ASB hopes to help more small businesses invest in innovation. Photo / Getty Images
ASB hopes to help more small businesses invest in innovation. Photo / Getty Images
ASB says it will target up to half a billion dollars of lending to support businesses to invest and drive productivity.
Until the end of June, ASB business borrowers that invest in productivity initiatives will receive a grant, equal to 1 per cent of their loan of up to $50,000per business, the bank says.
The bank has also released a research paper, in partnership with NZIER, which concludes that investing in innovation would unlock tens of billions per year to the economy, raising real GDP to $500 billion by 2045 - an increase of about 5 per cent on current projections.
The report identifies New Zealand’s shallow capital pool as one of the productivity challenges holding New Zealand back relative to other advanced nations.
Small and medium businesses have long complained of the difficulty of getting funding from banks for expansion.
But the report finds that may be shifting, for larger businesses at least.
“Factors such as high real interest rates and the high cost of capital goods that were identified as contributing to capital shallowness have possibly become less of a constraint,” it says.
Drawing on the NZIER’s long-running Quarterly Survey of Business Opinion data, it found that access to finance had become less of a constraint compared to other issues such as labour supply and sales.
Finance was a more significant constraint for businesses employing fewer than 20 people, it found.
NZIER principal economist Christina Leung says the report looked at growth opportunities and what businesses, government and banks can do to power productivity, comparing New Zealand to 12 other small advanced economies.
“When we look at other, more productive small advanced economies, business is leading the way with support from government and the finance sector.
“New Zealand business needs to be more ambitious, embrace innovation and invest in capital, knowledge and research and development as an engine for growth and sustainability.
“The country’s economic growth over the past two decades has been largely driven by adding more people to the workforce, and this needs to change, we need to work smarter.”
The report did show a need for banks to help enable business innovation by stepping up with funding and support, said ASB executive general manager for business banking Rebecca James.
“We see it as our role to lean into this.”
James described ASB’s new scheme as a “kick-starter” which she hoped would lead to more investment in R&D and innovation through the economy.
“All businesses should be thinking about how they can raise their productivity to help meet resource constraints and rising costs in order to improve the bottom line,” she said.
Rebecca James, ASB executive general manager for business banking.
While the economic cycle meant interest rates were high rate now, she noted that business confidence had been improving and there was an opportunity for there for those firms prepared to take up the challenge.
“Productivity improvements will look different for each business, depending on their sector, size and goals,” she said.
“We expect to be supporting our customers’ productivity growth through investments in things like efficiency improvements with monitoring and inspection technology, increasing output by adding robotics to production lines, reducing errors and admin by building in point-of-sale technology or investing in people with workforce training and capability.”
The bank had been working with its lending team to “empower” them and give them the tools to work businesses and grow lending in this space, James said.
