost progress. I think we’re starting to see a bit of both, which is good.”
Downs said that at the group’s recent meeting, they checked in to see how members were feeling about the economy, and the response was “pretty negative”.
He said that while certain businesses in industries like agriculture were doing well, they were the exception.
“I’d have to say in general it was pretty negative, we’re finding it tough, very tough. The vast majority, particularly those in retail or hospitality or small services businesses, are just doing it really hard.
“The recession has been harder and longer than anyone anticipated. A year ago we were going ‘survive till 2025′ and we’re more than halfway through 2025 and there’s no let-up, so that was a bit of a sombre note."
Downs said it was good to have the minister and officials from the Ministry of Business, Innovation and Employment in attendance to gauge the mood of the room.
However, Downs said that many members were confident about the future.
“Everyone’s saying it’s tough at the moment, but the interest rates have come down and green shoots are appearing.
“My belief is if you’re a small business owner, you’re automatically an optimistic person. If you’re still in business now after a pretty tough couple of years, then you’re actually probably quite good at what you do.”
As for what’s next, Downs said the group has set up a number of workstreams and subgroups to relook at the Government’s “Going for Growth” strategy and how its five pillars relate to small business.
Downs said he was impressed by how much the group had been able to achieve already, but it’s also the community that has been formed that has been impressive.
“The meeting we had the other day was fantastic. It’s hard when you don’t live in the same regions. I travel around a lot as a few people do, but most of them stay in their regions and so don’t get to see each other.
“Now we’ve been together four or five times and people are really learning more about each other’s business and trusting and understanding the nuances of different regions. So I think the group is coalescing pretty well as well.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.