Real Solutions for Small and Medium Enterprises

Covid-19 has hurt our small businesses. Through no fault of their own, they were forced to shut down. The crisis also showed how government puts small business to the back of the bus. While supermarket chains who retain lobbyists in Wellington were given a pass, people were forced to drive past their local butcher, baker and greengrocer, which were all shut.

It’s only right that government now creates policies which supports SMEs to thrive.

Seven out of ACT’s top 10 candidates are business owners. We understand the pressures that business owners are under and how to create sensible, practical policies which support them. Starting a business is incredibly brave and involves taking huge risks.

ACT’s SME policies will empower small business owners to take chances, get more people into work, and boost the economy.

Depreciation of assets

ACT will:

  • Permanently increase the threshold to expense new capital investment from $5,000 to $150,000 per asset.

Cashflow is everything to a business. Investment in plant and equipment ties up cash. Leasing is capital efficient but expensive through-life. The majority of small businesses see cashflow as being their biggest issue.

ACT is committed to helping business owners invest in and grow their businesses. Capital investment needs to be returned to the owner as quickly as possible so that they can invest further as the business and revenues grow.

Moratorium on minimum wage increases

ACT will:

  • Place a moratorium on minimum wage increases for three years.

Labour increased the minimum wage as the economy was going into recession and businesses were in lockdown. Increasing the minimum wage further while the economy is recovering will put a handbrake on business growth and the creation of new jobs.

ACT would place a moratorium on minimum wage increases to enable SME businesses to better manage their way through a post Covid-19 recovery. Business owners will still have the discretion to increase wages in a manner that is realistic and relevant to the sustainability of their business.

Temporary reduction in GST

ACT will:

  • Reduce GST from 15 percent to 10 percent for 12 months.

As we recover from Covid-19, we need to put more money in the pockets of New Zealanders to encourage spending and grow the economy. A 12 month reduction in GST will stimulate consumption and put more cash in the hands of businesses and in the pockets of employees.

Reinstate 90-day trials for all businesses

ACT will:

  • Reinstate 90-day trials for all businesses.

With the impact of Covid-19, a renewed emphasis on job creation is required and regulations that impede hiring must be streamlined.

90-day trials reduce risks for employers, giving firms the opportunity to take a chance on workers they wouldn’t otherwise employ. Young or low-skilled workers, or people who have been out work, have the most to gain from being employed on a trial basis.

It also works to the advantage of the employee who can choose to leave should they find the job is not what they expected.

There are significant risks in hiring new employees. Performance management of employees is cumbersome and time-consuming for SME owners and can be financially catastrophic if they don’t get it right.

Direct a larger proportion of apprenticeships funding to business owners

ACT will:

  • Provide a greater proportion of apprenticeship funding to the business owner to reduce the cost to the business and encourage them to take on more apprentices.

SME owners are not adequately compensated for the costs of engaging, supervising, training and educating apprentices. ACT would create a more efficient funding pathway between the training providers and the business so that more funding ends up with the apprentice. We would make permanent the temporary increase in funding for apprentices, across established and new businesses.

Apprenticeship programmes are cumbersome and impose significant costs in time and money on the SME owner, in terms of supervision, on-the-job training and managing trainee skills development. SMEs have not been well compensated for these additional costs and most of the funding has been directed to the ITO or the trainee. The proportion of funding provided to the employer needs to be reviewed for equitable sharing of cost and risks taken.

Prioritise and streamline the immigration process for skilled workers

ACT will:

  • Consult with employers and training providers to identify skills gaps, establish a coordinated response to domestic training, and prioritise an immigration process that fast-tracks immigrants to fill our skills deficit.

For any economy to grow and raise the living standards of everyone, it needs a workforce that has the necessary skills.

SMEs are desperately short of skilled workers. While we build a domestic skilled workforce through our tertiary education institutions and apprenticeship programmes, we must attract skilled and semi-skilled workers from overseas to fill the gaps.

New Zealand was built on immigration. With about 300,000 workers due to retire by 2030, we need to encourage people with the right skills to immigrate to New Zealand, help our businesses to grow, and share in that growth.

ACT is committed to attracting immigrants to New Zealand who can provide the skills that businesses need, while we train and enhance the skills base of our current population.

Reduce the number of government organisations supporting SMEs

ACT will:

  • Privatise business mentoring through competitive tender with MBIE governing the performance of the contract
  • Place NZTE under the Ministry of Foreign Affairs and Trade.

There is a large, complex bureaucracy of government organisations which supports SMEs and funds innovation and export growth. But they have proven ineffective at delivering successful business outcomes

Government support to SMEs is provided through three different government departments: MBIE, NZTE and a voucher system administered through regional business networks. ACT will redefine the role of government organisations and reduce the level of bureaucratic interventions in new business development support, both domestic and export.

Mentoring and funding for export business development is provided through NZTE which lacks effective international business development capability and guidance. It primarily serves as an ‘introductions’ and large event management agency. NZTE should be placed under the Ministry of Foreign Affairs and Trade so that it can continue in its role of providing ‘government to government’ and ‘government to business’ introductions.

To drive effective export growth there is a need to channel government funding for new business development and export mentorship through a single, experienced, knowledgeable and business-savvy organisation with strong domestic and international business development capability. This private organisation would be accountable to the government against a robust set of professionally developed and agreed key performance indicators (KPIs).

Streamline performance management and personal grievance processes

ACT will:

  • Streamline performance management and personal grievance processes while maintaining the principle of fairness for both parties and invoke the principles of the Disputes Tribunal in the determination of cases.

For small businesses, the personal grievance process is cumbersome and open to abuse by some employees. It can impose significant legal costs on businesses and impact their reputation, for which there is no redress. Rather than the employer bearing all responsibility, ACT would make the personal grievance process fairer and more equitable by shortening the consultation and corrective action timeframes.

Personal grievance processes are intended to support fairness, non-discrimination and equity in employment. For small businesses, the personal grievance process is cumbersome, costly and can be misused by some employees who start unfounded personal grievances which add significant legal costs to the business.

ACT will shorten and simplify performance management and personal grievance processes, while retaining the principle of fairness. Information on personal grievance responsibilities needs to be readily available to SME owners at minimal cost so they don’t have to resort to expensive legal advice.

“Tick-the-box” adherence to process should not be the primary reason upon which decisions are made by the courts.

Reform the Health and Safety at Work Act

ACT will:

  • Amend the Health and Safety at Work so that employees who are found to have acted in a wilfully irresponsible manner with respect to workplace health and safety bear some personal responsibility and can be immediately terminated.

The Health and Safety at Work Act is unfairly weighted against employers. Punitive penalties exist for Persons Conducting a Business or Undertaking (PCBU), but workers, who may choose to ignore rules and safety practices or behave in a manner that endangers themselves and co-workers, do not face similar responsibilities.

Currently, employees cannot be terminated for wilful acts and must be taken through a time-consuming and costly termination process, sometimes lasting many months. There is a need for a provision within the Workplace Health and Safety Act for immediate termination for acting in a wilfully irresponsible manner with respect to workplace health and safety.

ACT would rebalance the responsibilities for health and safety between employers and employees to make them fairer.