KEY POINTS:
In the present economic circumstances, small and medium-sized businesses are probably the best placed to take on more staff. It is imperative, therefore, that the Government instils confidence in them by removing any obstacles to expansion.
One of these was swept away before Christmas when a new law permitted workers to be hired on 90 days' probation. More still went yesterday with the announcement of a package designed to reduce the impact of taxes on companies' cash flows, improve access to credit, and reduce business compliance costs.
In reality, many of the measures would probably have been introduced during this term of government in any event. Economic strife has, however, prompted urgency and a strong degree of practicality.
The Government has ventured widely, particularly in the area of compliance costs and form-filling, even though international surveys habitually indicate these are not as onerous as business leaders paint. Breeding optimism is clearly the overriding consideration.
The centrepiece of 11 separate tax changes is a reduction in the amount of provisional tax that firms are required to pay. This is designed to aid company cash flow and provide a breathing space. Notably, it is only temporary. The Government is saying, in effect, that the standard method of calculating provisional payments is appropriate in normal times but not when companies are confronting a recession. This is an admirably pragmatic approach.
Other measures traverse the penalties that businesses pay for not getting their tax payments right, the number of times they have to file PAYE and fringe benefit tax returns, and the amount that a small business can turn over before it has to register for GST.
All are largely uncontroversial and will be welcomed by the business community. There is also much to be said for the help to be provided by the expanded Export Credit Office to exporters struggling to find short-term trade credit. Again, this is a practical response, with some businesses saying they have had to turn down export orders.
The package also makes what is becoming a customary tilt at the bureaucracy to play its part. Government departments have been instructed to ensure all businesses that supply goods and services are paid promptly.
There is an air of the token gee-up about this, rather like the requirement for local authorities to pay discounts if they fail to process resource consent applications within the statutory time frame.
Equally problematic may be the expansion of Disputes Tribunals' jurisdiction in an effort to reduce the amount of time consumed by District Court contests for small businesses. The Government will encourage the use of the lower-cost and lower-compliance tribunals by raising the claim threshold at which cases can be heard there.
The danger is that the District Courts' current workload burden will simply transfer to the tribunals unless there is extra resourcing. There will also be added pressure on the decision-making of those ruling on the lower bench.
This package is part of a drip-feeding of policy by the Government. The Prime Minister says the next instalment will be a series of fast-tracked Government building projects, to be announced next week.
His approach is radically different from the big stimulus packages being employed by Kevin Rudd across the Tasman. What it lacks in oomph or excitement, however, it makes up for in targeting. If unemployment is to be kept to reasonable proportions, the Government has to address business' concerns rapidly and sympathetically. It must also acknowledge economic reality. This package goes quite some way to achieving those goals.
