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In Budget balancing act, what business wants to see

NZ Herald,
Publish Date
Thu, 2 May 2024, 8:40am

In Budget balancing act, what business wants to see

NZ Herald,
Publish Date
Thu, 2 May 2024, 8:40am

Business wants to see this year’s Budget focus on tax relief, reducing red tape and support for upskilling, according to a new poll.  

The MYOB survey canvassed the expectations and concerns of more than 1000 business owners and decision makers ahead of Finance Minister Nicola Willis’ maiden Budget on May 30.  

Respondents were made up of 554 small and medium-sized businesses and 516 mid-market businesses (employing 20-500 full-time staff with $5 million-plus in annual revenue). 

MYOB chief executive Paul Robson said most businesses recognise that the Government needs to walk a fine line with this year’s Budget. 

“Any business hopes or expectations around Budget outcomes will be tempered by understanding the Government’s fiscal position, and balancing their needs with areas requiring urgent spend,” he said. 

“However, investing in local business is critical to growing the economy and business owners are clear on some of the policy settings that could free them up to do just that.” 

Leaders of SMEs said increased investment in healthcare (43 per cent) was the top policy announcement they wanted to see in this year’s Budget, followed by a reduction in the company tax rate to 25 per cent (36 per cent). 

The tax rate for most businesses is currently 28 per cent. 

SMEs also want to see increased investment in education (30 per cent), increased investment in infrastructure (28 per cent), and support for training and upskilling (27 per cent). 

“SMEs tend to have strong ties to their local community... so it makes sense that investment in core areas that have broader benefits for society and secure New Zealand’s future are high on the agenda,” Robson said. 

However, almost half (49 per cent) of SMEs aren’t confident their business will benefit from the Budget compared with 46 per cent who were confident. 

Meanwhile, leaders of mid-market businesses were far more confident (68 per cent) than SMEs that the Budget would deliver benefits for their business. 

Topping the Budget wish list for mid-market businesses was support for training and upskilling (42 per cent), followed by changes to immigration policy settings, such as automatic recognition of appropriate training and certification of skilled migrants (32 per cent). 

Leaders also want to see red tape issues addressed, with automatic approvals for appropriately certified international materials and products (31 per cent). 

Improving the immigration accreditation scheme (27 per cent) and a reduction in the company tax rate to 25 per cent (26 per cent) also made the top five. 

“The mid-market might represent a smaller segment of overall enterprises, but they are some of the most ambitious organisations in New Zealand,” Robson said. 

“Local mid-sized businesses are consistently driving for growth, and whether they’re aiming to increase revenue, grow their presence in the market or outpace their competitors, policy that helps to deliver the resource and expertise they need could contribute significantly towards these goals.” 

In addition to policy expectations, SME leaders were asked what business-focused policy initiatives they would support. 

More than half (52 per cent) would support reducing the company tax rate for small businesses, while 42 per cent would support policies that simplify the tax filing process. 

Simplifying and streamlining the consenting process at all levels (36 per cent), assigning a set proportion of Government contracts to local SMEs (30 per cent) and a lower research and development tax credit threshold (29 per cent) were also in the top five. 

“Ultimately, SMEs are looking for policies that address the costs impacting their bottom line, simplify complex processes that stifle growth, and create an environment that supports innovation and uplifts the potential of their teams,” Robson said. 

Looking beyond Budget 2024, 34 per cent of mid-market businesses said the fast-track digitisation of Government and public sector systems to improve business-to-government engagement experience was the top focus. 

This was followed by a 30-year plan for national infrastructure projects (24 per cent), increasing international trade deals (24 per cent), enhanced investment for R&D, innovation and commercialisation (23 per cent), and investing in hi-tech infrastructure (23 per cent). 

Robson said growing the business sector will give the Government the flexibility to do more in future Budgets. 

“[And] increasing the skills and capabilities within local businesses, and making it possible for them to devote more resources to improving innovation will ultimately create the framework for a more efficient and productive economy.”  

In a speech to the Auckland Business Chamber in March, Workplace Relations and Safety Minister Brooke van Velden said the Government was committed to cutting red tape and regulations.  

She vowed to restore business confidence and certainty while outlining her key priorities for the portfolio.  

Business confidence has been in short supply lately after the country dipped into recession in the December quarter.  

ANZ’s April Business Outlook survey found business confidence fell eight points to +15 in April. It followed a 12-point decline in March.  

And among SMEs, pessimists still outnumber optimists, according to MYOB’s latest Business Monitor survey. Forty per cent said they expect the local economy to decline this year, while 37 per cent believe it will improve. 

The Business Herald’s Liam Dann will be hosting a live panel discussion at 8.15am with NZIER principal economist Christina Leung, Auckland Business Chamber CEO Simon Bridges, MYOB CEO Paul Robson and Retail NZ CEO Carolyn Young. 

This article was originally published on the NZ Herald here. 

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