Small business is set to become a focus for the New Zealand economy as the Government introduces a 13-member Small Business Council.

The Council, made up of business leaders from the private sector including The Icehouse, Xero and Fonterra, Chamber of Commerce heads, tax experts and academics, will give government direction on what is needed to improve the performance of the sector.

It will be chaired by Hunter Powell Investments director Tenby Powell and University of Auckland lecturer Dr Deborah Shepherd, who will meet with members on a monthly basis.

Small business minister Stuart Nash said the Small Business Council had a strict mandate and a fixed term of one year to deliver results.

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"The Council will help the government develop a strategy to drive improvement and innovation in the small business sector," Nash announced this morning.

"Significant shifts in technology, the global trading environment, and domestic policy settings always present challenges for businesses.

"The time has come to establish a specialist group to consider some of these strategic issues over a longer timeframe, and pull together advice from a range of institutions and practitioners."

Nash said the Council would play an important role in developing small business-friendly Government policy, taking a bird's-eye look at the issues and opportunities for small and medium-sized firms, providing insights and recommendations.

It will also provide advice on whether there is a need for establishing a Small Business Institute within a New Zealand tertiary institution.

"I have purposely cast the net wide for the members of the council and deliberately sought out some of New Zealand's largest enterprises to play a role, in recognition of the connections and networks that are vital to helping small businesses thrive."

Nash said his priority for the sector was to modernise the way Kiwis do business.

"I want to make sure SMEs are well placed to maximise future opportunities and play their part in helping create a sustainable, productive and inclusive New Zealand economy."

Canterbury Employers' Chamber of Commerce welcomed the introduction of the Small Business Council.

"In today's fast changing world where small business face increased complexity, digital disruption, a changing trade environment and increased costs and compliance," Leeann Watson, chief executive of the chamber, said.

"We are very keen to work with government to ensure that policy acts as an enabler for small business and supports strong outcomes for business and the wider community."

The first Council meeting will be held next week.